Heron Therapeutics Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 6, 2025
Skip to Participants
Operator

Good day, and thank you for standing by. Welcome to the Heron Therapeutics Q1 twenty twenty five Conference Call. At this time, all participants are in a listen only mode. Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question and answer session.

Operator

To ask a question, please press 11 on your telephone I would now like to hand the conference over to your speaker today, Melissa Jarrell, Executive Director of Legal at Heron.

Melissa Jarel
Melissa Jarel
Executive Director - Legal at Heron Therapeutics Inc

Thank you, operator, and good morning, everyone. Thank you for joining us on the Heron Therapeutics conference call this morning to discuss the company's financial results for the quarter ended 03/31/2025. With me today from hereon are Craig Collard, Chief Executive Officer Ira Duarte, Executive Vice President, Chief Financial Officer Bill Forbes, Executive Vice President, Chief Development Officer and Kevin Werner, Senior Vice President, Medical Affairs Strategy and Engagement. For those of you participating via conference call, slides are made available via webcast and can also be accessed via the Investor Relations page of our website following the conclusion of today's call. Before we begin, let me quickly remind you that during the course of this conference call, the company will make forward looking statements.

Melissa Jarel
Melissa Jarel
Executive Director - Legal at Heron Therapeutics Inc

We caution you that any statement that is not a statement of historical fact is a forward looking statement. This includes remarks about the company's projections, expectations, plans, beliefs, and future performance, all which constitute forward looking statements for the purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. These statements are based on judgment and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward looking statements. The risks and uncertainties associated with the forward looking statements made in this conference call and webcast are described in the Safe Harbor statement in today's press release and in Heron's public periodic filings with the SEC. Except as required by law, Heron assumes no obligation to update these forward looking statements to reflect future events or actual outcomes and does not intend to do so.

Melissa Jarel
Melissa Jarel
Executive Director - Legal at Heron Therapeutics Inc

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

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

Thanks, Melissa. Good morning, everyone, and welcome to Heron Therapeutics first quarter twenty twenty five earnings call. Today, we are extremely excited to share our results for the first quarter of twenty twenty five. After establishing the company's financial foundation in 2024, we are now focused on targeted product growth for our two key assets, Zeneralev and Oponvi, while continuing to maintain and grow Cymbontium cystol within clinics and select hospital accounts. With Zeneral S formulary status now covering approximately nineteen percent of all orthopedic procedures and key catalysts such as our expanded label, the VAN launch, the approval of the No Pain Act and the CrossLink partnership, we see a clear opportunity to drive deeper adoption in a market where we already have access and the potential to expand coverage as interest grows nationwide.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

In 2025, we will focus on disciplined execution, optimizing commercial performance and selectively expanding the team where it directly supports high return growth opportunities. Looking at our achievements in Q1, we generated total net revenues of approximately $39,000,000 achieved a record quarterly adjusted EBITDA of $6,200,000 and reported net income of $2,600,000 Since joining the company in 2023, our management team has been clear in our commitment to not only reach profitability, but also to execute with consistency. In addition, we reached a settlement agreement with Mylan Pharmaceuticals regarding the Cymbonte and Aponvi products, avoiding costly litigation fees and removing uncertainty around the outcome of the litigation. Lastly, as we continue advancing our commercial plans, hiring the right commercial leader was a key priority. We're pleased to share that Mark Hensley joined us on April 28.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

Mark, who previously worked with me at Veloxys as our commercial lead brings deep expertise from a career spent entirely in the hospital market. He is the missing piece to the puzzle as we move into this next phase of growth. Now moving on to product performance. The oncology franchise continues to outperform our expectations with combined net revenues from CINVONTI and SUSTAL reaching $28,600,000 for the quarter. We have maintained market share in a highly competitive environment and we believe these products will continue to deliver consistent performance throughout 2025.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

We are extremely pleased with the results of our oncology supportive care franchise, and we are actively exploring creative strategies to drive continued growth in this market. SYNVANTI, our lead product for chemotherapy induced nausea and vomiting or CINV continues its strong growth. While I spoke earlier about the overall oncology franchise, you can see on the left side of the slide that's in Bonni is steadily increasing in average daily units, even within a highly competitive market. Now that the company is commercializing Bonni through a more focused account team across our entire portfolio, we are seeing positive results. New accounts shown in green on the graph and defined as those who have ordered within the past three months are growing at a healthy rate and benefited from the IV bag shortage in October of last year as reflected in the spike on the graph.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

Existing accounts depicted by the blue line and defined as those with continuous product orders are also experiencing steady growth since the new management team joined in April of twenty twenty three. Cinvanti's well established safety profile and competitive advantages such as the IV push administration support its continued upward trajectory and unit growth. The key to sustaining consistency with this product will be a strategic management of our average selling price or ASP. Now moving on to the acute hospital side of our business, both upon the and Xenolef experienced significant growth in Q1 of twenty twenty five, up over 43260% respectively compared to the same period last year. We believe these two products have significant growth opportunity.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

Building on our efforts to strengthen our financial foundation last year, including a significant cost restructuring and the completion of numerous strategic initiatives, the full focus of the organization will emphasize product growth and execution this year. Today, the company is well positioned for sustainable, scalable and capital efficient growth. With Apon V, we are beginning to see a dramatic shift in key trends, particularly in average daily units and the number of orient counts. We believe this growth will continue throughout 2025 and beyond as our pull through efforts drive expanded product adoption within hospital institutions. Our goal with Aponvi is to continue building awareness, focusing our message on its strong safety profile and unique mechanism of action.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

Post operative nausea and vomiting or PONV is a serious issue that can often be mitigated by the addition of upon V as the provider's third agent of choice in a multimodal approach to PONV therapy for moderate to severe cases. A similar positive trend is emerging with Xenralev. Our daily unit sales are steadily increasing and we are onboarding new accounts at a much faster rate than in the past. With the van launch just getting underway and the CrossLink partnership fully integrated, we believe Zeneralev is positioned to show a significantly stronger growth trajectory as we approach Q3 and beyond. Many of the current initiatives around ZENELF are already in motion, but require time to take full effect.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

As both daily unit volumes and the number of ordering accounts continue to rise, we remain confident in ZENELF's multi hundred million dollar potential, provided we can continue to improve execution and expand usage within our existing access points. Our top priority for 2025 is disciplined execution, converting access into sustained case level market share, optimizing our current commercial footprint and selectively investing in team expansion where it directly supports high return growth opportunities. I will now turn the call over to Era Duarte, our CFO, to cover our financials and update our financial guidance. Go ahead, Era.

Ira Duarte
Ira Duarte
Executive VP & CFO at Heron Therapeutics Inc

Thank you, Craig. Our product gross profit for the three months ended 03/31/2025 was $30,400,000 or 78%, which increased from 76% for the same period in 2024. This is due to a lower cost per unit in the three months ended 03/31/2025 as a result of production efficiencies compared to the same period ended 03/31/2024, offset by an increase in the units sold. SG and A expenses for the three months ended 03/31/2025 were $25,000,000 compared to $26,400,000 in the same period in 2024. The decrease was primarily related to decreases in personnel and related costs and legal expense related to the timing of patent litigations, offset by increased sales and marketing spend to support revenue growth.

Ira Duarte
Ira Duarte
Executive VP & CFO at Heron Therapeutics Inc

Research and development expenses were $2,300,000 for the three months ended 03/31/2025, compared to $4,600,000 in the comparable period in 2024. The decrease was primarily related to decreases in personnel and related costs due to the terminations in 2024, as well as decrease in development activities. We achieved net income for the three months ended 03/31/2025 of $2,600,000 During the comparable period in 2024, we had a net loss of $3,200,000 Cash and short term investments at 03/31/2025 was $50,700,000 If we had excluded depreciation and stock based compensation, our adjusted EBITDA results would have been a positive $6,200,000 operating income compared to a loss of $700,000 for the same period in 2024. We are revising our previously given guidance for adjusted EBITDA range of 0 to $8,000,000 to a range of $4,000,000 to $12,000,000 And now we would like to open the call for any questions.

Operator

Thank you. Our first question comes from Clara Dong with Jefferies. You may proceed.

Clara Dong
Clara Dong
Vice President - Biotechnology Equity Research at Jefferies

Hi, guys. Congrats on the great quarter. So my question is on the Cimanti litigation settlements. I understand you might not be able to share details of terms quantitatively. So wondering whether you can give any qualitative comments and how should we think about the implications of settlement for maybe your near term financials or guidance? Thank you. And I have a follow-up also.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

To not only continue with Cymbonte but also to grow PONVY.

Clara Dong
Clara Dong
Vice President - Biotechnology Equity Research at Jefferies

Got it. Based on what you've seen so far with after XenlaRaf van launch, no pink act taking effect in April and continued costing partnership. So how should we think about or what should we expect in terms of sales momentum in the back half of the year?

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

Yes. No, it's a great question. When you look at sort of Q4 to Q1 and net revenues were fairly similar. But if you look at demand, we were actually up 2% in unit demand and the market was actually down 5.3%. And so what we foresee in front of us, we've got a number of accounts.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

Actually, I think there's six accounts right now that we're in the onboarding process, meaning they've gone through P and T and we're now getting to train physicians and training the hospital and getting things in Epic system and so forth. And this just takes time. And so one of the things that we're extremely excited about are bringing these accounts on board. And so for us, we can sort of see this coming. And if you think about all the things that are moving as far as moving pieces right now with the CrossLink partnership and just our messaging and really getting us to hit on all cylinders, we see this all kind of coming together midyear and beyond.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

And so I feel extremely confident that you're going to really see a different inflection as we move towards the end of the year, we feel very comfortable with consensus numbers and hitting those as we move forward.

Clara Dong
Clara Dong
Vice President - Biotechnology Equity Research at Jefferies

Got it. Thank you and congrats again.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

Thanks, Claire.

Operator

Thank you. Our next question comes from Serge Belanger with Needham. You may proceed.

Serge Belanger
Senior Analyst at Needham & Company

Hi, good morning. Thanks for taking my questions. The first one, Craig, can you just talk about the overall 1Q trends, whether the usual seasonality was what you were expecting or similar to prior years? And then maybe just secondly, for Ira, just highlight some of the changes to the guidance and what's driving the EBITDA increase? Thanks.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

Thanks, Serge. And great question. Again, I thought the trends were fairly consistent with what we've seen in the past. Whether it's copay resets or deductibles or what have you, you typically see a little bit of a fall off in Q1. But again, we were pleased because with all the other things going on, we were actually up, versus the market.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

So I think it's a positive sign. But again, you know, we have much bigger hopes than, you know, growing 2%, versus the market. And so I think as we move forward again, as I said, you know, before to Claire's point, I think there's a lot coming at the end of the year, with, you know, the number of accounts we have coming on board and really just, you know, getting this CrossLink partnership where it's really just, functioning and going just continue to become more efficient, I guess. And one of the things too that we're looking to do is that as we're onboarding a number of these accounts, we're looking to do a little bit more of a targeted expansion, as I said in my prepared remarks. And what I mean by that is that as we onboard these accounts, from time to time, we have gaps as far as being able to do this as fast as we want, and we may need more coverage in a certain account based on sort of the cross link overlay of their footprint.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

And so we are going to expand in some areas like that. It may be, you know, headcount such as an MSL, medical sales liaison, it may be, some kind of clinical support staff or even, you know, sales rep. And so we're really taking a much more of a targeted approach versus just an all out expansion, and we're gonna do that where we have access and where things are, you know, going well as far as a new account coming on board and so forth. So that's why we're, you know, really upbeat about what we see and what's coming towards the end of the year. So I'll, turn it over to Eira on the other question.

Ira Duarte
Ira Duarte
Executive VP & CFO at Heron Therapeutics Inc

Yeah, as far as EBITDA, hi Serge, thanks for the question. EBITDA, we obviously had a very strong first quarter. And some of that is due to efficiencies on the overall spend. Some of that is on the announcement with the settlement, the future spend on that. So overall, we feel very comfortable that the rest of the year will be fairly positive and have revised guidance on that.

Serge Belanger
Senior Analyst at Needham & Company

Thank you.

Operator

Thank you. Our next question comes from Karl Burns with Northland Capital Markets. You may proceed.

Carl Byrnes
Managing Director at Northland Capital Markets

Thanks for the question and congratulations on the results and the progress. It looks like the gross profit margin came in around 78.3%. I'm wondering if you can talk a little bit about how you expect that to progress through the balance of the year or if there was any anomalies? Obviously, the Symbody sales were higher than expected, which should be part of it. Thanks. And then I have a follow-up as well.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

Okay. Thanks, Karl. Yes, gross margin is a little higher than typical. I mean, we've said all along, we thought we would be in sort of this sort of low to mid 70s. And basically what you had happened is exactly what you said.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

Some anti sales were up and we're actually we've got two different manufacturers and we're still using the manufacturer we have higher scale or larger scale. And so most of those lots came through there. As we go through the year, you're going to see us incorporate some of the lots from where we have smaller scale. And so that may come down a little bit. But again, we still should be in that sort of mid seventies range.

Carl Byrnes
Managing Director at Northland Capital Markets

Got it. Thanks. And then switching gears to a PONDI, you know, a third line agent agent, obviously, the sales there again higher than expected. How do you see it progressing? And what do you see as sort of near term to long term potential in terms of peak sales that's obviously referencing long term? Thanks.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

Yeah, no, you know, it's PONVY. We get so caught up sometimes, I think, talking about Zeneralev. But a PONVY is a product that once we go into a hospital system, we really don't lose these accounts. I mean, it's a product that works extremely well. It's extremely safe.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

And we continue to have good experiences with that. But the issue we've had is that we're getting a lot of formulary wins and PNT wins. So we're getting access. But typically where Aponogies starts is sort of like a bariatric surgery or something like that. And then what you see happen as they get more usage of the product, you typically see it sort of broaden out throughout the hospital.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

This is where we're trying to focus now. This is sort of a twofold problem because as we have said all along is the more we can integrate our CrossLink partnership, it allows our reps to get out of the OR cases and get out in the hospital and do more selling. And so as they're doing that, that should affect the upon the pull through. So you can imagine if I've got access, you know, with bariatric surgery, now my reps are able to go into the PACU and speak to some of those, you know, nurses and so forth and talk to anesthesiology, we can get more pull through and get sort of the system wide usage with upon being so listen, I think Uponbee is going continue to grow. We've got, you know, a very unique safety profile and a unique MOA.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

Our real goal with this is to be the first choice when you go to a third line agent. And if that happens, this is a multi hundred million dollar drug because, there's seventy million surgeries a year that occur in The US. And so about half of that market is moderate to severe, which is sort of our sweet spot as far as patients go. And so again, we think we're going to see tremendous growth. And I think it's only gonna get better as we get better with our cross link partners and and move our reps out of the, you know, kind of the OR suite.

Carl Byrnes
Managing Director at Northland Capital Markets

Great. Thanks. That's very helpful. And then switching back to ZENBERLAP. Considering the formulary wins and new accounts coming on, obviously, you have a feel for the timing of that.

Carl Byrnes
Managing Director at Northland Capital Markets

How do you see an inflection or the timing of an inflection where ZENBERLEV, you start up achieving sequential revenue growth. Again, I know you mentioned 2% unit growth versus the market being down and that may be related to somewhat related to deductible resets and such, given the fourth quarter, first quarter transition. But I'm just wondering where when you might expect to see that inflection and and ZENRA led sales taking off. Thanks.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

Yeah. So we know currently we have five new accounts, that I think are in Michigan, North Carolina, and a couple of the states that are ready to onboard. And these counts alone are numerous amount of surgeries, not only in ortho, but obviously throughout the hospital. They're also aligned with our CrossLink partnerships. So our footprints overlap with this and we have access.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

So look, we know that those counts are in the process of onboarding. This should take place, you know, kind of June, July, as far as getting these things fully on board. So, you know, where I really see the product beginning to change is as we move into kind of, you know, later in the q three into q four, I think you're gonna see a a really different inflection, especially as we come out of the year into '26. And so not only do I think we'll hit consensus this year with our numbers, but I really think next, you know, as we move into next year as these accounts come on board. And again, we continue to get better with our partnership with Crosslink.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

I think this is really going to change the direction of this product.

Carl Byrnes
Managing Director at Northland Capital Markets

Great. Excellent. And again, congratulations on the progress and results. Thanks.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

Thanks, Pearl.

Operator

Thank you. I would now like to turn the call back over to Craig Collard for any closing remarks.

Craig Collard
Craig Collard
CEO & Director at Heron Therapeutics Inc

I just would like to thank all the employees at Heron. We had a great quarter, and we continue to execute as we move forward. We want to thank everyone for being on the call today, and we'll see you next quarter.

Operator

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Executives
    • Melissa Jarel
      Melissa Jarel
      Executive Director - Legal
    • Craig Collard
      Craig Collard
      CEO & Director
    • Ira Duarte
      Ira Duarte
      Executive VP & CFO
Analysts
Powered by Quartr

Key Takeaways

  • Q1 financial performance: Net revenues of ~$39 million, record adjusted EBITDA of $6.2 million and net income of $2.6 million drove Heron to profitability with $50.7 million in cash and short‐term investments.
  • Litigation settlement: Reached an agreement with Mylan on Cymbontium and Aponvi, avoiding costly patent litigation and removing uncertainty around these products.
  • Oncology franchise strength: CINVONTI and SUSTAL generated combined net revenues of $28.6 million, maintained market share in a competitive environment and will be supported by strategic ASP management.
  • Hospital product growth: Oponvi and Zeneralev sales rose 432% and 260% year‐over‐year respectively, with Zeneralev now on formulary for ~19% of orthopedic procedures and poised for further gains via the CrossLink partnership, No Pain Act and label expansion.
  • Raised guidance: Heron updated its full‐year adjusted EBITDA guidance to $4 million–$12 million and reported a first‐quarter gross margin increase to 78%, reflecting production efficiencies and product mix.
AI Generated. May Contain Errors.
Earnings Conference Call
Heron Therapeutics Q1 2025
00:00 / 00:00

Transcript Sections