HERON THERAPEUTICS INC DE

Previous wording

the impact of evolving legal and regulatory requirements, including emerging environmental, social and governance requirements;

Current wording

the impact of evolving legal and regulatory requirements and interpretations thereof, including emerging environmental, social and governance requirements and the recent U.S. Supreme Court decision regarding deference to federal administrative agencies' interpretations of federal statutes;

Previous wording

In May 2024, we submitted a prior approval supplement (“PAS”) for the addition of a vial access needle (“VAN”) in the ZYNRELEF co-packaged combination product kit. The FDA accepted the VAN PAS for filing and set a Prescription Drug User Fee Act goal date of September 23, 2024. If approved, the introduction of the VAN will replace the current vented vial spike and has the potential to simplify aseptic preparation, while also significantly reducing ZYNRELEF's withdrawal time from up to three minutes down to between twenty and forty-five seconds. The user-friendly "container-like" design of the VAN may enhance the safe use of ZYNRELEF, increase adoption, and improve the preparation process. If approved, the VAN is expected to be available for use in the fourth quarter of this year.

Current wording

In September 2024, the FDA approved the prior approval supplement (“PAS”) for the addition of a vial access needle (“VAN”) in the ZYNRELEF co-packaged combination product kit. The introduction of the VAN will replace the current vented vial spike and has the potential to simplify aseptic preparation, while also significantly reducing ZYNRELEF's withdrawal time down to between twenty and forty-five seconds. The user-friendly "container-like" design of the VAN may enhance the safe use of ZYNRELEF, increase adoption, and improve the preparation process. The VAN is expected to be available for use in the fourth quarter of 2024.

Previous wording

Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023

Current wording

Results of Operations for the Three and Nine Months Ended September 30, 2024 and 2023

Previous wording

For the three and six months ended June 30, 2024, net product sales of ZYNRELEF were $5.8 million and $10.8 million, respectively, compared to $4.1 million and $7.7 million, respectively, for the same periods in 2023. For the three and six months ended June 30, 2024, net product sales of APONVIE were $1.0 million and $1.5 million, respectively, compared to $0.3 million and $0.6 million, respectively, for the same periods in 2023. The increase in net product sales for both ZYNRELEF and APONVIE is attributed to an increase in the units sold in 2024 as compared to 2023.

Current wording

For the three and nine months ended September 30, 2024, net product sales of ZYNRELEF were $6.3 million and $17.1 million, respectively, compared to $4.4 million and $12.0 million, respectively, for the same periods in 2023. For the three and nine months ended September 30, 2024, net product sales of APONVIE were $1.1 million and $2.6 million, respectively, compared to $0.3 million and $0.9 million, respectively, for the same periods in 2023. The increase in net product sales for both ZYNRELEF and APONVIE is attributed to an increase in the units sold in 2024 as compared to 2023.

Previous wording

For the three and six months ended June 30, 2024, net product sales of CINVANTI were $24.9 million and $50.5 million, respectively, compared to $24.5 million and $47.3 million, respectively, for the same periods in 2023. For the three and six months ended June 30, 2024, net product sales of SUSTOL were $4.3 million and $7.9 million, respectively, compared to $2.9 million and $5.8 million, respectively, for the same periods in 2023. The increase in net product sales for both CINVANTI and SUSTOL is attributed to an increase in the units sold in 2024 as compared to 2023.

Current wording

For the three and nine months ended September 30, 2024, net product sales of CINVANTI were $22.6 million and $73.2 million, respectively, compared to $23.3 million and $70.6 million, respectively, for the same periods in 2023. For the three and nine months ended September 30, 2024, net product sales of SUSTOL were $2.8 million and $10.6 million, respectively, compared to $3.4 million and $9.3 million, respectively, for the same periods in 2023. The decrease in net product sales for CINVANTI for the three months ended September 30, 2024, as compared to 2023 is attributed to an increase in units sold, offset by increased gross to net adjustments. The decrease in net product sales for SUSTOL for the three months ended September 30, 2024, as compared to 2023 is attributed to a decrease in units sold. The increase in net product sales for both CINVANTI and SUSTOL for the nine months ended September 30, 2024 as compared to 2023 is attributed to an increase in the units sold.

Previous wording

For the three and six months ended June 30, 2024, cost of product sales was $10.5 million and $19.0 million, respectively, compared to $20.2 million and $37.0 million, respectively, for the same periods in 2023. Cost of product sales primarily included raw materials, labor and overhead related to the manufacturing of our Products, as well as shipping and distribution costs. For the three and six months ended June 30, 2024, cost of product sales included charges of $1.6 million relating to reserves and write-offs of inventory. For the three and six months ended June 30, 2023, cost of product sales included charges of $7.5 million and $12.8 million, respectively, relating to the write-off of inventory. The remaining decrease in cost of product sales is attributed to a decrease in cost per units for CINVANTI and ZYNRELEF, as large-scale manufacturing was validated and approved in late 2022.

Current wording

For the three and nine months ended September 30, 2024, cost of product sales was $9.5 million and $28.4 million, respectively, compared to $18.2 million and $55.2 million, respectively, for the same periods in 2023. Cost of product sales primarily included raw materials, labor and overhead related to the manufacturing of our Products, as well as shipping and distribution costs. For the three and nine months ended September 30, 2024, cost of product sales included charges of $0.8 million and $2.4 million, respectively relating to reserves and write-offs of inventory. For the three and nine months ended September 30, 2023, cost of product sales included charges of $7.5 million and $20.3 million, respectively, relating to the write-off of inventory. The remaining decrease in cost of product sales is attributed to a decrease in cost per units for CINVANTI and ZYNRELEF, as large-scale manufacturing was validated and approved in late 2022.

Previous wording

For the three and six months ended June 30, 2024, research and development expense was $4.4 million and $9.0 million, respectively, compared to $13.2 million and $22.0 million, respectively, for the same periods in 2023. The decrease in research and development expense was primarily due to our decreased headcount and related costs as a result of the restructuring implemented in 2023, as well as a decrease in non-cash, stock-based compensation expense. The decrease is also due to decreases in costs related to ZYNRELEF, as large-scale manufacturing was approved in 2022, and APONVIE as a result of the product becoming commercially available in March 2023.

Current wording

For the three and nine months ended September 30, 2024, research and development expense was $4.5 million and $13.5 million, respectively, compared to $9.3 million and $31.3 million, respectively, for the same periods in 2023. The decrease in research and development expense was primarily due to our decreased headcount and related costs as a result of the restructuring implemented in 2023, as well as a decrease in non-cash, stock-based compensation expense. The decrease is also due to decreases in costs related to ZYNRELEF, as large-scale manufacturing was approved in 2022, and APONVIE, as a result of the product becoming commercially available in March 2023.

Previous wording

For the three and six months ended June 30, 2024, general and administrative expense was $13.9 million and $28.9 million, respectively, compared to $19.6 million and $35.4 million, respectively, for the same periods in 2023. The decrease was primarily due to our decreased headcount and related costs as a result of the restructuring implemented in 2023 and operational efficiencies.

Current wording

For the three and nine months ended September 30, 2024, general and administrative expense was $12.4 million and $41.3 million, respectively, compared to $15.9 million and $51.3 million, respectively, for the same periods in 2023. The decrease was primarily due to our decreased headcount and related costs as a result of the restructuring implemented in 2023 and operational efficiencies.

Previous wording

For the three and six months ended June 30, 2024, sales and marketing expense was $13.6 million and $25.1 million, respectively, compared to $21.2 million and $42.4 million, respectively, for the same period in 2023. The decrease was primarily due to our decreased headcount and related costs as a result of the restructuring implemented in 2023 and operational efficiencies.

Current wording

For the three and nine months ended September 30, 2024, sales and marketing expense was $11.0 million and $36.0 million, respectively, compared to $13.0 million and $55.3 million, respectively, for the same period in 2023. The decrease was primarily due to our decreased headcount and related costs as a result of the restructuring implemented in 2023 and operational efficiencies.

Previous wording

For the three and six months ended June 30, 2024, other expense, net was $2.8 million and $1.2 million, respectively, compared to other income, net of $0.3 million and $0.6 million, respectively, for the same period in 2023. The increase in other expense is attributed to increased interest expense as a result of the working capital facility agreement entered into in August 2023 (see Note 8 for further discussion of our working capital facility agreement) and the write-off of property and equipment during the three months ended June 30, 2024, which was associated with a project for which we had a one-time settlement related to a legal dispute during the three months ended March 31, 2024.

Current wording

For the three and nine months ended September 30, 2024, other expense, net was $0.4 million and $1.5 million, respectively, compared to other (expense) income, net of ($0.1) million and $0.6 million, respectively, for the same period in 2023. The increase in other expense, net is attributed to increased interest expense as a result of the working capital facility agreement entered into in August 2023 (see Note 8 for further discussion of our working capital facility agreement) and the write-off of property and equipment during the three months ended June 30, 2024, which was associated with a project for which we had a one-time settlement related to a legal dispute.

Previous wording

The Company's short-term and long-term liquidity requirements primarily arise from funding (i) sales and marketing expenses, (ii) general and administrative expenses including salaries, bonuses and commissions, (iii) working capital requirements, and (iv) research and development expenses, and (v) payments related to our outstanding convertible notes. As of June 30, 2024, we had cash, cash equivalents and short-term investments of $67.3 million. Based on our current operating plan and projections, management believes that the Company's cash, cash equivalents, short-term investments and working capital facility, will be sufficient to meet the Company's anticipated cash requirements for a period of at least the next twelve months from the date this Quarterly Report on Form 10-Q is filed with the SEC. Our future cash requirements and the adequacy of our available funds will depend on many factors, primarily including our ability to generate revenue and the scope and costs of our commercial and research and development activities.

Current wording

The Company's short-term and long-term liquidity requirements primarily arise from funding (i) sales and marketing expenses, (ii) general and administrative expenses including salaries, bonuses and commissions, (iii) working capital requirements, and (iv) research and development expenses, and (v) payments related to our outstanding convertible notes. As of September 30, 2024, we had cash, cash equivalents and short-term investments of $70.9 million. Based on our current operating plan and projections, management believes that the Company's cash, cash equivalents, short-term investments and working capital facility, will be sufficient to meet the Company's anticipated cash requirements for a period of at least the next twelve months from the date this Quarterly Report on Form 10-Q is filed with the SEC. Our future cash requirements and the adequacy of our available funds will depend on many factors, primarily including our ability to generate revenue and the scope and costs of our commercial and research and development activities.

Previous wording

Our net loss for the three and six months ended June 30, 2024 was $9.2 million, or $0.06 per share, and $12.4 million, or $0.08 per share, respectively, compared to $42.1 million, or $0.35 per share and $74.8 million, or $0.63 per share, respectively, for the same period in 2023.

Current wording

Our net loss for the three and nine months ended September 30, 2024 was $4.8 million, or $0.03 per share, and $17.2 million, or $0.11 per share, respectively, compared to $25.0 million, or $0.17 per share, and $99.8 million, or $0.75 per share, respectively, for the same period in 2023.

Previous wording

Our net cash used in operating activities for the six months ended June 30, 2024 and June 30, 2023 was $14.1 million and $52.1 million, respectively. The decrease in net cash used in operating activities was primarily due to a decrease in net loss as a result of decreases in operating spend, primarily as a result of the restructuring implemented in 2023, partially offset by $3.4 million of write-offs of property and equipment during the six months ended June 30, 2024, changes in working capital, specifically accounts receivable due to timing of collections, inventory as a result of write-offs incurred during the six months ended June 30, 2024, accounts payable and accrued expenses due to timing of payments and accrued payroll and employee liabilities due to reduced headcount.

Current wording

Our net cash used in operating activities for the nine months ended September 30, 2024 and September 30, 2023 was $10.7 million and $61.2 million, respectively. The decrease in net cash used in operating activities was primarily due to a decrease in net loss as a result of decreases in operating spend and stock-based compensation expenses, primarily as a result of the restructuring implemented in 2023, the $4.3 million of write-offs of property and equipment during the nine months ended September 30, 2024, and changes in working capital, specifically accounts receivable due to timing of collections, inventory as a result of write-offs incurred, prepaid assets due to the timing of payments, and accounts payable and accrued expenses, including payroll and employee liabilities due to the timing of payments and reduced headcount.

Previous wording

Our net cash provided by investing activities for the six months ended June 30, 2024 and June 30, 2023 was $3.3 million, and $50.1 million, respectively. The decrease in cash provided by investing activities was primarily due to net maturities of short-term investments of $4.0 million for the six months ended June 30, 2024 compared to $50.6 million for the six months ended June 30, 2023.

Current wording

Our net cash provided by investing activities for the nine months ended September 30, 2024, and September 30, 2023 was $7.3 million, and $26.8 million, respectively. The decrease in cash provided by investing activities was primarily due to net maturities of short-term investments of $8.4 million for the nine months ended September 30, 2024 compared to $28.1 million for the nine months ended September 30, 2023.

Previous wording

Our net cash provided by financing activities for the six months ended June 30, 2024 and June 30, 2023 was $0.5 million, and $0.1 million, respectively.

Current wording

Our net cash provided by financing activities for the nine months ended September 30, 2024, and September 30, 2023 was $0.5 million, and $53.9 million, respectively. The decrease in cash provided by financing activities is a result of proceeds from the 2023 private placement and note financing, which did not recur in 2024.