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What changed in HERON THERAPEUTICS, INC. /DE/'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of HERON THERAPEUTICS, INC. /DE/'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+277 added−288 removedSource: 10-K (2024-03-12) vs 10-K (2023-03-29)

Top changes in HERON THERAPEUTICS, INC. /DE/'s 2023 10-K

277 paragraphs added · 288 removed · 218 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

58 edited+11 added−23 removed133 unchanged
Biggest changeWe have filed a number of U.S. patent applications on inventions relating to the composition of a variety of polymers, specific products, product groups and processing technology. As of December 31, 2022, we had a total of 33 issued U.S. patents and an additional 111 issued (or registered) foreign patents. The patents on the bioerodible technologies expire in March 2026.
Biggest changeAs of December 31, 2023, we had a total of 34 issued U.S. patents and an additional 118 issued (or registered) foreign patents. The patents on the bioerodible technologies expire in March 2026. Currently, CINVANTI is covered by 10 patents issued in the U.S. and by five patents issued (or registered) in foreign countries including Korea and Japan.
Additionally, the California Privacy Rights Act (the “CPRA”), a ballot measure that was approved by California voters on November 3, 2020 and became operative on January 1, 2023, amends and expands the CCPA and its accompanying obligations, including through yet-to-be-finalized implementing regulations from a new enforcement agency, the California Privacy Protection Agency.
Additionally, the California Privacy Rights Act, a ballot measure that was approved by California voters on November 3, 2020 and became operative on January 1, 2023, amends and expands the CCPA and its accompanying obligations, including through yet-to-be-finalized implementing regulations from a new enforcement agency, the California Privacy Protection Agency.
CINVANTI is the first and only IV formulation of an NK 1 receptor antagonist indicated for the prevention of acute and delayed nausea and vomiting associated with HEC and nausea and vomiting associated with MEC that is free of synthetic surfactants, including polysorbate 80. 6 NK 1 receptor antagonists are typically used in combination with 5-HT 3 receptor antagonists.
CINVANTI is the first and only IV formulation of an NK 1 receptor antagonist indicated for the prevention of acute and delayed nausea and vomiting associated with HEC and nausea and vomiting associated with MEC that is free of synthetic surfactants, including polysorbate 80. NK 1 receptor antagonists are typically used in combination with 5-HT 3 receptor antagonists.
Our CINVANTI data has demonstrated the bioequivalence of CINVANTI to EMEND IV, supporting its efficacy for the prevention of both acute and delayed nausea and vomiting associated with HEC and nausea and vomiting associated with MEC. Results also showed CINVANTI was better tolerated in healthy volunteers than EMEND IV, with significantly fewer adverse events (“AEs”) reported with CINVANTI.
Our CINVANTI data has demonstrated the bioequivalence of CINVANTI to EMEND IV, supporting its efficacy for the prevention of both acute and delayed nausea and vomiting associated with HEC and nausea and vomiting associated with MEC. Results also showed CINVANTI was better tolerated in healthy volunteers than EMEND IV, with significantly fewer adverse events reported with CINVANTI.
Arrangements with third-party payors and customers may expose us to applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute our Products and any other product candidates for which we obtain marketing approval. 16 Regulations under applicable federal and state healthcare laws and regulations include the federal health care programs’ Anti-Kickback Law, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral or purchase of any good or service for which payment may be made under federal health care programs such as the Medicare and Medicaid programs.
Arrangements with third-party payors and customers may expose us to applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute our Products and any other product candidates for which we obtain marketing approval. 14 Regulations under applicable federal and state healthcare laws and regulations include the federal health care programs’ Anti-Kickback Law, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral or purchase of any good or service for which payment may be made under federal health care programs such as the Medicare and Medicaid programs.
If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. 13 Satisfaction of FDA requirements or similar requirements of state, local and foreign regulatory agencies typically takes several years and requires the expenditure of substantial financial resources.
If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. Satisfaction of FDA requirements or similar requirements of state, local and foreign regulatory agencies typically takes several years and requires the expenditure of substantial financial resources.
Currently, SUSTOL is covered by 6 patents issued in the U.S. and by 18 patents issued (or registered) in foreign countries including France, Germany, Hong Kong, 9 Ireland, Italy, Japan, Spain, Sweden, Switzerland, Taiwan, and the United Kingdom. U.S. patents covering SUSTOL expire in September 2024; foreign patents covering SUSTOL expire in September 2025.
Currently, SUSTOL is covered by 6 patents issued in the U.S. and by 18 patents issued (or registered) in foreign countries including France, Germany, Hong Kong, Ireland, Italy, Japan, Spain, Sweden, Switzerland, Taiwan, and the United Kingdom. U.S. patents covering SUSTOL expire in September 2024; foreign patents covering SUSTOL expire in September 2025.
Any failure to comply with these regulations could lead to a variety of sanctions, including the revocation, or a denial of renewal, of the DEA registration, injunctions or civil or criminal penalties. 15 Third-party Payor Coverage and Reimbursement Commercial success of our Products and our product candidates that are approved or commercialized for any indication will depend, in part, on the availability of coverage and reimbursement from third-party payors at the federal, state and private levels.
Any failure to comply with these regulations could lead to a variety of sanctions, including the revocation, or a denial of renewal, of the DEA registration, injunctions or civil or criminal penalties. 13 Third-party Payor Coverage and Reimbursement Commercial success of our Products and our product candidates that are approved or commercialized for any indication will depend, in part, on the availability of coverage and reimbursement from third-party payors at the federal, state and private levels.
In addition, clinical trials in the U.S. and other regions must be performed according to current Good Clinical Practices (“cGCP”), which are enumerated in FDA regulations and guidance documents.
In addition, clinical trials in the U.S. and other regions must be performed according to current Good Clinical Practices, which are enumerated in FDA regulations and guidance documents.
The process for clinical trials in other jurisdictions are similar, and trials are heavily scrutinized by the designated Ethics Committee. 14 Section 505(b)(2) Applications Some of our product candidates may be eligible for submission of applications for approval under the FDA’s Section 505(b)(2) approval process, which provides an alternate path to FDA approval for new or improved formulations or new uses of previously approved products.
The process for clinical trials in other jurisdictions are similar, and trials are heavily scrutinized by the designated Ethics Committee. 12 Section 505(b)(2) Applications Some of our product candidates may be eligible for submission of applications for approval under the FDA’s Section 505(b)(2) approval process, which provides an alternate path to FDA approval for new or improved formulations or new uses of previously approved products.
Actual bonus payouts for all employees except our senior executives are based on a weighting of Company and individual performance, which varies based on level of responsibility.
Actual bonus payouts for all employees except our most senior executives are based on a weighting of Company and individual performance, which varies based on level of responsibility.
None of our employees are represented by a labor union or covered by a collective bargaining agreement. We expect to hire a small number of additional employees in 2023 to backfill critical positions, but do not expect significant headcount growth. We continually evaluate business needs and opportunities in addition to balancing in-house expertise and capacity with that of outsourced resources.
None of our employees are represented by a labor union or covered by a collective bargaining agreement. We expect to hire a small number of additional employees in 2024 to backfill critical positions, but do not expect significant headcount growth. We continually evaluate business needs and opportunities in addition to balancing in-house expertise and capacity with that of outsourced resources.
Furthermore, our trade secrets may otherwise become known to, or be independently developed by, our competitors. 10 Government Regulation Pharmaceutical Regulation Pharmaceutical products that we market in the U.S. are subject to extensive government regulation. Likewise, if we receive approvals to market and distribute any such products abroad, they would also be subject to extensive foreign government regulation.
Furthermore, our trade secrets may otherwise become known to, or be independently developed by, our competitors. 8 Government Regulation Pharmaceutical Regulation Pharmaceutical products that we market in the U.S. are subject to extensive government regulation. Likewise, if we receive approvals to market and distribute any such products abroad, they would also be subject to extensive foreign government regulation.
Most of these studies must be performed according to Good Laboratory Practices (“GLP”), a system of management controls for laboratories and research organizations to ensure the consistency and reliability of results. An IND is the request for authorization from the FDA to administer an investigational new drug product to humans.
Most of these studies must be performed according to Good Laboratory Practices, a system of management controls for laboratories and research organizations to ensure the consistency and reliability of results. 9 An IND is the request for authorization from the FDA to administer an investigational new drug product to humans.
Additional information regarding us, including our audited financial statements and descriptions of our business, is contained in the documents incorporated by reference in this Annual Report on Form 10-K. Our common stock is traded on The Nasdaq Capital Market, under the symbol “HRTX.” 20
Additional information regarding us, including our audited financial statements and descriptions of our business, is contained in the documents incorporated by reference in this Annual Report on Form 10-K. Our common stock is traded on The Nasdaq Capital Market, under the symbol “HRTX.” 18
We also monitor employee compliance with applicable laws and regulations through a third party ethics and compliance hotline system that facilitates anonymous internal and external reporting of complaints or concerns. We did not receive any complaints during 2022.
We also monitor employee compliance with applicable laws and regulations through a third party ethics and compliance hotline system that facilitates anonymous internal and external reporting of complaints or concerns. We did not receive any complaints during 2023.
Currently, ZYNRELEF is protected by 15 patents issued in the U.S. and by 89 patents issued (or registered) in foreign countries including Albania, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Mexico, Monaco, Netherlands, Norway, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, Turkey and the United Kingdom.
Currently, ZYNRELEF is protected by 16 patents issued in the U.S. and by 94 patents issued (or registered) in foreign countries including Albania, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Mexico, Monaco, Netherlands, Norway, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, Turkey and the United Kingdom.
The FDA approval process for new drugs includes, without limitation: • preclinical studies; • submission in the U.S. of an Investigational New Drug application (“IND”), for clinical trials conducted in the U.S.; • adequate and well-controlled human clinical trials to establish safety and efficacy of the product; • submission and review of an NDA in the U.S.; and • inspection of the facilities used in the manufacturing of the drug to assess compliance with the FDA’s current cGMP regulations.
The FDA approval process for new drugs includes, without limitation: • preclinical studies; • submission in the U.S. of an Investigational New Drug application (“IND”), for clinical trials conducted in the U.S.; • adequate and well-controlled human clinical trials to establish safety and efficacy of the product; • submission and review of a New Drug Application (“NDA”) in the U.S.; and • inspection of the facilities used in the manufacturing of the drug to assess compliance with the FDA’s current cGMP regulations.
Pharmaceutical companies both large and small compete for a limited number of qualified applicants to fill specialized positions, which continued in 2022, with heavy competition for talent.
Pharmaceutical companies both large and small compete for a limited number of qualified applicants to fill specialized positions, which continued in 2023, with heavy competition for talent.
We have a policy against using Company funds for political purposes, and we incurred no costs in 2021 associated with legal or regulatory fines or settlements associated with violations of bribery, corruption or anti-competitive standards. 17 Patient Privacy and Data Security We are required to comply, as applicable, with numerous federal and state laws, including state security breach notification laws, state health and personal information privacy laws and federal and state consumer protection laws, and to govern the collection, use and disclosure of personal information.
We have a policy against using Company funds for political purposes, and we incurred no costs in 2022 or 2023 associated with legal or regulatory fines or settlements associated with violations of bribery, corruption or anti-competitive standards. 15 Patient Privacy and Data Security We are required to comply, as applicable, with numerous federal and state laws, including state security breach notification laws, state health and personal information privacy laws and federal and state consumer protection laws, and to govern the collection, use and disclosure of personal information.
Actual bonus payout for our senior executives is based exclusively on Company performance, as will be more fully described in our Definitive Proxy Statement to be filed with the SEC related to our 2023 Annual Meeting of Stockholders.
Actual bonus payout for our most senior executives is based exclusively on Company performance, as will be more fully described in our Definitive Proxy Statement to be filed with the SEC related to our 2024 Annual Meeting of Stockholders.
In the U.S., ZYNRELEF competes in, and HTX-034, if successfully developed, will compete in, the postoperative pain management market with MARCAINE TM (bupivacaine hydrochloride injection, solution, marketed by Pfizer Inc.) and generic forms of bupivacaine; NAROPIN ® (ropivacaine, marketed by Fresenius Kabi USA, LLC) and generic forms of ropivacaine; EXPAREL ® (bupivacaine liposome injectable suspension, marketed by Pacira BioSciences, Inc.); XARACOLL ® (bupivacaine HCl implant, marketed by Innocoll Pharmaceuticals Limited); POSIMIR ® (owned by Durect Corporation and to be marketed in the U.S. by Innocoll Pharmaceuticals Limited); ANJESO ® (meloxicam injection, marketed by Baudax Bio, Inc.); OFIRMEV ® (acetaminophen injection, marketed by Mallinckrodt Pharmaceuticals); SEGLENTIS ® (celecoxib and tramadol hydrochloride, marketed by Kowa Pharmaceuticals America, Inc. in the U.S.); generic forms of IV acetaminophen; and potentially other products in development for postoperative pain management that reach the U.S. market.
ZYNRELEF competes in the postoperative pain management market with MARCAINE TM (bupivacaine hydrochloride injection, solution, marketed by Pfizer Inc.) and generic forms of bupivacaine; NAROPIN ® (ropivacaine, marketed by Fresenius Kabi USA, LLC) and generic forms of ropivacaine; EXPAREL ® (bupivacaine liposome injectable suspension, marketed by Pacira BioSciences, Inc.); XARACOLL ® (bupivacaine HCl implant, marketed by Innocoll Pharmaceuticals Limited); POSIMIR ® (owned by Durect Corporation and to be marketed in the U.S. by Innocoll Pharmaceuticals Limited); ANJESO ® (meloxicam injection, marketed by Baudax Bio, Inc.); OFIRMEV ® (acetaminophen injection, marketed by Mallinckrodt Pharmaceuticals); SEGLENTIS ® (celecoxib and tramadol hydrochloride, marketed by Kowa Pharmaceuticals America, Inc. in the U.S.); generic forms of IV acetaminophen; and potentially other products in development for postoperative pain management that reach the U.S. market.
Currently available NK 1 receptor antagonists include: generic versions of EMEND ® IV (fosaprepitant); EMEND ® IV (fosaprepitant, marketed by Merck & Co., Inc.); EMEND ® ( aprepitant, marketed by Merck & Co., Inc.); AKYNZEO ® (palonosetron, a 5-HT 3 receptor antagonist, combined with netupitant, an NK 1 receptor antagonist, marketed by Helsinn Therapeutics (U.S.), Inc.); VARUBI ® (rolapitant, marketed by TerSera Therapeutics LLC) and other products that include an NK 1 receptor antagonist that reach the market for the prevention of CINV.
Currently available NK 1 receptor antagonists include: generic versions of EMEND ® IV (fosaprepitant); EMEND ® IV (fosaprepitant, marketed by Merck & Co., Inc.); EMEND ® ( aprepitant, marketed by Merck & Co., Inc.); AKYNZEO ® (palonosetron, a 5-HT 3 receptor antagonist, combined with netupitant, an NK 1 receptor antagonist, marketed by Helsinn Therapeutics (U.S.), Inc.); VARUBI ® (rolapitant, marketed by TerSera Therapeutics LLC) and other products that include an NK 1 receptor antagonist that reach the market for the prevention of CINV. 6 SUSTOL faces significant competition.
U.S. patents covering ZYNRELEF have expiration dates ranging from March 2034 to April 2035; foreign patents covering ZYNRELEF have expiration dates ranging from November 2033 to November 2036. APONVIE is covered by 9 patents issued in the U.S. and by three patents issued (or registered) in foreign countries including Korea and Japan.
U.S. patents covering ZYNRELEF have expiration dates ranging from March 2034 to April 2035; foreign patents covering ZYNRELEF have expiration dates ranging from November 2033 to November 2036. APONVIE is covered by 10 patents issued in the U.S. and by five patents issued (or registered) in foreign countries including Korea and Japan.
A standard of care in the treatment of breast cancer and other cancer types, AC regimens are among the most commonly prescribed HEC regimens, as defined by both the National Comprehensive Cancer Network (“NCCN”) and the American Society of Clinical Oncology (“ASCO”).
A standard of care in the treatment of breast cancer and other cancer types, AC regimens are among the most commonly prescribed Highly Emetogenic Cancer (“HEC”) regimens, as defined by both the National Comprehensive Cancer Network (“NCCN”) and the American Society of Clinical Oncology (“ASCO”).
Where underutilization is identified, we remain committed to current and future outreach efforts in place to build employee diversity through our hiring efforts. We are also building diversity in our leadership team. In 2022, 40% of our Section 16 officers were female.
Where underutilization is identified, we remain committed to current and future outreach efforts in place to build employee diversity through our hiring efforts. We are also building diversity in our leadership team. In 2023, 50% of our Section 16 officers were female.
In October 2019, the FDA approved our sNDA for CINVANTI to expand the indication and recommended dosage to include the 130 mg single-dose regimen for patients receiving MEC. In the fourth quarter of 2022, we validated larger-scale manufacturing of CINVANTI, which will significantly reduce the cost of product sales.
In October 2019, the FDA approved our sNDA for CINVANTI to expand the indication and recommended dosage to include the 130 mg single-dose regimen for patients receiving MEC. In the fourth quarter of 2022, we validated larger-scale manufacturing of CINVANTI, which significantly reduced the cost of product sales in 2023 and will continue going forward.
NK 1 receptor antagonists are administered for the prevention of CINV, in combination with 5-HT 3 receptor antagonists, to augment the therapeutic effect of the 5-HT 3 receptor antagonist.
CINVANTI faces significant competition. NK 1 receptor antagonists are administered for the prevention of CINV, in combination with 5-HT 3 receptor antagonists, to augment the therapeutic effect of the 5-HT 3 receptor antagonist.
In February 2019, the FDA approved our sNDA for CINVANTI, for IV use, which expanded the administration of CINVANTI beyond the initially approved administration method (a 30-minute IV infusion) to include a 2-minute IV injection.
In February 2019, the FDA approved our Supplemental New Drug Application ( “ sNDA ”) for CINVANTI, for IV use, which expanded the administration of CINVANTI beyond the initially approved administration method (a 30-minute IV infusion) to include a 2-minute IV injection.
The new J-code was assigned by the Centers for Medicare and Medicaid Services (“CMS”) and has helped simplify the billing and reimbursement process for prescribers of SUSTOL. CINVANTI CINVANTI was approved by the FDA in November 2017, and we commenced commercial sales in the U.S. in January 2018.
The new J-code was assigned by CMS and has helped simplify the billing and reimbursement process for prescribers of SUSTOL. 4 CINVANTI CINVANTI was approved by the FDA in November 2017, and we commenced commercial sales in the U.S. in January 2018.
In addition, in December 2022, H.R. 2617, the omnibus spending bill was approved by Congress that includes a provision requiring CMS to pay for certain non-opioids outside the existing bundled payment for surgeries for the period January 1, 2025 through December 31, 2027. ZYNRELEF was granted a marketing authorization by the European Commission (“EC”) in September 2020.
In addition, in December 2022, H.R. 2617, the omnibus spending bill was approved by Congress that includes a provision requiring CMS to pay for certain non-opioids outside the existing bundled payment for surgeries for the period January 1, 2025 through December 31, 2027.
In March 2022, CMS approved a 3-year transitional pass-through status of ZYNRELEF, which became effective on April 1, 2022, for separate reimbursement outside of the surgical bundle payment in the Hospital Outpatient Department (HOPD) setting of care.
In March 2022, the Centers for Medicare and Medicaid Services (“CMS”) approved a 3-year transitional pass-through status of ZYNRELEF, which became effective on April 1, 2022, for separate reimbursement outside of the surgical bundle payment in the Hospital Outpatient Department (“HOPD”) setting of care.
We are also subject to various laws, regulations and recommendations relating to safe working conditions, laboratory practices and the experimental use of animals. 18 Human Capital Management Heron Employees As of December 31, 2022, Heron employed 203 full-time employees, 117 of whom are involved in sales and marketing activities, 63 of whom are involved in research and development activities and 23 of whom are involved in general and administrative activities.
We are also subject to various laws, regulations and recommendations relating to safe working conditions, laboratory practices and the experimental use of animals. 16 Human Capital Management Heron Employees As of December 31, 2023, Heron employed 126 full-time employees, 72 of whom are involved in sales and marketing activities, 39 of whom are involved in research and development activities and 15 of whom are involved in general and administrative activities.
CINVANTI is an intravenous (“IV”) formulation of aprepitant, a substance P/neurokinin-1 (“NK 1 ”) receptor antagonist. CINVANTI is the first IV formulation to directly deliver aprepitant, the active ingredient in EMEND ® capsules.
CINVANTI is an IV formulation of aprepitant, a substance NK 1 receptor antagonist. CINVANTI is the first IV formulation to directly deliver aprepitant, the active ingredient in EMEND ® capsules.
No other 5-HT 3 receptor antagonist is specifically approved for the prevention of delayed CINV associated with a HEC regimen. 8 In the U.S., APONVIE will compete in the PONV prevention market with generic ondansetron, the current standard of care, generic aprepitant, and BARHEMSYS ® (amisulpride, marketed by Eagle Pharmaceuticals, Inc.); TAK-951 (a peptide agonist under development (PH2) by Takeda Pharmaceutical Company Limited for PONV and not approved anywhere globally for any use); and potentially other products in development for PONV prevention that reach the market.
APONVIE competes in the PONV prevention market with generic ondansetron, the current standard of care, generic aprepitant, and BARHEMSYS ® (amisulpride, marketed by Eagle Pharmaceuticals, Inc.); TAK-951 (a peptide agonist under development (PH2) by Takeda Pharmaceutical Company Limited for PONV and not approved anywhere globally for any use); and potentially other products in development for PONV prevention that reach the market.
We believe diversity is a competitive advantage and through initiatives established in our recruiting strategy and documented in our Affirmative Action Plan, we expanded our recruiting efforts in 2022 to reach underrepresented candidates and plan to continue doing so on an ongoing basis.
We believe diversity is a competitive advantage and through initiatives established in our recruiting strategy and documented in our Affirmative Action Plan, we continued outreach in 2023 to underrepresented candidates for positions undergoing recruitment and will continue doing so on an ongoing basis.
We intend to continue to seek appropriate patent protection for the product candidates in our research and development programs and their uses by filing patent applications in the U.S. and other selected countries. We intend for these patent applications to cover, where possible, claims for composition of matter, medical uses, processes for preparation and formulations.
We intend to continue to seek appropriate patent protection for the product candidates in our research and development programs and their uses by filing patent applications in the U.S. and other selected countries.
Even if a product candidate receives regulatory approval, the approval may be significantly limited to specific disease states, patient populations and dosages, or have conditions placed on it that restrict the commercial applications, advertising, promotion or distribution of these products.
Even if a product candidate receives regulatory approval, the approval may be significantly limited to specific disease states, patient populations and dosages, or have conditions placed on it that restrict the commercial applications, advertising, promotion or distribution of these products. 11 Once issued, the FDA may withdraw product approval if ongoing regulatory standards are not met or if safety problems occur after the product reaches the market.
In clinical trials, surrogate endpoints are alternative measurements of the symptoms of a disease or condition that are substituted for measurements of observable clinical symptoms. In the U.S., failure to timely conduct Phase 4 clinical trials and follow-up could result in withdrawal of approval for products approved under accelerated approval regulations. Clinical Data Review and Approval in the U.S.
In the U.S., failure to timely conduct Phase 4 clinical trials and follow-up could result in withdrawal of approval for products approved under accelerated approval regulations. Clinical Data Review and Approval in the U.S.
In the fourth quarter of 2022, we validated large-scale manufacturing of our proprietary polymer and ZYNRELEF, which will allow for the manufacturing of millions of doses of ZYNRELEF annually at a significantly reduced cost of product sales.
In total, approximately 650 representatives will be added to Heron ’ s sales network over the year. In the fourth quarter of 2022, we validated large-scale manufacturing of our proprietary polymer and ZYNRELEF, which will allow for the manufacturing of ZYNRELEF annually at a significantly reduced cost of product sales.
Acute Care Product Portfolio ZYNRELEF ZYNRELEF was initially approved by the FDA in May 2021, and we commenced commercial sales in the U.S. in July 2021. In December 2021, the FDA approved our sNDA for ZYNRELEF, which significantly expanded the indication statement.
Acute Care Product Portfolio ZYNRELEF ZYNRELEF was initially approved by the FDA in May 2021, and we commenced commercial sales in the U.S. in July 2021. In December 2021 and January 2024, the FDA approved an expansion of ZYNRELEF's indication.
Customers Our Products are distributed in the U.S. through a limited number of specialty distributors and full line wholesalers (collectively, “Customers”) that resell to healthcare providers and hospitals, the end users of our Products. 7 Competition The biotechnology and pharmaceutical industries are extremely competitive. Our potential competitors are many in number and include major and mid-sized pharmaceutical and biotechnology companies.
In total, approximately 650 representatives will be added to Heron’s sales network over the year. Customers Our Products are distributed in the U.S. through a limited number of specialty distributors and full line wholesalers that resell to healthcare providers and hospitals, the end users of our Products. Competition The biotechnology and pharmaceutical industries are extremely competitive.
Currently, we outsource substantial clinical study work to clinical research organizations and drug manufacturing work to contract manufacturers. Drug development is a complex endeavor that requires deep expertise and experience across a broad array of disciplines.
Currently, we outsource drug manufacturing work to contract manufacturers in addition to a few other specialty tasks for which we do not have in-house expertise. Drug development is a complex endeavor that requires deep expertise and experience across a broad array of disciplines.
Heron also monitors pay practices and decisions to ensure pay equity for minority and female employees when compared to non-minority and male employees in same or similar positions and when considering objective factors related to position qualifications. 19 Heron is committed to upholding basic human rights and complies with all laws and practices that prohibit child labor, forced or indentured labor, human trafficking and unfair wages.
Heron also monitors pay practices and decisions to ensure pay equity for minority and female employees when compared to non-minority and male employees in same or similar positions and when considering objective factors related to position qualifications.
Manufacturing and Clinical Supplies We do not own or operate manufacturing facilities for the production of commercial or clinical quantities of any product, including our Products and product candidates.
No other 5-HT 3 receptor antagonist is specifically approved for the prevention of delayed CINV associated with a HEC regimen. Manufacturing and Clinical Supplies We do not own or operate manufacturing facilities for the production of commercial or clinical quantities of any product, including our Products and product candidates.
Additionally, the commercial team manages relationships with key accounts, such as managed care organizations, group purchasing organizations, hospital systems, oncology group networks, payors and government accounts. The sales force is supported by sales management, internal sales support, an internal marketing group and distribution support.
The sales and marketing infrastructure includes a targeted, acute care and oncology sales force to establish relationships with a focused group of surgeons, oncologists, nurses and pharmacists. Additionally, the commercial team manages relationships with key accounts, such as managed care organizations, group purchasing organizations, hospital systems, oncology group networks, payors and government accounts.
In Phase 3 clinical trials, the investigational product is administered to an expanded patient population to confirm proof of concept and efficacy claims, provide evidence of clinical efficacy and to further test for safety, generally at multiple clinical sites. 12 In Phase 4 clinical trials or other post-approval commitments, additional studies and patient follow-up are conducted to gain experience from the treatment of patients in the intended therapeutic indication.
Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning Phase 3 clinical trials. In Phase 3 clinical trials, the investigational product is administered to an expanded patient population to confirm proof of concept and efficacy claims, provide evidence of clinical efficacy and to further test for safety, generally at multiple clinical sites.
The FDA and other regulatory authorities may require a commitment to conduct post-approval Phase 4 studies as a condition of approval. Additional studies and follow-up may be conducted to document a clinical benefit where drugs are approved under accelerated approval regulations and based on surrogate endpoints.
Additional studies and follow-up may be conducted to document a clinical benefit where drugs are approved under accelerated approval regulations and based on surrogate endpoints. In clinical trials, surrogate endpoints are alternative measurements of the symptoms of a disease or condition that are substituted for 10 measurements of observable clinical symptoms.
We cannot give any assurances that we can compete effectively with these other biotechnology and pharmaceutical companies. Our Products compete in, and our product candidates, if approved, will compete in, highly competitive markets. Our potential competitors in these markets may succeed in developing products that could render our Products and our product candidates obsolete or noncompetitive.
In addition, they may have substantially more experience in effecting strategic combinations, in-licensing technology, developing drugs, obtaining regulatory approvals and manufacturing and marketing products. We cannot give any assurances that we can compete effectively with these other biotechnology and pharmaceutical companies. Our Products compete in, and our product candidates, if approved, will compete in, highly competitive markets.
In addition, we provided cell phone and home internet stipends to reimburse all employees for additional expenses related to working from home. Company Information Our principal executive offices are located at 4242 Campus Point Court, Suite 200, San Diego, California 92121, and our telephone number is (858) 251-4400. Our website address is www.herontx.com .
One was related to a COVID-19 infection and resulted in all of the missed workdays reported. We did not experience any work-related deaths. Company Information Our principal executive offices are located at 4242 Campus Point Court, Suite 200, San Diego, California 92121, and our telephone number is (858) 251-4400. Our website address is www.herontx.com .
Currently, CINVANTI is covered by 9 patents issued in the U.S. and by three patents issued (or registered) in foreign countries including Korea and Japan. U.S. patents covering CINVANTI have expiration dates ranging from September 2035 to February 2036; foreign patents covering CINVANTI have expiration dates ranging from September 2035 to February 2036.
U.S. patents covering CINVANTI have expiration dates ranging from September 2035 to February 2036; foreign patents covering CINVANTI have expiration dates ranging from September 2035 to February 2036.
In 2022, Heron reduced headcount, across all functions, in order to enable us to decrease costs and focus our resources more on commercial activities to support revenue growth.
In 2023, Heron reduced headcount, across all functions, in order to enable us to decrease costs and focus our resources on commercial activities to support revenue growth. Our 2023 voluntary turnover rate of 17% was slightly above industry average voluntary turnover due to employee concerns of job stability following our restructuring and extensive leadership changes.
Furthermore, even after regulatory approval of an NDA is obtained, under certain circumstances, such as later discovery of previously unknown problems, the FDA can withdraw approval or subject the drug to additional restrictions. 11 Preclinical Testing Preclinical studies include laboratory evaluation of the product and animal studies to assess the potential safety and effectiveness of the product.
The FDA may also place a hold on one or more clinical trials conducted under an IND for a drug if it deems warranted. Furthermore, even after regulatory approval of an NDA is obtained, under certain circumstances, such as later discovery of previously unknown problems, the FDA can withdraw approval or subject the drug to additional restrictions.
APONVIE is indicated for the prevention of postoperative nausea and vomiting (“PONV ” ) in adults. CMS granted pass-through payment status for APONVIE, effective April 1, 2023. APONVIE is the first and only intravenous (IV) formulation of a substance NK 1 receptor antagonist indicated for PONV.
CMS granted pass-through payment status for APONVIE, effective April 1, 2023. APONVIE is the first and only intravenous (“IV ” ) formulation of a substance P/neurokinin-1 (“NK 1 ”) receptor antagonist indicated for PONV. Delivered via single 30-second IV injection, APONVIE has demonstrated rapid achievement of therapeutic drug levels ideally suited for the surgical setting.
When administered, the polymers undergo controlled hydrolysis, resulting in a controlled, sustained release of the pharmacological agent encapsulated within the Biochronomer-based composition. Furthermore, our Biochronomer Technology is designed to permit more than one pharmacological agent to be incorporated, such that multimodal therapy can be delivered with a single administration.
Furthermore, our Biochronomer Technology is designed to permit more than one pharmacological agent to be incorporated, such that multimodal therapy can be delivered with a single administration. 5 Sales and Marketing Our U.S.-based sales and marketing team consists of 72 employees as of December 31, 2023.
We are pausing the HTX-034 program to focus on the efficacy supplement to further expand the ZYNRELEF indication to broadly include soft tissue and orthopedic surgical procedures. 5 Oncology Care Product Portfolio SUSTOL SUSTOL was approved by the FDA in August 2016, and we commenced commercial sales in the U.S. in October 2016.
Oncology Care Product Portfolio SUSTOL SUSTOL was approved by the FDA in August 2016, and we commenced commercial sales in the U.S. in October 2016.
Many of our potential competitors have significantly more financial, technical and other resources than we do, which may give them a competitive advantage. In addition, they may have substantially more experience in effecting strategic combinations, in-licensing technology, developing drugs, obtaining regulatory approvals and manufacturing and marketing products.
Our potential competitors are many in number and include major and mid-sized pharmaceutical and biotechnology companies. Many of our potential competitors have significantly more financial, technical and other resources than we do, which may give them a competitive advantage.
ZYNRELEF is a dual-acting local anesthetic that delivers a fixed-dose combination of the local anesthetic bupivacaine and a low dose of the nonsteroidal anti-inflammatory drug meloxicam.
ZYNRELEF is approved for small-to-medium open abdominal, lower extremity total joint arthroplasty, soft tissue and orthopedic surgical procedures including foot and ankle, and other procedures in which direct exposure to articular cartilage is avoided. ZYNRELEF is a dual-acting local anesthetic that delivers a fixed-dose combination of the local anesthetic bupivacaine and a low dose of the nonsteroidal anti-inflammatory drug meloxicam.
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ZYNRELEF is currently indicated for use in adults for soft tissue or periarticular instillation to produce postsurgical analgesia for up to 72 hours after foot and ankle, small-to-medium open abdominal, and lower extremity total joint arthroplasty surgical procedures.
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In January 2024, we entered into a five-year distributor partnership with CrossLink Life Sciences, LLC (“Crosslink ” ) to expand the sales network supporting ZYNRELEF. Crosslink will be the lead partner in the U.S. to expand ZYNRELEF promotion for orthopedic indications. The partnership will launch in several phases, initially at a regional level, followed by an expanded national rollout.
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In December 2022, we submitted an sNDA to the FDA requesting expansion of the indication statement for ZYNRELEF to broadly cover soft tissue and orthopedic surgical procedures.
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ZYNRELEF was granted a marketing authorization by the European Commission in September 2020 and by the United Kingdom ( “ U.K. ” ) Regulatory Authority in January 2021. In August 2023, we cancelled the U.K.
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This sNDA is based on safety and pharmacokinetic data from clinical trials in total shoulder arthroplasty, spinal surgery, abdominoplasty, and C-section showing comparable results to the previously completed pivotal safety and efficacy trials of ZYNRELEF. The FDA accepted the sNDA for filing and set a Prescription Drug User Fee Act goal date of October 23, 2023.
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ZYNRELEF marketing authorization and, in October 2023, we cancelled the ZYNRELEF marketing authorization in the European Union (“EU ” ) as we do not plan to commercially launch ZYNRELEF in the U.K., the EU, or the other countries in the European Economic Area. 3 Health Canada issued a Notice of Compliance to commercialize ZYNRELEF in March 2022.
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As of January 1, 2021, ZYNRELEF is approved in 31 European countries including the countries of the EU and EEA and the United Kingdom. ZYNRELEF is indicated in Europe for the treatment of somatic postoperative pain from small- to medium-sized surgical wounds in adults. 4 Health Canada issued a Notice of Compliance to commercialize ZYNRELEF in March 2022.
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In the second quarter of 2023, we withdrew our new drug submission, as we do not plan to commercially launch ZYNRELEF in Canada. APONVIE APONVIE was approved by the FDA in September 2022 and became commercially available in the U.S. in March 2023. APONVIE is indicated for the prevention of postoperative nausea and vomiting (“PONV ” ) in adults.
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ZYNRELEF is indicated in Canada for instillation into the surgical wound for postoperative analgesia after bunionectomy, open inguinal herniorrhaphy, and total knee arthroplasty surgical procedures. Based on prior agreements with the FDA, Heron already has clinical studies underway, which we plan to submit to Health Canada to expand the indication statement.
Added
When administered, the polymers undergo controlled hydrolysis, resulting in a controlled, sustained release of the pharmacological agent encapsulated within the Biochronomer-based composition.
Removed
As we build large-scale manufacturing capacity to meet the anticipated commercial demand in the U.S. and the rest of the world, we are developing a coordinated global marketing strategy. APONVIE (HTX-019) APONVIE was approved by the FDA in September 2022 and became commercially available in the U.S. in March 2023.
Added
The sales force is supported by sales management, internal sales support, an internal marketing group and distribution support. In January 2024, we entered into a distributor partnership with Crosslink to expand the sales network supporting ZYNRELEF. Crosslink will be the lead partner in the U.S. to expand ZYNRELEF promotion for orthopedic indications.
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Delivered via single 30-second IV injection, APONVIE has demonstrated rapid achievement of therapeutic drug levels ideally suited for the surgical setting. HTX-034 HTX-034, our next-generation product candidate for postoperative pain management, is an investigational non-opioid, fixed-dose combination, extended‑release solution of the local anesthetic bupivacaine, the nonsteroidal anti-inflammatory drug meloxicam and aprepitant that further potentiates the activity of bupivacaine.
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Our potential competitors in these markets may succeed in developing products that could render our Products and our product candidates obsolete or noncompetitive.
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HTX-034 is formulated in the same proprietary polymer as ZYNRELEF . By combining two different mechanisms that each enhance the activity of the local anesthetic bupivacaine, HTX-034 is designed to provide superior and prolonged analgesia. Local administration of HTX-034 in a validated preclinical postoperative pain model resulted in sustained analgesia for 7 days.
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We intend for these patent applications to cover, where possible, claims for composition of matter, medical uses, processes for preparation and formulations. 7 We have filed a number of U.S. patent applications on inventions relating to the composition of a variety of polymers, specific products, product groups and processing technology.
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In May 2020, we initiated a Phase 1b/2 clinical study in patients undergoing bunionectomy of HTX-034.
Added
Preclinical Testing Preclinical studies include laboratory evaluation of the product and animal studies to assess the potential safety and effectiveness of the product.
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In the Phase 1b portion of this Phase 1b/2 double-blind, randomized, active-controlled, dose-escalation study in 33 patients undergoing bunionectomy, the reduction in pain intensity observed was greater with the lowest dose of HTX-034 evaluated (containing 21.7 mg of bupivacaine plus meloxicam and aprepitant) than with the bupivacaine 50 mg solution through 96 hours.
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In Phase 4 clinical trials or other post-approval commitments, additional studies and patient follow-up are conducted to gain experience from the treatment of patients in the intended therapeutic indication. The FDA and other regulatory authorities may require a commitment to conduct post-approval Phase 4 studies as a condition of approval.
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In addition, 45.5% of HTX-034 patients remained opioid-free through Day 15 with median opioid consumption of 2.5 milligram morphine equivalents (same as one 5 mg oxycodone pill) through 72-hours, a 71% reduction compared to bupivacaine solution. We initiated the expanded Phase 2 portion of the study for HTX-034 in the first quarter of 2021.
Added
Heron is committed to upholding basic human rights and complies with all laws and practices that prohibit child labor, forced or indentured labor, human trafficking and unfair wages. 17 Heron’s Injury and Illness Prevention Plan documents procedures to reduce work-related injuries and occupational illnesses. In 2023, Heron had three Occupational Safety and Health Administration-reportable work-related injuries or illnesses.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

100 edited+22 added−26 removed362 unchanged
Biggest changeOur capital requirements and liquidity going forward will depend on numerous factors, including but not limited to: the costs associated with the U.S. commercial launches of ZYNRELEF, APONVIE and our product candidates, if approved, and making some or all of our Products and our product candidates commercially available outside of the U.S.; the degree of commercial success of our Products and our product candidates, if approved; the scope, rate of progress, results and costs of preclinical testing and clinical trials; the timing and cost to manufacture our Products and our product candidates; the number and characteristics of product development programs we pursue and the pace of each program, including the timing of clinical trials; the time, cost and outcome involved in seeking other regulatory approvals, including an expanded U.S. label for ZYNRELEF; scientific progress in our research and development programs; the magnitude and scope of our research and development programs; our ability to establish and maintain strategic collaborations or partnerships for research, development, clinical testing, manufacturing and marketing of our product candidates; the impact of competitive products; the cost and timing of establishing sales, marketing and distribution capabilities if we commercialize products independently; the cost of establishing clinical and commercial supplies of our product candidates; the impact of our restructuring plans; the extent of the impact of the ongoing COVID-19 pandemic on our business; and general market conditions.
Biggest changeOur capital requirements and liquidity going forward will depend on numerous factors, including but not limited to: the costs associated with the U.S. commercial launches of ZYNRELEF and APONVIE.; the degree of commercial success of our Products and our product candidates, if approved; the timing and cost to manufacture our Products and our product candidates; the number and characteristics of product development programs we pursue and the pace of each program, including the timing of clinical trials; the time, cost and outcome involved in seeking other regulatory approvals; scientific progress in our research and development programs; the magnitude and scope of our research and development programs; our ability to establish and maintain strategic collaborations or partnerships for research, development, clinical testing, manufacturing and marketing of our product candidates; the impact of competitive products; the cost and timing of establishing sales, marketing and distribution capabilities if we commercialize products independently; the cost of establishing clinical and commercial supplies of our product candidates; the impact of our restructuring plans; and general market conditions.
Even if we are successful, our business, results of operations, liquidity, financial condition, and trading price of our common stock could be adversely affected by any proxy contest or activist stockholder request or action involving us because: • responding to proxy contests and requests or actions by activist stockholders can be costly and time-consuming, disrupting operations and diverting the attention of management and employees, and can lead to uncertainty; 60 • perceived uncertainties as to the future direction of the Company and our business may result in the loss of potential acquisitions, collaborations or in-licensing opportunities, and may make it more difficult to attract and retain qualified personnel and business partners; • if individuals are elected or appointed to our Board of Directors with a specific agenda, it may adversely affect our ability to effectively implement our strategic plan in a timely manner and create additional value for our stockholders; and • if individuals are elected or appointed to our Board of Directors who do not agree with our strategic plan, the ability of our Board of Directors to function effectively could be adversely affected.
Even if we are successful, our business, results of operations, liquidity, financial condition, and trading price of our common stock could be adversely affected by any proxy contest or activist stockholder request or action involving us because: • responding to proxy contests and requests or actions by activist stockholders can be costly and time-consuming, disrupting operations and diverting the attention of management and employees, and can lead to uncertainty; • perceived uncertainties as to the future direction of the Company and our business may result in the loss of potential acquisitions, collaborations or in-licensing opportunities, and may make it more difficult to attract and retain qualified personnel and business partners; • if individuals are elected or appointed to our Board of Directors with a specific agenda, it may adversely affect our ability to effectively implement our strategic plan in a timely manner and create additional value for our stockholders; and • if individuals are elected or appointed to our Board of Directors who do not agree with our strategic plan, the ability of our Board of Directors to function effectively could be adversely affected.
Our ability to complete clinical trials in a timely manner, or at all, has in the past been, and could in the future be impacted by, among other factors: • delay or failure in reaching agreement with the FDA or comparable foreign regulatory authority on a trial design that we are able to execute; • delay or failure in obtaining authorization to commence a trial or inability to comply with conditions imposed by a regulatory authority regarding the scope or design of a clinical study; • delay or failure in reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • delay or failure in obtaining IRB approval or the approval of other reviewing entities, including comparable foreign entities, to conduct a clinical trial at each site; • withdrawal of clinical trial sites from our clinical trials as a result of changing standards of care or the ineligibility of a site to participate in our clinical trials; • delay or failure in obtaining clinical materials; • delay or failure in recruiting and enrolling suitable subjects to participate in a trial; • delay or failure of subjects completing a trial or returning for post-treatment follow-up; • clinical sites and investigators deviating from trial protocol, failing to conduct the trial in accordance with regulatory requirements, or dropping out of a trial; • inability to identify and maintain a sufficient number of trial sites, many of which may already be engaged in other clinical trial programs, including some that may be for the same indication; • failure of our third-party clinical trial managers to satisfy their contractual duties or meet expected deadlines; 45 • delay or failure in adding new clinical trial sites; • ambiguous or negative interim results or results that are inconsistent with earlier results; • feedback from the FDA, the IRB, data safety monitoring boards or comparable foreign entities, or results from earlier stage or concurrent preclinical and clinical studies that might require modification to the protocol; • decisions by the FDA, the IRB, comparable foreign regulatory entities, or recommendations by a data safety monitoring board or comparable foreign regulatory entity to suspend or terminate clinical trials at any time for safety issues or for any other reason; • unacceptable risk-benefit profiles or unforeseen safety issues or adverse side effects; • failure to demonstrate a benefit from using a drug; • manufacturing issues, including problems with manufacturing or obtaining from third parties sufficient quantities of a product candidate for use in clinical trials; and • changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
Our ability to complete clinical trials in a timely manner, or at all, has in the past been, and could in the future be impacted by, among other factors: • delay or failure in reaching agreement with the FDA or comparable foreign regulatory authority on a trial design that we are able to execute; • delay or failure in obtaining authorization to commence a trial or inability to comply with conditions imposed by a regulatory authority regarding the scope or design of a clinical study; • delay or failure in reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • delay or failure in obtaining IRB approval or the approval of other reviewing entities, including comparable foreign entities, to conduct a clinical trial at each site; • withdrawal of clinical trial sites from our clinical trials as a result of changing standards of care or the ineligibility of a site to participate in our clinical trials; • delay or failure in obtaining clinical materials; 41 • delay or failure in recruiting and enrolling suitable subjects to participate in a trial; • delay or failure of subjects completing a trial or returning for post-treatment follow-up; • clinical sites and investigators deviating from trial protocol, failing to conduct the trial in accordance with regulatory requirements, or dropping out of a trial; • inability to identify and maintain a sufficient number of trial sites, many of which may already be engaged in other clinical trial programs, including some that may be for the same indication; • failure of our third-party clinical trial managers to satisfy their contractual duties or meet expected deadlines; • delay or failure in adding new clinical trial sites; • ambiguous or negative interim results or results that are inconsistent with earlier results; • feedback from the FDA, the IRB, data safety monitoring boards or comparable foreign entities, or results from earlier stage or concurrent preclinical and clinical studies that might require modification to the protocol; • decisions by the FDA, the IRB, comparable foreign regulatory entities, or recommendations by a data safety monitoring board or comparable foreign regulatory entity to suspend or terminate clinical trials at any time for safety issues or for any other reason; • unacceptable risk-benefit profiles or unforeseen safety issues or adverse side effects; • failure to demonstrate a benefit from using a drug; • manufacturing issues, including problems with manufacturing or obtaining from third parties sufficient quantities of a product candidate for use in clinical trials; and • changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
Future acquisitions, licenses or investments could subject us to a number of risks, including, but not limited to: • our inability to appropriately evaluate and take into consideration the potential uncertainties associated with the other party to such a transaction, including, but not limited to, the prospects of that party and their existing products or product candidates and regulatory approvals; • difficulties associated with realizing the perceived potential for commercial success with respect to any acquired or licensed technology, product or business; 35 • our ability to effectively integrate any new technology, product and/or business including personnel, intellectual property or business relationships into our Company; • our inability to generate revenues from acquired or licensed technology and/or products sufficient to meet our objectives in undertaking the acquisition or license or even to offset the associated acquisition and maintenance costs and/or assumption of liabilities; and • the distraction of our management from our existing product development programs and initiatives in pursuing an acquisition or license.
Future acquisitions, licenses or investments could subject us to a number of risks, including, but not limited to: • our inability to appropriately evaluate and take into consideration the potential uncertainties associated with the other party to such a transaction, including, but not limited to, the prospects of that party and their existing products or product candidates and regulatory approvals; • difficulties associated with realizing the perceived potential for commercial success with respect to any acquired or licensed technology, product or business; • our ability to effectively integrate any new technology, product and/or business including personnel, intellectual property or business relationships into our Company; • our inability to generate revenues from acquired or licensed technology and/or products sufficient to meet our objectives in undertaking the acquisition or license or even to offset the associated acquisition and maintenance costs and/or assumption of liabilities; and • the distraction of our management from our existing product development programs and initiatives in pursuing an acquisition or license.
Factors that could impede our ability to generate commercially viable products through the conduct of clinical trials include: • insufficient funds to conduct clinical trials; • the inability to find partners, if necessary, for support, including research, development, manufacturing or clinical needs; • the failure of tests or studies necessary to submit an NDA, such as clinical studies, bioequivalence studies in support of a 505(b)(2) regulatory filing, or stability studies; • the failure of clinical trials to demonstrate the safety and efficacy of our product candidates to the extent necessary to obtain regulatory approvals; • the failure by us or third-party investigators, CROs, or other third parties involved in the research to adhere to regulatory requirements applicable to the conduct of clinical trials; • the failure of preclinical testing and early clinical trials to predict results of later clinical trials; • any delay in completion of clinical trials caused by a regional, national or global disturbance where we or our collaborative partners are enrolling patients in clinical studies, such as a pandemic (including COVID-19), terrorist activities, cyberattack, or war, political unrest, a natural or man-made disaster or any other reason or event, resulting in increased costs; 44 • any delay in obtaining advice from the FDA or similar regulatory authorities; and • the inability to obtain regulatory approval of our product candidates following completion of clinical trials, or delays in obtaining such approvals.
Factors that could impede our ability to generate commercially viable products through the conduct of clinical trials include: • insufficient funds to conduct clinical trials; • the inability to find partners, if necessary, for support, including research, development, manufacturing or clinical needs; • the failure of tests or studies necessary to submit an NDA, such as clinical studies, bioequivalence studies in support of a 505(b)(2) regulatory filing, or stability studies; • the failure of clinical trials to demonstrate the safety and efficacy of our product candidates to the extent necessary to obtain regulatory approvals; • the failure by us or third-party investigators, CROs, or other third parties involved in the research to adhere to regulatory requirements applicable to the conduct of clinical trials; 40 • the failure of preclinical testing and early clinical trials to predict results of later clinical trials; • any delay in completion of clinical trials caused by a regional, national or global disturbance where we or our collaborative partners are enrolling patients in clinical studies, such as a pandemic (including COVID-19), terrorist activities, cyberattack, or war, political unrest, a natural or man-made disaster or any other reason or event, resulting in increased costs; • any delay in obtaining advice from the FDA or similar regulatory authorities; and • the inability to obtain regulatory approval of our product candidates following completion of clinical trials, or delays in obtaining such approvals.
If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines or if the quality or accuracy of the preclinical results or clinical data they obtain is 28 compromised due to the failure to adhere to test requirements, our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our Products and product candidates.
If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines or if the quality or accuracy of the preclinical results or clinical data they obtain is compromised due to the failure to adhere to test requirements, our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our Products and product candidates.
As previously reported, in February 2023, we entered into a Cooperation Agreement, dated February 21, 2023, with two of our stockholders, Rubric Capital Management LP and certain of its affiliates and Velan Capital Investment Management LP and certain of its affiliates (collectively, the “Investor Group”), regarding certain changes to the composition of our Board of Directors, including the appointment of three new independent directors, Adam Morgan, Craig Collard, and Kevin Kotler, to our Board of Directors, among other items.
As previously reported, in February 2023, we entered into a Cooperation Agreement, dated February 21, 2023, with two of our stockholders, Rubric Capital Management LP and certain of its affiliates and Velan Capital Investment Management LP and certain of its affiliates (collectively, the “Investor Group”), regarding certain changes to the 55 composition of our Board of Directors, including the appointment of three new independent directors, Adam Morgan, Craig Collard, and Kevin Kotler, to our Board of Directors, among other items.
If adequate funds are not available, we may default on our indebtedness, be required to further delay, reduce the scope of, or eliminate one or more of our product development programs and reduce personnel-related and other costs, which would have a negative impact on our business. Provisions contained in our debt instruments limit our ability to incur additional indebtedness.
If adequate funds are not available, we may default on our indebtedness, be required to further delay, reduce the scope of, or eliminate one or more of our product development programs and reduce personnel-related and other costs, which would have a negative impact on our business. 37 Provisions contained in our debt instruments limit our ability to incur additional indebtedness.
Additional discussion of the risks summarized in this risk factor summary, as well as other risks that we face, can be found below. • We are substantially dependent on the commercial success of our Products and our U.S. product candidates, and if these Products and product candidates do not attain market acceptance by healthcare professionals and patients, our business and results of operations will suffer. • If we are unable to develop and maintain sales, marketing and distribution capabilities or enter into agreements with third parties to sell and market our Products or our product candidates, our sales may be adversely affected. • If we cannot establish satisfactory pricing of our Products or product candidates, if approved, that is also acceptable to the U.S. government, insurance companies, managed care organizations and other payors, or arrange for favorable reimbursement policies, our product sales may be adversely affected and our future revenue might suffer. • If we fail to comply with our reporting and payment obligations under U.S. governmental pricing and contracting programs, we could be subject to additional reimbursement requirements, penalties and fines, which could have a negative impact on our business, financial condition, and results of operations. • Because the results of preclinical studies and clinical trials are not necessarily predictive of future results, we can provide no assurances that our Products or product candidates will have favorable results in future studies or receive regulatory approval or expansion of approved indications. • Interim, topline or preliminary data from our clinical trials that we announce or publish may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data. • Although the FDA might grant Fast Track, Breakthrough Therapy, Priority Review or similar designations to our Products and product candidates, there can be no assurance that any of our Products or product candidates that receive similar designations in the U.S. or in any other regulatory jurisdictions will receive regulatory approval any sooner than other Products or product candidates that do not have such designations, or at all. • Our product platforms or product development efforts may not produce safe, efficacious or commercially viable products, and, if we are unable to develop new products, our business may suffer. 21 • We rely on third parties to conduct our preclinical testing and conduct our clinical trials, and their failure to perform their obligations in a timely and competent manner may delay development and commercialization of our Products and product candidates and our business could be substantially harmed. • If our suppliers or contract manufacturers are unable to manufacture in commercially viable quantities, we could face delays in our ability to commercialize our Products and product candidates, our costs will increase and sales of our Product and product candidates, if approved, may be severely hindered. • The evolving effects of the COVID-19 pandemic and associated global economic instability could have further adverse effects on our business, including our commercialization efforts, supply chain, regulatory activities, clinical development activities and other business operations. • We have a history of losses, we expect to generate losses in the near future, and we may never achieve or maintain profitability. • Additional capital may be needed in the future to enable us to implement our business plan, and we may be unable to raise capital, which would force us to limit or cease our operations and related product development programs. • Drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results. • Delays in, or suspensions and terminations of, clinical testing could increase our costs and delay our ability to obtain regulatory approval for, and commercialize, our product candidates. • We may not obtain regulatory approval for our product candidates in development.
Additional discussion of the risks summarized in this risk factor summary, as well as other risks that we face, can be found below. • We are substantially dependent on the commercial success of our Products and our U.S. product candidates, and if these Products and product candidates do not attain market acceptance by healthcare professionals and patients, our business and results of operations will suffer. • If we are unable to develop and maintain sales, marketing and distribution capabilities or enter into agreements with third parties to sell and market our Products or our product candidates, our sales may be adversely affected. • If we cannot establish satisfactory pricing of our Products or product candidates, if approved, that is also acceptable to the U.S. government, insurance companies, managed care organizations and other payors, or arrange for favorable reimbursement policies, our product sales may be adversely affected and our future revenue might suffer. • If we fail to comply with our reporting and payment obligations under U.S. governmental pricing and contracting programs, we could be subject to additional reimbursement requirements, penalties and fines, which could have a negative impact on our business, financial condition, and results of operations. • Because the results of preclinical studies and clinical trials are not necessarily predictive of future results, we can provide no assurances that our Products or product candidates will have favorable results in future studies or receive regulatory approval or expansion of approved indications. • Interim, topline or preliminary data from our clinical trials that we announce or publish may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data. • Although the FDA might grant Fast Track, Breakthrough Therapy, Priority Review or similar designations to our Products and product candidates, there can be no assurance that any of our Products or product candidates that receive similar designations in the U.S. or in any other regulatory jurisdictions will receive regulatory approval any sooner than other Products or product candidates that do not have such designations, or at all. • Our product platforms or product development efforts may not produce safe, efficacious or commercially viable products, and, if we are unable to develop new products, our business may suffer. 19 • We rely on third parties to conduct our preclinical testing and conduct our clinical trials, and their failure to perform their obligations in a timely and competent manner may delay development and commercialization of our Products and product candidates and our business could be substantially harmed. • If our suppliers or contract manufacturers are unable to manufacture in commercially viable quantities, we could face delays in our ability to commercialize our Products and product candidates, our costs will increase and sales of our Product and product candidates, if approved, may be severely hindered. • The global economic instability could have further adverse effects on our business, including our commercialization efforts, supply chain, regulatory activities, clinical development activities and other business operations. • We have a history of losses, we expect to generate losses in the near future, and we may never achieve or maintain profitability. • Additional capital may be needed in the future to enable us to implement our business plan, and we may be unable to raise capital, which would force us to limit or cease our operations and related product development programs. • Drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results. • Delays in, or suspensions and terminations of, clinical testing could increase our costs and delay our ability to obtain regulatory approval for, and commercialize, our product candidates. • We may not obtain regulatory approval for our product candidates in development.
The FDA or any foreign regulatory authorities may also withdraw or revoke Fast Track, Breakthrough Therapy, Priority Review or similar designations, or elect to treat designated candidates in a manner different from what was originally indicated, if they determine that any of our Products or product candidates that receive such designations no longer meet the 27 relevant criteria.
The FDA or any foreign regulatory authorities may also withdraw or revoke Fast Track, Breakthrough Therapy, Priority Review or similar designations, or elect to treat designated candidates in a manner different from what was originally indicated, if they determine that any of our Products or product candidates that receive such designations no longer meet the relevant criteria.
In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position. Our use of hazardous materials could subject us to liabilities, fines and sanctions.
In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position. 51 Our use of hazardous materials could subject us to liabilities, fines and sanctions.
Problems with manufacturing processes could result in product defects or manufacturing failures, which could require us to delay shipment of products or recall products previously shipped, or could impair our ability to expand into new markets or supply products in existing markets. We may not be able to resolve any such problems in a timely manner, if at all.
Problems with manufacturing processes could result in product defects or manufacturing failures, which could require us to delay shipment of products or recall products previously shipped, or could impair our 27 ability to expand into new markets or supply products in existing markets. We may not be able to resolve any such problems in a timely manner, if at all.
If we decide to commercialize our Products or product candidates outside of the U.S. without the assistance of third parties with international expertise, it may take longer than expected to obtain the approvals and take the steps needed to commercialize them. As a result, we may decide to delay or abandon development efforts in certain markets.
If we decide to commercialize our Products or product candidates outside of the U.S. without the assistance of third parties with international expertise, it may take longer than expected to obtain the approvals and take the steps needed to commercialize them. As a result, we may decide to delay or abandon development efforts in certain 22 markets.
If we delay or abandon our efforts to develop any of our Products for expanded indications, or product candidates for approval, we may not be able to generate sufficient revenues to 26 become profitable, and our reputation in the industry and in the investment community would likely be significantly damaged, each of which would cause our stock price to decrease significantly.
If we delay or abandon our efforts to develop any of our Products for expanded indications, or product candidates for approval, we may not be able to generate sufficient revenues to become profitable, and our reputation in the industry and in the investment community would likely be significantly damaged, each of which would cause our stock price to decrease significantly.
We continually evaluate our supply chains to identify potential risks and needs for additional 30 manufacturers and other suppliers for the manufacturing of our Products and product candidates. Establishing additional or replacement suppliers for certain raw materials in our proprietary polymers, if required, may not be accomplished quickly, or at all, and may involve significant expense.
We continually evaluate our supply chains to identify potential risks and needs for additional manufacturers and other suppliers for the manufacturing of our Products and product candidates. Establishing additional or replacement suppliers for certain raw materials in our proprietary polymers, if required, may not be accomplished quickly, or at all, and may involve significant expense.
These and other risks related to the entry of generic product competing with CINVANTI are difficult to assess in terms of timing and impact on our operations and prospects. Additionally, while we had expected that generic versions of ALOXI (palonosetron) would launch in September 2018 following the expiration of the ALOXI patents, a U.S.
These and other risks related to the entry of generic product competing with CINVANTI are difficult to assess in terms of timing and impact on our operations and prospects. 31 Additionally, while we had expected that generic versions of ALOXI (palonosetron) would launch in September 2018 following the expiration of the ALOXI patents, a U.S.
If such regulatory authorities or state, federal or foreign courts were to determine that our services providers are employees and not independent contractors, we would, among other things, be required to withhold income taxes, to withhold and pay Social Security, Medicare and similar taxes, to pay unemployment and other related payroll taxes, and to provide certain employee benefits.
If such regulatory authorities or state, federal or foreign courts were to determine that our services providers are employees 38 and not independent contractors, we would, among other things, be required to withhold income taxes, to withhold and pay Social Security, Medicare and similar taxes, to pay unemployment and other related payroll taxes, and to provide certain employee benefits.
If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain expanded indications for our Products, or to obtain approvals for and commercialize our product candidates, our business, operating results, prospects or financial condition may be harmed.
If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain expanded indications for our 25 Products, or to obtain approvals for and commercialize our product candidates, our business, operating results, prospects or financial condition may be harmed.
Price increases or changes to our marketing strategies may also negatively affect our reputation and our ability to secure and maintain reimbursement coverage for our approved Products, which could result in decreased demand and cause our business and results of operations to suffer. 34 Guidelines and recommendations published by various organizations could reduce the demand for or use of our Products.
Price increases or changes to our marketing strategies may also negatively affect our reputation and our ability to secure and maintain reimbursement coverage for our approved Products, which could result in decreased demand and cause our business and results of operations to suffer. Guidelines and recommendations published by various organizations could reduce the demand for or use of our Products.
Furthermore, we rely on CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials and while we have agreements governing their activities, we have limited influence over CROs’ actual performance. Our failure to successfully establish, recruit for, and oversee our clinical trials could delay our product development efforts and negatively impact our business.
We rely on CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials and while we have agreements governing their activities, we have limited influence over CROs’ actual performance. Our failure to successfully establish, recruit for, and oversee our clinical trials could delay our product development efforts and negatively impact our business.
Some European regulators have prevented companies from transferring personal data out of Europe for allegedly violating the GDPR’s cross-border data transfer limitations. In addition to data privacy and security laws, we may be contractually subject to industry standards adopted by industry groups and may become subject to such obligations in the future.
Some European regulators have prevented companies from transferring personal data out of Europe for allegedly violating the GDPR’s cross-border data transfer limitations. 49 In addition to data privacy and security laws, we may be contractually subject to industry standards adopted by industry groups and may become subject to such obligations in the future.
As more products are commercialized using our proprietary product platforms, or as any product achieves greater commercial success, our patents become more likely to be subject to challenge by potential competitors. 57 We also rely on trade secrets, technical know-how and continuing technological innovation to develop and maintain our competitive position.
As more products are commercialized using our proprietary product platforms, or as any product achieves greater commercial success, our patents become more likely to be subject to challenge by potential competitors. We also rely on trade secrets, technical know-how and continuing technological innovation to develop and maintain our competitive position.
In the U.S., the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by federal and state legislative initiatives, including those designed to limit the pricing, coverage, and reimbursement of pharmaceutical and biopharmaceutical products, especially under government-funded healthcare programs, and increased governmental control of drug pricing.
In the U.S., the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by federal and state legislative initiatives, including those designed to limit the pricing, coverage, and reimbursement of pharmaceutical and biopharmaceutical 47 products, especially under government-funded healthcare programs, and increased governmental control of drug pricing.
In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, processing) personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, sensitive third-party data, business plans, transactions and financial information (collectively, sensitive data).
In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, processing) personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, sensitive 48 third-party data, business plans, transactions and financial information (collectively, sensitive data).
If we experience excessive unanticipated inefficiencies or incremental costs in connection with restructuring activities, such as unanticipated inefficiencies caused by our reduced headcount, we may be unable to meaningfully realize cost savings or capitalize on future opportunities and we may incur expenses in excess of what we anticipate.
If we experience excessive unanticipated inefficiencies or incremental costs in connection with restructuring activities, such as unanticipated inefficiencies caused by our reduced headcount, we may be unable to meaningfully realize cost savings or capitalize on future opportunities and we may incur expenses 32 in excess of what we anticipate.
Our reliance on 29 third-party suppliers and contract manufacturers also subjects our business to risks associated with geographic areas in which those parties reside, which could include natural or man-made disasters, including epidemics, pandemics, acts of war or terrorism, or resource shortages.
Our reliance on third-party suppliers and contract manufacturers also subjects our business to risks associated with geographic areas in which those parties reside, which could include natural or man-made disasters, including epidemics, pandemics, acts of war or terrorism, or resource shortages.
Therefore, there is risk that third parties may make claims of infringement against our Products, our product candidates or our technologies. We may not be able to design around the patented technologies or inventions of others, and we may not be able to obtain licenses to use patented technologies on acceptable terms, or at all.
Therefore, there is risk that third parties may make claims of infringement against our Products, our product 53 candidates or our technologies. We may not be able to design around the patented technologies or inventions of others, and we may not be able to obtain licenses to use patented technologies on acceptable terms, or at all.
Restrictions under applicable federal, state and foreign healthcare laws and regulations include, but are not limited to, the following: • the Federal health care programs’ Anti-Kickback Law, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, lease, order or recommendation of, any good or service for which payment may be made under federal health care programs such as the Medicare and Medicaid programs; 49 • federal false claims laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other federal health care programs that are false or fraudulent.
Restrictions under applicable federal, state and foreign healthcare laws and regulations include, but are not limited to, the following: • the Federal health care programs’ Anti-Kickback Law, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, lease, order or recommendation of, any good or service for which payment may be made under federal health care programs such as the Medicare and Medicaid programs; 45 • federal false claims laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other federal health care programs that are false or fraudulent.
These consequences, could, in turn, have a negative impact on our business, financial condition and results of operations and could cause the market value of our common shares to decline. 51 Health care reform could increase our expenses and adversely affect the commercial success of our Products and our product candidates.
These consequences, could, in turn, have a negative impact on our business, financial condition and results of operations and could cause the market value of our common shares to decline. Health care reform could increase our expenses and adversely affect the commercial success of our Products and our product candidates.
If our competitors are able to meet demand with their products before we are able to produce and sell inventory, our ability to gain market share will be adversely impacted, which could materially and adversely 31 affect our business, financial condition, cash flows and results of operations.
If our competitors are able to meet demand with their products before we are able to produce and sell inventory, our ability to gain market share will be adversely impacted, which could materially and adversely affect our business, financial condition, cash flows and results of operations.
Our existing patents may not cover future products, additional patents may not be issued and current patents, or patents issued in the future, may not provide meaningful protection or prove to be of commercial benefit. The patent positions of pharmaceutical companies, including ours, are uncertain and involve complex legal and factual questions.
Our existing patents may not cover future products, additional patents may not be issued and current patents, or patents issued in the future, may not provide meaningful protection or prove to be of commercial benefit. 52 The patent positions of pharmaceutical companies, including ours, are uncertain and involve complex legal and factual questions.
Failure to comply with our reporting and payment obligations under U.S. governmental pricing and contracting programs may result in additional payments, penalties and fines due to government agencies, which could negatively impact our business, financial condition and results of operations.
Failure to comply with our reporting and payment obligations under U.S. 24 governmental pricing and contracting programs may result in additional payments, penalties and fines due to government agencies, which could negatively impact our business, financial condition and results of operations.
Failure to comply with applicable regulatory requirements can, among other things, result in warning letters, imposition of civil penalties or other monetary payments, delay in approving or refusal to approve a product candidate, suspension or withdrawal of regulatory approval, product recall or seizure, operating restrictions, interruption of clinical trials or manufacturing, injunctions and criminal prosecution. 47 In addition, the marketing and manufacturing of products are subject to continuing FDA review, and later discovery of previously unknown problems with a product, its manufacture or its marketing may result in the FDA requiring further clinical research or restrictions on the product or the manufacturer, including withdrawal of the product from the market.
Failure to comply with applicable regulatory requirements can, among other things, result in warning letters, imposition of civil penalties or other monetary payments, delay in approving or refusal to approve a product candidate, suspension or withdrawal of regulatory approval, product recall or seizure, operating restrictions, interruption of clinical trials or manufacturing, injunctions and criminal prosecution. 43 In addition, the marketing and manufacturing of products are subject to continuing FDA review, and later discovery of previously unknown problems with a product, its manufacture or its marketing may result in the FDA requiring further clinical research or restrictions on the product or the manufacturer, including withdrawal of the product from the market.
Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. Risks Related to Our Common Stock The price of our common stock has been and may continue to be volatile.
Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. 54 Risks Related to Our Common Stock The price of our common stock has been and may continue to be volatile.
If the CROs fail to commit resources to our Products or product candidates, our clinical programs could be delayed, terminated or unsuccessful, and we may not be able to obtain initial or expanded regulatory approvals for, or successfully commercialize, them.
If the CROs fail to commit resources to our Products or product candidates, our clinical programs could be delayed, terminated or unsuccessful, and we may not be able to obtain 26 initial or expanded regulatory approvals for, or successfully commercialize, them.
As a result, we may not be able to raise funds through the 41 issuance of debt or selling of royalty interests in the future, which could impair our ability to finance our business obligations or pursue business expansion initiatives.
As a result, we may not be able to raise funds through the issuance of debt or selling of royalty interests in the future, which could impair our ability to finance our business obligations or pursue business expansion initiatives.
For example, a natural or man-made disaster, including an epidemic, pandemic, cyberattack, or act of war or terrorism, and the resulting damage could negatively impact enrollment and participation in our clinical studies, divert attention and resources at our research sites, cause unanticipated delays in the collection and receipt of data from our clinical studies, cause unanticipated delays in communications with, and any required approvals from, the FDA, European Medicines Agency, United Kingdom’s Medicines and Healthcare Products Regulatory Agency, Health Canada, and other regulatory authorities, and cause unanticipated delays in the manufacturing and distribution of our Products and our product candidates.
For example, a natural or man-made disaster, including an epidemic, pandemic, or other disease outbreak, cyberattack, or act of war or terrorism, and the resulting damage could negatively impact enrollment and participation in our clinical studies, divert attention and resources at our research sites, cause unanticipated delays in the collection and receipt of data from our clinical studies, cause unanticipated delays in communications with, and any required approvals from, the FDA, European Medicines Agency, United Kingdom’s Medicines and Healthcare Products Regulatory Agency, Health Canada, and other regulatory authorities, and cause unanticipated delays in the manufacturing and distribution of our Products and our product candidates.
Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
Additionally, future or past business 50 transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
If ZYNRELEF or our other Products or product candidates are marketed internationally by potential third-party partners, we and such third-party partners could be subject to additional risks related to operating in foreign countries, including: • general economic conditions and monetary and fiscal policy, including economic weakness or inflation; • financial risks, such as longer payment cycles, difficulty in collecting from international customers, pricing and insurance regimes, unexpected changes in tariffs, trade barriers, and exposure to foreign 38 currency exchange rate fluctuations and controls, which could result in increased operating expenses and reduced revenue, and the effect of local and regional financial crises; • conflicting and changing laws and regulations such as export and import restrictions; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • difficulties staffing and managing foreign operations; • workforce uncertainty in countries where labor unrest is more common than in the U.S.; • potential liability under the FCPA or comparable foreign regulations; • challenges enforcing contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the U.S.; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad, if applicable; • logistical challenges resulting from distributing our Products and product candidates to foreign countries; and • economic or business interruptions resulting from civil unrest or social, political, economic, or diplomatic developments, including geo-political actions, such as armed conflict or terrorism.
If our Products or product candidates are marketed internationally by us or a potential third-party partners, we and such third-party partners could be subject to additional risks related to operating in foreign countries, including: • general economic conditions and monetary and fiscal policy, including economic weakness or inflation; • financial risks, such as longer payment cycles, difficulty in collecting from international customers, pricing and insurance regimes, unexpected changes in tariffs, trade barriers, and exposure to foreign currency exchange rate fluctuations and controls, which could result in increased operating expenses and reduced revenue, and the effect of local and regional financial crises; • conflicting and changing laws and regulations such as export and import restrictions; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • difficulties staffing and managing foreign operations; • workforce uncertainty in countries where labor unrest is more common than in the U.S.; • potential liability under the FCPA or comparable foreign regulations; • challenges enforcing contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the U.S.; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad, if applicable; • logistical challenges resulting from distributing our Products and product candidates to foreign countries; and • economic or business interruptions resulting from civil unrest or social, political, economic, or diplomatic developments, including geo-political actions, such as armed conflict or terrorism.
Any of these impacts, or any other impacts resulting from the factors described 43 above or other related or similar factors not described above, could have material adverse impacts on our liquidity and our current and/or projected business operations and financial condition and results of operations.
Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse impacts on our liquidity and our current and/or projected business operations and financial condition and results of operations.
If we and our contract manufacturers fail to comply with applicable regulatory requirements, a regulatory agency may: • issue warning letters; • impose civil or criminal penalties; • suspend or withdraw our regulatory approval; • suspend or terminate any of our ongoing clinical trials; • refuse to approve pending applications or supplements to approved applications filed by us; 48 • impose restrictions on our operations; • close the facilities of our contract manufacturers; or • seize or detain products or require a product recall.
If we and our contract manufacturers fail to comply with applicable regulatory requirements, a regulatory agency may: • issue warning letters; • impose civil or criminal penalties; • suspend or withdraw our regulatory approval; • suspend or terminate any of our ongoing clinical trials; • refuse to approve pending applications or supplements to approved applications filed by us; 44 • impose restrictions on our operations; • close the facilities of our contract manufacturers; or • seize or detain products or require a product recall.
Any delays in completing our clinical trials will increase our costs, slow our product candidates’ development and approval process and jeopardize our ability to commence product sales and generate revenues. Any of these occurrences may harm our business, financial condition and prospects significantly. 46 We may not obtain regulatory approval for our product candidates in development.
Any delays in completing our clinical trials will increase our costs, slow our product candidates’ development and approval process and jeopardize our ability to commence product sales and generate revenues. Any of these occurrences may harm our business, financial condition and prospects significantly. 42 We may not obtain regulatory approval for our product candidates in development.
These factors that may affect revenue include: • the scope of our approved Product labels, including any expanded indication statement of ZYNRELEF in the U.S.; • the perception of physicians and other members of the health care community of the safety and efficacy and cost-competitiveness relative to that of competing products; • our ability to maintain successful sales, marketing and educational programs for certain physicians and other health care providers; • our ability to raise patient and physician awareness of the risks associated with using opioids for postoperative pain management and encourage physicians to consider utilizing a non-opioid alternative; • our ability to raise patient and physician awareness of CINV associated with AC combination chemotherapy regimens, MEC or HEC and encourage physicians to look for incidence of CINV among patients; • our ability to raise patient and physician awareness of PONV associated with surgical procedures and encourage physicians to look for incidence of PONV among patients; • the cost-effectiveness of our Products and our product candidates; • the timing and scope of acceptance of our Products by institutional formulary committees and the amount of time between such acceptance and the first use of our Products within the applicable setting of care; • patient and physician satisfaction with our Products and our product candidates; • the size of the potential market for our Products and our product candidates; • our ability to obtain adequate reimbursement from government and third-party payors; • unfavorable publicity concerning our Products, our product candidates or similar products; • the introduction, availability and acceptance of competing treatments, including competing generic products; • adverse event information relating to our Products, our product candidates or similar classes of drugs; • product liability litigation alleging injuries relating to our Products, our product candidates or similar classes of drugs; • our ability to maintain and defend our patents and trade secrets for our Products, our product candidates and our Biochronomer Technology; • our ability to continue to have our Products manufactured at commercial production levels successfully and on a timely basis; • our ability to scale up manufacturing of our Products to meet commercial requirements; 23 • the availability of raw materials necessary to manufacture our Products and our product candidates; • our ability to access third parties to manufacture and distribute our Products and our product candidates on acceptable terms or at all and those third parties’ ability and/or willingness to fully perform their obligations; • regulatory developments related to the manufacture or continued use of our Products and our product candidates; • conduct of post-approval study requirements and the results thereof; • the extent and effectiveness of sales and marketing and distribution support for our Products and our product candidates; • the extent of the evolving effects of the COVID-19 pandemic on our business; • our competitors’ activities, including decisions as to the timing of competing product launches, generic entrants, pricing and discounting; and • any other material adverse developments with respect to the commercialization of our Products and our product candidates.
The factors that may affect revenue include: • the scope of our approved Product labels, including our recently expanded indication statement of ZYNRELEF in the U.S.; • the perception of physicians and other members of the health care community of the safety and efficacy and cost-competitiveness relative to that of competing products; • our ability to maintain successful sales, marketing and educational programs for certain physicians and other health care providers; • our ability to raise patient and physician awareness of the risks associated with using opioids for postoperative pain management and encourage physicians to consider utilizing a non-opioid alternative; • our ability to raise patient and physician awareness of CINV associated with AC combination chemotherapy regimens, MEC or HEC and encourage physicians to look for incidence of CINV among patients; • our ability to raise patient and physician awareness of PONV associated with surgical procedures and encourage physicians to look for incidence of PONV among patients; • the cost-effectiveness of our Products and our product candidates; • the timing and scope of acceptance of our Products by institutional formulary committees and the amount of time between such acceptance and the first use of our Products within the applicable setting of care; • patient and physician satisfaction with our Products and our product candidates; • the size of the potential market for our Products and our product candidates; • our ability to obtain adequate reimbursement from government and third-party payors; • unfavorable publicity concerning our Products, our product candidates or similar products; • the introduction, availability and acceptance of competing treatments, including competing generic products; • adverse event information relating to our Products, our product candidates or similar classes of drugs; • product liability litigation alleging injuries relating to our Products, our product candidates or similar classes of drugs; 21 • our ability to maintain and defend our patents and trade secrets for our Products, our product candidates and our Biochronomer Technology; • our ability to continue to have our Products manufactured at commercial production levels successfully and on a timely basis; • our ability to scale up manufacturing of our Products to meet commercial requirements; • the availability of raw materials necessary to manufacture our Products and our product candidates; • our ability to access third parties to manufacture and distribute our Products and our product candidates on acceptable terms or at all and those third parties’ ability and/or willingness to fully perform their obligations; • regulatory developments related to the manufacture or continued use of our Products and our product candidates; • conduct of post-approval study requirements and the results thereof; • the extent and effectiveness of sales and marketing and distribution support for our Products and our product candidates; • our competitors’ activities, including decisions as to the timing of competing product launches, generic entrants, pricing and discounting; and • any other material adverse developments with respect to the commercialization of our Products and our product candidates.
We obtain certain critical materials and components used in manufacturing our Products and our product candidates from third-party suppliers whose operations might be directly or indirectly affected by adverse events or conditions, including the effects of the COVID-19 pandemic, rising geopolitical tensions, armed conflict or other factors (including, without limitation, adverse weather conditions, political instability, war, civil unrest, economic instability, outbreaks of disease, or other public health emergencies and the impact of any such U.S. or foreign government response and public fears regarding any of the foregoing).
We obtain certain critical materials and components used in manufacturing our Products and our product candidates from third-party suppliers whose operations might be directly or indirectly affected by adverse events or conditions, including the effects of a pandemic or disease outbreak, rising geopolitical tensions, armed conflict or other factors (including, without limitation, adverse weather conditions, political instability, war, civil unrest, economic instability, outbreaks of disease, or other public health emergencies and the impact of any such U.S. or foreign government response and public fears regarding any of the foregoing).
Currently, ZYNRELEF is protected by 15 patents issued in the U.S. and by 89 patents issued (or registered) in foreign countries including Albania, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Mexico, Monaco, Netherlands, Norway, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, Turkey and the United Kingdom.
Currently, ZYNRELEF is protected by 16 patents issued in the U.S. and by 94 patents issued (or registered) in foreign countries including Albania, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Mexico, Monaco, Netherlands, Norway, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, Turkey and the United Kingdom.
Management’s view of our liquidity relies on estimates and assumptions about the market opportunity for the expanded U.S. label of ZYNRELEF, which estimates and assumptions are subject to significant uncertainty. 40 We may not be able to raise additional capital when needed or desired, or we may need to raise additional capital on unfavorable terms, which could result in dilution to existing stockholders.
Management’s view of our liquidity relies on estimates and assumptions about the market opportunity for the recently expanded U.S. label of ZYNRELEF, which estimates and assumptions are subject to significant uncertainty. 36 We may not be able to raise additional capital when needed or desired, or we may need to raise additional capital on unfavorable terms, which could result in dilution to existing stockholders.
These agreements may be breached, and in some instances, we may not have an appropriate remedy available for breach of the agreements. Furthermore, our competitors may independently develop substantially equivalent proprietary information and techniques, reverse engineer our information and techniques, or otherwise gain access to our proprietary technology.
These agreements may be breached, and in some instances, we may not have an appropriate remedy available for such breach. Furthermore, our competitors may independently develop substantially equivalent proprietary information and techniques, reverse engineer our information and techniques, or otherwise gain access to our proprietary technology.
Utilization of our remaining net operating loss and research and development credit carryforwards may still be subject to substantial annual limitations due to ownership change limitations provided by the IRC and similar state provisions for ownership changes after December 31, 2021, including those that may come in conjunction with future equity financings or market trades by our stockholders.
Utilization of our remaining net operating loss and research and development credit carryforwards may still be subject to substantial annual limitations due to ownership change limitations provided by the IRC and similar state provisions for ownership changes after July 31, 2023, including those that may come in conjunction with future equity financings or market trades by our stockholders.
Our ongoing or planned clinical studies and approved drug commercialization efforts could be delayed or disrupted indefinitely on the occurrence of a natural or man-made disaster, including an epidemic, pandemic, cyberattack, or acts of war or terrorism, or resource shortages.
Our ongoing or planned clinical studies and approved drug commercialization efforts could be delayed or disrupted indefinitely on the occurrence of a natural or man-made disaster, including an epidemic, pandemic, or other disease outbreak, cyberattack, or acts of war or terrorism, or resource shortages.
In the U.S., ZYNRELEF competes in, and HTX-034, if successfully developed, will compete in, the postoperative pain management market with MARCAINE TM (bupivacaine hydrochloride injection, solution, marketed by Pfizer Inc.) and generic forms of bupivacaine; NAROPIN ® (ropivacaine, marketed by Fresenius Kabi USA, LLC) and generic forms of ropivacaine; EXPAREL ® (bupivacaine liposome injectable suspension, marketed by Pacira BioSciences, Inc.); XARACOLL ® (bupivacaine HCl implant, marketed by Innocoll Pharmaceuticals Limited); POSIMIR ® (owned by Durect Corporation and to be marketed in the U.S. by Innocoll Pharmaceuticals Limited); ANJESO ® (meloxicam injection, marketed by Baudax Bio, Inc.); OFIRMEV ® (acetaminophen injection, marketed by Mallinckrodt Pharmaceuticals); SEGLENTIS ® (celecoxib and tramadol hydrochloride, marketed by Kowa Pharmaceuticals America, Inc. in the U.S.); generic forms of IV acetaminophen; and potentially other products in development for postoperative pain management that reach the U.S. market.
ZYNRELEF competes in the postoperative pain management market with MARCAINE TM (bupivacaine hydrochloride injection, solution, marketed by Pfizer Inc.) and generic forms of bupivacaine; NAROPIN ® (ropivacaine, marketed by Fresenius Kabi USA, LLC) and generic forms of ropivacaine; EXPAREL ® (bupivacaine liposome injectable suspension, marketed by Pacira BioSciences, Inc.); XARACOLL ® (bupivacaine HCl implant, marketed by Innocoll Pharmaceuticals Limited); POSIMIR ® (owned by Durect Corporation and to be marketed in the U.S. by Innocoll Pharmaceuticals Limited); ANJESO ® (meloxicam injection, marketed by Baudax Bio, Inc.); OFIRMEV ® (acetaminophen injection, marketed by Mallinckrodt Pharmaceuticals); SEGLENTIS ® (celecoxib and tramadol hydrochloride, marketed by Kowa Pharmaceuticals America, Inc. in the U.S.); generic forms of IV acetaminophen; and potentially other products in development for postoperative pain management that reach the U.S. market.
If we issue additional equity securities or securities convertible into equity securities to raise funds, our stockholders will suffer dilution of their investment, and such issuance may adversely affect the market price of our common stock. Any new debt financing we enter into may involve covenants that restrict our operations.
If we issue additional equity securities or securities convertible into equity securities to raise funds, our stockholders will suffer dilution of their investment, and such issuance may adversely affect the market price of our common stock. New debt financing we enter into typically involves covenants that restrict our operations.
Any adverse findings for our Products from such research may negatively impact reimbursement available for our Products. Similarly, the SUPPORT Act, which was signed into law on October 24, 2018, encourages the prevention and treatment of opioid addiction and the development of non-opioid pain management treatments.
Any adverse findings for our Products from such research may negatively impact reimbursement available for our Products. Similarly, the SUPPORT Act, which was signed into law on October 24, 2018, established policies to encourage the prevention and treatment of opioid addiction and the development of non-opioid pain management treatments.
Currently, CINVANTI is covered by 9 patents issued in the U.S. and by three patents issued (or registered) in foreign countries including Korea and Japan. U.S. patents covering CINVANTI have expiration dates ranging from September 2035 to February 2036; foreign patents covering CINVANTI have expiration dates ranging from September 2035 to February 2036.
Currently, CINVANTI is covered by 10 patents issued in the U.S. and by five patents issued (or registered) in foreign countries including Korea and Japan. U.S. patents covering CINVANTI have expiration dates ranging from September 2035 to February 2036; foreign patents covering CINVANTI have expiration dates ranging from September 2035 to February 2036.
In June 2022, in connection with our efforts to decrease costs and maintain a streamlined organization to support our acute care and oncology care franchises, we implemented a workforce reduction that resulted in the termination of approximately 34% of our workforce.
In June 2023, in connection with our efforts to decrease costs and maintain a streamlined organization to support our acute care and oncology care franchises, we implemented a workforce reduction that resulted in the termination of approximately 25% of our workforce.
Some of our suppliers may experience disruption to their respective supply chains due to the adverse events or conditions, including the effects of the COVID-19 pandemic, rising geopolitical tensions, armed conflict or other factors, which could delay, prevent or impair our development or commercialization efforts.
Some of our suppliers may experience disruption to their respective supply chains due to the adverse events or conditions, including the effects of a pandemic or disease outbreak, rising geopolitical tensions, armed conflict or other factors, which could delay, prevent or impair our development or commercialization efforts.
We have filed a number of U.S. patent applications on inventions relating to the composition of a variety of polymers, specific products, product groups and processing technology. As of December 31, 2022, we had a total of 33 issued U.S. patents and an additional 111 issued (or registered) foreign patents. The patents on the bioerodible technologies expire in March 2026.
We have filed a number of U.S. patent applications on inventions relating to the composition of a variety of polymers, specific products, product groups and processing technology. As of December 31, 2023, we had a total of 34 issued U.S. patents and an additional 118 issued (or registered) foreign patents. The patents on the bioerodible technologies expire in March 2026.
Additional capital may be needed in the future to enable us to implement our business plan, and we may be unable to raise capital, which would force us to limit or cease our operations and related product development programs. As of December 31, 2022, we had cash, cash equivalents and short-term investments of $84.9 million.
Additional capital may be needed in the future to enable us to implement our business plan, and we may be unable to raise capital, which would force us to limit or cease our operations and related product development programs. As of December 31, 2023, we had cash, cash equivalents and short-term investments of $80.4 million.
U.S. patents covering 56 ZYNRELEF have expiration dates ranging from March 2034 to April 2035; foreign patents covering ZYNRELEF have expiration dates ranging from November 2033 to November 2036. APONVIE is covered by 9 patents issued in the U.S. and by three patents issued (or registered) in foreign countries including Korea and Japan.
U.S. patents covering ZYNRELEF have expiration dates ranging from March 2034 to April 2035; foreign patents covering ZYNRELEF have expiration dates ranging from November 2033 to November 2036. APONVIE is covered by 10 patents issued in the U.S. and by five patents issued (or registered) in foreign countries including Korea and Japan.
Our spending will depend, in part, on: • the number of product candidates we pursue; • the progress of our research and development programs for our product candidates, including clinical trials; 39 • the time and expense required to pursue FDA and/or non-U.S. regulatory approvals for our product candidates, whether such approvals are obtained and the scope of any approved product label; • the cost of possible acquisitions of technologies, compounds, product rights or companies; • the cost of obtaining licenses to use technology owned by others for proprietary products and otherwise; • the time and expense required to prosecute, enforce and/or challenge patent and other intellectual property rights; • the costs of potential litigation; and • the costs associated with recruiting and compensating a highly skilled workforce in an environment where competition for such employees may be intense.
Our spending will depend, in part, on: • the commercial success of our Products; • the time and expense required to pursue FDA and/or non-U.S. regulatory approvals for our product candidates, whether such approvals are obtained and the scope of any approved product label; • the cost of possible acquisitions of technologies, compounds, product rights or companies; • the cost of obtaining licenses to use technology owned by others for proprietary products and otherwise; • the time and expense required to prosecute, enforce and/or challenge patent and other intellectual property rights; • the costs of potential litigation; and • the costs associated with recruiting and compensating a highly skilled workforce in an environment where competition for such employees may be intense.
A significant amount of our assets is comprised of cash, cash equivalents and short-term investments. These investments of cash, cash equivalents and short-term investments are subject to general credit, liquidity, market and interest rate risks, which have been and may, in the future, be exacerbated by a U.S. and/or global financial crisis.
These investments of cash, cash equivalents and short-term investments are subject to general credit, liquidity, market and interest rate risks, which have been and may, in the future, be exacerbated by a U.S. and/or global financial crisis.
We will incur substantial expenses in our efforts to develop and commercialize our Products and our product candidates and we may never generate sufficient revenue to become profitable or to sustain profitability.
We have incurred substantial expenses in our efforts to develop and commercialize our Products and our product candidates and we may never generate sufficient revenue to become profitable or to sustain profitability.
Under the law, and a CMS Proposed Rule issued in July 2022, this refund program became effective on January 1, 2023.
Under the law, and a CMS Proposed Rule issued in July 2022, this refund program became effective on January 1, 2023 and could potentially result in refund obligations.
Under agreements with any collaborators we may work with in the future, we may rely significantly on them to, among other activities: • fund or perform research and development activities with us or independently; • diligently pursue regulatory approvals in certain territories; • pay us fees on the achievement of milestones; and • market for or with us any commercial products that result from our collaborations.
Our collaborators may choose to pursue existing or alternative technologies in preference to those being developed in collaboration with us. 33 Under agreements with any collaborators we may work with in the future, we may rely significantly on them to, among other activities: • fund or perform research and development activities with us or independently; • diligently pursue regulatory approvals in certain territories; • pay us fees on the achievement of milestones; and • market for or with us any commercial products that result from our collaborations.
The timing and degree of any future capital requirements will depend on many factors, including: • our ability to successfully commercialize, market and achieve market acceptance of our Products and our product candidates; • the status of regulatory approval of any pending applications with the FDA, or other regulators, as the case may be, and the costs involved with pursuing regulatory approvals; • the number and characteristics of product development programs we pursue and the pace of each program; • the scope, rate of progress, results and costs of preclinical testing and clinical trials; • our ability to establish and maintain strategic collaborations or partnerships for research, development, clinical testing, manufacturing and marketing of our product candidates; • the cost and timing of establishing or enlarging sales and marketing capabilities; • the cost of establishing supply arrangements for clinical and commercial development of our Products and our product candidates; and • the extent of the evolving effects of the COVID-19 pandemic on our business, or other factors (including the current Russia-Ukraine conflict).
The timing and degree of any future capital requirements will depend on many factors, including: • our ability to successfully commercialize, market and achieve market acceptance of our Products and our product candidates; • the status of regulatory approval of any pending applications with the FDA, or other regulators, as the case may be, and the costs involved with pursuing regulatory approvals; • the number and characteristics of product development programs we pursue and the pace of each program; • the scope, rate of progress, results and costs of preclinical testing and clinical trials; • our ability to establish and maintain strategic collaborations or partnerships for research, development, clinical testing, manufacturing and marketing of our product candidates; • the cost and timing of establishing or enlarging sales and marketing capabilities; • the cost of establishing supply arrangements for clinical and commercial development of our Products and our product candidates; and • the unanticipated delays due to manufacturing difficulties, supply constraints or changes in the regulatory environment, including as a result of geopolitical uncertainty, or other factors (including the current Russia-Ukraine conflict).
If we are unable to establish and maintain adequate sales, marketing and distribution capabilities, whether independently (including as a result of our recent reduction in force) or with third parties, we may not be able to generate product revenue and our business and results of operations will suffer.
If we are unable to establish and maintain adequate sales, marketing and distribution capabilities, whether independently or with third parties, we may not be able to generate product revenue and our business and results of operations will suffer.
For example, if legislation is passed or regulations are adopted that tie the prices of U.S. pharmaceuticals to the cost of pharmaceuticals in other countries and if ZYNRELEF is subject to pricing regulations in the EU or in other countries in which it is approved that keep its price low in those jurisdictions, then this could lower the potential price of the product in the U.S., thereby limiting the revenue we would be able to generate from it.
For example, if legislation is passed or regulations are adopted that tie the prices of U.S. pharmaceuticals to the cost of pharmaceuticals in other countries, then this could lower the potential price of the product in the U.S., thereby limiting the revenue we would be able to generate from it.
In addition, if regulatory approval of any of our product candidates comes earlier than anticipated, as a result of preferential designations designed to hasten the approval process or otherwise, and we have not built up sufficient inventory to meet commercial demand, our ability to generate additional revenue sooner as a result of those early approvals may be diminished. 32 We face intense competition from other companies developing products for the management of postoperative pain or the prevention of CINV and PONV.
In addition, if regulatory approval of any of our product candidates comes earlier than anticipated, as a result of preferential designations designed to hasten the approval process or otherwise, and we have not built up sufficient inventory to meet commercial demand, our ability to generate additional revenue sooner as a result of those early approvals may be diminished.
For example, under the EU GDPR, companies may face temporary or definitive bans on data processing and other corrective actions; fines of up to 20 million Euros or 4% of annual global revenue, whichever is greater; or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests. 53 In addition, we may be unable to transfer personal data from Europe and other jurisdictions to the U.S. or other countries due to data localization requirements or limitations on cross-border data flows.
For example, under the EU GDPR, companies may face temporary or definitive bans on data processing and other corrective actions; fines of up to 20 million Euros or 4% of annual global revenue, whichever is greater; or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests.
If we are unable to obtain these critical materials and components in sufficient quantities and in a timely manner, the development, testing and clinical study of our Products and product candidates might be delayed or infeasible, and regulatory approval or commercialization of our Products and product candidates might be delayed, not obtained or hindered, which could significantly harm our business.
If we are unable to obtain these critical materials and components in sufficient quantities and in a timely manner, the development, testing and clinical study of our Products and product candidates might be delayed or infeasible, and regulatory approval or commercialization of our Products and product candidates might be delayed, not obtained or hindered, which could significantly harm our business. 29 We have, or may have, significant inventory levels of drug products, and write-downs related to the impairment of those inventories may adversely impact or delay our profitability.
Any such delay or abandonment may have an adverse effect on the benefits otherwise expected from marketing our Products or product candidates in foreign countries. 24 If we cannot establish satisfactory pricing of our Products or product candidates, if approved, that is also acceptable to the U.S. government, insurance companies, managed care organizations and other payors, or arrange for favorable reimbursement policies, our product sales may be adversely affected and our future revenue may suffer.
If we cannot establish satisfactory pricing of our Products or product candidates, if approved, that is also acceptable to the U.S. government, insurance companies, managed care organizations and other payors, or arrange for favorable reimbursement policies, our product sales may be adversely affected and our future revenue may suffer.
In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all.
The results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on our current and projected business operations and our financial condition and results of operations. 39 In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all.
This conflict may also give rise to or amplify the other risks described herein including risks relating to cybersecurity, global economic conditions, and supply chains, which could adversely affect our business, operations and financial condition and results.
This conflict may also give rise to or amplify the other risks described herein including risks relating to cybersecurity, global economic conditions, and supply chains, which could adversely affect our business, operations and financial condition and results. 34 Our potential international expansion of our business may expose us to new business, regulatory, political, operational, financial and economic risks associated with such expansion and could adversely affect our business, financial condition, results of operations and growth.
Our stock price may be particularly volatile given the stage of our business. In the past, following periods of volatility in the market price of a particular company’s securities, litigation has often been brought against that company.
Our stock price may be particularly volatile given the stage of our business. In the past, following periods of volatility in the market price of a particular company’s securities, litigation has often been brought against that company. If litigation of this type is brought against us, it could be extremely expensive and divert management’s attention and our Company’s resources.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions. 52 We are and may become subject to stringent and evolving laws, regulations, rules, contractual obligations, policies and other obligations related to data privacy and security.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.
In addition, such failure could be the basis for the FDA or foreign regulators to issue a warning or untitled letter or take other regulatory or legal action, including recall or seizure, total or partial suspension of production, suspension of ongoing clinical trials, refusal to approve pending applications or supplemental applications, and potentially civil and/or criminal penalties depending on the matter.
In addition, such failure could be the basis for the FDA or foreign regulators to issue a warning or untitled letter or take other regulatory or legal action, including recall or seizure, total or partial suspension of production, suspension of ongoing clinical trials, refusal to approve pending applications or supplemental applications, and potentially civil and/or criminal penalties depending on the matter. 28 Our Products and product candidates may be in competition with other products for access to the facilities of third parties and, consequently, could be subject to manufacturing delays if our contractors give other companies’ products greater priority than ours.
We have, or may have, significant inventory levels of drug products, and write-downs related to the impairment of those inventories may adversely impact or delay our profitability. We have, or may have, significant inventory levels of drug products, and we may increase those inventory levels as we continue to commercialize our Products and our product candidates.
We have, or may have, significant inventory levels of drug products, and we may increase those inventory levels as we continue to commercialize our Products and our product candidates.
Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors. 54 Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities.
Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors.
We currently intend to retain all of our current and future earnings to finance the growth and development of our business. As a result, capital appreciation, if any, of our common stock will be the sole source of gain for our stockholders for the foreseeable future. 61 ITEM 1B. UNRESOLVE D STAFF COMMENTS . None.
As a result, capital appreciation, if any, of our common stock will be the sole source of gain for our stockholders for the foreseeable future. 57 ITEM 1B. UNRESOLVE D STAFF COMMENTS . None.
Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries. In particular, the EEA and the United Kingdom (“UK”) have significantly restricted the transfer of personal data to the U.S. and other countries whose data privacy and security laws it believes are inadequate.
In particular, the EEA and the United Kingdom (“UK”) have significantly restricted the transfer of personal data to the U.S. and other countries whose data privacy and security laws it believes are inadequate. Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross-border data transfer laws.
If we fail to comply with continuing federal, state and foreign regulations, we could lose our approvals to market drugs, and our business would be seriously harmed. • If we are unable to adequately protect or enforce our intellectual property rights, we may lose valuable assets or incur costly litigation to protect our rights. • The price of our common stock has been and may continue to be volatile.
If we fail to comply with continuing federal, state and foreign regulations, we could lose our approvals to market drugs, and our business would be seriously harmed. • If we are unable to adequately protect or enforce our intellectual property rights, we may lose valuable assets or incur costly litigation to protect our rights. • The price of our common stock has been and may continue to be volatile. 20 Risks Related to Our Business We are substantially dependent on the commercial success of our Products and our U.S. product candidates, and if these Products and product candidates do not attain market acceptance by healthcare professionals and patients, our business and results of operations will suffer.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe space was delivered to the subtenant in March 2022. The sublease agreement expires on December 31, 2025 and is coterminous with the operating lease for the subleased space.
Biggest changeThe space was delivered to the subtenant in March 2022. The sublease agreement expires on December 31, 2025 and is coterminous with the operating lease for the subleased space. We also had an operating lease for 5,840 square feet of office space in Cary, North Carolina, with a lease term that expires on April 30, 2025. 58
ITEM 2. PR OPERTIES . As of December 31, 2022, we had an operating lease for 52,148 square feet of laboratory and office space in San Diego, California, with a lease term that expires on December 31, 2025. In October 2021, we entered into a sublease agreement to sublet 23,873 square feet of laboratory and office space.
ITEM 2. PR OPERTIES . As of December 31, 2023, we had an operating lease for 52,148 square feet of laboratory and office space in San Diego, California, with a lease term that expires on December 31, 2025. In October 2021, we entered into a sublease agreement to sublet 23,873 square feet of laboratory and office space.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOn July 27, 2022, the Company filed a complaint for patent infringement of the CINVANTI Patents against Fresenius Kabi and a related entity in the District of Delaware in response to Fresenius Kabi’s ANDA filing. The complaint seeks, among other relief, equitable relief enjoining Fresenius Kabi from infringing the CINVANTI Patents.
Biggest changeDistrict Court for the District of Delaware (the “Court”) in response to Fresenius Kabi’s ANDA filing. The complaint seeks, among other relief, equitable relief enjoining Fresenius Kabi from infringing the CINVANTI Patents. The parties are currently completing fact discovery and will be moving into expert discovery. A five-day bench trial is scheduled for June 24, 2024.
ITEM 3. LEGAL PROCEEDINGS. On June 14, 2022, the Company received a paragraph IV notice of certification (the “Notice Letter”) from Fresenius Kabi advising that Fresenius Kabi had submitted an ANDA to the FDA seeking approval to manufacture, use or sell a generic version of CINVANTI in the U.S. prior to the expiration of U.S.
ITEM 3. LEGAL PROCEEDINGS. On June 14, 2022, the Company received a paragraph IV notice of certification (the “Fresenius Kabi Notice”) from Fresenius Kabi advising that Fresenius Kabi had submitted an ANDA to the FDA seeking approval to manufacture, use or sell a generic version of CINVANTI in the U.S. prior to the expiration of U.S.
The Notice Letter alleges that the CINVANTI Patents are invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of the generic product described in Fresenius Kabi’s ANDA.
The Fresenius Kabi Notice alleges that the CINVANTI Patents are invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of the generic product described in Fresenius Kabi’s ANDA. On July 27, 2022, the Company filed a complaint for patent infringement of the CINVANTI Patents against Fresenius Kabi and a related entity in the U.S.
The action is currently in fact discovery, and a five-day bench trial is scheduled for June 24, 2024. The Company intends to vigorously enforce its intellectual property rights relating to CINVANTI. As a result of filing our complaint for patent infringement, the FDA may not approve the ANDA until the earlier of December 14, 2024 or resolution of the litigation.
The complaint seeks, among other relief, equitable relief enjoining Mylan from infringing the CINVANTI Patents. The Company intends to vigorously enforce its intellectual property rights relating to the CINVANTI Patents. As a result of our complaint for patent infringement, the FDA may not approve Mylan’s ANDA until the earlier of February 4, 2026 or resolution of the litigation.
Removed
ITEM 4. MINE SAF ETY DISCLOSURES. Not applicable. 62 PART II
Added
On October 17, 2023, the Company received an updated Notice Letter from Fresenius Kabi advising that it had submitted an amendment to Fresenius’s ANDA to include a paragraph IV certification to Heron’s recently listed U.S. Patent No. 11,744,800 (the “800 Patent”). The Company intends to vigorously enforce its intellectual property rights relating to CINVANTI.
Added
As a result of filing our complaint for patent infringement, the FDA may not approve Fresenius’s ANDA until the earlier of December 14, 2024 or resolution of the litigation. On August 14, 2023, the Company received a Notice Letter from Mylan Pharmaceuticals Inc.
Added
(“Mylan”) advising that Mylan had submitted an ANDA (“Mylan's ANDA”) to the FDA seeking approval to manufacture, use or sell a generic version of CINVANTI in the U.S. prior to the expiration of the CINVANTI patents, which are listed in the Orange Book.
Added
The Notice Letter alleges that the CINVANTI Patents are invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of the generic product described in Mylan’s ANDA. On September 15, 2023, the Company filed a complaint for patent infringement of the CINVANTI Patents against Mylan in the Court in response to Mylan’s ANDA filing.
Added
On December 18, 2023, the Company received a paragraph IV notice of certification (the “Mylan Notice”) from Mylan advising that Mylan had submitted an ANDA with the FDA, seeking approval to manufacture, use or sell a generic version of the Company’s product APONVIE in the U.S. prior to the expiration of U.S.
Added
Patent Nos. 9,561,229; 9,808,465; 9,974,742; 9,974,793; 9,974,794; 10,500,208; 10,624,850; 10,953,018; 11,173,118 and 11,744,800 (the “APONVIE Patents”), which are listed in the Orange Book and each of which expire September 18, 2035.
Added
The Mylan Notice alleges that the APONVIE Patents are invalid, unenforceable, or will not be infringed by the commercial manufacture, use or sale of the generic product described in the ANDA. As of the date of this filing, the Company is not aware of any other ANDA filers.
Added
On January 11, 2024, the Company filed a complaint for patent infringement of the APONVIE Patents against Mylan. The Company intends to vigorously defend and enforce its intellectual property rights protecting APONVIE.
Added
In accordance with the Hatch-Waxman Act, because APONVIE is a new chemical entity the FDA cannot approve Mylan’s ANDA any earlier than 7.5 years from the approval of the APONVIE NDA unless a District Court finds that all of the asserted claims of the patents-in-suit are invalid, unenforceable and/or not infringed. ITEM 4. MINE SAF ETY DISCLOSURES.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Information About Our Common Stock Shares of our common stock are traded on The Nasdaq Capital Market, under the symbol “HRTX.” Stockholders The number of record holders of our common stock as of March 14, 2023 was 90.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Information About Our Common Stock Shares of our common stock are traded on The Nasdaq Capital Market, under the symbol “HRTX.” Stockholders The number of record holders of our common stock as of February 28, 2024 was 88.
Unregistered Sales of Equity Securities and Use of Proceeds None. ITEM 6. [RES ERVED] . 63
Unregistered Sales of Equity Securities and Use of Proceeds None. ITEM 6. [RES ERVED] . 60

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe expect sales and marketing expense to decrease in 2023, as 2022 included one-time launch preparation costs for ZYNRELEF and the APONVIE launch will leverage our existing commercial organization in the acute care setting, with no additional field force and limited external spend. 65 Other Expense, Net Other expense, net primarily consists of interest expense and the amortization of debt issuance costs related to our convertible notes payable, write-off of property and equipment, and income earned on our cash, cash equivalents and short-term investments.
Biggest changeOther Income (Expense), Net Other income (expense), net primarily consists of interest expense, income earned on our cash, cash equivalents and short-term investments, the amortization of debt issuance costs related to our convertible notes payable, the amortization of a debt discount related to our working capital line of credit, and write-off of property and equipment.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to revenue recognition, investments, inventory, accrued clinical liabilities, income taxes and stock-based compensation.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to revenue recognition, investments, inventory, accrued clinical and manufacturing liabilities, income taxes and stock-based compensation.
However, subsequent changes in estimates may result in a material change to our accruals, which could also materially affect our results of operations and financial position. Income Taxes We make certain estimates and judgments in determining income tax expense for financial statement purposes.
However, subsequent changes in estimates may result in a material change to our accruals, which could also materially affect our results of operations and financial position. 64 Income Taxes We make certain estimates and judgments in determining income tax expense for financial statement purposes.
This section contains a discussion of the accounting policies that we believe are important to our financial condition and results of operations and that require significant judgment and estimates on the part of management in their application.
This section contains a discussion of the accounting estimates that we believe are important to our financial condition and results of operations and that require significant judgment and estimates on the part of management in their application.
Historically, we have financed our operations, including technology and product research and development, primarily through sales of our common stock and debt financings. Material Cash Requirements As of December 31, 2022, we had an operating lease for 52,148 square feet of laboratory and office space in San Diego, California, with a lease term that expires on December 31, 2025.
Historically, we have financed our operations, including technology and product research and development, primarily through sales of our common stock and debt financings. Material Cash Requirements As of December 31, 2023, we had an operating lease for 52,148 square feet of laboratory and office space in San Diego, California, with a lease term that expires on December 31, 2025.
Our discussion is organized as follows: • Overview. This section provides a general description of our business and operating expenses. • Critical accounting policies and estimates.
Our discussion is organized as follows: • Overview. This section provides a general description of our business and operating expenses. • Critical accounting estimates.
We believe our estimated allowance for product returns requires a high degree of judgment and is subject to change based on our experience and certain quantitative and qualitative factors. We allow our Customers to return product for credit for up to 12 months after its product expiration date.
We believe our estimated allowance for product returns and GPO discounts requires a high degree of judgment and is subject to change based on our experience and certain quantitative and qualitative factors. We allow our Customers to return product for credit for up to 12 months after its product expiration date.
At December 31, 2022, we established a valuation allowance to offset our deferred tax assets due to the uncertainty of realizing future tax benefits from our net operating loss carryforwards and other deferred tax assets. To date, our estimates have not materially changed.
At December 31, 2023, we established a valuation allowance to offset our deferred tax assets due to the uncertainty of realizing future tax benefits from our net operating loss carryforwards and other deferred tax assets. To date, our estimates have not materially changed.
See the “Critical Accounting Policies and Estimates” section of this Annual Report on Form 10-K for further details on our revenue recognition policy. Cost of Product Sales Cost of product sales relates to the costs to produce, package and deliver our Products to our Customers.
See the “Critical Accounting Estimates” section of this Annual Report on Form 10-K for further details on our revenue recognition policy. 61 Cost of Product Sales Cost of product sales relates to the costs to produce, package and deliver our Products to our Customers.
This section provides an analysis of our cash flows and a discussion of our outstanding commitments and contingencies that existed as of December 31, 2022. Included in this discussion is our financial capacity to fund our future commitments and a discussion of other financing arrangements.
This section provides an analysis of our cash flows and a discussion of our outstanding commitments and contingencies that existed as of December 31, 2023. Included in this discussion is our financial capacity to fund our future commitments and a discussion of other financing arrangements.
This section provides an analysis of our results of operations presented in the accompanying consolidated statements of operations and comprehensive loss by comparing the results for the year ended December 31, 2022 to the results for the year ended December 31, 2021. • Liquidity and capital resources.
This section provides an analysis of our results of operations presented in the accompanying consolidated statements of operations and comprehensive loss by comparing the results for the year ended December 31, 2023 to the results for the year ended December 31, 2022. • Liquidity and capital resources.
We intend to use our current financial resources to fund our obligations under these commitments. 72 ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK. Not required for smaller reporting companies.
We intend to use our current financial resources to fund our obligations under these commitments. 68 ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK. Not required for smaller reporting companies.
We believe our estimated allowances for distributor fees, group purchasing organization discounts, rebates and administrative fees and Medicaid rebates do not require a high degree of judgment because the amounts are settled within a relatively short period of time.
We believe our estimated allowances for distributor fees, group purchasing organization (“GPO”) rebates and administrative fees, Medicaid rebates and prompt pay discounts do not require a high degree of judgment because the amounts are settled within a relatively short period of time.
In addition, all of our significant accounting policies, including the critical accounting policies and estimates, are summarized in Note 2 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. • Results of operations.
In addition, all of our significant accounting policies are summarized in Note 2 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. • Results of operations.
To date, our estimates have not differed materially from actual returns. However, subsequent changes in estimates may result in a material change to our product sales allowances, which could materially affect our results of operations and financial position. Investments We invest in various types of securities, including U.S. treasury bills and government agency obligations, corporate debt securities and commercial paper.
However, subsequent changes in estimates may result in a material change to our product sales allowances, which could materially affect our results of operations and financial position. Investments We invest in various types of securities, including U.S. treasury bills and government agency obligations, corporate debt securities and commercial paper.
Our net cash provided by financing activities for the year ended December 31, 2022 was $75.1 million, compared to $156.0 million for the same period in 2021.
Our net cash provided by financing activities for the year ended December 31, 2023 was $54.1 million, compared to $75.1 million for the same period in 2022.
The decrease in cash provided by investing activities was primarily due to net purchases of short-term investments of $1.7 million for the year ended December 31, 2022, compared to net maturities of $35.7 million for the same period in 2021.
The increase in cash provided by investing activities was primarily due to net maturities of short-term investments of $19.5 million for the year ended December 31, 2023, compared to net purchases of short-term investments of $1.7 million for the same period in 2022.
Our net cash used for investing activities for the year ended December 31, 2022 was $3.3 million, compared to net cash provided by investing activities of $32.7 million for the same period in 2021.
Our net cash provided by investing activities for the year ended December 31, 2023 was $18.0 million, compared to net cash used in investing activities of $3.3 million for the same period in 2022.
Other general and administrative expense includes professional fees for legal, investor relations, accounting and other general corporate purposes, facility costs and insurance not otherwise included in research and development expense. We expect general and administrative expense in 2023 to remain comparable with 2022.
Other general and administrative expense includes professional fees for legal, investor relations, accounting and other general corporate purposes, facility costs and insurance not otherwise included in research and development expense.
Product sales allowances are based on amounts owed or to be claimed on the related sales. Such variable consideration includes estimates that take into consideration the terms of our agreements with Customers, historical product returns, rebates or discounts taken, the shelf life of the product and specific known market events, such as competitive pricing and new product introductions.
Such variable consideration includes estimates that take into consideration the terms of our agreements with Customers, historical product returns, rebates or discounts taken, the shelf life of the product and specific known market events, 63 such as competitive pricing and new product introductions.
However, subsequent changes in estimates may result in a significant change to our deferred tax assets and liabilities, which could materially affect our results of operations and financial position. Stock-based Compensation We estimate the fair value of stock options granted using the Black-Scholes option pricing model. This fair value is then amortized over the requisite service periods of the awards.
However, subsequent changes in estimates may result in a significant change to our deferred tax assets and liabilities, which could materially affect our results of operations and financial position. Stock-based Compensation We estimate the fair value of stock options granted using the Black-Scholes option pricing model and for market-based stock option grants using the Monte Carlo simulation model.
Sales and Marketing Expense Sales and marketing expense primarily consists of salaries and related costs for personnel, stock-based compensation expense and other related costs for sales operations, marketing and market access.
Sales and Marketing Expense Sales and marketing expense primarily consists of salaries and related costs for personnel, stock-based compensation expense and other related costs for sales operations, marketing and market access. Other sales and marketing costs include professional fees and commercialization costs related to our Products.
To determine revenue recognition for contracts with customers, we perform the following 5 steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations of the contract(s); (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract(s); and (v) recognize revenue when (or as) we satisfy the performance obligations. 66 Product Sales Allowances We recognize product sales allowances as a reduction of product sales in the same period the related revenue is recognized.
To determine revenue recognition for contracts with customers within the scope of Topic 606, we perform the following 5 steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations of the contract(s); (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract(s); and (v) recognize revenue when (or as) we satisfy the performance obligations.
Our net cash used in operating activities for the year ended December 31, 2022 was $146.9 million, compared to $203.4 million for the same period in 2021. The decrease in net cash used in operating activities was primarily due to changes in working capital, as well as a decrease in net loss.
Our net cash used in operating activities for the year ended December 31, 2023 was $58.8 million, compared to $146.9 million for the same period in 2022. The decrease in net cash used in operating activities was primarily due to a decrease in operating expenses and changes in working capital.
The Black-Scholes option pricing model requires the input of subjective assumptions, including each option’s expected life and price volatility of the underlying stock. Expected volatility is based on our historical stock price volatility.
This fair value is then amortized over the requisite service periods of the awards. The Black-Scholes option pricing model requires the input of subjective assumptions, including each option’s expected life and price volatility of the underlying stock. Expected volatility is based on our historical stock price volatility.
Critical Accounting Policies and Estimates A summary of the significant accounting policies is provided in Note 2 to our Consolidated Financial Statements. The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S.
The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S.
These factors raise substantial doubt regarding our ability to continue as a going concern for a period of one year after the date that the financial statements are issued, however, based on our current operating plan and projections, management believes that the Company’s existing cash, cash equivalents and short-term investments will be sufficient to meet the Company’s anticipated cash requirements for at least one year from the date this Annual Report on Form 10-K is filed with the U.S.
Based on our current operating plan and projections, management believes that the Company’s existing cash, cash equivalents and short-term investments will be sufficient to meet the Company’s anticipated cash requirements for a period of at least one year from the date this Annual Report on Form 10-K is filed with the U.S. Securities and Exchange Commission.
As of December 31, 2022, we had total operating lease obligations of $9.1 million, with $3.0 million due in one year and $6.1 million due within two to three years. At December 31, 2022, capital expenditures consisted of non-cancellable commitments for equipment at our third-party manufacturers.
As of December 31, 2023, we had total operating lease obligations of $6.3 million, with $3.2 million due in one year and $3.1 million due within two to three years. At December 31, 2023, purchase obligations primarily consisted of non-cancellable commitments with third-party manufacturers in connection with the manufacturing of our Products.
We intend to use our current financial resources to fund our commitments under these purchase obligations. 71 As of December 31, 2022, $150.0 million aggregate principal amount of the convertible notes were outstanding (see Note 8 to the Consolidated Financial Statements included in this Annual Report on Form 10-K).
As of December 31, 2023, $150.0 million aggregate principal amount of the convertible notes were outstanding (see Note 8 to the Consolidated Financial Statements included in this Annual Report on Form 10-K).
See the “Critical Accounting Policies and Estimates” section of this Annual Report on Form 10-K for further details on our inventory policy. Research and Development Expense All costs of research and development are expensed in the period incurred.
These costs include raw materials, labor, manufacturing and quality control overhead, and depreciation of equipment, as well as shipping and distribution costs. See the “Critical Accounting Estimates” section of this Annual Report on Form 10-K for further details on our inventory policy. Research and Development Expense All costs of research and development are expensed in the period incurred.
The convertible notes mature on May 26, 2026, unless earlier converted, redeemed or repurchased. We enter into agreements with clinical sites and clinical research organizations for the conduct of our clinical trials and contract manufacturing organizations for the manufacture and supply of preclinical, clinical and commercial materials and drug product.
We enter into agreements with clinical sites and clinical research organizations for the conduct of our clinical trials and contract manufacturing organizations for the manufacture and supply of preclinical, clinical and commercial materials and drug product.
Total capital expenditures of $0.7 million were not included in our consolidated financial statements for the year ended December 31, 2022 and are due within one year. We intend to use our current financial resources to fund our commitments under the capital expenditure obligations.
Total purchase obligations of $60.2 million were not included in our consolidated financial statements for the year ended December 31, 2023, with $39.0 million due in one year and $21.2 million due within two to three years. We intend to use our current financial resources to fund our commitments under these purchase obligations.
Research and Development Expense Research and development expense consisted of the following (in thousands): December 31, 2022 2021 ZYNRELEF-related costs $ 46,929 $ 46,804 CINVANTI-related costs 5,594 8,711 APONVIE-related costs 942 6,232 HTX-034-related costs 803 3,260 SUSTOL-related costs 1,902 1,435 Personnel costs and other expenses 33,427 44,897 Stock-based compensation expense 17,909 19,482 Total research and development expense $ 107,506 $ 130,821 For the year ended December 31, 2022, research and development expense was $107.5 million, compared to $130.8 million for the same period in 2021.
Research and Development Expense Research and development expense consisted of the following (in thousands): December 31, 2023 2022 ZYNRELEF-related costs $ 12,165 $ 46,929 CINVANTI-related costs 1,842 5,594 APONVIE-related costs 4,464 942 HTX-034-related costs 76 803 SUSTOL-related costs 1,286 1,902 Personnel costs and other expenses 25,184 33,427 Stock-based compensation expense 10,880 17,909 Total research and development expense $ 55,897 $ 107,506 For the year ended December 31, 2023, research and development expense was $55.9 million, compared to $107.5 million for the same period in 2022.
Our advanced science, patented technologies, and innovative approach to drug discovery and development have allowed us to create and commercialize a portfolio of products that aim to advance the standard of care for acute care and oncology patients.
Our advanced science, patented technologies, and innovative approach to drug discovery and development have allowed us to create and commercialize a portfolio of products that aim to advance the standard of care for acute care and oncology patients. ZYNRELEF ® (bupivacaine and meloxicam) extended-release solution (“ZYNRELEF”) is approved in the United States (“U.S.”) for the management of postoperative pain.
CINVANTI ® (aprepitant) injectable emulsion (“CINVANTI”) and SUSTOL ® (granisetron) extended-release injection (“SUSTOL”) are both approved in the United States (“U.S.”) for the prevention of chemotherapy-induced nausea and vomiting. ZYNRELEF ® (bupivacaine and meloxicam) extended-release solution (“ZYNRELEF”) is approved in the U.S., 31 European countries and Canada for the management of postoperative pain.
APONVIE ® (aprepitant) injectable emulsion (“APONVIE”) is approved in the U.S. for the prevention of postoperative nausea and vomiting. CINVANTI ® (aprepitant) injectable emulsion (“CINVANTI”) and SUSTOL ® (granisetron) extended-release injection (“SUSTOL”) are both approved in the U.S. for the prevention of chemotherapy-induced nausea and vomiting.
We are also developing HTX-034, an investigational agent, our next generation product candidate for the management of postoperative pain. 64 Net Product Sales Net product sales include revenue recognized for sales of CINVANTI, SUSTOL and ZYNRELEF (collectively, our “Products”) to a limited number of specialty distributors and full line wholesalers (collectively, “Customers”), less applicable sales allowances.
Net Product Sales Net product sales include revenue recognized for sales of ZYNRELEF, APONVIE, CINVANTI, and SUSTOL (collectively, our “Products”) to a limited number of specialty distributors and full line wholesalers (collectively, “Customers”), less applicable sales allowances.
Net Product Sales – Oncology Care For the year ended December 31, 2022, net product sales of CINVANTI were $87.3 million, compared to $73.5 million for the same period in 2021. For the year ended December 31, 2022, net product sales of SUSTOL were $10.2 million, compared to $9.9 million for the same period in 2021.
For the year ended December 31, 2023, net product sales of APONVIE were $1.4 million. APONVIE became commercially available in the U.S. in March 2023. Net Product Sales – Oncology Care For the year ended December 31, 2023, net product sales of CINVANTI were $94.9 million, compared to $87.3 million for the same period in 2022.
For the year ended December 31, 2022, cost of product sales also included charges of $8.9 million, resulting primarily from the write-off of short-dated ZYNRELEF inventory. For the year ended December 31, 2021, cost of product sales also included charges of $3.8 million, resulting from the write-off of short-dated SUSTOL inventory.
The increase in cost of product sales was primarily due to an increase in inventory write-offs in 2023, as compared to 2022. For the years ended December 31, 2023 and 2022, cost of product sales included charges of $20.3 million and $8.9 million, respectively, resulting primarily from the write-off of ZYNRELEF inventory.
We believe the following critical accounting policies and estimates describe the most significant judgments and estimates used in the preparation of our consolidated financial statements. Revenue Recognition Product Sales Our Products are distributed in the U.S. through a limited number of Customers that resell to healthcare providers and hospitals, the end users of our Products.
Product Sales Our Products are distributed in the U.S. through a limited number of Customers that resell to healthcare providers and hospitals, the end users of our Products. Revenue is recognized in an amount that reflects the consideration we expect to receive in exchange for our Products.
This decrease was primarily due to a reduction in facility-related costs as we subleased a portion of our leased space beginning in March 2022. Sales and Marketing Expense For the year ended December 31, 2022, sales and marketing expense was $82.5 million, compared to $87.2 million for the same period in 2021.
Sales and Marketing Expense For the year ended December 31, 2023, sales and marketing expense was $67.6 million, compared to $82.5 million for the same period in 2022. The decrease was primarily due to a decrease in costs to support the ongoing commercialization of ZYNRELEF, due to improved operational efficiencies.
If adequate funds are not available, we may default on our indebtedness, which could have a material adverse effect on our business. Our net loss for the year ended December 31, 2022 was $182.0 million, or $1.67 per share, compared to a net loss of $220.7 million, or $2.24 per share for the same period in 2021.
Our net loss for the year ended December 31, 2023 was $110.6 million, or $0.80 per share, compared to a net loss of $182.0 million, or $1.67 per share, for the same period in 2022.
Net Product Sales – Acute Care For the year ended December 31, 2022, net product sales of ZYNRELEF were $10.2 million, which was net of $0.5 million in returns for short-dated product. Short-dated product returns were due to delays in obtaining initial FDA approval of ZYNRELEF.
Net Product Sales – Acute Care For the year ended December 31, 2023, net product sales of ZYNRELEF were $17.7 million, compared to $10.2 million for the same period in 2022. The increase in net product sales of ZYNRELEF was primarily due to an increase in units sold in 2023, as compared to 2022.
Recent Accounting Pronouncements See Note 2 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 68 Results of Operations Years Ended December 31, 2022 and 2021 Net Product Sales For the year ended December 31, 2022, net product sales were $107.7 million, compared to $86.3 million for the same period in 2021.
Results of Operations Years Ended December 31, 2023 and 2022 Net Product Sales For the year ended December 31, 2023, net product sales were $127.0 million, compared to $107.7 million for the same period in 2022.
As such, there may be a significant period of time between the time the product is shipped and the time the credit is issued on returned product. We regularly monitor our estimates and record adjustments when return trends, contract terms or other significant events indicate that a change in estimates is appropriate.
We regularly monitor our estimates and record adjustments when trends, contract terms or other significant events indicate that a change in estimates is appropriate. To date, our estimates have not differed materially from actuals.
The decrease in cash provided by financing activities was primarily due to net proceeds of $149.0 million from a convertible note financing received in May 2021, partially offset by net proceeds of $75.1 million received from a private placement in August 2022.
The decrease in cash provided by financing activities was primarily due to net proceeds of $54.1 million received from debt and equity financings completed in the third quarter of 2023, compared to net proceeds of $75.1 million received from an equity financing in 2022.
However, subsequent changes in our assumptions could impact our stock-based compensation expense, which could materially affect our net loss and net loss per share.
However, subsequent changes in our assumptions could impact our stock-based compensation expense, which could materially affect our net loss and net loss per share. Recent Accounting Pronouncements See Note 2 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
We began capitalizing raw materials, labor and overhead related to the manufacturing of APONVIE following FDA approval in September 2022. There were no costs incurred prior to FDA approval for the commercial manufacturing of APONVIE.
There were no commercial manufacturing costs incurred prior to FDA approval of APONVIE.
Cost of Product Sales For the year ended December 31, 2022, cost of product sales was $54.9 million, compared to $46.0 million for the same period in 2021. 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.
The increase in net product sales of SUSTOL was primarily due to an increase in units sold in 2023, as compared to 2022. 65 Cost of Product Sales For the year ended December 31, 2023, cost of product sales was $65.1 million, compared to $54.9 million for the same period in 2022.
This decrease was primarily due to a decrease in costs to support the ongoing commercialization of CINVANTI and SUSTOL, partially offset by an increase in costs to support the launch activities for ZYNRELEF. Other Expense, Net For the year ended December 31, 2022, other expense, net was $7.4 million, compared to $2.9 million for the same period in 2021.
The increase in net product sales of CINVANTI was primarily due to an increase in units sold in 2023, as compared to 2022. For the year ended December 31, 2023, net product sales of SUSTOL were $13.0 million, compared to $10.2 million for the same period in 2022.
This decrease was primarily due to decreases in personnel and related costs of $11.5 million, as well as decreases in costs related to APONVIE, CINVANTI and HTX-034 of $5.3 million, $3.1 million and $2.5 million, respectively. 69 General and Administrative Expense For the year ended December 31, 2022, general and administrative expense was $37.4 million, compared to $40.2 million for the same period in 2021.
General and Administrative Expense For the year ended December 31, 2023, general and administrative expense was $49.0 million, compared to $37.4 million for the same period in 2022.
The increase was primarily due to the write-off of property and equipment at a third-party manufacturing site, partially offset by an increase in interest income earned on our short-term investments.
The change was primarily due to the write-off of property and equipment at a third-party manufacturing site in 2022, as well as an increase in interest income earned on our invested cash balances in 2023. 66 Restructuring Plans See Note 7 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for discussion of the June 2022 and June 2023 Reorganizations.
In addition, cost of product sales for the year ended December 31, 2021 included charges of $3.8 million, resulting from the write-off of short-dated SUSTOL inventory. 67 Accrued Research and Development Expenses We estimate certain costs and expenses and accrue for these liabilities as part of our process of preparing financial statements.
If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required, which would be recorded as cost of product sales. Accrued Research and Development Expenses We estimate certain costs and expenses and accrue for these liabilities as part of our process of preparing financial statements.
Removed
In September 2022, APONVIE™ (aprepitant) injectable emulsion (“APONVIE”) was approved in the U.S. for the prevention of postoperative nausea and vomiting and became commercially available in the U.S. in March 2023.
Added
We expect total operating expenses to decrease on a year-over-year basis in 2024 as a result of our cost reduction efforts. Our expectations are subject to various risks and assumptions, including but not limited to those listed under the section entitled “Risk Factors” in this Annual Report on Form 10-K.
Removed
These costs include raw materials, labor, manufacturing and quality control overhead, and depreciation of equipment, as well as shipping and distribution costs. We expect cost of product sales to decrease in 2023, as large-scale manufacturing of ZYNRELEF and CINVANTI were validated in the fourth quarter of 2022.
Added
Additional uncertainties are identified in the section entitled “Forward-Looking Statements” in this Annual Report on Form 10-K.
Removed
At this time, due to the risks inherent in the clinical trial process, we are unable to estimate with any certainty the costs we will incur in the continued development of our product candidates.
Added
We continue to monitor the factors which may impact our business and as of the filing date of this report, we do not believe they are material. 62 Critical Accounting Estimates A summary of the significant accounting policies is provided in Note 2 to our Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Removed
Other than costs for outsourced services associated with our clinical programs, we generally do not track research and development expense by project; rather, we track such expense by the type of cost incurred. We expect research and development expense to decrease in 2023 because (i) APONVIE was approved in September 2022, (ii) we received U.S.
Added
We believe the following critical accounting estimates describe the most significant judgments and estimates used in the preparation of our consolidated financial statements. Revenue Recognition Revenue is recognized in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“Topic 606”).
Removed
Food and Drug Administration (“FDA”) approval for two manufacturing supplements to the New Drug Application (“NDA”) for ZYNRELEF to add a large-scale supplier of our proprietary polymer and to add larger-scale manufacturing of ZYNRELEF, (iii) larger-scale manufacturing of CINVANTI was validated in the fourth quarter of 2022, and (iv) we submitted a supplemental NDA for ZYNRELEF to further expand the indication statement in December 2022.
Added
Topic 606 is based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.
Removed
Other sales and marketing costs include professional fees and commercialization costs related to launch activities for ZYNRELEF, ongoing costs related to CINVANTI and SUSTOL, and launch preparation activities for APONVIE.
Added
We recognize revenue from product sales when there is a transfer of control of the product to our Customers. We typically determine transfer of control based on when the product is delivered, and title passes to our Customers.
Removed
Revenue is recognized in an amount that reflects the consideration we expect to receive in exchange for our Products.
Added
Product Sales Allowances We recognize product sales allowances as a reduction of product sales in the same period the related revenue is recognized. Product sales allowances are based on amounts owed or to be claimed on the related sales.
Removed
If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required. Cost of product sales for the year ended December 31, 2022 included charges of $8.9 million, resulting primarily from the write-off of short-dated ZYNRELEF inventory.
Added
As such, there may be a significant period of time between the time the product is shipped and the time the credit is issued on returned product. We estimate anticipated GPO discounts based on the applicable contractual terms.
Removed
For the year ended December 31, 2021, net product sales of ZYNRELEF were $2.9 million, which was net of $45,000 in returns for short-dated product. We commenced commercial sales of ZYNRELEF in the U.S. in July 2021.
Added
The increase was also due to an increase in units sold in 2023, as compared to 2022, partially offset by a decrease in cost per units for CINVANTI and ZYNRELEF, as large-scale manufacturing was validated and approved in late 2022. We began capitalizing raw materials, labor and overhead related to the manufacturing of APONVIE following FDA approval in September 2022.
Removed
Prior to FDA approval, $23.6 million of costs to manufacture ZYNRELEF were recorded to research and development expense in prior periods. We began capitalizing raw materials, labor and overhead related to the manufacturing of ZYNRELEF following FDA approval in May 2021.
Added
This decrease was primarily due to decreases in costs related to ZYNRELEF and CINVANTI, as product scale-up, validation activities and raw materials qualification were completed in 2022.
Removed
Restructuring Plans See Note 7 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for discussion of the restructuring plans implemented in October 2021 and June 2022. Liquidity and Capital Resources We have incurred significant operating losses and negative cash flows from operations.
Added
In addition, the decrease in research and development expense was due to decreases in personnel and related costs as a result of the savings from our reorganizations, as well as a decrease in non-cash, stock-based compensation expense.
Removed
As of December 31, 2022, we had an accumulated deficit of $1.8 billion and cash, cash equivalents and short-term investments of $84.9 million. In addition, our net loss for the year ended December 31, 2022 was $182.0 million.
Added
The increase was primarily due to severance and non-cash, stock-based compensation expense in connection with executive departures in the second and third quarters of 2023, and ongoing legal costs associated with the CINVANTI patent litigation.
Removed
In order to meet our cash requirements, we may be required to obtain additional funds and if we are not able to obtain adequate funds, we may be required to delay, reduce the scope of, or eliminate activities to support our Products and reduce personnel and related costs, which could have a material adverse effect on our business.
Added
Other Income (Expense), Net For the year ended December 31, 2023, other income (expense), net was $0.1 million, compared to ($7.4) million for the same period in 2022.
Removed
Our capital requirements and liquidity for the next twelve months will depend on numerous factors, including but not limited to: the degree of commercial success of our Products; the impact of competitive products; the timing and cost to manufacture our Products; the costs associated with the U.S. commercial launch of ZYNRELEF and APONVIE; the time, cost and outcome involved in seeking a further expanded label for ZYNRELEF in the U.S.; our ability to establish and maintain strategic collaborations or partnerships for research, development, clinical testing, manufacturing and marketing of our Products and product candidates; and general market conditions.
Added
Liquidity and Capital Resources As of December 31, 2023, we had cash, cash equivalents and short-term investments of $80.4 million.

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