Heron Therapeutics, Inc. (NASDAQ:HRTX) Q2 2023 Earnings Call Transcript

Serge Belanger: Yes. Thank you.

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

Boris Peaker: Great. Thanks. Two questions on my end. First, in terms of profitability. I’m just curious, Craig, do you think Heron can become a profitable organization based on supportive care alone? Like if we exclude ZYNRELEF, is there an opportunity to restructure it such just to profitability without ZYNRELEF?

Craig Collard: We really hadn’t looked at it that way. But I mean, again, now you’re talking if we put total focus around APONVIE and didn’t promote ZYNRELEF at all, I mean, I think we would have obviously some inventory problems and that type of thing. But we really haven’t analyzed it that way. But again, we’re not looking for superior growth or anything with ZYNRELEF. From a profitability standpoint, we’re really only trimming the product on the current growth trajectory it’s on. So again, I think there’s some upside there. And again, we’ve been pretty conservative well — with APONVIE. And I think our one surprise is that we still are getting really good results out of CINVANTI. So, I think there’s an upside here that we really haven’t accounted for.

But I think the point of this that we’ve been really trying to communicate is that we wanted transparency and the fact that we’re trying to dig this business and put a cost reduction in place that allows us to get to profitability and be fairly conservative about our outlook.

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

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

Boris Peaker: Great. Thank you very much for taking my questions.

Craig Collard: Thank you.

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

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

Craig Collard: Well, thanks, Carl. Sorry, we almost cut you off there, so I apologize for that. Yes, one of the things we’ve been looking to do is what can we do outside of things that were used as far as improving ZYNRELEF like targeting and using better data, position our reps, maximizing territory potential and so on and so forth. We’ve been looking at possibilities to partner this product. The biggest issue with ZYNRELEF is not the clinical story. The true 72-hour pain relief is a big thing. And as we look at market research and that type of thing, that seems to — we have no issue there. And I think we’ve had really good success. The issue has been with the preparation of the product in the surgical suite itself. And the issue with that is the non-sterile to sterile environment and then just the time that it takes to pull product out of the vial.