HERON THERAPEUTICS, INC. The following discussion and analysis of our financial condition and results of
operations should be read together with our condensed consolidated financial
statements and related notes included in this Quarterly Report on Form 10-Q and
the audited financial statements and related notes included in our Annual Report
on Form 10-K for the year ended
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. In some cases, you can identify forward-looking statements by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "project," "will," "would," "could," "should," "may," "might," "plan," "assume" and other expressions that predict or indicate future events and trends and which do not relate to historical matters. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business and commercialization strategy, products and product candidates, research pipeline, ongoing and planned preclinical studies and clinical trials, regulatory submissions and approvals, addressable patient population, research and development expenses, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. These risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from our anticipated future results, performance or achievements expressed or implied by the forward-looking statements.
Factors that might cause these differences include the following:
• the impact of our restructuring activities, including the reduced headcount
and external spend;
• our ability to successfully commercialize, market and achieve market
acceptance of ZYNRELEF® (bupivacaine and meloxicam) extended-release
solution ("ZYNRELEF") in the United States ("U.S."), the European Union
("EU"), the other countries in the European Economic Area ("EEA"), the
United Kingdom , Canada and any other countries in which we receive
applicable regulatory approvals, and of CINVANTI® (aprepitant) injectable
emulsion ("CINVANTI"), SUSTOL® (granisetron) extended-release injection
("SUSTOL") and APONVIE™ (aprepitant) injectable emulsion ("APONVIE") in the
U.S. (collectively, our "Products"), and HTX-034, if approved by applicable
regulatory authorities, and our positioning relative to competing products;
• the timing of the U.S. Food and Drug Administration's ("FDA") review
process, whether the FDA approves any future supplemental New Drug
Application ("sNDA") for ZYNRELEF to further expand the U.S. label, and our
ability to capture the potential additional market opportunity for the
expanded U.S. label;
• our ability to establish satisfactory pricing and obtain adequate
reimbursement from government and third-party payors of our Products and
product candidates that receive regulatory approvals;
• whether study results of our Products and product candidates are indicative
of the results in future studies;
• the timing and results of the commercial launch of APONVIE in the U.S. ;
• the timing and results of the commercial launch of ZYNRELEF in Europe and
Canada ;
• the potential regulatory approval for and commercial launch of our product
candidates, if approved;
• the potential market opportunities for our Products and our product
candidates, if approved;
• our competitors' activities, including decisions as to the timing of
competing product launches, generic entrants, pricing and discounting;
• whether safety and efficacy results of our clinical studies and other
required tests for expansion of the indications for our Products and
approval of our product candidates provide data to warrant progression of
clinical trials, potential regulatory approval or further development of
any of our Products or product candidates;
• our ability to develop, acquire and advance product candidates into, and
successfully complete, clinical studies, and our ability to submit for and
obtain regulatory approval for product candidates in our anticipated
timing, or at all;
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• our ability to meet the postmarketing study requirements within the FDA's
mandated timelines and to obtain favorable results and comply with standard
postmarketing requirements, including U.S. federal advertising and
promotion laws, federal and state anti-fraud and abuse laws, healthcare
information privacy and security laws, safety information, safety
surveillance and disclosure of payments or other transfers of value to
healthcare professionals and entities for Products or any of our product
candidates;
• our ability to successfully develop and achieve regulatory approval for
HTX-034 and our other future product candidates utilizing our proprietary
Biochronomer® drug delivery technology ("Biochronomer Technology");
• our ability to establish key collaborations and vendor relationships for
our Products and our product candidates;
• our ability to successfully develop and commercialize any technology that
we may in-license or products we may acquire;
• unanticipated delays due to manufacturing difficulties, supply constraints
or changes in the regulatory environment;
• our ability to successfully operate in non-U.S. jurisdictions in which we
may choose to do business, including compliance with applicable regulatory
requirements and laws;
• uncertainties associated with obtaining and enforcing patents and trade
secrets to protect our Products, our product candidates, our Biochronomer
Technology and our other technology, and our ability to successfully defend
ourselves against unforeseen third-party infringement claims;
• the extent of the impact of the ongoing Coronavirus Disease 2019
("COVID-19") pandemic on our business, including any COVID-19 mutations or
variants and any other diseases related to or resulting from COVID-19;
• our estimates regarding our capital requirements; and
• our ability to obtain additional financing and raise capital as necessary
to fund operations or pursue business opportunities.
Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our
current views with respect to future events or to our future financial
performance and involve known and unknown risks, uncertainties and other factors
that may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by these forward-looking statements. Factors that may cause actual
results to differ materially from current expectations include, among other
things, those listed under the section entitled "Risk Factors" in this Quarterly
Report on Form 10-
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Overview
We are a commercial-stage biotechnology company focused on improving the lives of patients by developing and commercializing therapeutic innovations that improve medical care. Our advanced science, patented technologies, and innovative approach to drug discovery and development have allowed us to create and commercialize a portfolio of products that aim to advance the standard of care for acute care and oncology patients.
Oncology Care Product Portfolio
SUSTOL
SUSTOL is our first commercial product. SUSTOL was approved by the FDA in
SUSTOL is indicated in combination with other antiemetics in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of moderately emetogenic chemotherapy (MEC) or anthracycline and cyclophosphamide (AC) combination chemotherapy regimens. SUSTOL is an extended-release, injectable 5-hydroxytryptamine type 3 ("5-HT3") receptor antagonist that utilizes our Biochronomer Technology to maintain therapeutic levels of granisetron for ?5 days. The SUSTOL global Phase 3 development program was comprised of two, large, guideline-based clinical studies that evaluated SUSTOL's efficacy and safety in more than 2,000 patients with cancer. SUSTOL's efficacy in preventing nausea and vomiting was evaluated in both the acute phase (0-24 hours following chemotherapy) and the delayed phase (24-120 hours following chemotherapy).
SUSTOL is the first extended-release 5-HT3 receptor antagonist approved for the
prevention of acute and delayed nausea and vomiting associated with both MEC and
AC combination chemotherapy regimens. A standard of care in the treatment of
breast cancer and other cancer types, AC regimens are among the most commonly
prescribed HEC regimens, as defined by both the National Comprehensive Cancer
Network ("NCCN") and the
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CINVANTI
CINVANTI is our second commercial product. CINVANTI was approved by the FDA in
CINVANTI, in combination with other antiemetic agents, is indicated in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of highly emetogenic cancer chemotherapy (HEC) including high-dose cisplatin as a single-dose regimen, delayed nausea and vomiting associated with initial and repeat courses of moderately emetogenic cancer chemotherapy (MEC) as a single-dose regimen, and nausea and vomiting associated with initial and repeat courses of MEC as a 3-day regimen.
CINVANTI is an intravenous ("IV") formulation of aprepitant, a substance P/neurokinin-1 ("NK1") receptor antagonist. CINVANTI is the first IV formulation to directly deliver aprepitant, the active ingredient in EMEND® capsules. Aprepitant (including its prodrug, fosaprepitant) is the only single-agent NK1 receptor antagonist to significantly reduce nausea and vomiting in both the acute phase (0-24 hours after chemotherapy) and the delayed phase (24-120 hours after chemotherapy). CINVANTI is the first and only IV formulation of an NK1 receptor antagonist indicated for the prevention of acute and delayed nausea and vomiting associated with HEC and nausea and vomiting associated with MEC that is free of synthetic surfactants, including polysorbate 80.
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NK1 receptor antagonists are typically used in combination with 5-HT3 receptor
antagonists. The only other injectable NK1 receptor antagonist currently
approved in the
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In the fourth quarter of 2021, we received FDA approval of a manufacturing supplement to the NDA for CINVANTI to allow larger-scale manufacturing of CINVANTI. This approval will significantly reduce the cost of product sales.
Acute Care Product Portfolio
ZYNRELEF (HTX-011)
ZYNRELEF is our third commercial product. ZYNRELEF was initially approved by the
FDA in
ZYNRELEF is a dual-acting local anesthetic that delivers a fixed-dose combination of the local anesthetic bupivacaine and a low dose of the nonsteroidal anti-inflammatory drug meloxicam. ZYNRELEF is the first and only modified-release local anesthetic to be classified by the FDA as an extended-release product because ZYNRELEF demonstrated in Phase 3 studies significantly reduced pain and significantly increased proportion of patients requiring no opioids through the first 72 hours following surgery compared to bupivacaine solution, the current standard-of-care local anesthetic for postoperative pain control.
At a Type C meeting with the FDA, we aligned with the FDA on the data needed to support a future efficacy supplement to further expand the ZYNRELEF indication to broadly include soft tissue and orthopedic surgical procedures with pharmacokinetic, safety and pharmacodynamic data from a limited number of additional procedures. The studies in these additional surgeries are already in progress with the plan to submit the next efficacy supplement in the second half of 2022.
In the fourth quarter of 2021, we received FDA approval of two manufacturing supplements to the NDA for ZYNRELEF to add a large-scale secondary supplier of our proprietary polymer and to add larger-scale manufacturing of ZYNRELEF, which will allow for the manufacturing of millions of doses of ZYNRELEF annually at a significantly reduced cost of product sales.
In
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ZYNRELEF was granted a marketing authorization by the
As we build large-scale manufacturing capacity to meet the anticipated
commercial demand in the
APONVIE (HTX-019)
APONVIE is our fourth commercial product. APONVIE was approved by the FDA in
APONVIE is the first and only intravenous formulation of a substance NK1 receptor antagonist indicated for PONV. Delivered via a single 30-second IV injection, APONVIE has demonstrated rapid achievement of therapeutic drug levels ideally suited for the surgical setting.
HTX-034
HTX-034, our next-generation product candidate for postoperative pain management, is an investigational non-opioid, fixed-dose combination, extendedrelease solution of the local anesthetic bupivacaine, the nonsteroidal anti-inflammatory drug meloxicam and aprepitant that further potentiates the activity of bupivacaine. HTX-034 is formulated in the same proprietary polymer as ZYNRELEF. By combining two different mechanisms that each enhance the activity of the local anesthetic bupivacaine, HTX-034 is designed to provide superior and prolonged analgesia. Local administration of HTX-034 in a validated preclinical postoperative pain model resulted in sustained analgesia for 7 days.
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Biochronomer Technology
Our proprietary Biochronomer Technology is designed to deliver therapeutic levels of a wide range of otherwise short-acting pharmacological agents over a period from days to weeks with a single administration. Our Biochronomer Technology consists of polymers that have been the subject of comprehensive animal and human toxicology studies that have shown evidence of the safety of the polymer. When administered, the polymers undergo controlled hydrolysis, resulting in a controlled, sustained release of the pharmacological agent encapsulated within the Biochronomer-based composition. Furthermore, our Biochronomer Technology is designed to permit more than one pharmacological agent to be incorporated, such that multimodal therapy can be delivered with a single administration.
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Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations
are based on our condensed consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
Our critical accounting policies include: revenue recognition, investments,
inventory, accrued clinical liabilities, income taxes, and stock-based
compensation. There have been no material changes to our critical accounting
policies and estimates disclosures included in our Annual Report on Form 10-K
for the year ended
Recent Accounting Pronouncements
See Note 3 to the condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.
Results of Operations for the Three and Nine Months Ended
Net Product Sales
For the three and nine months ended
Net Product Sales - Oncology Care
For the three and nine months ended
Net Product Sales - Acute Care
For the three months ended
Cost of Product Sales
For the three and nine months ended
Prior to FDA approval,
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Research and Development Expense
Research and development expense consisted of the following (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
ZYNRELEF-related costs $ 6,940 $ 7,839 $ 44,555 $ 40,958
CINVANTI-related costs 3,055 2,948 5,132 4,253
APONVIE-related costs 115 1,116 843 4,615
HTX-034-related costs 304 173 591 3,116
SUSTOL-related costs 248 206 1,558 1,074
Personnel costs and other expenses 9,962 11,792 29,864 33,798
Stock-based compensation expense 4,921 4,521 13,906 14,130
Total research and development expense
For the three months ended
For the nine months ended
General and Administrative Expense
For the three and nine months ended
Sales and Marketing Expense
For the three months ended
For the nine months ended
Other Expense, Net
For the three and nine months ended
Restructuring Plans
See Note 8 to the condensed consolidated financial statements included in Item 1
of this Quarterly Report on Form 10-Q for discussion of the restructuring plans
implemented in
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Liquidity and Capital Resources
As of
Our capital requirements and liquidity for the next twelve months will depend on
numerous factors, including but not limited to: the degree of commercial success
of our Products; the impact of competitive products; the timing and cost to
manufacture our Products; the costs associated with the
We may not be able to raise sufficient additional capital when needed on favorable terms, or at all. If we are unable to obtain adequate funds, we may be required to curtail significantly or cease our operations. If we issue additional equity securities or securities convertible into equity securities to raise funds, our stockholders will suffer dilution of their investment, and such issuance may adversely affect the market price of our common stock.
Any new debt financing we enter into may involve covenants that restrict our operations. These restrictive covenants may include, among other things, limitations on borrowing and specific restrictions on the use of our assets, as well as prohibitions on our ability to create liens, pay dividends, redeem capital stock or make investments. In the event that additional funds are obtained through arrangements with collaborative partners, these arrangements may require us to relinquish rights to some of our technologies, Products or product candidates on terms that are not favorable to us or require us to enter into a collaboration arrangement that we would otherwise seek to develop and commercialize ourselves. If adequate funds are not available, we may default on our indebtedness, which could have a material adverse effect on our business.
Our net loss for the three and nine months ended
Our net cash used in operating activities for the nine months ended
Our net cash used for investing activities for the nine months ended
Our net cash provided by financing activities for the nine months ended
Historically, we have financed our operations, including technology and product research and development, primarily through sales of our common stock and debt financings.
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