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What changed in HERON THERAPEUTICS, INC. /DE/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of HERON THERAPEUTICS, INC. /DE/'s 2023 and 2024 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 2024 report.

+397 added−400 removedSource: 10-K (2025-02-27) vs 10-K (2024-03-12)

Top changes in HERON THERAPEUTICS, INC. /DE/'s 2024 10-K

397 paragraphs added · 400 removed · 309 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

72 edited+16 added−30 removed100 unchanged
Biggest changeSUSTOL is an extended-release, injectable 5-hydroxytryptamine type 3 (“5-HT 3 ”) receptor antagonist that utilizes our Biochronomer Technology to maintain therapeutic levels of granisetron for ≥5 days. The SUSTOL global Phase 3 development program was comprised of two, large, guideline-based clinical studies that evaluated SUSTOL’s efficacy and safety in more than 2,000 patients with cancer.
Biggest changeThe SUSTOL global Phase 3 development program was comprised of two, large, guideline-based clinical studies that evaluated SUSTOL’s efficacy and safety in more than 2,000 patients with cancer. SUSTOL’s efficacy in preventing nausea and vomiting was evaluated in both the acute phase (0–24 hours following chemotherapy) and the delayed phase (24–120 hours following chemotherapy).
If deemed complete, the FDA will “file” the NDA, thereby triggering substantive review of the application. The FDA can refuse to file any NDA that it deems incomplete or not properly reviewable. The FDA has established internal substantive review goals of 10 months for most NDAs.
If deemed complete, the FDA will “file” the NDA, thereby triggering substantive review of the application. The FDA can refuse to file any NDA that it deems incomplete or not properly reviewable. 10 The FDA has established internal substantive review goals of 10 months for most NDAs.
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.
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 measurements of observable clinical symptoms.
Compliance with these regulations has not had a material effect on our capital expenditures, earnings, or competitive position to date, but new regulations or amendments to existing regulations to make them more stringent could have such an effect in the future.
Compliance with these regulations has not had a material effect on our capital 8 expenditures, earnings, or competitive position to date, but new regulations or amendments to existing regulations to make them more stringent could have such an effect in the future.
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.
Our existing patents may not cover future products, 7 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.
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.
ZYNRELEF competes in the postoperative pain management market with MARCAINETM (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, 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.
ZYNRELEF is protected by 16 patents issued in the U.S. and by 100 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.
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.
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 13 patents issued in the U.S. and by five patents issued (or registered) in foreign countries including Korea and Japan.
HTX-034 is protected by 12 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.
HTX-034 is protected by 13 patents issued in the U.S. and by 100 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.
We currently rely on a small number of third-party manufacturers to produce compounds used in our product development and commercial activities and expect to continue to do so to meet the preclinical and clinical requirements of our potential products and for all of our commercial needs. We currently have long-term commercial supply agreements with certain third-party manufacturers.
We currently rely on a small number of third-party manufacturers to produce compounds used in our product development and commercial activities and expect to continue to do so to meet the preclinical and clinical requirements of our Products and potential products and for all of our commercial needs. We currently have long-term manufacturing and processing agreements with certain third-party manufacturers.
We make our periodic and current reports available on our website, free of charge, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. No portion of our website is incorporated by reference into this Annual Report on Form 10-K.
We make our periodic and current reports, and any amendments to those reports, available on our website, free of charge, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. No portion of our website is incorporated by reference into this Annual Report on Form 10-K. 17
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.
Furthermore, our Biochronomer Technology is designed to permit more than 5 one pharmacological agent to be incorporated, such that multimodal therapy can be delivered with a single administration. Sales and Marketing Our U.S.-based sales and marketing team consists of 75 employees as of December 31, 2024.
SUSTOL is indicated in combination with other antiemetics in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of moderately emetogenic chemotherapy (MEC) or anthracycline and cyclophosphamide (AC) combination chemotherapy regimens, which is considered to be a HEC regimen by the NCCN and ASCO.
SUSTOL is indicated in combination with other antiemetics in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of MEC or AC combination chemotherapy regimens, which is considered to be a HEC regimen by the NCCN and ASCO.
Heron supports our employees’ further development with individualized development plans, mentoring, coaching, internal development workshops, and certain financial support, including company-paid external conference attendance and tuition reimbursement. Heron sponsors professional society memberships for all employees, as well as memberships for interested female employees in a women’s advocacy organization supporting women in Science, Technology, Engineering and Math.
We support our employees’ further development with individualized development plans, mentoring, coaching, internal development workshops, and certain financial support, including Company-paid external conference attendance and tuition reimbursement. We sponsor professional society memberships for all employees, as well as memberships for interested female employees in a women’s advocacy organization supporting women in Science, Technology, Engineering and Math.
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”).
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”).
CINVANTI, in combination with other antiemetic agents, is indicated in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of highly emetogenic cancer chemotherapy (HEC) including high-dose cisplatin as a single-dose regimen, delayed nausea and vomiting associated with initial and repeat courses of moderately emetogenic cancer chemotherapy (MEC) as a single-dose regimen, and nausea and vomiting associated with initial and repeat courses of MEC as a 3-day regimen.
CINVANTI, in combination with other antiemetic agents, is indicated in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of HEC including high-dose cisplatin as a single-dose regimen, delayed nausea and vomiting associated with initial and repeat courses of MEC as a single-dose regimen, and nausea and vomiting associated with initial and repeat courses of MEC as a 3-day regimen.
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.
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.
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.
SUSTOL is covered 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. Foreign patents covering SUSTOL expire in September 2025.
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.
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 co-promotion agreement with Crosslink Network to expand the sales network supporting ZYNRELEF. Crosslink Network is the lead partner in the U.S. for ZYNRELEF promotion for orthopedic indications.
Currently, palonosetron is the only 5-HT 3 receptor antagonist other than SUSTOL that is approved for the prevention of delayed CINV associated with MEC regimens.
Currently, palonosetron is the only 5-HT3receptor antagonist other than SUSTOL that is approved for the prevention of delayed CINV associated with MEC regimens.
Currently available 5-HT 3 receptor antagonists include: AKYNZEO ® (palonosetron, a 5-HT 3 receptor antagonist, combined with netupitant, an NK 1 receptor antagonist, marketed by Helsinn Therapeutics (U.S.), Inc.); SANCUSO ® (granisetron transdermal patch, marketed by Cumberland Pharmaceuticals Inc.); and generic products including ondansetron (formerly marketed by GlaxoSmithKline plc as ZOFRAN), granisetron (formerly marketed by Hoffman-La Roche, Inc. as KYTRIL) and palonosetron (formerly marketed by Eisai in conjunction with Helsinn Healthcare S.A. as ALOXI).
Currently available 5-HT3 receptor antagonists include: AKYNZEO® (palonosetron, a 5-HT3 receptor antagonist, combined with netupitant, an NK1 receptor antagonist, marketed by Helsinn Therapeutics (U.S.), Inc.); SANCUSO® (granisetron transdermal patch, marketed by Cumberland Pharmaceuticals Inc.); and generic products including ondansetron (formerly marketed by GlaxoSmithKline plc as ZOFRAN), granisetron (formerly marketed by Hoffman-La Roche, Inc. as KYTRIL) and palonosetron (formerly marketed by Eisai in conjunction with Helsinn Healthcare S.A. as ALOXI) and Posfrea (Palonosetron Injection, marketed by AVYXA).
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.
No other 5-HT3 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 our Products.
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.
Currently available NK1receptor 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-HT3 receptor antagonist, combined with netupitant, an NK1 receptor antagonist, marketed by Helsinn Therapeutics (U.S.), Inc.); VARUBI® (rolapitant, marketed by TerSera Therapeutics LLC), FOCINVEZTM (fosaprepitant injection, marketed by Amneal Pharmaceuticals, LLC) and other products that include an NK1 receptor antagonist that reach the market for the prevention of CINV. 6 SUSTOL also faces significant competition.
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.
CINVANTI faces significant competition. NK1 receptor antagonists are administered for the prevention of CINV, in combination with 5-HT3 receptor antagonists, to augment the therapeutic effect of the 5-HT3 receptor antagonist.
Bribery Act, generally prohibit companies and their intermediaries from providing money or anything of value to officials of foreign governments, foreign political parties, or international organizations with the intent to obtain or retain business or seek a business advantage.
The FCPA and other similar anti-bribery laws in other jurisdictions, such as the U.K. Bribery Act, generally prohibit companies and their intermediaries from providing money or anything of value to officials of foreign governments, foreign political parties, or international organizations with the intent to obtain or retain business or seek a business advantage.
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.
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 2024. We are committed to the safety, health and security of our employees.
The FDA provides that reviews and/or approvals of applications submitted under Section 505(b)(2) will be delayed in various circumstances. For example, the holder of the NDA for the listed drug may be entitled to a period of market exclusivity during which the FDA will not approve, and may not even review, a Section 505(b)(2) application from other sponsors.
For example, the holder of the NDA for the listed drug may be entitled to a period of market exclusivity during which the FDA will not approve, and may not even review, a Section 505(b)(2) application from other sponsors.
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.
Actual bonus payout for our executive officers (including our named executive officers for the year ended December 31, 2024) 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 2025 Annual Meeting of Stockholders.
Clinical Trials Clinical trials involve the administration of the product candidate that is the subject of the trial to volunteers or patients under the supervision of a qualified principal investigator and in accordance with a clinical trial protocol, which sets forth details, such as the study objectives, enrollment criteria and the safety and effectiveness criteria to be evaluated.
We cannot assure that submission of any additional INDs or CTAs for any of our Products will result in authorization to commence clinical trials. 9 Clinical Trials Clinical trials involve the administration of the product candidate that is the subject of the trial to volunteers or patients under the supervision of a qualified principal investigator and in accordance with a clinical trial protocol, which sets forth details, such as the study objectives, enrollment criteria and the safety and effectiveness criteria to be evaluated.
In addition, both before and after approval is sought, we are required to comply with a number of FDA requirements. For example, we are required to report certain adverse reactions and production problems, if any, to the FDA, and to comply with certain limitations and other requirements concerning advertising and promotion for our products.
For example, we are required to report certain adverse reactions and production problems, if any, to the FDA, and to comply with certain limitations and other requirements concerning advertising and promotion for our products.
Drug manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMPs, which impose certain procedural and documentation requirements on us and our third-party manufacturers.
Drug manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMPs, which impose certain procedural and documentation requirements on us and our third-party manufacturers. 11 In addition, both before and after approval is sought, we are required to comply with a number of FDA requirements.
The law governing Section 505(b)(2) or FDA’s current policies may change in such a way as to adversely affect our applications for approval that seek to utilize the Section 505(b)(2) approach. Such changes could result in additional costs associated with additional studies or clinical trials and delays.
The law governing Section 505(b)(2) or FDA’s current policies may change in such a way as to adversely affect our applications for approval that seek to utilize the Section 505(b)(2) approach.
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 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.
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.
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.
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.
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.
Aprepitant (including its prodrug, fosaprepitant) is the only single-agent NK 1 receptor antagonist to significantly reduce nausea and vomiting in both the acute phase (0–24 hours after chemotherapy) and the delayed phase (24–120 hours after chemotherapy).
CINVANTI is the first IV formulation to directly deliver aprepitant, the active ingredient in EMEND® capsules. Aprepitant (including its prodrug, fosaprepitant) is the only single-agent NK1 receptor antagonist to significantly reduce nausea and vomiting in both the acute phase (0–24 hours after chemotherapy) and the delayed phase (24–120 hours after chemotherapy).
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.
None of our employees are represented by a labor union or covered by a collective bargaining agreement. We continually evaluate business needs and opportunities in addition to balancing in-house expertise and capacity with that of outsourced resources.
Our manufacturing and processing agreements require that all third-party contract manufacturers and processors produce active pharmaceutical ingredients, excipients and finished products in accordance with the FDA’s current Good Manufacturing Practices (“cGMP”) and all other applicable laws and regulations.
These agreements require that all third-party contract manufacturers and processors produce active pharmaceutical ingredients, excipients and finished products in accordance with the FDA’s current Good Manufacturing Practices (“cGMP”) and all other applicable laws and regulations. We maintain confidentiality agreements with potential and existing manufacturers in order to protect our proprietary rights related to our Products and our Biochronomer Technology.
Failure to submit required information can result in civil monetary penalties. A number of states have laws that require the implementation of commercial compliance programs, impose restrictions on drug manufacturer marketing practices and/or require pharmaceutical companies to track and report payments, gifts and other benefits provided to physicians and other health care professionals and entities.
A number of states have laws that require the implementation of commercial compliance programs, impose restrictions on drug manufacturer marketing practices and/or require pharmaceutical companies to track and report payments, gifts and other benefits provided to physicians and other health care professionals and entities. 14 Foreign Corrupt Practices Act We are subject to the Foreign Corrupt Practices Act of 1997 (“FCPA”).
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.
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.
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.
APONVIE APONVIE is the first and only intravenous (“IV”) formulation of a substance P/neurokinin-1 (“NK1”) receptor antagonist indicated for postoperative nausea and vomiting (“PONV”). Delivered via single 30-second IV injection, APONVIE has demonstrated rapid achievement of therapeutic drug levels ideally suited for the surgical setting.
The only other injectable NK 1 receptor antagonist currently approved in the U.S. for both acute and delayed chemotherapy induced nausea and vomiting (“CINV”), EMEND ® IV (fosaprepitant), contains polysorbate 80, a synthetic surfactant, which has been linked to hypersensitivity reactions, including anaphylaxis, and infusion site reactions. The CINVANTI formulation does not contain polysorbate 80 or any other synthetic surfactant.
NK1 receptor antagonists are typically used in combination with 5-hydroxytryptamine type 3 (“5-HT3”) receptor antagonists. The only other injectable NK1 receptor antagonist currently approved in the U.S. for both acute and delayed chemotherapy induced nausea and vomiting (“CINV”), EMEND® IV (fosaprepitant), contains polysorbate 80, a synthetic surfactant, which has been linked to hypersensitivity reactions, including anaphylaxis, and infusion site reactions.
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.
Bonus opportunity and equity compensation increase as a percentage of total compensation based on level of responsibility. Actual bonus payouts for all employees except our executive officers are based on a weighting of Company and individual performance, which varies based on level of responsibility.
An interruption in the supply of a key material could significantly delay our research and development process or increase our expenses for commercialization or development of our Products or product candidates.
Some of the critical materials and components used in manufacturing our Products are sourced from single suppliers. An interruption in the supply of a key material could significantly delay our research and development process or increase our expenses for commercialization or development of our Products.
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.
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. Our potential competitors are many in number and include major and mid-sized pharmaceutical and biotechnology companies.
SUSTOL’s efficacy in preventing nausea and vomiting was evaluated in both the acute phase (0–24 hours following chemotherapy) and the delayed phase (24–120 hours following chemotherapy). SUSTOL is the first extended-release 5-HT 3 receptor antagonist approved for the prevention of acute and delayed nausea and vomiting associated with both MEC and AC combination chemotherapy regimens.
SUSTOL SUSTOL is the first extended-release 5-HT3 receptor antagonist approved for the prevention of acute and delayed nausea and vomiting associated with both MEC and anthracycline and cyclophosphamide ("AC") combination chemotherapy regimens.
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.
CINVANTI is the first and only IV formulation of an NK1 receptor antagonist indicated for the prevention of acute and delayed nausea and vomiting associated with Highly Emetogenic Cancer (“HEC”) and nausea and vomiting associated with moderately emetogenic chemotherapy ("MEC") that is free of synthetic surfactants, including polysorbate 80.
There is no assurance that any future FDA approval of any of our product candidates will result in similar foreign approvals or vice versa.
There is no assurance that any future FDA approval of any of our product candidates will result in similar foreign approvals or vice versa. The process for clinical trials in other jurisdictions are similar, and trials are heavily scrutinized by the designated Ethics Committee.
Anti-kickback, Fraud and Abuse and False Claims Regulation We are subject to health care fraud and abuse regulation and enforcement by both the federal government and the states in which we conduct our business.
As in the U.S., the lack of satisfactory reimbursement or inadequate government pricing of any of our Products would limit widespread use and lower potential Product revenues. 13 Anti-kickback, Fraud and Abuse and False Claims Regulation We are subject to health care fraud and abuse regulation and enforcement by both the federal government and the states in which we conduct our business.
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.
Preclinical Testing Preclinical studies include laboratory evaluation of the product and animal studies to assess the potential safety and effectiveness of the product. 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.
When administered, the polymers undergo controlled hydrolysis, resulting in a controlled, sustained release of the pharmacological agent encapsulated within the Biochronomer-based composition.
Our Biochronomer Technology consists of polymers that have been the subject of comprehensive animal and human toxicology studies that have shown evidence of the safety of the polymer. When administered, the polymers undergo controlled hydrolysis, resulting in a controlled, sustained release of the pharmacological agent encapsulated within the Biochronomer-based composition.
SUSTOL is indicated in combination with other antiemetics in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of moderately emetogenic chemotherapy (MEC) or anthracycline and cyclophosphamide (AC) combination chemotherapy regimens.
SUSTOL is indicated in combination with other antiemetics in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of MEC or AC combination chemotherapy regimens. SUSTOL is an extended-release, injectable 5-HT3 receptor antagonist that utilizes our Biochronomer Technology to maintain therapeutic levels of granisetron for ≥5 days.
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.
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.
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.
CINVANTI is covered by 12 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.
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.
Likewise, if we receive approvals to market and distribute any such products abroad, they would also be subject to extensive foreign government regulation.
However, these agreements may not provide meaningful protection for, or adequate remedies to protect, our technology in the event of unauthorized use or disclosure of information.
However, these agreements may not provide meaningful protection for, or adequate remedies to protect, our technology in the event of unauthorized use or disclosure of information. Furthermore, our trade secrets may otherwise become known to, or be independently developed by, our competitors. Government Regulation Pharmaceutical Regulation Pharmaceutical products that we market in the U.S. are subject to extensive government regulation.
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.
Pharmaceutical companies both large and small compete for a limited number of qualified applicants to fill specialized positions, which continued in 2024, with heavy competition for talent. To attract qualified applicants, we offer a total rewards package consisting of base salary and cash bonus incentive targets aligned with the applicable market norms and long term equity compensation.
If concerns or questions are raised, an IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can proceed. An IND must become effective before human clinical trials begin. We have filed INDs in the U.S. and Clinical Trial Applications (“CTAs”) in the EU, and we may file additional INDs and CTAs in the future.
Clinical trials may begin 30 days after an IND is received, unless the FDA raises concerns or questions about the conduct of the clinical trials. If concerns or questions are raised, an IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can proceed. An IND must become effective before human clinical trials begin.
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.
The CINVANTI formulation does not contain polysorbate 80 or any other synthetic surfactant. 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.
Our potential competitors in these markets may succeed in developing products that could render our Products and our product candidates obsolete or noncompetitive.
We cannot give any assurances that we can compete effectively with these other biotechnology and pharmaceutical companies. Our Products compete in highly competitive markets. Our potential competitors in these markets may succeed in developing products that could render our Products obsolete or noncompetitive.
Biochronomer Technology Our proprietary Biochronomer Technology is designed to deliver therapeutic levels of a wide range of otherwise short-acting pharmacological agents over a period from days to weeks with a single administration. Our Biochronomer Technology consists of polymers that have been the subject of comprehensive animal and human toxicology studies that have shown evidence of the safety of the polymer.
SUSTOL was approved by the FDA in August 2016, and we commenced commercial sales in the U.S. in October 2016. Biochronomer Technology Our proprietary Biochronomer Technology is designed to deliver therapeutic levels of a wide range of otherwise short-acting pharmacological agents over a period from days to weeks with a single administration.
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.
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.
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.
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. In September 2024, the FDA approved our Prior Approval Supplement Application for ZYNRELEF Vial Access Needle ("VAN"), which will replace the current vented vial spike.
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.
Human Capital Management As of December 31, 2024, we employed 122 full-time employees, 75 of whom are involved in sales and marketing activities, 12 of whom are involved in research and development activities and 35 of whom are involved in general and administrative activities.
The IND includes information regarding the preclinical studies, the investigational product’s chemistry and manufacturing, supporting data and literature and the investigational plan and protocol(s). Clinical trials may begin 30 days after an IND is received, unless the FDA raises concerns or questions about the conduct of the clinical trials.
An IND is the request for authorization from the FDA to administer an investigational new drug product to humans. The IND includes information regarding the preclinical studies, the investigational product’s chemistry and manufacturing, supporting data and literature and the investigational plan and protocol(s).
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.
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.
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.
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, 2024, we had a total of 31 issued U.S. patents and an additional 124 issued (or registered) foreign patents. The patents on the bioerodible technologies expire in April 2026.
Healthcare providers, physicians and third-party payors play a primary role in the recommendation and prescription of our Products and any other product candidates for which we obtain marketing approval.
Healthcare providers, physicians and third-party payors play a primary role in the recommendation and prescription of our Products. 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.
Other internal or government investigations or legal or regulatory proceedings, including lawsuits brought by private litigants, may also follow as a consequence.
Other internal or government investigations or legal or regulatory proceedings, including lawsuits brought by private litigants, may also follow as a consequence. We have a policy against using Company funds for political purposes, and we incurred no costs in 2024, 2023 or 2022 associated with legal or regulatory fines or settlements associated with violations of bribery, corruption or anti-competitive standards.
In these markets, once marketing approval is received, pricing negotiations could take significant additional time. As in the U.S., the lack of satisfactory reimbursement or inadequate government pricing of any of our Products would limit widespread use and lower potential Product revenues.
In these markets, once marketing approval is received, pricing negotiations could take significant additional time.
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.
Results also showed CINVANTI was better tolerated in healthy volunteers than EMEND IV, with significantly fewer adverse events reported with 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.
In addition, in December 2022, H.R. 2617, the omnibus spending bill was approved by Congress, which includes the Non-Opioids Prevent Addiction in the Nation (NOPAIN) Act which directs CMS to provide separate Medicare reimbursement for non-opioid treatments that are used to manage pain during surgeries conducted in hospital outpatient departments or in ambulatory surgical centers.
Removed
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.
Added
Acute Care Product Portfolio ZYNRELEF 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.
Removed
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.
Added
To qualify, the non-opioid treatment must demonstrate the ability to replace, reduce, or avoid intraoperative or postoperative opioid use or the quantity of opioids prescribed in a clinical trial or through data published in a peer-reviewed journal.
Removed
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.
Added
The hospital outpatient prospective payment system and ambulatory surgical center proposed rule for calendar year 2025 includes ZYNRELEF as a qualifying non-opioid requiring CMS to provide separate Medicare reimbursement in both the hospital outpatient department and ambulatory surgical center settings from January 1, 2025, through December 31, 2027.
Removed
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.
Added
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 PONV in adults. CMS granted pass-through payment status for APONVIE, effective April 1, 2023. 4 Oncology Care Product Portfolio CINVANTI CINVANTI is an IV formulation of aprepitant, a substance NK1 receptor antagonist.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditional 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.
Biggest changeAdditional 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 if these Products do not attain market acceptance by healthcare professionals and patients, our business and results of operations will suffer. • If we cannot maintain satisfactory pricing of our Products, 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 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. • If our suppliers or contract manufacturers are unable to manufacture in commercially viable quantities, or perform as expected, we could face delays in our ability to commercialize our Products, our costs will increase and sales of our Products , may be severely hindered. • Certain of the components used in the manufacture of our Products are, or might be, sourced from a single vendor, and the loss or disruption of this vendor could significantly harm our business. • We face intense competition from other companies developing products for the management of postoperative pain or the prevention of CINV and PONV, including lower-cost generic products, which may limit our ability to sell our products. • 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. • If we are unable to recruit and retain skilled employees, we may not be able to achieve our objectives. • Our business strategy may include international expansion, acquisitions of other businesses, products or product licenses.
Historically, we have financed our operations, including technology and product research and development, primarily through sales of our common stock and debt financings.
Historically, we have financed our operations, including technology and product research and development, primarily through sales of our common stock, product sales and debt financings.
In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace or remove our Board of Directors. These provisions include authorizing the issuance of “blank check” preferred stock without any need for action by stockholders.
In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace or remove our Board of Directors (the "Board"). These provisions include authorizing the issuance of “blank check” preferred stock without any need for action by stockholders.
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.
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; • 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.
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.
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 the Board 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 the Board who do not agree with our strategic plan, the ability of the Board to function effectively could be adversely affected.
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.
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; • 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.
If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to the U.S., or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business.
If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to the U.S., or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions at significant expense, 47 increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business.
Further, the Inflation Reduction Act of 2022 (“IRA”), signed into law in August 2022, includes various provisions intended to address drug-pricing issues (such as provisions empowering the federal government to negotiate the price of some high-cost, single-source Medicare Part B and Part D drugs (with the new pricing to take effect in January 2026 or thereafter) and requiring rebates for certain Part B and Part D drugs if their price increases outpace inflation).
Further, the Inflation Reduction Act of 2022 (“IRA”), signed into law in August 2022, includes various provisions intended to address drug-pricing issues (such as provisions empowering the federal government to negotiate the 23 price of some high-cost, single-source Medicare Part B and Part D drugs (with the new pricing to take effect in January 2026 or thereafter) and requiring rebates for certain Part B and Part D drugs if their price increases outpace inflation).
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.
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; • impose restrictions on our operations; • close the facilities of our contract manufacturers; or • seize or detain products or require a product recall.
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.
If our Products 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; 33 • 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 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.
In addition, PPACA provides that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the false claims statutes. Finally, some states, such as California, Massachusetts and Vermont, mandate implementation of commercial compliance programs to ensure compliance with these laws.
In addition, PPACA provides that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the false claims statutes. Finally, 40 some states, such as California, Massachusetts and Vermont, mandate implementation of commercial compliance programs to ensure compliance with these laws.
While we value constructive input from investors and regularly engage in dialogue with our stockholders, and we welcome their views and opinions regarding strategy and performance, we may be subject to actions or proposals from activist stockholders that may not align with our business strategies or the interests of our other stockholders, and our Board of Directors and our management are committed to acting in the best interests of all of our stockholders.
While we value constructive input from investors and regularly engage in dialogue with our stockholders, and we welcome their views and opinions regarding strategy and performance, we may be subject to actions or proposals from activist stockholders that may not align with our business strategies or the interests of our other stockholders, and the Board and our management are committed to acting in the best interests of all of our stockholders.
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.
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.
A product liability claim could also significantly harm our reputation and delay market acceptance of our Products. If any of our services providers are characterized as employees, we would be subject to employment and tax withholding liabilities and other additional costs. We rely on independent third parties to provide certain services to us.
A product liability claim could also significantly harm our reputation and delay market acceptance of our Products. If any of our services providers are characterized as employees, we would be subject to employment and tax withholding liabilities and other additional costs. 36 We rely on independent third parties to provide certain services to us.
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 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 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.
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.
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.
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.
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 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 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).
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").
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.
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. 35 New debt financing we enter into typically involves covenants that restrict our operations.
Satisfying regulatory requirements typically takes a significant number of years and can vary substantially based on the type, complexity and novelty of the product candidate. Our business, results of operations and financial condition could be materially and adversely affected by any delays in, or termination of, our clinical trials.
Satisfying regulatory requirements typically takes a significant number of years and can vary substantially based on the type, complexity and novelty of the product candidate. Our business, results of operations and financial 42 condition could be materially and adversely affected by any delays in, or termination of, our clinical trials.
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.
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. We may not obtain regulatory approval for our product candidates in development.
The FDA or a comparable non-U.S. regulatory authority may require additional preclinical or clinical data to support approval, such as confirmatory studies and other data or studies to address questions or concerns that may arise during the FDA review process. Regulatory approval may also be delayed, limited or prevented by other factors.
The FDA or a comparable non-U.S. regulatory authority may require additional preclinical or clinical data to support approval, such as confirmatory studies and other data or studies to address questions or concerns that may arise during the FDA review process. Regulatory approval may also be delayed, limited or prevented by other 45 factors.
Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data are available. We may also disclose interim data from our clinical trials.
Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data are available. We may also 29 disclose interim data from our clinical trials.
On the expiration or loss of patent protection for a branded product, or on the “at-risk” launch (despite pending patent infringement litigation against the generic product) by a manufacturer of a generic version of a drug that may compete with one of our products, we could quickly lose a significant portion of our sales of that Product or product candidate.
On the expiration or loss of patent protection for a branded product, or on the “at-risk” launch (despite pending patent infringement litigation against the generic product) by a manufacturer of a generic version of a drug that may compete with one of our products, we could quickly lose a significant portion of our sales of that Product.
Further, any further deterioration in the macroeconomic economy or financial services industry could lead to losses or defaults by parties with whom we conduct business, which in turn, could have a material adverse effect on our current and/or projected business operations and results of operations and financial condition.
Further, any additional deterioration in the macroeconomic economy or financial services industry could lead to losses or defaults by parties with whom we conduct business, which in turn, could have a material adverse effect on our current and/or projected business operations and results of operations and financial condition.
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.
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.
We may publicly disclose interim, topline, or preliminary data from our clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a full analyses of all data related to the particular trial.
We may publicly disclose interim, topline, or preliminary data from our clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a full analysis of all data related to the particular trial.
From time to time, even if a product candidate has not failed, we may voluntarily determine to pause development, which effectively halts our ability to commercialize the product. For example, we recently decided to pause the development of HTX-034 to evaluate the program and market potential going forward.
From time to time, even if a product candidate has not failed, we may voluntarily determine to pause development, which effectively halts our ability to commercialize the product. For example, we decided to pause the development of HTX-034 to evaluate the program and market potential going forward.
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.
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 competitors may also independently develop products similar to ours or design around or otherwise circumvent patents issued to us or licensed by us. In addition, the laws of some foreign countries may not protect our proprietary rights to the same extent as U.S. laws.
Our competitors may also independently develop products similar to 50 ours or design around or otherwise circumvent patents issued to us or licensed by us. In addition, the laws of some foreign countries may not protect our proprietary rights to the same extent as U.S. laws.
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 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.
In addition, because we fund the development of our Products and product candidates, we may not be able to continue to fund all such development efforts to completion or to provide the support necessary to perform the clinical trials, obtain regulatory approvals, or market any approved products.
In addition, because we fund the development of our Products and product candidates, we may not be able to continue to fund all such development efforts to completion or to provide the support necessary to perform the 30 clinical trials, obtain regulatory approvals, or market any approved products.
Costly and time-consuming litigation could be necessary to seek to enforce and determine the scope of our proprietary rights. Any failure to enforce or protect our rights could cause us to lose the ability to exclude others from using our technology to develop or sell competing products.
Costly and time-consuming litigation could be necessary to seek to enforce and determine the scope of our 51 proprietary rights. Any failure to enforce or protect our rights could cause us to lose the ability to exclude others from using our technology to develop or sell competing products.
The terms of our Senior Unsecured Convertible Notes require us to seek approval from the holders of such notes before taking certain actions, including incurring certain additional indebtedness, modifying the terms of certain existing indebtedness, creating liens or selling royalty interests in Company assets.
The terms of our Senior Convertible Notes require us to seek approval from the holders of such notes before taking certain actions, including incurring certain additional indebtedness, modifying the terms of certain existing indebtedness, creating liens or selling royalty interests in Company assets.
If a previously unknown problem or problems with a Product or a manufacturing and laboratory facility used by us is discovered, the FDA or foreign regulatory agency may impose restrictions on that Product or on the manufacturing facility, including requiring us to withdraw the Product from the market.
If a previously unknown problem or problems with a Product 38 or a manufacturing and laboratory facility used by us is discovered, the FDA or foreign regulatory agency may impose restrictions on that Product or on the manufacturing facility, including requiring us to withdraw the Product from the market.
Changes in laws affecting the healthcare industry could also adversely affect our revenues and profitability, including new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations or 46 decisions related to patent protection and enforcement, healthcare availability, and drug product pricing and marketing.
Changes in laws affecting the healthcare industry could also adversely affect our revenues and profitability, including new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations or decisions related to patent protection and enforcement, healthcare availability, and drug product pricing and marketing.
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.
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.
Accordingly, there is no assurance that the actions taken by our Board of Directors and our management in seeking to maintain constructive engagement with certain stockholders will be successful in preventing the occurrence of stockholder activist campaigns.
Accordingly, there is no assurance that the actions taken by the Board and our management in seeking to maintain constructive engagement with certain stockholders will be successful in preventing the occurrence of stockholder activist campaigns.
Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, and other adverse business consequences.
Our actual or perceived failure to comply with 46 such obligations could lead to regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, and other adverse business consequences.
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.
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.
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.
Our collaborators may choose to pursue existing or alternative technologies in preference to those being developed in collaboration with us. 32 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.
Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.
Extortion payments may alleviate the negative impact of a ransomware 48 attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.
Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by the SEC, The Nasdaq Capital Market or other regulatory authorities. 56 Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be the source of gain for our stockholders.
Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by the SEC, The Nasdaq Capital Market or other regulatory authorities. 54 Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be the source of gain for our stockholders.
In the event we pursue the right to market and sell our Products or our product candidates in jurisdictions other than the U.S., we or our potential third-party partners would be required to obtain separate marketing approvals and comply with numerous and varying regulatory requirements in each foreign country. The approval procedure varies among countries and can involve additional testing.
In the event we pursue the right to market and sell our Products in jurisdictions other than the U.S., we or our potential third-party partners would be required to obtain separate marketing approvals and comply with numerous and varying regulatory requirements in each foreign country. The approval procedure varies among countries and can involve additional testing.
These factors could involve financial institutions or financial services industry companies with which we have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.
These factors could involve financial institutions or financial services industry companies with which we have financial or business relationships, but could also include factors involving financial markets or the financial 37 services industry generally.
Following initial regulatory approval for drugs we develop, including our Products and our product candidates, we remain subject to continuing regulatory review, including review of adverse drug experiences and clinical results that may be reported after drug products become commercially available. This would include results from any postmarketing tests or continued actions required as a condition of approval.
Following initial regulatory approval for drugs we develop, including our Products, we remain subject to continuing regulatory review, including review of adverse drug experiences and clinical results that may be reported after drug products become commercially available. This would include results from any postmarketing tests or continued actions required as a condition of approval.
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.
ZYNRELEF competes in the postoperative pain management market with MARCAINETM (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.
The Medicare program and certain government pricing programs, including the Medicaid drug rebate program, the Public Health Services’ 340B drug pricing program, and the pricing program under the Veterans Health Care Act of 1992 impact the reimbursement we may receive from sales of our Products, our product candidates or any other products that are approved for marketing in the U.S.
The Medicare program and certain government pricing programs, including the Medicaid drug rebate program, the Public Health Services’ 340B drug pricing program, and the pricing program under the Veterans Health Care Act of 1992 impact the reimbursement we may receive from sales of our Products, or any other products that are approved for marketing in the U.S.
At times, our contract manufacturers or other third parties might not perform their obligations under long-term commercial manufacturing agreements or other agreements, which could impede the manufacturing of our Products and our product candidates and could require us to incur additional costs, including legal fees, as we seek to enforce our contractual rights.
At times, our contract manufacturers or other third parties might not perform their obligations under long-term commercial manufacturing agreements or other agreements, which could impede the manufacturing of our Products and could require us to incur additional costs, including legal fees, as we seek to enforce our contractual rights.
Government agencies promulgate regulations and guidelines directly applicable to us and to our Products and product candidates. In addition, professional societies, practice management groups, private health and science foundations and other organizations from time to time may publish papers, guidelines or recommendations to the healthcare and patient communities with respect to specific products or classes of products.
Government agencies promulgate regulations and guidelines directly applicable to us and to our Products. In addition, professional societies, practice management groups, private health and science foundations and other organizations from time to time may publish papers, guidelines or recommendations to the healthcare and patient communities with respect to specific products or classes of products.
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. We have established an internal commercial organization for the sale, marketing and distribution of our Products in the U.S.
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, our sales may be adversely affected. We have established an internal commercial organization for the sale, marketing and distribution of our Products in the U.S.
Our Products, our product candidates and other products that we may commercially market in the future may cause, or may appear to have caused, injury or dangerous drug reactions, and we may not learn about or understand those effects until the Product or product candidate has been administered to patients for a prolonged period of time.
Our Products and other products that we may commercially market in the future may cause, or may appear to have caused, injury or dangerous drug reactions, and we may not learn about or understand those effects until the Product has been administered to patients for a prolonged period of time.
Our future arrangements with third-party payors and customers may expose us to broadly 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 product candidates with marketing approval.
Our future arrangements with third-party payors and customers may expose us to broadly 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 with marketing approval.
Our ability to commercialize our Products and product candidates successfully will depend in part on the extent to which governmental authorities, private health insurers and other organizations establish appropriate reimbursement levels for the cost of such products and related treatments and for what uses reimbursement will be provided.
Our ability to commercialize our Products successfully will depend in part on the extent to which governmental authorities, private health insurers and other organizations establish appropriate reimbursement levels for the cost of such products and related treatments and for what uses reimbursement will be provided.
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.
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.
Our business will be adversely affected if, due to these or other factors, our commercialization of our Products and our product candidates does not achieve the acceptance and demand necessary to sustain revenue growth. If we are unable to successfully commercialize our Products and our product candidates our business and results of operations will suffer.
Our business will be adversely affected if, due to these or other factors, our commercialization of our Products does not achieve the acceptance and demand necessary to sustain revenue growth. If we are unable to successfully commercialize our Products our business and results of operations will suffer.
The continuing efforts of the U.S. government, insurance companies, managed care organizations and other payors of health care costs to contain or reduce costs of health care may adversely affect our ability to generate adequate revenues and gross margins to make our Products or product candidates commercially viable.
The continuing efforts of the U.S. government, insurance companies, managed care organizations and other payors of health care costs to contain or reduce costs of health care may adversely affect our ability to generate adequate revenues and gross margins to make our Products commercially viable.
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.
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. 25 Our Products 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.
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.
Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. 52 Risks Related to Our Common Stock The price of our common stock has been and may continue to be volatile.
Changes in FDA regulations and regulations issued by other regulatory agencies inside and outside of the U.S., including new or different approval requirements, timelines and processes, may also delay or prevent the approval of our product candidates, require additional safety monitoring, labeling changes, restrictions on product distribution or other measures that could increase our costs of doing business and adversely affect the market for our Products and our product candidates.
Changes in FDA regulations and regulations issued by other regulatory agencies inside and outside of the U.S., including new or different approval requirements, timelines and processes, may also require additional safety monitoring, labeling changes, restrictions on product distribution or other measures that could increase our costs of doing business and adversely affect the market for our Products.
The development of a sales organization to market our Products and product candidates is expensive and time consuming, and we cannot be certain that we will be able to successfully develop this capacity or that this function will execute as expected.
The development of a sales organization to market our Products is expensive and time consuming, and we cannot be certain that we will be able to successfully develop this capacity or that this function will execute as expected.
Our internal sales and marketing organization is not currently structured or staffed to launch products on an international level and, therefore, we may not be able to successfully commercialize our Products or product candidates outside of the U.S.
Our internal sales and marketing organization is not currently structured or staffed to launch products on an international level and, therefore, we may not be able to successfully commercialize our Products outside of the U.S.
Certain of the components used in the manufacture of our Products and product candidates are, or might be, sourced from a single vendor, and the loss or disruption of this vendor could significantly harm our business. Some of the critical materials and components used in manufacturing our Products and product candidates are, or might be, sourced from single suppliers.
Certain of the components used in the manufacture of our Products are, or might be, sourced from a single vendor, and the loss or disruption of this vendor could significantly harm our business. Some of the critical materials and components used in manufacturing our Products are, or might be, sourced from single suppliers.
Priority Review designation is intended to direct overall attention and resources of the FDA to the evaluation of such applications and means that the FDA’s goal is to take action on such applications within 6 months, compared to 10 months under standard review.
Priority Review designation is intended to direct overall attention and resources of the FDA to the evaluation of such applications and means that the FDA’s goal is to take action on such applications within six months, compared to 10 months under standard review.
We depend on third-party suppliers and contract manufacturers to manufacture our Products and our product candidates, and we expect to do the same for any future products that we develop; if our contract manufacturers do not perform as expected, our business could suffer.
We depend on third-party suppliers and contract manufacturers to manufacture our Products, and we expect to do the same for any future products that we develop; if our contract manufacturers do not perform as expected, our business could suffer.
The inability for a branded Product or product candidate we may sell to successfully compete against generic products could negatively impact sales of our Product or product candidate, reduce our ability to grow our business and significantly harm our business prospects.
The inability for a branded Product we may sell to successfully compete against generic products could negatively impact sales of our Product, reduce our ability to grow our business and significantly harm our business prospects.
We are prohibited from promoting our Products and any product candidates that receive regulatory approval for “off-label” uses or promoting in a non-truthful and misleading way that are not described in its labeling and that differ from the uses approved by the FDA. Physicians may prescribe drug products for off-label uses, and such off-label uses are common across medical specialties.
We are prohibited from promoting our Products that receive regulatory approval for “off-label” uses or promoting in a non-truthful and misleading way that are not described in its labeling and that differ from the uses approved by the FDA. Physicians may prescribe drug products for off-label uses, and such off-label uses are common across medical specialties.
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 decide to commercialize our Products 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.
We may not be able to enter into collaborative agreements or may not be able to negotiate commercially acceptable terms for these agreements. Our business strategy may include the entry into collaborative agreements for the development and commercialization of our Products and our product candidates.
We may not be able to enter into collaborative agreements or may not be able to negotiate commercially acceptable terms for these agreements. Our business strategy may include the entry into collaborative agreements for the development and commercialization of our Products.
These and other aspects of the PPACA, including the regulations that may be imposed in connection with the implementation of the PPACA, could increase our expenses and adversely affect our ability to successfully commercialize our Products and our product candidates.
These and other aspects of the PPACA, including the regulations that may be imposed in connection with the implementation of the PPACA, could increase our expenses and adversely affect our ability to successfully commercialize our Products.
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.
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. 55 ITEM 1B. UNRESOLVE D STAFF COMMENTS . None.
No other 5-HT 3 receptor antagonist is specifically approved for the prevention of delayed CINV associated with a HEC regimen. Small or early-stage companies and research institutions may also prove to be significant competitors, particularly through collaborative arrangements with large and established pharmaceutical companies.
No other 5-HT3 receptor antagonist is specifically approved for the prevention of delayed CINV associated with a HEC regimen. Small or early-stage companies and research institutions may also prove to be significant competitors, particularly through collaborative arrangements with large and established pharmaceutical companies.
The pharmaceutical industry is subject to significant regulation and oversight pursuant to anti-kickback laws, false claims statutes and anti-corruption laws, which may result in significant additional expense and limit our ability to commercialize our Products and our product candidates. In addition, any failure to comply with these regulations could result in substantial fines or penalties.
The pharmaceutical industry is subject to significant regulation and oversight pursuant to anti-kickback laws, false claims statutes and anti-corruption laws, which may result in significant additional expense and limit our 39 ability to commercialize our Products. In addition, any failure to comply with these regulations could result in substantial fines or penalties.
If we decide to seek the assistance of third parties with international expertise to help commercialize our Products or product candidates outside of the U.S., we may not be successful in finding willing third parties and, even if we are able to find willing third parties, they might not be able to successfully obtain the approvals and take the steps needed to commercialize our Products or product candidates.
If we decide to seek the assistance of third parties with international expertise to help commercialize our Products outside of the U.S., we may not be successful in finding willing third parties and, even if we are able to find willing third parties, they might not be able to successfully obtain the approvals and take the steps needed to commercialize our Products.
As evidenced by developments such as these, low prices of our Products and product candidates in the U.S. and foreign jurisdictions may have a negative impact on the prices of our Products and product candidates in the U.S.
As evidenced by developments such as these, low prices of our Products in the U.S. and foreign jurisdictions may have a negative impact on the prices of our Products in the U.S.
For this and other reasons, our third-party contract manufacturers may not be able to manufacture our Products or product candidates in a cost-effective or timely manner.
For this and other reasons, our third-party contract manufacturers may not be able to manufacture our Products in a cost-effective or timely manner.
The Senior Unsecured Convertible Notes also contain provisions that trigger events of default on any default of our financial obligations under certain material contracts we may enter into.
Our Senior Convertible Notes also contain provisions that trigger events of default on any default of our financial obligations under certain material contracts we may enter into.
Likewise, our distribution and contracting partners and those providing vendor support services may also be the subject of regulatory investigations involving, or remedies or sanctions for, off-label promotion of our Products or product candidates, which may adversely impact sales of our Products or product candidates or trigger indemnification obligations.
Likewise, our distribution and contracting partners and those providing 41 vendor support services may also be the subject of regulatory investigations involving, or remedies or sanctions for, off-label promotion of our Products, which may adversely impact sales of our Products or trigger indemnification obligations.
Although we entered into long-term commercial manufacturing agreements for the manufacture of our Products and our product candidates, and we have long-term agreements for the manufacture of our Biochronomer Technology, we might not be able to successfully negotiate long-term agreements with any additional third parties, or we might not receive all required regulatory approvals to utilize such third parties, and, accordingly, we might not be able to reduce or remove our dependence on a single supplier for the commercial manufacturing of our Products or our product candidates.
Although we entered into long-term commercial manufacturing agreements for the manufacture of our Products, including long-term agreements for the manufacture of our Biochronomer Technology, we might not be able to successfully negotiate long-term agreements with any additional third parties, or we might not receive all required regulatory approvals to utilize such third parties, and, accordingly, we might not be able to reduce or remove our dependence on a single supplier for the commercial manufacturing of our Products.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Chief Financial Officer, who reports directly to the Chief Executive Officer and has over 15 years of experience managing information technology and cybersecurity matters, is responsible for assessing and managing cybersecurity risks. We consider cybersecurity, along with other significant risks that we face, within our overall enterprise risk management framework.
Biggest changeAdditional information on cybersecurity risks we face is discussed in Part I, Item 1A, “Risk Factors.” Governance Our Chief Financial Officer, who reports directly to the Chief Executive Officer and has over 15 years of experience managing information technology and cybersecurity matters, is responsible for assessing and managing cybersecurity risks.
The Audit Committee, which is comprised solely of independent directors, has been designated by our Board to oversee cybersecurity risks. The Audit Committee receives regular updates on cybersecurity and information technology matters and related risk exposures from our Chief Financial Officer.
The Audit Committee, which is comprised solely of independent directors, has been designated by the Board to oversee cybersecurity risks. The Audit Committee receives regular updates on cybersecurity and information technology matters and related risk exposures from our Chief Financial Officer.
For example, we conduct penetration and vulnerability testing, data recovery testing, security audits, and ongoing risk assessments, including due diligence on and audits of our key technology vendors, and other contractors and suppliers. We also conduct periodic employee training on cyber and information security, among other topics.
For example, we conduct vulnerability testing, data recovery testing, security audits, and ongoing risk assessments, including due diligence on and audits of our key technology vendors, and other contractors and suppliers. We also conduct periodic employee training on cyber and information security, among other topics.
ITEM 1C. CYBERSECU RITY In the ordinary course of our business, we collect, use, store, and transmit digitally large amounts of confidential, sensitive, proprietary, and personal information. The secure maintenance of this information and our information technology systems is important to our operations and business strategy.
ITEM 1C. CYBERSECU RITY Risk Management and Strategy In the ordinary course of our business, we collect, use, store, and transmit digitally large amounts of confidential, sensitive, proprietary, and personal information. The secure maintenance of this information and our information technology systems is important to our operations and business strategy.
In addition, we consult with outside advisors and experts, when appropriate to assist with assessing, identifying, and managing cybersecurity risks, including to anticipate future threats and trends, and their impact on the Company’s risk environment.
In addition, we consult with outside advisors and experts, when appropriate to assist with assessing, identifying, and managing cybersecurity risks, including to anticipate future threats and trends, and their impact on the Company’s risk environment. In the last fiscal year, we have not identified risks from known cybersecurity threats, including any prior cybersecurity incidents, that have materially affected us .
Additional information on cybersecurity risks we face is discussed in Part I, Item 1A, “Risk Factors.” The Board of Directors, as a whole and at the committee level, has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage, and mitigate those risks.
We consider cybersecurity, along with other significant risks that we face, within our overall enterprise risk management framework. The Board, as a whole and at the committee level, has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage, and mitigate those risks.
In the last fiscal year, we have not identified risks from known cybersecurity threats, including any prior cybersecurity incidents, that have materially affected us. However, we face certain ongoing cybersecurity threats that, if realized, are reasonably likely to materially affect us.
However, we face certain ongoing cybersecurity threats that, if realized, are reasonably likely to materially affect us.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 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.
Biggest changeITEM 2. PR OPERTIES . We have 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.
The 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
The 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 have 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.
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We also have a short-term operating lease for 9,882 square feet of office space in Cary, North Carolina, with a lease term that expires on August 31, 2025. 56

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe 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.
Biggest change(“Slayback’s NDA”) prior to the expiration of the patents listed in the Orange Book. The Slayback 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 Slayback’s NDA.
(“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.
(“Mylan”) advising that Mylan had submitted an ANDA to the FDA seeking approval to manufacture, use or sell a generic version of CINVANTI (“Mylan’s CINVANTI ANDA”) in the U.S. prior to the expiration of the CINVANTI Patents, which are listed in the Orange Book.
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.
The Mylan August 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 Mylan’s CINVANTI ANDA. On September 15, 2023, the Company filed a complaint for patent infringement of the CINVANTI Patents against Mylan in the U.S.
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.
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 Mylan’s CINVANTI ANDA until the earlier of February 4, 2026 or resolution of the litigation.
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.
On December 16, 2023, the Company received a Notice Letter (the “Mylan December Notice”) from Mylan advising that Mylan had submitted an ANDA to the FDA seeking approval to manufacture, use or sell a generic version of APONVIE in the U.S. (“Mylan’s APONVIE ANDA”) prior to the expiration of U.S.
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.
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. The Mylan December Notice alleges that the APONVIE 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 APONVIE ANDA.
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.
As a result of filing our complaint for patent 57 infringement, the FDA may not approve Mylan’s APONVIE ANDA until the earlier of June 16, 2026 or resolution of the litigation.
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.
On November 9, 2023, the Company received an updated Notice Letter from Mylan advising that it had submitted an amendment to Mylan’s ANDA to include a Paragraph IV certification to Heron’s recently listed U.S. Patent No. 11,744,800. The parties completed fact discovery and are in expert discovery. A five-day bench trial is scheduled for May 19, 2025.
District 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.
District Court for the District of Delaware in response to the filing of Mylan’s CINVANTI ANDA. The complaint seeks, among other relief, equitable relief enjoining Mylan from infringing the CINVANTI Patents.
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.
On January 11, 2024, the Company filed a complaint for patent infringement of the APONVIE Patents against Mylan in the U.S. District Court for the District of Delaware in response to Mylan filing Mylan's APONVIE ANDA. The complaint seeks, among other relief, equitable relief enjoining Mylan from infringing the APONVIE Patents.
Removed
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.
Added
District 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. On May 15, 2024, the Court granted partial summary judgment of infringement for the Company and found no indefiniteness of U.S. Patent Nos. 9,561,229 and 9,974,794.
Added
On June 24, 2024, the parties commenced a four-day bench trial centered on Fresenius Kabi’s defense of obviousness of claims from U.S. Patent Nos. 9,561,229 and 9,974,794 that cover CINVANTI. Oral argument was held on August 29, 2024. On December 3, 2024, the Court issued a ruling in the Company’s favor. The Court found that the Company’s U.S.
Added
Patent Nos. 9,561,229 and 9,974,794, which expire in 2035, are valid and would be infringed by Fresenius Kabi’s proposed generic product.
Added
In view of the decision, the Court ordered that the effective date of any final approval by the FDA of Fresenius Kabi’s ANDA shall not be a date earlier than September 18, 2035, the expiration date of each of U.S. Patents Nos. 9,561,229 and 9,974,794. On January 8, 2025, Fresenius Kabi filed notice of appeal to the U.S.
Added
Court of Appeals for the Federal Circuit. The Company intends to vigorously enforce its intellectual property rights relating to CINVANTI. On August 4, 2023, the Company received a Notice Letter (the “Mylan August Notice”) from Mylan Pharmaceuticals Inc.
Added
On January 26, 2024, the Court consolidated this litigation concerning Mylan’s APONVIE ANDA with the previously-filed litigation concerning Mylan’s CINVANTI ANDA. A five-day bench trial is scheduled for May 19, 2025. The Company intends to vigorously enforce its intellectual property rights relating to APONVIE.
Added
On December 11, 2023, the Company received a Paragraph IV notice of certification (the “Slayback Notice”) from Slayback Pharma LLC ("Slayback") (now owned by Azurity Pharmaceuticals, Inc.) advising that Slayback had submitted an NDA under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act to the FDA seeking approval to manufacture, use or sell a generic version of CINVANTI in the U.S.
Added
On January 24, 2024, the Company filed a complaint for patent infringement of the CINVANTI Patents against Slayback and a related entity in the U.S. District Court for the District of New Jersey in response to Slayback’s NDA filing. The complaint seeks, among other relief, equitable relief enjoining Slayback from infringing those patents. On July 2, 2024, the U.S.
Added
District Court for the District of New Jersey granted Slayback’s motion to transfer this matter to the U.S. District Court for the District of Delaware. On December 12, 2024, to reflect Azurity Pharmaceuticals, Inc.’s (“Azurity”) acquisition of Slayback, the Court entered a stipulation adding Azurity and a related entity into the case.
Added
On December 12, 2024, the Company filed a complaint against Slayback, Azurity, and related entities in the U.S. District Court for District of Delaware for patent infringement of U.S. Patent Nos. 12,115,254 and 12,115,255. The parties are currently in fact discovery and preparing for claim construction. A four-day bench trial is currently scheduled for November 17, 2025.
Added
The Company intends to vigorously enforce its intellectual property rights relating to CINVANTI. As a result of our initial complaint for patent infringement, the FDA may not approve Slayback’s NDA until the earlier of June 12, 2026 or resolution of the litigation. ITEM 4. MINE SAF ETY DISCLOSURES. Not applicable. 58 PART II

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 February 28, 2024 was 88.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Removed
Unregistered Sales of Equity Securities and Use of Proceeds None. ITEM 6. [RES ERVED] . 60
Added
Information About Our Common Stock Shares of our common stock are traded on The Nasdaq Capital Market, under the symbol “HRTX.” Stockholders As of February 6, 2025, there were 68 holders of record of our common stock, which does not include beneficial owners of stock held in street name (i.e., through a brokerage firm, bank, broker-dealer, trust or other similar organization).
Added
Unregistered Sales of Equity Securities and Use of Proceeds None. 59 Performance Graph Cumulative Total Return The following graph compares the relative performance of our common stock, the NASDAQ Composite Index and the NASDAQ Biotechnology Index.
Added
This graph covers the period from December 31, 2019 through December 31, 2024 and assumes that $100 was invested on December 31, 2019 in our common stock, the NASDAQ Composite Index and the NASDAQ Biotechnology Index with the reinvestment of any dividends.
Added
December 31, 2019 2020 2021 2022 2023 2024 Heron Therapeutics, Inc. $ 100.00 $ 90.06 $ 38.85 $ 10.64 $ 7.23 $ 6.51 Nasdaq Composite Index 100.00 143.64 174.36 116.65 167.30 215.22 Nasdaq Biotechnology Index 100.00 125.69 124.89 111.27 115.42 113.84 The graph is not, and is not intended to be, indicative of future performance of our common stock.
Added
This performance graph shall not be deemed “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act, and should not be deemed incorporated by reference into any of our prior or subsequent filings under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 7. Management's Discussion & Analysis

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

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Biggest changeSales 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.
Biggest changeSales and Marketing Expense Sales and marketing expense decreased 30.4% during the year ended December 31, 2024, compared to the prior year and as a percentage of sales, decreased 20.6% during the same period, primarily due to decreased headcount and related costs, as a result of the restructuring implemented in the year ended December 31, 2023, and operational efficiencies. 67 Sales and marketing expense decreased 18.0% during the year ended December 31, 2023, compared to the prior year and as a percentage of sales, decreased 23.4% during the same period, primarily due to a decrease in costs to support the ongoing commercialization of ZYNRELEF, offset by costs to support commercialization of APONVIE, and due to improved operational efficiencies.
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.
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. 64 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.
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.
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.
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.
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, 2024 to the results for the year ended December 31, 2023 and the results for the year ended December 31, 2023 to the results for the year ended December 31, 2022. • Liquidity and capital resources.
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.
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 condition. 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.
However, subsequent changes in estimates may result in a material change to the value of our cash equivalents and short-term investments, which could materially affect our results of operations and financial position. Inventory Inventory is stated at the lower of cost or estimated net realizable value on a first-in, first-out, or FIFO, basis.
However, subsequent changes in estimates may result in a material change to the value of our cash equivalents and short-term investments, which could materially affect our results of operations and financial condition. Inventory Inventory is stated at the lower of cost or estimated net realizable value on a first-in, first-out ("FIFO"), basis.
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 condition. Investments We invest in various types of securities, including U.S. treasury bills and government agency obligations, corporate debt securities and commercial paper.
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.
At December 31, 2024, 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.
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.
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 condition. Income Taxes We make certain estimates and judgments in determining income tax expense for financial statement purposes.
These securities have been initially valued at the transaction price and subsequently valued utilizing a third-party service provider who assesses the fair value using inputs other than quoted prices that are observable either directly or indirectly, such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures.
These securities have been initially valued at the transaction price and subsequently valued utilizing a third-party to assess the fair value using inputs other than quoted prices that are observable either directly or indirectly, such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures.
General and Administrative Expense General and administrative expense primarily consists of salaries, stock-based compensation expense and other related costs for personnel in executive, finance and accounting, information technology, legal and human resource functions.
General and Administrative Expense General and administrative expense primarily consists of salaries, stock-based compensation expense and other related costs for personnel in executive, finance and accounting, information technology, legal, human resource, manufacturing and medical affairs functions.
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.
Our net loss for the year ended December 31, 2024 was $13.6 million, or $0.09 per share, compared to a net loss of $110.6 million, or $0.80 per share, for the same period in 2023, and $182.0 million or $1.67 per share for the same period in 2022.
The senior unsecured convertible notes mature on May 26, 2026, unless earlier converted, redeemed or repurchased. 67 As of December 31, 2023, $25.2 million aggregate principal amount under the working capital facility was outstanding (see Note 8 to the Consolidated Financial Statements included in this Annual Report on Form 10-K).
The Senior Convertible Notes mature on May 26, 2026, unless earlier converted, redeemed or repurchased. 68 As of December 31, 2024, $25.5 million aggregate principal amount under the Working Capital Facility was outstanding (see Note 8 to the Consolidated Financial Statements included in this Annual Report on Form 10-K).
We perform certain procedures to corroborate the fair value of these holdings, and in the process, we apply judgment and estimates that if changed, could significantly affect our statements of financial positions. To date, our estimates have not differed materially from actual values.
We perform certain procedures to corroborate the fair value of these holdings, and in the process, we apply judgment and estimates that if changed, could significantly affect our consolidated balance sheets. To date, our estimates have not differed materially from actual values.
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).
Material Cash Requirements As of December 31, 2024, $150.0 million in aggregate principal amount of the Senior Convertible Notes were outstanding (see Note 8 to the Consolidated Financial Statements included in this Annual Report on Form 10-K).
You should review the “Risk Factors” included in Item 1A of this Annual Report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
You should review the sections entitled "Forward-Looking Statements" and "Risk Factors" in this Annual Report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
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.
The increase in cash provided by investing activities was primarily due to net maturities of short-term investments of $20.4 million for the year ended December 31, 2024, compared to net maturities of short-term investments of $19.5 million for the same period in 2023.
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.
Our net cash provided by investing activities for the year ended December 31, 2024 was $18.7 million, compared to $18.0 million for the same period in 2023.
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.
Total purchase obligations of $49.2 million were not included in our consolidated financial statements for the year ended December 31, 2024, with $37.4 million due in one year and $11.8 million due within two years. We intend to use our current financial resources to fund our commitments under these purchase obligations.
Changes to estimates are recorded to research and development expense in the period in which the facts that gave rise to the revision become known. To date, our estimates have not differed materially from the actual costs incurred.
In the case of clinical trials, we rely on estimates of the progress of the clinical trials and related expenses incurred. Changes to estimates are recorded to research and development expense in the period in which the facts that gave rise to the revision become known. To date, our estimates have not differed materially from the actual costs incurred.
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.
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.
Liquidity and Capital Resources As of December 31, 2023, we had cash, cash equivalents and short-term investments of $80.4 million.
Liquidity and Capital Resources As of December 31, 2024, we had cash, cash equivalents and short-term investments of $59.3 million.
Other 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.
Other sales and marketing costs include professional fees and commercialization costs related to our Products. 62 Other 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 Senior Convertible Notes payable, the amortization of debt discount related to our Working Capital Facility, and write-off of property and equipment.
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.
We typically determine transfer of control based on when the product is delivered, and title passes to our Customers. 63 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.
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.
We recognize revenue from product sales when there is a transfer of control of the product to our Customers.
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.
Our net cash provided by financing activities for the year ended December 31, 2024 was $0.9 million, compared to $54.1 million for the same period in 2023. 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.
Examples of areas in which subjective judgment may be required include, among other things, costs associated with services provided by contract organizations for preclinical and clinical development, and manufacturing of our Products and product candidates.
Examples of areas in which subjective judgment may be required include, among other things, costs associated with services provided by contract organizations for preclinical and clinical development, and manufacturing of our Products. We accrue for costs incurred as the services are being provided by monitoring the status of the services provided, and the invoices received from our external service providers.
In October 2021, we entered into a sublease agreement to sublet 23,873 square feet of laboratory and office space. The 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.
The 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.
Research and development expense primarily consists of salaries, stock-based compensation expense and other related costs for personnel in manufacturing, clinical and preclinical development, regulatory, quality and medical affairs. Other research and development expense includes professional fees paid to outside service providers and consultants, facilities costs and materials used in the clinical and preclinical trials and research and development.
Other research and development expense includes professional fees paid to outside service providers and consultants, facilities costs and materials used in the clinical and preclinical trials and research and development.
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.
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.
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.
Our net cash used in operating activities for the year ended December 31, 2024 was $22.5 million, compared to $58.8 million for the same period in 2023.
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.
Our expectations are subject to various risks and assumptions, including but not limited to those listed under the section entitled "Forward-Looking Statements" and “Risk Factors” in this Annual Report on Form 10-K.
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.
In addition, the decrease in research and development expense was due to decreased headcount and related costs as a result of restructurings in the years ended December 31, 2023 and December 31, 2022, as well as a decrease in corresponding non-cash, stock-based compensation expense.
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.
The costs to produce, package and deliver our Products are dependent upon and subject to several factors as discussed in the "Risk Factors" section of this Annual Report on Form 10-K. See the “Critical Accounting Estimates” section of this Annual Report on Form 10-K for further details on our inventory policy.
Under certain of these agreements, we may be subject to penalties in the event that we prematurely terminate these agreements. At this time, due to the variability associated with clinical site agreements, contract research organization agreements and contract manufacturing agreements, we are unable to estimate with certainty the future costs we will incur.
At this time, due to the variability associated with clinical site agreements, contract research organization agreements and contract manufacturing agreements, we are unable to estimate with certainty the future costs we will incur. We intend to use our current financial resources to fund our obligations under these commitments. 69
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 a discussion of our financial condition and liquidity, an analysis of our cash flows for the years ended December 31, 2024 and 2023, and a discussion of our outstanding commitments and contingencies that existed as of December 31, 2024.
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.
General and administrative expense increased 5.7% during the year ended December 31, 2023, compared to the prior year and as a percentage of sales, decreased 6.0% during the same period, primarily due to severance and non-cash, stock-based compensation expense in connection with the executive departures in the second and third quarters of 2023, and ongoing legal costs associated with the CINVANTI patent litigation.
Our discussion is organized as follows: • Overview. This section provides a general description of our business and operating expenses. • Critical accounting estimates.
Our discussion is organized as follows: • Overview. This section provides a general description of our business and operating expenses, as well as other matters that we believe are important to understanding our results of operations and financial condition and in anticipating future trends. • Critical accounting estimates.
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.
This section contains a discussion of the accounting estimates that require a significant level of estimation uncertainty, and changes in which are reasonably likely to have a material effect on our financial condition or results of operations.
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.
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.
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.
As of December 31, 2024, 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.
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.
Other (expense) income, net increased $7.4 million during the year ended December 31, 2023, compared to the prior year, 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.
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.
As of December 31, 2024, the total amount of availability under the Working Capital Facility is approximately $10 million. At December 31, 2024, purchase obligations primarily consisted of non-cancellable commitments with third-party manufacturers in connection with the manufacturing of our Products.
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.
Research and development expense decreased 52.7% during the year ended December 31, 2023, compared to the prior year and as a percentage of sales, decreased 46.0% during the same period, 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.
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.
Total oncology net product sales increased 5.8% during the year ended December 31, 2024, as compared to the prior year, primarily driven by an increase in the units sold. Total oncology net product sales increased 10.7% during the year ended December 31, 2023, as compared to the prior year, driven by an increase in the units sold.
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 contract manufacturing organizations for the manufacture and supply of commercial materials and drug product. In some of our agreements with contract manufacturing organizations, we are required to meet minimum purchase obligations. Under certain of these agreements, we may be subject to penalties in the event that we prematurely terminate these agreements.
The working capital facility has a four year term, with a springing maturity date that is 91 days prior to the stated maturity of our existing senior unsecured convertible notes (if still outstanding at such time).
The Working Capital Facility has a four year term and matures on the earlier of earlier of (a) September 1, 2027 and (b) to the extent that any of the Senior Convertible Notes remain outstanding on such date, (i) May 12, 2026 or (ii) in the event that the maturity date of any of the Senior Convertible Notes is extended, prior to May 12, 2026, to August 11, 2026 or later, the date that is ninety-one days prior to the maturity date of such further extended Senior Convertible Notes.
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.
Other (Expense) Income, Net Other (expense) income, net decreased $2.1 million during the year ended December 31, 2024, compared to the prior year, primarily due to the interest expense associated with the Working Capital Facility Agreement, which was entered into August 2023.
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.
Cost of sales increased 18.6% during the year ended December 31, 2023, as compared to the prior year and as a percentage of sales, increased 0.2% during the same period, primarily driven by a 20.8% increase due to inventory 66 reserves recorded.
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.
Cost of Product Sales Cost of product sales relates to the costs to produce, package and deliver our Products to our Customers. These costs include raw materials, labor, manufacturing and quality control overhead, and depreciation of equipment, as well as shipping and distribution costs.
Removed
Additional uncertainties are identified in the section entitled “Forward-Looking Statements” in this Annual Report on Form 10-K.
Added
Material Trends and Developments Impact of Global Business, Political and Macroeconomic Conditions Uncertainty in the political and macroeconomic environments presents significant risks to our business.
Removed
We accrue for costs incurred as the services are being provided by monitoring the status of the services provided, and the invoices received from our external service providers. In the case of clinical trials, we rely on estimates of the progress of the clinical trials and related expenses incurred.
Added
We are subject to continuing risks and uncertainties, including increasing financial market volatility and uncertainty, 61 inflation, interest rate fluctuations, uncertainty with respect to the federal budget and debt ceiling and potential government shutdowns related thereto, natural or man-made disasters, including severe weather, epidemics, pandemics, cyberattacks, acts of war or terrorism, armed conflict, or global pandemics.
Removed
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.
Added
We closely monitor the impacts of these factors on all aspects of our business, including the impacts on our clinical trial patients, employees, partners, suppliers, and vendors. The ultimate impact of global economic conditions on our business remains highly uncertain and will depend on future developments and factors that continue to evolve.
Removed
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.
Added
Most of these developments and factors are outside of our control and could exist for an extended period of time. As a result, we are subject to continuing risks and uncertainties and continue to closely monitor the impact of the current conditions on our business.
Removed
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.
Added
For more information regarding these risks and uncertainties, see the section titled "Risk Factors" in this Annual Report on Form 10-K. Crosslink Co-Promotion Agreement On January 5, 2024, we entered into a five-year co-promotion agreement with Crosslink Network to be the lead partner in the United States to expand the promotion of ZYNRELEF for orthopedic indications.
Removed
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.
Added
Under the terms of the agreement, Crosslink Network is compensated on a fixed-fee per vial basis, based on growth over a pre-determined baseline period.
Removed
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.
Added
The revenues we generate are dependent upon and subject to several factors, including those discussed in the "Risk Factors" section of this Annual Report on Form 10-K. Refer to the “Critical Accounting Estimates” section of this Annual Report on Form 10-K for further details on our revenue recognition policy.
Removed
There were no commercial manufacturing costs incurred prior to FDA approval of APONVIE.
Added
Research and Development Expense All costs of research and development are expensed in the period incurred. Research and development expense primarily consists of salaries, stock-based compensation expense and other related costs for personnel in clinical and preclinical development, regulatory, and quality.
Removed
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.
Added
We may be able to control the timing and extent of the operating expenses, but some expenses may be incurred without regard to our actions due to contractual commitments.
Removed
General and Administrative Expense For the year ended December 31, 2023, general and administrative expense was $49.0 million, compared to $37.4 million for the same period in 2022.
Added
Recent Accounting Pronouncements See Note 2 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 65 Results of Operations Comparison of Results of Operations Years Ended December 31, ($ in thousands) 2024 % of Sales 2023 % of Sales 2022 % of Sales Net product sales $ 144,285 $ 127,044 $ 107,672 Cost of product sales 38,648 26.8 % 65,105 51.2 % 54,874 51.0 % Gross Profit $ 105,637 $ 61,939 $ 52,798 Operating expenses: Research and development 16,683 11.6 % 39,133 30.8 % 82,704 76.8 % General and administrative 53,397 37.0 % 65,778 51.8 % 62,239 57.8 % Sales and marketing 47,085 32.6 % 67,643 53.2 % 82,513 76.6 % Loss from operations $ (11,528 ) (8%) $ (110,615 ) (87%) $ (174,658 ) (162%) Net Product Sales Years Ended December 31, 2024 2023 2022 Acute Care Net Product Sales $ 30,064 $ 19,118 $ 10,196 Oncology Net Product Sales $ 114,221 $ 107,926 $ 97,476 Total Net Product Sales $ 144,285 $ 127,044 $ 107,672 2024 vs. 2023 2023 vs. 2022 Acute Care Growth 57.3 % 87.5 % Oncology Growth 5.8 % 10.7 % Total Net Product Sales Growth 13.6 % 18.0 % Total acute care net product sales increased 57.3% during the year ended December 31, 2024, as compared to the prior year, primarily driven by an increase in the units sold as a result of increase in market share and new customers to the products for both ZYNRELEF and APONVIE.
Removed
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.
Added
In addition, the increase is attributed to the commercial launch of APONVIE in March 2023.
Removed
We make payments to these clinical sites and clinical research organizations based in part on the number of eligible patients enrolled and the length of their participation in the clinical trials. In some of our agreements with contract manufacturing organizations, we are required to meet minimum purchase obligations.
Added
Total acute care net product sales increased 87.5% during the year ended December 31, 2023, as compared to the prior year, driven by an increase in the units sold as a result of increase in market share and new customers to the products, as well as commercial launch of APONVIE in the U.S. in March 2023.
Removed
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.
Added
Cost of Product Sales Cost of sales decreased 40.6% during the year ended December 31, 2024, as compared to the prior year and as a percentage of sales, decreased 24.4% during the same period, primarily driven by a 29.2% decrease due to reduction in inventory reserves recorded, as the year-ended December 31, 2023 included write-offs for excess and obsolete inventory, for which there were not similar reserves or write-offs in the current year, and a 10.3% decrease due to scaled production achieved in late 2022, resulting in a lower cost per unit.
Added
This increase was partially offset by a 1.8% decrease due to scaled production achieved in late 2022, resulting in a lower cost per unit.
Added
Research and Development Expense Research and development expense consisted of the following (in thousands): December 31, 2024 2023 2022 ZYNRELEF-related costs $ 6,424 $ 11,505 $ 47,975 CINVANTI-related costs 1,441 1,772 6,300 SUSTOL-related costs 428 1,207 1,681 APONVIE-related costs 405 4,572 724 Personnel costs and other expenses 6,129 13,572 15,993 Stock-based compensation expense 1,856 6,505 10,031 Total research and development expense $ 16,683 $ 39,133 $ 82,704 Research and development expense decreased 57.4% during the year ended December 31, 2024, compared to the prior year and as a percentage of sales, decreased 19.2% during the same period, primarily due to decreased headcount and related costs as a result of the restructuring implemented in the year ended December 31, 2023, as well as a decrease in corresponding non-cash, stock-based compensation expense.
Added
The decrease is also partially due to APONVIE becoming commercially available in March 2023, which resulted in lower research and development expense in the year ended December 31, 2024 for APONVIE.
Added
These decreases were offset by an increase in APONVIE related costs to support commercial launch in March 2023.

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