Q2 2026 Heron Therapeutics Inc Earnings Call

August 10, 2026

Operator: Good day. Thank you for standing by. Welcome to the Heron Therapeutics Q2 2026 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You'll hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised today's conference is being recorded. I would now like to turn the conference over to your speaker today, Melissa Jarel. Please go ahead.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your telephone.

Speaker #1: You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised today's conference is being recorded.

Speaker #1: I would now like to end the conference and turn it over to your speaker today, Melissa Jarel. Please go ahead.

Melissa Jarel: Thank you, operator. Good morning, everyone. Thank you for joining us on the Heron Therapeutics conference call today to discuss the company's financial results for Q2 2026. With me today from Heron are Craig Collard, Chief Executive Officer, Ira Duarte, Executive Vice President, Chief Financial Officer, Bill Forbes, Executive Vice President, Chief Development Officer, Mark Hensley, Chief Operating 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 and can also be accessed via the investor relations page of our website following the conclusion of today's call. 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 #2: Thank you, operator. And good morning, everyone. Thank you for joining us on the HERON THERAPEUTICS conference call today to discuss the company's financial results for the second quarter of 2026.

Speaker #2: With me today from HERON are Craig Collard, Chief Executive Officer; Ira Duarte, Executive Vice President, Chief Financial Officer; Bill Forbes, Executive Vice President, Chief Development Officer; Mark Hensley, Chief Operating Officer; and Kevin Warner, Senior Vice President, Medical Affairs, Strategy and Engagement.

Speaker #2: For those of you participating via conference call, slides are available via webcast and can also be accessed through the Investor Relations page of our website following the conclusion of today's call.

Speaker #2: 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 #2: This includes remarks about the company's projections, expectations, plans, beliefs, and future 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.

Melissa Jarel: This includes remarks about the company's projections, expectations, plans, beliefs, and future 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. These statements are based on judgment and analysis as of the date of this conference call, are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. 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 in Heron's public periodic filings with the SEC. Except as required by law, Heron assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes, does not intend to do so.

Speaker #2: 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 #2: 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 in Heron's public periodic filings with the SEC.

Speaker #2: Except as required by law, HERON assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. I'll now turn the call over to Craig Collard, Chief Executive Officer of HERON.

Melissa Jarel: With that, I would now like to turn the call over to Craig Collard, Chief Executive Officer of Heron.

Speaker #3: Thanks, Melissa. Hello, everyone, and welcome to Heron Therapeutics' second quarter 2026 earnings call. Net revenue for the quarter was $37.7 million. That is growth from the first quarter, but it is below what we expected of ourselves.

Craig Collard: Thanks, Melissa. Hello, everyone, and welcome to Heron Therapeutics' Q2 2026 Earnings Call. Net revenue for the quarter was $37.7 million. That is growth from Q1, it is below what we expected of ourselves. CINVANTI sales were up compared to Q1 in a highly competitive market, ZYNRELEF grew 35% year over year, both were slower than we anticipated. Turning to slide four, let me walk through the key updates from the quarter. The Acute Care franchise delivered revenue growth of 44% year over year. ZYNRELEF grew 35%, with average daily units growing 19% year over year. APONVIE grew 74% year over year and reached 23% share of the surgical NK1 segment, up 2 points from Q1. CINVANTI came in at $21.8 million, up from $20.5 million in Q1.

Speaker #3: Since bondy sales were up compared to Q1 in a highly competitive market, and general lev grew 35% year over year, but both were slower than we anticipated.

Speaker #3: Turning to slide 4, let me walk through the key updates from the quarter. The acute care franchise delivered revenue growth of 44% year over year.

Speaker #3: General lev grew 35%, with average daily units growing 19% year over year. Upon we grew 74% year over year, and reached 23% share of the surgical NK1 segment, up 2 points from the first quarter.

Speaker #3: And since bondy came in at 21.8 million dollars, up from 20.5 million in the first quarter. Mark will add more color in a moment to the commercial performance.

Craig Collard: Mark will add more color in a moment to the commercial performance. Beyond the commercial results, what I want to spend the rest of my time on today is what we have done about the quarter and how we are proceeding moving forward. First, we reset the balance sheet. As we disclosed today, we amended our credit facility with Hercules. When the June decision from the U.S. District Court for the District of Delaware regarding certain patents covering CINVANTI changed the outlook for the company, we went to our lender. The amendment resets our covenants through 2027 to match our new plan and reduces our principal. The terms are in the filing. Second, we tightened our spending. After the June court decision, we paused the salesforce expansion we had planned for H2 of this year, we are holding spending tightly while the competitive picture clarifies.

Speaker #3: Beyond the commercial results, what I want to spend the rest of my time on today is what we have done about the quarter and how we are proceeding moving forward.

Speaker #3: First, we reset the balance sheet. As we disclosed today, we amended our credit facility with Hercules. When the June decision from the U.S. District Court for the District of Delaware regarding certain patents covering SUSTOL changed the outlook for the company, we went to our lender.

Speaker #3: The amendment resets our covenants through 2027 to match our new plan and reduces our principal. The terms are in the filing. Second, we tightened our spending.

Speaker #3: After the June court decision, we paused the Salesforce expansion we had planned for the second half of this year, and we are holding spending tightly while the competitive picture clarifies.

Speaker #3: Our spending decisions follow what the business demonstrates, not a plan that events have overtaken. Third, we are defending our oncology franchise. We have filed our appeal, based on the June decision.

Craig Collard: Our spending decisions follow what the business demonstrates, not a plan that events have overtaken. Third, we are defending our oncology franchise. We have filed our appeal based on the June decision. The generic has not launched, we are preparing for potential generic competition to CINVANTI. We have a defense strategy built around the clinical profile of the product, our customer relationships, and our contracting position, we are executing it now before we needed it. Last, we are considering strategic alternatives as we continue to execute our current plan. The company has not set a timetable for this process. There can be no assurances that it will result in any transaction, the company does not intend to comment further on such matters unless and until it determines that additional disclosure is appropriate or required by law.

Speaker #3: The generic is not launched, but we are preparing for potential generic competition to Sinvonti. We have a defense strategy built around the clinical profile of the product, our customer relationships, and our contracting position, and we are executing it now, before we need it.

Speaker #3: Last, we are considering strategic alternatives as we continue to execute our current plan. The company has not set a timetable for this process. There can be no assurances that it will result in any transaction, and the company does not intend to comment further on such matters unless and until it determines that additional disclosure is appropriate or required by law.

Speaker #3: Before I turn things over to Mark, I want to recognize the entire HERON team. This has been a demanding stretch—a hard quarter, a court decision we disagree with, and a lot of change—and this team has stayed focused on patients and customers through all of it.

Craig Collard: Before I turn things over to Mark, I want to recognize the entire Heron team. This has been a demanding stretch, a hard quarter, a court decision we disagree with, and a lot of change, and this team has stayed focused on patients and customers through all of it. I will now turn the call over to Mark to cover our commercial performance. Go ahead, Mark.

Speaker #3: I will now turn the call over to Mark to cover our commercial performance. Go ahead, Mark.

Speaker #4: Thanks, Craig. Starting on slide 6 with the overall net sales picture. Total net sales were $37.7 million in the second quarter, up from $34.7 million in the first quarter.

Mark Hensley: Thanks, Craig. Starting on slide six with the overall net sales picture. Total net sales of $37.7 million in Q2, up from $34.7 million in Q1. On the acute care side, $15.3 million combined. ZYNRELEF at $11.1 million, up from $10.2 million, and APONVIE at $4.2 million, up from $3.4 million. On the oncology side, $22.3 million combined. CINVANTI at $21.8 million and SUSTOL at $0.5 million, continuing the planned wind down. As always, ordering and channel patterns move quarter-to-quarter. The cleaner read on adoption is average daily units and ordering accounts, which is what I will focus on. Turning to slide seven. There are two charts on this slide, average daily units on the left, ordering accounts on the right, and both continue their upward trend.

Speaker #4: On the acute care side, 15.3 million combined. General LEV at $11.1 million, up from $10.2 million. And APONVY at $4.2 million, up from $3.4 million.

Speaker #4: On the oncology side, $22.3 million combined—Sinvonti at $21.8 million and Systol at $0.5 million. Continuing the planned wind-down. As always, ordering and channel patterns move quarter to quarter.

Speaker #4: The cleaner read on adoption is average daily units and ordering accounts, which is what I will focus on. Turning to slide 7, there are two charts on this slide.

Speaker #4: Average daily units on the left, ordering accounts on the right. In both, continue their upward trend. Net sales were 11.1 million, up 9% from the first quarter, and up 35% from a year ago.

Mark Hensley: Net sales were $11.1 million, up 9% from Q1 and up 35% from a year ago. The number I would anchor on is demand. Average daily units grew 19% year-over-year. Lastly, I would add IGNITE 2.0 is active across 3,150 accounts, up from 2,260 in IGNITE 1.0. This remains a site-by-site, case-by-case adoption curve. Unit growth was real this quarter, but it was below the rate we planned, and the work now is converting that access into cases and protocols in the accounts we are already in. Moving to APONVIE. The same two views for APONVIE, and both charts show the steady climb. Net sales were approximately $4.2 million, up 74% from a year ago and up 26% from Q1. Share in the NK1 segment reached 23%, up 2 points sequentially.

Speaker #4: The number I would anchor on is demand. Average daily units grew 19% year over year, and lastly, I would add, Ignite 2.0 is active across 3,150 accounts, up from 2,260 in Ignite 1.0.

Speaker #4: This remains a site-by-site, case-by-case adoption curve. Unit growth was real this quarter, but it was below the rate we planned, and the work now is converting that access into cases and protocols in the accounts we are already in.

Speaker #4: Moving to Q2, we see the same two views for Q2. Both charts show a steady climb. Net sales were approximately $4.2 million, up 74% from a year ago and up 26% from the first quarter.

Speaker #4: Share in the NK1 segment reached 23%, up 2 points sequentially. Average daily units grew 59% year over year, and ordering accounts in June were up 42% from June of last year.

Mark Hensley: Average daily units grew 59% year-over-year, and ordering accounts in June were up 42% from June of last year. P&T approvals now stand at 1,810 accounts, representing 6.7 medium to high-risk procedures annually. Demand through the quarter was steady. Now turning to CINVANTI. Average daily units on the left have held a consistent level of utilization over the past two years. Ordering accounts on the right, 1,241 in June, are in line with the 12-month average of about 1,200. Net sales were $21.8 million, up from $20.5 million in Q1 and down about 10% from a year ago. That year-over-year decline is the branded competition we have discussed on prior calls. The more recent picture is one of stability. Utilization has held steady, and share in June was 25%, in line with its 12-month average.

Speaker #4: P&T approvals now stand at 1,810 accounts, representing 6.7 medium- to high-risk procedures annually. Demand through the quarter was steady. Now turning to Sinvonti—average daily units on the left have held a consistent level of utilization over the past two years, and ordering accounts on the right—1,241 in June—are in line with the 12-month average of about 1,200.

Speaker #4: Net sales were $21.8 million, up from $20.5 million in the first quarter, and down about 10% from a year ago. That year-over-year decline is due to the branded competition we have discussed on prior calls.

Speaker #4: The more recent picture is one of stability. Utilization has held steady, and share in June was 25%, in line with its 12-month average. The reignite work on formulary position and our contracting relationships are the levers we control, and they are the foundation of how we would compete against any future entrant.

Mark Hensley: The REIGNITE work on formulary position and our contracting relationships are the levers we control, and they are the foundation of how we would compete against any future entrant. Lastly, SUSTOL continues its planned wind down, as we've discussed on prior calls. To wrap up the commercial section, ZYNRELEF average daily units grew 19% year-over-year. APONVIE reached 23% share of the NK1 segment. CINVANTI declined year-over-year against branded competition, but has held steady in recent months. The defensive contracting and formulary work is in place. That is the demand picture as it stands. I will now turn the call over to Ira to cover our financials. Go ahead, Ira.

Speaker #4: Lastly, Systol continues its planned wind-down as we've discussed on prior calls. To wrap up the commercial section, General lev average daily units grew 19% year over year, upon we reached 23% share of the NK1 segment.

Speaker #4: Sinvonti declined year over year against branded competition, but has held steady in recent months. And the defensive contracting and formulary work is in place.

Speaker #4: That is the demand picture as it stands. I will now turn the call over to Ira to cover our financials. Go ahead, Ira.

Speaker #2: Thank you, Mark. Craig has addressed the quarter directly. What is within our control is how we manage the business in response, and disciplined management of our balance sheet and our spending is what is important moving forward.

Ira Duarte: Thank you, Mark. Craig has addressed the quarter directly. What is within our control is how we manage the business in response, disciplined management of our balance sheet and our spending is what is important moving forward. Our full results are shown on this slide. I will cover the highlights. Net revenues for the quarter were $37.7 million, compared to $34.7 million in Q1 2026 and $37.2 million in the comparable prior year quarter, with gross margin coming in at 69.3%. R&D expense was $2.7 million, SG&A expense was $25.4 million, bringing total operating expenses to $28.1 million, including stock-based compensation and depreciation. Our operating loss was $2 million, and net loss was $5.5 million, compared to a net loss of $2.4 million for the comparable prior year quarter. Adjusted EBITDA was $3.2 million, up from $2.2 million in the comparable prior year quarter.

Speaker #2: Our full results are shown on this slide. I will cover the highlights. Net revenues for the quarter were $37.7 million, compared to $34.7 million in the first quarter of 2026, and $37.2 million in the comparable prior year quarter.

Speaker #2: With gross margin coming in at 69.3%. R&D expense was 2.7 million dollars, and SG&A expense was 25.4 million dollars, bringing total operating expenses to 28.1 million dollars, including stock-based compensation and depreciation.

Speaker #2: Our operating loss was $2 million, and net loss was $5.5 million, compared to a net loss of $2.4 million for the comparable prior year quarter.

Speaker #2: Adjusted EBITDA was $3.2 million, up from $2.2 million in the comparable prior year quarter.

Speaker #5: We ended the quarter with $42.7 million in cash, cash equivalents, and short-term investments. Following the June court decision, we negotiated an amendment with our lender that waives the June 30 covenants and resets the schedule to match our operating plan.

Ira Duarte: We ended the quarter with $42.7 million in cash equivalents, and short-term investments. Following the June court decision, we negotiated an amendment with our lender that waives the 30 June covenants and resets the schedule to match our operating plan. As part of that amendment, we agreed to a principal reduction that comes in two steps. $13.5 million paid at the amendment's execution plus associated fees, and a potentially further $4 million reduction scheduled on or before 15 September, for a total potential principal reduction of $17.5 million. Reflecting those payments, our pro forma cash is approximately $28.5 million and approximately $24.3 million after the September payment. The amendment sets monthly minimum revenue and EBITDA covenants through December 2027, along with a minimum cash covenant. The agreement is filed with our 10-Q.

Speaker #5: As part of that amendment, we agreed to a principal reduction that comes in two steps: $13.5 million paid at the amendment's execution, plus associated fees, and a potentially further $4 million reduction scheduled on or before September 15th.

Speaker #5: For a total potential principal reduction of 17.5 million dollars. Reflecting those payments, our pro forma cash is approximately $28.5 million dollars, and approximately $24.3 million dollars after the September payment.

Speaker #5: The amendment sets monthly minimum revenue and EBITDA covenants through December 2027, along with the minimum cash covenant, and the agreement is filed with our 10-Q.

Speaker #2: We are withdrawing our full year 2026 guidance of $173 to $183 million in net product sales and $10 to $20 million in adjusted EBITDA.

Ira Duarte: We are withdrawing our full-year 2026 guidance of $173 to $183 million in net product sales and $10 to $20 million in adjusted EBITDA. Three things make an annual number unreliable right now, and none of them is about a single quarter. First, the June court decision. The timing and terms of potential generic entry against CINVANTI, our largest product, are not events we can forecast, and any annual number would embed an assumption we are not in a position to make. Second, the actions we took ourselves after that decision. We paused the sales force expansion that our plan had assumed for the H2, we tightened spending. Our prior guidance was built on that investment plan, it is not the plan we are currently executing on. Third, as Craig mentioned, we are considering strategic alternatives, which our amended credit agreement also reflects.

Speaker #2: Three things make an annual number unreliable right now, and none of them are about a single quarter. First, the June court decision—the timing and terms of potential generic entry against Sinvonti, our largest product, are not events we can forecast, and any annual number would embed an assumption we are not in a position to make.

Speaker #2: Second, the actions we took ourselves after that decision. We paused the Salesforce expansion that our plan had assumed for the second half, and we tightened spending.

Speaker #2: Our prior guidance was built on that investment plan, and it is not the plan we are currently executing on. Third, as Craig mentioned, we are considering strategic alternatives, which our amended credit agreement also reflects.

Speaker #2: Any one of these items on its own would make an annual number unreliable. This is a forecasting decision, not a statement about the underlying business.

Ira Duarte: Any one of these items on its own would make an annual number unreliable. This is a forecasting decision, not a statement about the underlying business. We would make the same decision regardless of the quarter's results. In place of guidance, we will report our cash position, our spending, and our covenant compliance every quarter. With that, we will open the call up for questions.

Speaker #2: We would make the same decision regardless of the quarter’s results. In place of guidance, we will report our cash position, our spending, and our covenant compliance every quarter.

Speaker #2: With that, we will open the call up for questions.

Speaker #4: Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 11 on your telephone. If your question has been answered and you wish to move yourself from the queue, please press star 11 again.

Operator: Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star 11 on your telephone. If your question has been answered and you wish to remove yourself from the queue, please press star 11 again. We will pause for a moment while we compile our Q&A roster. Our first question comes from Brendan Foltz with H.C. Wainwright. Your line is open.

Operator: Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star 11 on your telephone. If your question has been answered and you wish to remove yourself from the queue, please press star 11 again. We will pause for a moment while we compile our Q&A roster. Our first question comes from Raghuram Selvaraju with H.C. Wainwright. Your line is open.

Speaker #4: We'll pause for a moment while we compile our Q&A roster. Our first question comes from Brendan Fulks with HC Wainwright. Your line is open.

Speaker #6: Hi. Thanks for taking my question. Maybe just three from me. Can you elaborate on your confidence in meeting the updated debt covenants should a Sinvonti generic come to market?

Brendan Foltz: Hi. Thanks for taking my questions. Maybe just three from me. Can you elaborate on your confidence in meeting the updated debt covenants should a CINVANTI generic come to market? Maybe just staying on CINVANTI. If and when a generic does launch, any reason the erosion should not look like the SUSTOL erosion curve? Maybe just on ZYNRELEF. You called out it was below expectations. Can you just help us think about what is driving this below expectation performance recently? Are surgeons just not warm to the detail? Are they just very sticky on the alternatives they use? Just any drive and color in terms of what is the hurdle there on ZYNRELEF, and potentially, what can a strategic partner who's well-capitalized do differently? Thank you.

Raghuram Selvaraju: Hi. Thanks for taking my questions. Maybe just three from me. Can you elaborate on your confidence in meeting the updated debt covenants should a CINVANTI generic come to market? Maybe just staying on CINVANTI. If and when a generic does launch, any reason the erosion should not look like the SUSTOL erosion curve? Maybe just on ZYNRELEF. You called out it was below expectations. Can you just help us think about what is driving this below expectation performance recently? Are surgeons just not warm to the detail? Are they just very sticky on the alternatives they use? Just any drive and color in terms of what is the hurdle there on ZYNRELEF, and potentially, what can a strategic partner who's well-capitalized do differently? Thank you.

Speaker #6: Maybe just staying on Sinvonti—if and when a generic does launch, any reason the erosion should not look like the Systol erosion curve? And then maybe just on Zenrelief, right?

Speaker #6: So, you called out that it was below expectations. Can you help us think about what is driving this below-expectation performance recently?

Speaker #6: Desertions just not sort of warm to the detail? Are they just very sticky on the alternatives they use? Just any driving color in terms of what is the hurdle there on Zenrelief, and potentially, I mean, what can a strategic partner who's well capitalized do differently?

Speaker #6: Thank you.

Craig Collard: Yeah. Hi, Brendan. Let me take first on the Hercules amended agreement. The way we looked at CINVANTI, again, we took a very conservative approach with how we looked at the generic launch. In reality, there's a number of factors here that are at play. First of all, we don't know when the product does come to market. We know that there's some manufacturing challenges with this product as we go through them ourselves. It's a sterile process. It's an emulsion. All of that takes time to scale in order to meet market demand. Keep in mind, we're moving about 750,000 to 800,000 units a year. I don't think anyone wants to launch a net at scale. Secondly, there's the reimbursement piece. Do they fall under our J-code or do they fall under their own J-code? Again, that can determine share as well.

Craig Collard: Yeah. Hi, Raghuram. Let me take first on the Hercules amended agreement. The way we looked at CINVANTI, again, we took a very conservative approach with how we looked at the generic launch. In reality, there's a number of factors here that are at play. First of all, we don't know when the product does come to market. We know that there's some manufacturing challenges with this product as we go through them ourselves. It's a sterile process. It's an emulsion. All of that takes time to scale in order to meet market demand. Keep in mind, we're moving about 750,000 to 800,000 units a year. I don't think anyone wants to launch a net at scale. Secondly, there's the reimbursement piece. Do they fall under our J-code or do they fall under their own J-code? Again, that can determine share as well.

Speaker #3: Yeah. Hi, Brendan. Look, let me take first on the Hercules amended agreement. The way we looked at Sionvanti, again, we took a very conservative approach with how we looked at the generic launch.

Speaker #3: In reality, there's a number of factors here that are at play. First of all, we don't know when the product does come to market.

Speaker #3: We know that there are some manufacturing challenges with this product, as we go through them ourselves. It's a sterile process. It's an emulsion, so all of that takes time.

Speaker #3: To scale in order to meet market demand. I mean, keep in mind, we're moving about 750,000 to 800,000 units a year, and so I don't think anyone wants to launch in that market at scale.

Speaker #3: Secondly, there's the reimbursement piece. Do they fall under RJ code, or do they fall under their own J code? And again, that can determine share as well.

Speaker #3: And it could change sort of the market dynamic. So there's a number of moving pieces, but the way we viewed this was in a really conservative kind of earlier launch.

Craig Collard: It could change the market dynamic. There's a number of moving pieces, but the way we viewed this was in a really conservative, earlier launch scenario with Hercules on the covenant. Again, I think we're very covered there because I do think this may take a bit longer than maybe we modeled out. I think from that standpoint, our lenders felt very comfortable. I'll turn it over to Mark on the second piece about ZYNRELEF and kind of what's going on with the quarter.

Speaker #3: Scenario with Hercules on the covenant. So again, I think we're very covered there, because I do think this may take a bit longer than maybe we modeled out.

Speaker #3: And so I think from that standpoint, our lenders felt very comfortable. I'll turn a remark on the second piece about Zenrelief and kind of what's going on with the quarter.

Speaker #6: Yeah. And thanks for the question, Brendan. On Zenrelief, the product grew 9% quarter over quarter. As you're aware, in Q1, the market itself was down.

Mark Hensley: Yeah. Thanks for the question, Brendan. On ZYNRELEF, the product grew 9% quarter-over-quarter. As you're aware, in Q1, the market itself was down, we expected to recover from that quite strongly in Q2. We didn't quite get to our expectations in Q2, and certainly that's on us to rectify. I wouldn't point to anything necessarily about the product. Certainly the market itself is a little bit slow this time of year, and as you can look back at slide seven in the earnings deck, you see a really nice run-up in H2 for the market and for ZYNRELEF and other products in that market. We still expect that to occur. Certainly Q2 is on us from an execution perspective, and we'll work to fix that in Q3.

Mark Hensley: Yeah. Thanks for the question, Raghuram. On ZYNRELEF, the product grew 9% quarter-over-quarter. As you're aware, in Q1, the market itself was down, we expected to recover from that quite strongly in Q2. We didn't quite get to our expectations in Q2, and certainly that's on us to rectify. I wouldn't point to anything necessarily about the product. Certainly the market itself is a little bit slow this time of year, and as you can look back at slide seven in the earnings deck, you see a really nice run-up in H2 for the market and for ZYNRELEF and other products in that market. We still expect that to occur. Certainly Q2 is on us from an execution perspective, and we'll work to fix that in Q3.

Speaker #6: And so we expected to recover from that quite strongly in Q2. We didn't quite get to our expectations in the second quarter, and certainly that's on us to rectify.

Speaker #6: I wouldn't point to anything necessarily about the product. Certainly, the market itself is a little bit slow this time of year, and as you can look back at slide 7 in the earnings deck, you see a really nice run-up in the back half of the year for the market and for Zynrelef and other products in that market.

Speaker #6: So we still expect that to occur. But certainly, Q2 was on us from an execution perspective, and we'll work to fix that in the third quarter.

Craig Collard: Excuse me.

Speaker #7: Excuse me.

Speaker #4: Thank you. One moment for our next question. Our next question comes from Serge Bellinger with Needham. Your line is open.

Operator: Thank you. One moment for our next question. Our next question comes from Serge Belanger with Needham. Your line is open.

Operator: Thank you. One moment for our next question. Our next question comes from Serge Belanger with Needham & Company. Your line is open.

Speaker #7: Hi, good morning. Thanks for taking my questions. I guess the first one is for Craig, regarding the potential generic Sinvonti. I know there's still some lack of clarity on a potential launch here, but I believe you have a couple of settlement agreements around Sinvonti with some other players.

Serge Belanger: Good morning, and thanks for taking my questions. I guess first one for Craig on potential generic CINVANTI. I know there's still a lack of clarity on a potential launch here, I believe you have a couple settlement agreements around CINVANTI with some other players. Curious what the impact would be for those potential launches on those players if Azurity does launch a generic product. Secondly, regarding ZYNRELEF, maybe for Mark, just curious what you're seeing in terms of surgical volumes and just the overall volume of procedures over Q2. I believe your competitor reported some macro volatility that impacted healthcare spending. Just curious if you're seeing kind of the same thing. Thanks.

Speaker #7: Curious what the impact would be for those potential launches on those players if, as you already does launch a generic product. And then secondly, regarding Zenrelief, maybe for Mark, just curious what you're seeing in terms of surgical volumes and just the overall volume of procedures over the second quarter.

Speaker #7: I believe your competitor reported some macro volatility that impacted healthcare spending. Just curious if you're seeing kind of the same thing. Thanks.

Speaker #3: Yeah. Serge, regarding Sinvonti, it will have, whether it launches or doesn't launch, it will have no impact at all on the settlement. So that should not change.

Craig Collard: Serge, regarding CINVANTI, whether it launches or doesn't launch, it will have no impact at all on the settlement. That should not change.

Speaker #6: And then, as far as Zenrelief goes, kind of macro impacts—look, I think we still continue to make progress on P&T wins throughout the quarter.

Mark Hensley: As far as ZYNRELEF goes, kind of macro impacts. Look, I think we still continue to make progress on P&T wins throughout the quarter. Maybe we weren't as impacted as much by that situation, or at least I didn't hear that much about it in particular. Really it's just about time of pull-through. We were a little bit slower on a few things in the quarter than we expected and certainly hope to see those continue to pull through in the back half of the year.

Speaker #6: So maybe we weren't as impacted as much. By that situation, or at least I didn't hear that much about it in particular. But really, it's just about time of pull-through.

Speaker #6: And we were a little bit slower on a few things in the quarter than we expected. And certainly, hope to see those continue to pull through in the back half of the year.

Speaker #7: Thank you.

Serge Belanger: Thank you.

Speaker #4: And I'm not showing any further questions at this time. I'd like to turn the call back over to Craig for any further remarks.

Operator: I'm not showing any further questions at this time. I'd like to turn the call back over to Craig for any further remarks.

Speaker #3: No, thanks, everyone, for joining the call this quarter. We'll talk to you next quarter. Thank you.

Craig Collard: No, thanks everyone for joining the call this quarter, and we'll talk to you next quarter. Thank you.

Operator: Thank you, ladies and gentlemen. This concludes today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day.

Q2 2026 Heron Therapeutics Inc Earnings Call

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