Earnings call transcript Q2 2023

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Heron Therapeutics Second Quarter 2023 Earnings Conference Call.

As a reminder, this conference is being recorded.

Now, I would like to turn the call over to Jeff Cohen, Executive Director, Assistant General Counsel and Assistant Secretary. Please proceed.

Jeff Cohen

good and Krista, you, afternoon, everyone. Thank for Therapeutics conference you for second XX, joining company's us Heron the the XXXX. June ended on afternoon quarter call results this financial Thank to the discuss

are Heron Vice Vice Executive Financial President, from today Development Chief me Craig Chief Ira President, Forbes, Executive Bill and Officer. Collard, Officer; Chief Duarte, Officer; Executive With

page following be call, via webcast available conclusion those For accessed the call. are via slides of website you participating made of Investor today's of Relations can the via also our conference and

we provision remind expectations, This statement Act Before a numerous the you during based remarks includes beliefs, actual the any statements. begin, plans, make We described that company's performance, future forward-looking and Private and statement. this not differ the and will is Safe of which call, to the the date to and Securities purposes conference are could that about uncertainties the this those historical statements all that statement risks under let results me materially These that of statements. of you call caution fact quickly Reform in Harbor are Litigation on as course is from XXXX. constitute statements projections, of subject the of important company the forward-looking forward-looking of forward-looking analysis for a cause judgment of

statements required future and Heron do conference public in actual SEC. and does reflect no forward-looking are by as uncertainties today's this Heron's and made call these in to webcast release not update assumes with periodic or in risks the The associated law, the to forward-looking so. obligation the Harbor press to with described Except outcomes; events in intend filings Safe statement statements

over And Chief Craig Collard, Officer. I now call the to would like Executive with turn to that,

Craig Collard

for us quarter Thanks, thank call. for our afternoon, today Jeff. everyone, and joining you earnings second Good XXXX

call. that our significant transpired share I'm have some last pleased with you since developments to

been with well Heron has updates at pending believe in of as on activities excited management an provide ANDA Hatch-Waxman I'm with you to team transforming as reduction our a on Our financing the growing including into efforts, to company litigation. we team, executive that lead our hard and changes updates update profitable and status patent cost work will revenues, our

On as I weeks my that four improvements that only here and where time could make earnings first was most determine call of with assess to CEO, Heron quickly. mentioned used business been and we the I'd

that those and executive Head The the first Vendor assessing changes and changes needed. business. We making side a new Marketing leadership have leaner Supply the new on in proper a Sales was step and made of Development, the Head acute we the were and with of of now CFO, leadership Management, and organization

cost new the initiative. areas we analysis announce that our Through successfully implemented I'm can thrilled a have identified strategic careful and to reduction operations where has enhance team efficiencies. and planning, streamline we

optimizing $XX our expect reflects the to to fiscal a sustained to our and our three cash approximately responsibility commitment This resources we years, of savings initiative Over next remarkable dedication million. for growth. achieve

with our have company able our growth of measures, an the partners and with expect financing as to products. that our closing largest achievement addition profitability. shareholders facility. we the million potential well $XX plan, to we on operational cutting million cost a balance equity current were $XX confidence our that In completing our by enough some business capital This will achieve the working to as sheet bolster capital on underscores to of this strategy Based provide on the and investors up

business. the up The company and changes efficient are of still will and company oncology made focused future. has this time both improved on of set business Heron into the growth. of of the the operations. products growth seeing revamping potential The of during with solid commercially-focused product stages next significant improvements sides the acute the organizational early certainly our for foundation care is this and change, the around in still have phase are we Even be We a maximizing all quarter recent a of

this dramatically expect strategic we as implement forward. We new to plans improve moving

moving Now highlights onto product from the quarter. some

On same for increased which for QX SUSTOL period net side the combined million in oncology $XX.X and of XXXX. sales the the $XX.X million, product business, from CINVANTI were

We also grew X% sales by combined quarter-over-quarter.

of for for guidance financial sales million net our reiterate XXXX. million to full pleased franchise $XXX to $XX the are product We oncology the in year

pending outcome our Hatch-Waxman at hearing ANDA the also our Markman Fresenius had CINVANTI favorable against enforce We litigation in to a recently patents.

outcome We are portfolio. enforce continue vigorously defend will pleased patent and to the and with our

of business, now the side ZYNRELEF the to acute APONVIE. and with care Moving

product then We to yet conduct we implement see business, changes. the with accomplish, some to we also, on side though this fundamentals the continue of our many business even we to of on of move improving growth our the how the plan transformational focused we of of Once many forward initiatives. have initiatives planned

million was to sales sales X, period of Net product for XXXX. March million XX%. were quarter the Net in product ZYNRELEF the in U.S. on of for became APONVIE XXXX. available $XXX,XXX. same $X.X quarter the Quarter-over-quarter $X.X were commercially the for compared APONVIE unit growth

feedback APONVIE's we some During unique positive customers were from to receiving very clinical phase, value. this due launch

many adopted system-wide already moderate In severe that for others to scheduled have review. patients and systems currently fact, hospital are several for all

true the have syringe. of product through next The assets. with focused needle, surgical to outside the maximizing around including ZYNRELEF, passed allowing of underway status, value prefilled business, be and separately reimbursed hour be we access business both to our has in and a With filed of reimbursement expand also unique the our hospitals key phase It initiatives growth or will three our product improvement pain sNDA, a relief. product vial and bundle ASCs. our XX ZYNRELEF VAN, is

a but see years. will that growth products should impact a not our these overnight, of have the status, several and ultimately a great should company part of commercial growth and lead improvements reimbursement profile, to product have the All dramatic product and with clinical will company improvement place right This and over the massive overall our take strategy are to begin attributes profitability. new plan, we excellent to next

a data three this Regarding by recently months. XXXX cooperation, the a non-clinical sNDA to was XX, January The for period The new became the agreed completing, to deemed and be submit the accordingly FDA expansion in our amendment to of sNDA our by division division our new the company our were of the spirit to XX, we to extension review informed we this date of major ZYNRELEF, October extended label for of submission three-month timeline for some data division. PDUFA from and XXXX. aware

moves In management of equity conclusion, company. the that by and for undoubtedly favorable trajectory the the debt significant Markman our of our the financing, team, outcome success and strengthening will cost accomplishments all hearing, marked continued past successful quarter position strategic shape us and at and The growth. initiative, implementation CINVANTI securing of the has been executive reduction our of

of this your will Thank not XXXX you While move turnaround through transition. business for continued will this and a we be transformed for year company as the support be prove patience overnight, Heron. to

call ahead, the over Ira. will now turn to Duarte, CFO. I our Ira Go

Ira Duarte

Thanks, Craig.

of compared increase XXXX of first XXXX same quarter $XX.X the of XXXX. for representing million million revenues to second the million $XX.X an increase net XXXX product XX% six the revenues combined million $XX.X were Product period of an for of were compared $XX.X with for in Our net with months XXXX, or QX XX%.

and XXXX June care the which and in XX, net were $X.X million, ended $X.X the six months XXXX. three revenues $X.X for Our $X.X million million, same respectively, from respectively, for franchise million and acute period increased

three respectively, and which and million were care oncology $XX.X increased XXXX, $XX.X respectively, the million, period the net six XX, product in from June $XX.X For sales and million, for months ended XXXX. same $XX.X franchise million

negatively our and was $XX.X believe and ZYNRELEF XX, will profit and ended net QX are for We six and for revenue, margins both these representing inventory. product These we million working XXXX. months quarter were as XXXX, inventory Our through in June the of of the gross XX% QX million, XX.X% impacted respectively. of write-offs of some margins by improve stabilize ZYNRELEF $XX.X

will of that are forward. calls that moving on very also impact positive initiatives had costs earnings we future on a a number have We we discuss should through working

XXXX $XX.X million and QX resulting SG&A from force XXXX, ended million six for and million XXXX. compared of with primarily June in the period months XX, $XX.X and were same $XX.X June expenses in $XX.X million, our in to announced increase the reduction respectively,

validation in up, months $XX.X related in and million costs expenses million million six to completed and compared to materials June comparable were ZYNRELEF, QX production and The as Research related was decrease in $XX.X $XX.X and in XX, to XXXX. raw ended periods spend of million in XXXX, qualifications and scale the were primarily decreases development XXXX. $XX.X activities

personnel We believe overall costs related area XXXX. and the reduction we to moving to continue decreased to reduce costs increase continue June as can in efficiencies. In this forward implemented in we due in addition, force

The for for XXXX, compared XXXX QX and $XX.X the was $XX.X was in operating quarter QX net loss in million for period $XX.X million $XX.X XXXX. the with million million loss the and comparable

compared a with is $XX.X comparable of total in period loss, million of XXXX. net to year-to-date $XXX.X loss net million Looking XXXX the

investment XX, cash at June balance $XX.X short-term of sheet a Our the million. balance shows and of end XXXX

capital in savings we approximately closed to up of cost profitability. facility us Craig million to financing XXXX million August as of the growth future working earlier However, position his and July in comments, mentioned XXXX. initiatives in our a with of combined capital These for and path raise $XX $XX

Craig. you, to Back

Craig Collard

Ira. line Thanks, like the open for this questions. we'd Operator, at time, to

Operator

comes Serge question Please & of ahead. first the Your from Instructions] Company. [Operator go Needham from line Belanger

open. is line Your

Serge Belanger

afternoon. good Hi,

us. Just a couple of for questions

one, regarding achieving profitability. First

that the how the still about the for assumptions get I can late maybe delay changed given you've around regulatory talk XXXX ZYNRELEF? timeline talked or about a on target, think And that. in past, the if has that there? you we Is

label for guess, I maybe about it just that gets expect you ZYNRELEF, delay regulatory the what Thanks. talk look expansion regarding once could approved. like secondly, And

Craig Collard

question. the for Thanks Serge. Hi,

have believe said So, achieve that in we late would we profitability regarding profitability, again, XXXX. we

on more we or upside point. we'll the VAN raised, in the forecast the monies think don't sNDA order of raise anything the is without I the we think to we've like to takeaway And any that that need to for here that. based monies get again, built

was on So this trend the more is just product of forecast a performing. how

efforts of the Again, expansion, to be reduction get have happen -- cost anticipating of types well. some that could assuming label assuming the from some will we within are things we're implement we're impact to those on we with able some profitability we and There upside things the positive made, we've that when that so timeframe. ZYNRELEF things get And doing. as APONVIE a

end getting how standpoint, at we're profitability So to that's from that the of 'XX.

the in to room. like and more like I'd the little Regarding Forbes maybe that a is thoughts. to here him I'd us around bit the detail and sNDA Bill expansion, his -- with speak

Bill Forbes

Hi, XX soft Serge. the for we're inguinal Yes, in open instillation for postsurgical sNDA to Forbes. we proposing with arthroplasty. analgesia insert This for current that of analgesia hours to is package bunionectomy, so What the is and Bill herniorrhaphy knee in total allows go orthopedic. periarticular up tissue

step soft And studied ZYNRELEF has bit just that tissue of I'll broadly clinical contributing and XX four trials. procedures surgical submission maybe here clinical here those orthopedic was different trials: little put actually the procedures. to been four kind XX back Heron. So, about in in Eight a and unique were talk surgical at

and abdominoplasty. So, The from presented Southern Ortho Western lumbar surgery, total actually data with surgery lumbar and it when in, went already surgery C-section, surgery, went shoulder supplement spinal has conferences. spinal actually been at in mammoplasty, total the

favorable data respects, out with our label. broaden this And going there. that data. this is can expansion I Hopefully, many a in label been we negotiate to put has So already think

and I'm doing in going about major those happened had little a looked to of and talk was we little a continue doing do a intra-articular further study We some some that rabbit out. This preclinical, with were been for the to injection. what bit amendment. studies

mentioned I've before, actually periarticular, not intra-articular. for the As indication ZYNRELEF is

particular physicians intra-articular. rabbit this study further. think actually And out that about just of consider itself looked labeling. perspective, use little bit using we This a I class the from So cautions the label

it new actually finding, is for not data, already it's label. is new it and accounted in while our So a

We this the needed declare side. needed think because of I it our was to -- major or that feel it that of on agency a like amendment filing So was kind to disappointment or -- division that. particular a -- the didn't

that hopefully, So question. your answers

Serge Belanger

Thank Yes. you.

Operator

of Boris Cowen. line Your next question from comes the from Please TD Peaker ahead. go

is line open. Your

Boris Peaker

questions Two on Thanks. my end. Great.

an if you opportunity alone? First, to is Like just Craig, profitability organization terms profitability. we in become of care supportive a such can I'm curious, based just on think ZYNRELEF, do ZYNRELEF? restructure exclude there to profitable Heron without it

Craig Collard

that type and promote problems you're I with obviously again, focus it's would ZYNRELEF. haven't But that I it of we're we really if We on. But again, I From anything mean, ZYNRELEF profitability growth we APONVIE some mean, really we're way. put now way. have trimming around that or current standpoint, it looking really total all, we talking on hadn't think at looked only at for inventory the and trajectory analyzed product not thing. growth But superior the a didn't

think So again, upside good are that of conservative one -- with surprise pretty results I again, And CINVANTI. been out there's is our think we And I there. some we've getting well still APONVIE. really

communicate trying for. reduction and fact I So, here about that think I allows and think of the place to dig get us that But we fairly outlook. this there's to transparency trying wanted an really we that haven't conservative a that really business in accounted point put profitability we're our cost the this to and to upside been is be we've that

Boris Peaker

Great. have it's And and certain now? But approved currently you of talked within do the sense then, right better coming approved in going to a others. obviously areas on where maybe where indications label versus path why sales ZYNRELEF, are the about expansion forward. the not the specifically, three indication, trying Just you understand from you've

Craig Collard

Yes.

being suggest been ASCs point where typically where And hospitals sort I I have keep of or passed procedures that we're sort of the data think hip. get issue, these we seeing success a had knee has we've once majority again, once that's to and prep of usage, most the this are really a mean the four-month customers. those within performed. we

we've most date. had where the to that's success So

Boris Peaker

very taking for my you Thank Great. questions. much

Craig Collard

Thank you.

Operator

Markets. questions at sorry, [Operator Your question I'm Instructions] the go this queue time. Byrnes have Carl no Capital ahead. Oh, from do. next Please -- in we we further Northland

open. Your line is

Carl Byrnes

terms Congratulations And Thanks. respect a Thanks. sales with as to and progress, existing partnership? in force? your on Any in then, thoughts for look and accelerating that ZYNRELEF might have follow-up of what thanks And the the terms I question. potential well. of leveraging

Craig Collard

Well, thanks, Carl.

relief and there, position looking cut forth. we and of were been to as as Yes, can we've outside far we partner success. product. this issue ZYNRELEF better improving almost We've we biggest the we And not been you a is of story. I -- to is that. with potential things there. at big think and and The good The things I like for using looking reps, as so one type to thing, used have at had do maximizing Sorry, off do that seems we've clinical possibilities issue so market the is data, our true apologize that look that research on XX-hour what thing. And no targeting pain of ZYNRELEF territory really so

sterile the the of in suite the the non-sterile with The out that been is issue to that just the surgical pull product time with it issue of the to And and environment vial. takes preparation itself. has product the then

be reps thing things more and up also our want And but well. a APONVIE on bit with (ph) looking could to it be detailing been you -- time a and give the on products would those our distributors, have think a I at other that. picking surgical companies some of much that physician product, allow with partner the And lift a pretty CINVANTI. of know basis. [our competitors who surgical do will, them suite, if with we would partner we've in as surgical daily would to by a true] in are so, living different And to those we spend suites done number that frees

the see not short think forecasted will be that footprint are some again, I I product. you'll think with next our the pick a So, in. to add partner fairly of we have we timeframe, over that it sort side these of [indiscernible] will should And things that ZYNRELEF

Carl Byrnes

And quantify And quarter switching $XX.X a Thanks. it. -- little the potentially think, If Got and severance one-time type for at around look do which gears much can $XX.X is the possible? at quantify and I around levels quarter? you SG&A, one-time additional related not extraordinary-type and able to expect of million to how if we Or you you're charges charges? to the in that's kind what million, one-time expect to expense bit. third quarter? kind if was severance R&D then you of Or hit third the be, Thanks.

Ira Duarte

Yes.

million in charge come we this I have that of will released, $X.X about through think year. the publicly to one-time end we

expenses in you at believe operating going XXXX, the forward. our up cut million million year, in $XX $XXX [advanced, see for and we (ph) go million So, levelling] of -- we another been probably they've will XXXX, that $XXX

Carl Byrnes

Thanks. it. Got

Operator

next Instructions] comes question the [Operator Please Your go from ahead. of Shi Jefferies. Kelly from line

open. is line Your

Unidentified Analyst

This question. Hi. Thanks for my (ph) [Clara] Kelly. on is for taking

So, I have two questions.

is For APONVIE, a positive physicians. from of Seems sales. of feedback like this the so you first lot quarter had full

just about sales on growth trajectory how So, the for should APONVIE. now from we wondering think

Craig Collard

great a question. it's No, Yes.

get situation system, high-risk if get we where can patients, to get selectively were what system-wide and situations and EBIC and APONVIE Baylor, those like of are you I moderate-to-severe And haven't all a not in the a we take biggest is to IDN it's the and the mean going can we all take The convert It's APONVIE, We when there system-wide we still a necessarily patients, so thing. APONVIE APONVIE maybe difference patients, an they literally that type with that quite conversion. a bit hospital of get ton by say that, forth. to of so work system or ZYNRELEF conversion. individual win formulary with had difference surgeons with time of but that with a is versus with ZYNRELEF,

you a sort win conversion, get if a we will. system leads that So, of to

over in we'll We've next quarters think find going systems couple the get revenues, forward. bigger date a if system-wide accounts the have annuities, what so to had you'll converted. is few begin And will, that I almost that to orders certain that you hospital of create

seen you'll have think we results review. now see begin another in haven't are that I but You yet, in systems to the And it. really right XX that

we like again, the progress. So really

we I that obviously, a from will, you're a again, a begin if we'll little going as and in time the do that. see short these we'll wins more very insight more I give on think period, you more what to little pipeline, to of forward, really try have want to going type of going we see bigger ideally, bit that a in to think what's time, to And orders that report in But with product. to going it's way, the hospital more, take thing, the some come through. results transparency

Unidentified Analyst

And the the physician had feedback also you be for of have in or on also quickly ZYNRELEF, we you. the on understanding surgical VAN improvement? VAN ZYNRELEF of of making are Great. you kinds you efforts growth sales seen see between can VAN Thank think do sales now launch? different kind How for by launch mid-XXXX. after available And terms also And could indications? different change and what curious, trajectory

Craig Collard

midyear And change that have going the sterility [indiscernible]. Yes. does the VAN is news two, the year. it's the the perspective. Well, time things. it believe to do in with next of we'll pull issue, And makes track timeline on from helps product. think that a it We it two good One, to out I is

it be four could upwards XX XX to to three of minutes, of instead So seconds.

to product think I the so it's And just use. of a ease standpoint of impact dramatically from going

to the partner possibly suite. before -- in our looking partner I mentioned Again, surgical surgical a with about

and into something an VAN with lead expanded I expanded as the think label that's footprint. hopefully and we as well

sales things higher growth and those lead higher of All to should sales

as we want to These have not far be as additional would that again, getting But profitability. I forecasted us to reiterate, sales.

comfortable timeline pretty with again, that. feel be we everything to seems track from a And So, on perspective.

Unidentified Analyst

Thank Okay. helpful. you. Very

Craig Collard

Thank you.

Operator

you I'll in turn further closing time. at no have it queue remarks. back We for to questions this Craig, the

Craig Collard

earnings I just our second appreciate everyone do but This and call, want we time to again. patience. the is thank really

time, transforming. It's that we've significant but making I think strides this little take we're there. think things going is I the a happened some getting And in to bit have some had business quarter. of

So, we look Thank quarter. you. next forward to updating everyone

Operator

today's participation, concludes may you call. and and gentlemen, disconnect. Thank your Ladies now for this Goodbye. conference you

Heron Therapeutics (HRTX) 14 Aug 232023 Q2 Earnings call transcript