Q1 2025 Heron Therapeutics Inc Earnings Call
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Speaker Change: Good day and thank you for standing by welcome to the Aaron's Therapeutics Q1, 2025 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 speaker's presentation there'll be a question and answer session to ask a question. Please press star one.
Speaker Change: One one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again I would now like to hand, the conference over to your speaker today, Melissa Jarrell executive director of legal.
Speaker Change: Erin.
Speaker Change: 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 March 31 2025.
Speaker Change: With me today from here on or Craig Collared, Chief Executive Officer, Yarra Duarte Executive Vice President Chief Financial Officer, Bill Ford Executive Vice President Chief Development Officer, and Kevin Warner Senior Vice President Medical Affairs strategy and engagement for those of you participating via conference call slides are made available via webcast.
Speaker Change: And can also be accessed via the Investor Relations page of our web site. Following the conclusion of today's call.
Speaker Change: Before we begin let me quickly remind you that during the course of this conference call. The company will make forward looking statements. We caution you that any statement that is not a statement of historical fact is a forward looking statement.
Speaker Change: This includes remarks about the company's projections expectations plans beliefs and teacher performance all of which constitute forward looking statements for the purposes of the safe Harbor provision under the private Securities Litigation Reform Act of 1995.
Speaker Change: 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.
Speaker Change: 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 enhance public periodic filings with the SEC except.
Speaker Change: Except as required by law Hereon assumes no obligation to update these forward looking statements to reflect future events or actual outcomes and does not intend to do so and with that I would now like to turn the call over to Craig Collared Chief Executive Officer of Huron.
Craig Collared: Thanks Melissa.
Craig Collared: Good morning, everyone and welcome to Heron Therapeutics first quarter 2025 earnings call.
Craig Collared: Today, we are extremely excited to share our results for the first quarter of 2025.
Craig Collared: After establishing the company's financial Foundation in 2024, we are now focused on targeted product growth for our two key assets is that a life and upon me.
Craig Collared: While continuing to maintain and gross involved here and first of all within clinics and select hospital accounts.
Craig Collared: With <unk> formulary status now covering approximately 19% of all orthopedic procedures.
Craig Collared: And key catalysts, such as our expanded label the band launch the approval of an old paint Act and the crossing partnership we see a clear opportunity to drive deeper adoption in our market, where we already have access and the potential to expand coverage as interest grows nationwide.
Craig Collared: In 2025, we will focus on disciplined execution, optimizing commercial performance and selectively expanding the team where it directly supports high return growth opportunities.
Craig Collared: Looking at our achievements in Q1.
Craig Collared: We generated total net revenues of approximately $39 million.
Craig Collared: Achieved a record quarterly adjusted EBITDA of $6 $2 million and.
Craig Collared: Net income of $2 $6 million.
Craig Collared: Since joining the company in 2023, our management team has been clear and our commitment to not only reach profitability, but also to execute with consistency.
Craig Collared: In addition, we reached a settlement agreement with Mylan Pharmaceuticals regarding those <unk> and upon b products, avoiding costly litigation fees and removing uncertainty.
Craig Collared: Around the outcome of the litigation.
Craig Collared: Lastly, as we continue advancing our commercial plans hired the right commercial leader was a key priority.
Craig Collared: We're pleased to share that Mark candidly joined US on April 28, Mark who previously worked with me at blocks as our commercial lead brings deep expertise from our careers, but entirely in the hospital market.
Craig Collared: He is the missing piece to the puzzle as we move into this next phase of growth.
Craig Collared: Now moving on to product performance.
Craig Collared: <unk> G franchise continues to outperform our expectations with combined net revenues from somebody and subtle reaching $28 $6 million 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 Collared: 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.
Craig Collared: <unk>, our lead product for chemotherapy induced nausea, and vomiting or <unk> continue.
Craig Collared: <unk> continues its strong growth.
Craig Collared: Well I spoke earlier about the overall oncology franchise you can see on the left side of the slide that somebody is steadily increasing and the average daily units.
Craig Collared: Even though it's at a highly competitive market.
Craig Collared: Now that the company is commercializing <unk> through a more focused account team across our entire portfolio. We're seeing positive results new accounts shown in green on the graph and defined as those who have order within the past three months are growing at a healthy rate and benefited from the IV bag shortage in October of last year.
Craig Collared: As reflected in a spike on the graph.
Craig Collared: 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 2023.
Craig Collared: Somebody's well established safety profile and competitive advantages such as the IV push administration support is continued upward trajectory in unit growth.
Craig Collared: The key to sustaining consistency with this product will be the strategic management of our average selling price or ASP.
Craig Collared: Now moving onto the acute hospital side of our business both upon being Zenola experienced significant growth in Q1 of 2025 up over 432% and 60% respectively compared to the same period last year.
Craig Collared: We believe these two products have significant growth opportunity.
Craig Collared: Aiding 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.
Craig Collared: Today, the company is well positioned for sustainable scalable and capital efficient growth.
Craig Collared: With <unk>, we are beginning to see a dramatic shift in key trends, particularly in average daily units and the number of ordering accounts.
Craig Collared: We believe this growth will continue throughout 2025 and beyond as our pull through efforts drive expanded product adoption within hospital institutions.
Craig Collared: <unk> is to continue building awareness focusing our message on its strong safety profile and unique mechanism of action.
Craig Collared: Post operative nausea, and vomiting, or <unk> is a serious issue that can often be mitigated by the addition of a party as the providers third agent of choice in a multimodal approach to <unk> therapy for moderate to severe cases.
Craig Collared: A similar positive trend is emerging with <unk>.
Craig Collared: Our daily unit sales are steadily increasing and we are onboarding new accounts at a much faster rate than in the past.
Craig Collared: With the van loss, just getting underway and the crossing partnership fully integrated we believe <unk> is positioned to show a significantly stronger growth trajectory as we approach Q3 and beyond.
Craig Collared: Many of the current initiatives around general half are already in motion, but require time to take full effect.
Craig Collared: As both daily unit volumes and the number of ordering accounts continue to rise we remain confident in general S. Multi hundred million dollar potential provided we can continue to improve execution and expand usage within our existing access points.
Craig Collared: 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 a directly supports high return growth opportunities.
Craig Collared: I'll now turn the call over to Eric <unk>, our CFO to cover our financials and update our financial guidance.
Speaker Change: Go ahead Eric.
Eric: Thank you Craig.
Eric: Our product gross profit for the three months ended March 31, 2025 was $30 4 million or 78%, which increased from 76% for the same period in 2024.
Eric: This is due to a lower cost per unit in the three months ended March 31, 2025, as a result of production efficiencies compared to the same period ended March 31 2024.
Eric: Offset by an increase in the unit itself.
Eric: G&A expenses for the three months ended March 31, 2025, with $25 million compared to $26 4 million.
Eric: 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 litigation offset by increased sales and marketing spend to support revenue growth.
Eric: Research and development expenses were $2 $3 million for the three months ended March 31, 2025, compared to $4 $6 million 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.
Eric: We achieved net income for the three months ended March 31, 2025 of $2 6 million.
Eric: During the comparable period in 2024, we had a net loss of $3 2 million.
Eric: Cash and short term investments at March 31, 2025, with $50 $7 million.
Eric: If we had excluded depreciation and stock based compensation, our adjusted EBITDA results would have been a positive $6 2 million.
Eric: Operating income compared to a loss of <unk> 7 million for the same period in 2024.
Eric: Our revising our previously given guidance for adjusted EBITDA range of zero to $8 million to a range of 4 million to $12 million.
Eric: And now we would like to open the call for any questions.
Eric: Thank you.
Eric: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.
Speaker Change: Our first question comes from Claridon with Jefferies. You May proceed.
Eric: Yes.
Speaker Change: Hey, guys. Congrats on a great quarter. So my question is Sean does seem lumpy litigation settlements understood, Brian I will be able to share details of.
Speaker Change: Quantitatively I wonder whether you can give any qualitative comments on how should we think about the implications of gentlemen for maybe your near term financials. Our guidance. Thank you and I have a follow up also.
Speaker Change: Thanks Claire.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
So not only continue with some voluntary but also.
Speaker Change: To grow upon.
Speaker Change: Got it.
Speaker Change: We have seen so far with <unk>.
Speaker Change: Then Laura will launch doping of taking effect in April continue, causing partnership so how should we think about or should we expect in terms of sales momentum in the back half of the year.
Speaker Change: Yes, no. That's a great question, because when you look at sort of Q4 to Q1.
Speaker Change: Net revenues were fairly similar but if you look at demand, we were actually up 2% and unit demand.
Speaker Change: The market was actually down five 3% and so what we foresee in front of US we've got a number of accounts actually I think there's six accounts right now that we're in the onboarding process, meaning they've gone through PNC and we're now getting to train physicians in training the hospital and getting things in epic system, and so forth and this just takes time and so one.
Speaker Change: All of the things that we're extremely excited about bringing these accounts onboard and so for US we can sort of see this coming.
Speaker Change: And if you think about all the things that are moving as far as moving pieces right now with the Cros like partnership.
Speaker Change: Our messaging and really getting us to hit on all cylinders. We see this all kind of coming together mid year and beyond and so I feel extremely confident that youre going to really see a different inflection as we move towards the end of the year and we feel very comfortable with consensus numbers and hitting those as we move forward.
Speaker Change: Got it thank you and congrats again.
Laura: Thanks, Laura.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Serge Belanger with Needham you May proceed.
Serge Belanger: Hey, good morning, Thanks for taking my questions.
Speaker Change: The first one Craig can you just talk about the overall <unk> trends whether they.
Serge Belanger: The usual seasonality was.
Serge Belanger: What you were expecting or similar to prior years and then maybe just.
Serge Belanger: Secondly for IRA just highlight some of the changes to the guidance and what's driving the.
Serge Belanger: The EBIT increase thanks.
Speaker Change: Okay, Thanks, Serge and Great question again.
Speaker Change: I thought the trends were fairly consistent with what we've seen in the past.
Speaker Change: Whether it's co pay resets or deductibles, what have you typically see a little bit of a falloff in Q1, but again, we were pleased because with all the other things going on we were actually up versus the market. So I think it's a positive sign but again.
Speaker Change: We have much bigger hopes then growing 2% versus the market and so I think as we move forward again as I've said before declares point.
Speaker Change: I think there's a lot coming at the end of the year.
Speaker Change: With the number of accounts, we have coming on board. It really just getting this cross link partnership where it's really just.
Speaker Change: Functionally.
Speaker Change: And going.
Speaker Change: We continue.
Speaker Change: Continue to become more efficient I guess, one of the things too that we're looking to do is that as we're onboarding number of these accounts, we're looking to do a little bit more of a targeted expansion as I said in my prepared remarks.
Speaker Change: And what I mean by that is that as we onboard these accounts from.
Speaker Change: From time to time, we have gaps as far as being able to do this as fast as we wanted we may need more coverage and a certain account based on sort of the cross link overlay of their footprint and so we are going to expand in some areas like that it may be a head count such as an MSL.
Speaker Change: Medical sales liaison it may be some kind of clinical support staff or even sales rep and so we're really taking a much more of a targeted approach versus just an all out expansion and we're going to do that where we have access and where things are going well as far as the new accounts coming on board and so forth. So that's why we're really upbeat about what we see and what's coming towards the end of the year. So ill turn it over here on the <unk>.
Speaker Change: Other questions, yes, as far as EBITDA Serge Thanks for the question EBIT.
Speaker Change: Obviously, you had a very strong first quarter and.
Speaker Change: Some of that is due to efficiencies on the overall spend some of that is on the announcement with the settlement.
Speaker Change: Would you 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.
Speaker Change: Thank you.
Speaker Change: Thank you and as a reminder to ask a question. Please press star one on your telephone. Our next question comes from Carl Byrnes with.
Speaker Change: Northland Capital markets you May proceed.
Speaker Change: Thanks for the question and congratulations on the results and the progress.
Speaker Change: It looks like the gross profit margin came in at around 78, 3% I'm wondering if you can.
Speaker Change: Talk a little bit about how you expect that to progress through the balance of the year or if there was any anomalies.
Speaker Change: Somebody sales were higher than expected should be part of it.
Speaker Change: And then I have follow up as well.
Carl: Okay. Thanks Carl.
Speaker Change: Gross margins a little higher than typical.
Speaker Change: Said, all along we thought we would be in sort of this sort of low to mid seventies.
Speaker Change: And basically what you had happened is exactly what you said some RV sales were up.
Speaker Change: 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 loss came through there as we go through the year youre going to see us incorporate some of the large from where we have smaller scale and so that may come down a little bit, but again, we still should be in that.
Speaker Change: Mid Seventy's range.
Speaker Change: Got it thanks, and then switching gears to Apondi.
Speaker Change: As a third line agent.
Speaker Change: Asia, obviously yourselves, there again higher than expected.
Speaker Change: How do you see it progressing and what do you see it sort of near term long term potential in terms of peak sales. That's obviously referencing long term. Thanks.
Speaker Change: Yes <unk>.
Speaker Change: We get so caught up sometimes I think talking about zenola, but <unk> is a product that once we go into a hospital system.
Speaker Change: We really don't lose these accounts I mean, they it's a product that works extremely well its extremely safe and well.
Speaker Change: 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 in PMT wins. So we're getting access but typically we're applying to be starts as 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.
Speaker Change: Broaden out throughout the hospital. This is where we're trying to focus now and this is sort of a twofold problem because as we have said all along is the more we can integrate our cross like 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.
Speaker Change: <unk> got access with bariatric surgery, and now my reps are able to go into the pack you in and speak to some of those.
Speaker Change: Nurses, and so forth and talked to anesthesiology, we can get more pull through and get sort of this system wide usage with upon being so.
Speaker Change: Listen I think upon me is going to continue to grow we've got a very unique safety profile and <unk>.
Speaker Change: MLA in our real go with this is to be the first choice. When you go to a third line agent and if that happens. This is a multi $100 million drug because theres 70 million surgeries a year that occurred in the U S and so.
About half of that market is.
Speaker Change: 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 going to get better as we get better with our crossing partners and move our reps out of the <unk>.
Speaker Change: <unk> suite.
Speaker Change: Great. Thanks, that's very helpful. And then switching back to Xander level, considering the formulary wins in new accounts coming on and obviously you have a feel for the timing of that.
Speaker Change: How do you see.
Speaker Change: <unk>, the timing of an inflection where a similar level.
Speaker Change: You start.
Speaker Change: <unk> sequential.
Speaker Change: Revenue growth again, I know you mentioned.
Speaker Change: 2% unit growth versus the market being down and Mike maybe.
Speaker Change: Related to somewhat related to deductible resets and such given that fourth quarter first quarter transition, but I'm just wondering.
Speaker Change: When you might expect to see that inflection and Zimbra led sales taking off.
Speaker Change: Yes. So we know currently we have five new accounts that I think are in Michigan, and North Carolina and a couple of other states that are ready to onboard.
Speaker Change: These counts alone are.
Speaker Change: Numerous amount of surgeries not only in ortho, but obviously throughout the hospital. They are also aligned with our cross link partnership so our footprints overlap with this and we have access. So look we know that those accounts are in the process of Onboarding. This should take place kind of June July as far as getting these things fully on board.
Speaker Change: So where I really see the product beginning to changes as we move into kind of later into Q3 into Q4, I think youre going to see a really different inflection, especially as we come out of the year into 'twenty six and so not only do I think we'll hit consensus this year with our numbers, but I really think next as we move into next year as these accounts come on board and again, we can.
Speaker Change: To get better with our partnership Crossly I think this is really going to change the direction of this product.
Speaker Change: Great excellent and again, congratulations on the progress and results.
Speaker Change: Thanks Carl.
Speaker Change: Thank you I would now like to turn the call back over to Craig collared for any closing remarks.
Craig Collared: So I just would like to thank all the employees of Heron, we had a great quarter and we continue to execute.
Speaker Change: Execute as we move forward and we want to thank everyone for being on the call today, and we'll see you next quarter.
Speaker Change: Thank you. This concludes the conference. Thank you for your participation you may now disconnect.
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