Slides
Page 1
Heron Therapeutics Q4 Earnings Call February 27, 2025
Page 2
2 This presentation contains “forward-looking statements”as defined by the Private Securities Litigation Reform Act of 1995. We caution investors that forward-looking statements are based on management’s expectations and assumptions as of the date hereof and are subject to certain risks and uncertainties that could cause actual results to differ materially. Examples of forward-looking statements include, among others, statements we make regarding the potential market opportunities for ZYNRELEF®, APONVIE®, CINVANTI® and SUSTOL®; revenue, adjusted EBITDA and other financial guidance provided by the Company; the potential additional market opportunity for the expanded U.S. label for ZYNRELEF or inclusion of ZYNRELEF under the OPPS and the ASC payment system or launch of the ZYNRELEF VAN; our ability to establish and maintain successful commercial arrangements like our co-promotion agreement with CrossLink Network, LLC (“CrossLink”); the outcome of the Company’s pending ANDA litigation, including potential appeals of any verdicts; whether the Company is required to write-off any additional inventory in the future; the expected future balances of Heron’s cash, cash equivalents and short-term investments; the expected duration over which Heron’s cash, cash equivalents and short-term investments balances will fund its operations and the risk that future equity financings may be needed; any inability or delay in achieving profitability. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q, and in our other reports filed with the Securities and Exchange Commission, including under the caption “Risk Factors.” Forward-looking statements reflect our analysis only on their stated date, and Heron takes no obligation to update or revise these statements except as may be required by law. In addition to the company's financial results determined in accordance with U.S. GAAP ,the company provides non-GAAP measures that it determines to be useful in evaluating its operating performance and liquidity. Management believes that presentation of operating results using non-GAAP financial measures provides useful supplemental information to investors and facilitates the analysis of the Company’s core operating results and comparison of operating results across reporting periods. Management uses non-GAAP financial measures to establish budgets, manage the Company’s business, and set incentive and compensation arrangements. The company presents adjusted EBITDA and adjusted operating expenses. For a reconciliation of non-GAAP measures to GAAP ,see below slides captioned “YTD Adjusted EBITDA” ,“2023 GAAP to Non-GAAP Reconciliation” ,and “2022 GAAP to Non-GAAP Reconciliation.” The Company has not provided a reconciliation of its full-year 2025 guidance for adjusted EBITDA or adjusted operating expenses to the most directly comparable forward-looking GAAP measures, in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K, because the Company is unable to predict, without unreasonable efforts, the timing and amount of items that would be included in such a reconciliation, including, but not limited to, stock-based compensation expense and inventory reserve and asset write-offs. These items are uncertain and depend on various factors that are outside of the Company’s control or cannot be reasonably predicted. While the Company is unable to address the probable significance of these items, they could have a material impact on GAAP net income and operating expenses for the guidance period. Forward-looking Statements and Non-GAAP Disclosures
Page 3
Executive Summary
Page 4
4 Milestone Year for Heron 2 1 3 4 Announced partnership with CrossLink Network, LLC (“Crosslink”) to expand promotional effort for ZYNRELEF® ZYNRELEF included in CMS’ Final Rule for the NOPAIN Act with favorable reimbursement limit 5 U.S. District Court ruled in favor of Heron in patent lawsuit against Fresenius Kabi USA, LLC and upheld the validity of CINVANTI® patents FDA approval of expanded ZYNRELEF label indication including additional orthopedic and soft tissue procedures FDA approval and launch of the ZYNRELEF Vial Access Needle (“VAN”)
Page 5
5 Q4 and 2024 FY Financial Achievements 2 1 3 4 5 Achieved Q4 2024 GAAP Net Income of $3.6 million ZYNRELEF achieved Net Revenue of $8.5 million, a 33% increase over Q3 Delivered full-year 2024 adjusted EBITDA of $8.6 million Generated full-year 2024 Net Revenue of $144.2 million, up 14% year-over-year CINVANTI achieved Q4 Net Revenue of $26.9 million, a 19% increase over Q3
Page 6
6 Financial Trends 2022-Present * 2023 R&D and SG&A restated for current org structure ($Thousands) 2022 2023 2024 Net Revenue 107,672 127,044 144,285 Cost of Product Sales 54,875 65,105 38,648 Gross Profit 52,798 61,939 105,637 Gross Margin % 49% 49% 73% Research & Development 70,098 29,963 12,522 General & Administrative 42,403 48,733 46,109 Selling & Marketing 69,086 58,104 43,081 Total Operating Expenses (Cash expenses) 181,587 136,801 101,712 EBITDA (128,789) (74,862) 3,925 Stock Based Compensation 42,980 32,854 12,962 D&A 2,889 2,899 2,492 Loss from operations (174,658) (110,615) (11,528) Ending Cash Balance 84,852 80,409 59,284
Page 7
Product Performance Update
Page 8
8 Oncology Care Franchise Net Sales 3 months ended December 31, 2024: $30.4 million 24.5 23.3 24.3 25.6 24.9 22.7 26.9 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 +10.7% CINVANTI® Net Sales 2.8 3.4 3.8 3.6 4.2 2.8 3.5 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 -7.4% SUSTOL® Net Sales
Page 9
9 0.2 0.3 0.4 0.5 0.4 1.0 1.1 1.9 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 +310.6% 3.5 4.1 4.4 5.7 5.0 5.8 6.2 8.5 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 +48.5% APONVIE ® Net Sales ZYNRELEF ® Net Sales Acute Care Franchise Net Sales 3 months ended December 31, 2024: $10.4 million
Page 10
10 - 100 200 300 400 500 600 700 800 APONVIE - AVERAGE DAILY UNITS APONVIE: Gaining Momentum through Team Alignment Beginning 2025 on a new growth trajectory An upward trend in growth of Average Daily Units throughout 2024 aligns with implementation of One Heron strategy Steady growth in number of accounts ordering APONVIE each month, up ~60% from January 2024 - 20 40 60 80 100 120 140 160 180 200 APONVIE - ORDERING ACCOUNTS
Page 11
11 Acceleration in growth of Average Daily Units correlates with the launch of the Orthopedic Surgery focus and CrossLink Steady growth in number of accounts ordering ZYNRELEF each month, 4 years from launch 300 350 400 450 500 550 600 650 700 ZYNRELEF - ORDERING ACCOUNTS 400 500 600 700 800 900 1000 1100 1200 ZYNRELEF - AVERAGE DAILY UNITS ZYNRELEF: The Stage is Set for Exponential Growth Multiple drivers contributing to increasing adoption
Page 12
Finance
Page 13
13 Select Financial Results In $K QTD YTD QTD YTD Q4 2024 Q4 2024 Q4 2023 Q4 2023 Net Product Sales $ 40,781 $144,285 $ 34,233 $ 127,044 Cost of Product Sales 10,229 38,648 9,885 65,105 Gross profit 30,552 105,637 24,348 61,939 Operating Expenses: Research and development 3,178 16,683 7,803 39,133 General and administrative 12,144 53,397 14,437 65,778 Sales and marketing 11,057 47,085 12,328 67,643 Total operating expense 26,379 117,165 34,568 172,554 Income (loss) from operations $ 4,173 $ (11,528) $ (10,220) $ (110,615) Cash and short-term investments $ 59,283 $ 80,409
Page 14
14 YTD Adjusted EBITDA In $K GAAP Actuals Stock-Based Inventory Reserve Asset Adjusted YTD 2024 Depreciation Compensation & Write-Off Write-Off YTD 2024 Net Product Sales $ 144,285 $ - $ - $ - $ - $ 144,285 Cost of Product Sales 38,648 2,117 - 2,474 - 34,057 Gross profit 105,637 (2,117) - (2,474) - 110,159 Operating Expenses: Research and development 16,683 189 1,856 - 2,210 12,428 General and administrative 53,397 149 7,138 - - 46,110 Sales and marketing 47,085 37 3,968 - - 43,080 Total Operating Expense 117,165 375 12,962 - 2,210 101,618 (Loss) Income from Operations $ (11,528) $ (2,492) $ (12,962) $ (2,474) $ (2,210) $ 8,610
Page 15
15 Item 2025 Full-Year Guidance for Net Revenue and Adjusted EBITDA (in millions) Net Revenue $153.0 to 163.0 Adjusted EBITDA^ $0.0 to $8.0 ^ Excludes Stock-Based Compensation, Depreciation and Amortization Financial Guidance for 2025
Page 16
Questions
Page 17
Addendum
Page 18
18 2023 GAAP to Non-GAAP Reconciliation In $K GAAP Actuals Stock-Based Adjusted YTD 2023 Depreciation Compensation YTD 2023 Net Product Sales $ 127,044 $ - $ - $127,044 Cost of Product Sales 65,105 - - 65,105 Gross profit 61,939 - - 61,939 Operating Expenses: Research and development 39,133 2,665 6,505 29,963 General and administrative 65,778 198 16,846 48,734 Sales and marketing 67,643 36 9,503 58,104 Total Operating Expense 172,554 2,899 32,854 136,801 Loss from Operations $ (110,615) $ (2,899) $ (32,854) $ (74,862)
Page 19
19 2022 GAAP to Non-GAAP Reconciliation In $K GAAP Actuals Stock-Based Adjusted YTD 2022 Depreciation Compensation YTD 2022 Net Product Sales $ 107,672 $ - $ - $107,672 Cost of Product Sales 54,874 - - 54,874 Gross profit 52,798 - - 52,798 Operating Expenses: Research and development 82,704 2,581 10,025 70,098 General and administrative 62,239 284 19,552 42,403 Sales and marketing 82,513 24 13,403 69,086 Total Operating Expense 227,456 2,889 42,980 181,587 Loss from Operations $ 174,658 $ (2,889) $ (42,980) $ (128,789)