CorMedix M&A announcement

Please go ahead. Good afternoon, and welcome to the CorMedix conference call.

Earlier today, CorMedix and Heron issued a joint press release announcing that the companies have entered into a definitive asset purchase agreement under which CorMedix will acquire substantially all of the assets of Heron. The press release is available on the investor section of each company's website. Leading the call today is Joe Todisco, Chairman and Chief Executive Officer of CorMedix. Following his prepared remarks, Joe will be available to take your questions during the Q&A session, and he will be joined by Susan Blum, Chief Financial Officer, Liz Hurlburt, EVP and Chief Operating and Commercial Officer, and Beth Zelnick Kaufman, EVP and Chief Legal and Compliance Officer and Corporate Secretary.

Before we begin, I would like to remind everyone that during the call, CorMedix management may make what are known as forward-looking statements within the meaning set forth in the Private Securities Litigation Reform Act of 1995. These statements are statements other than statements of historical fact regarding management's expectations, beliefs, goals, and plans, including statements regarding the proposed acquisition by CorMedix of substantially all of the assets of Heron, the expected timing of closing, the anticipated benefits of the transaction, including expected operating cost synergies and the expectation that the transaction will be accretive to earnings and free cash flow, the potential achievement of earn-out milestones and royalty payments, the commercial potential of the acquired products, the terms, funding, and availability of the Pharmakon term loan facility, and CorMedix's ability to pursue future business development transactions.

Actual results may differ materially from those expressed or implied by these statements due to a number of factors, including, among others, the risk that the closing conditions aren't satisfied, including receipt of Heron stockholder approval and/or required regulatory clearances, the ability to successfully integrate the acquired assets and realize anticipated synergies, the impact of the issuance of CorMedix common stock as consideration on our stockholders and the trading price of CorMedix common stock, and the risks associated with its new term loan facility, and the other risks and uncertainties described in greater detail in the joint press release and in the filings of CorMedix and Heron with the SEC, which are available free of charge on the SEC's website. Investors should not place undue reliance on these statements, and CorMedix does not intend to update these forward-looking statements except as required by law.

During this call, management may also refer to certain non-GAAP measures, including adjusted earnings. In connection with the proposed transaction, CorMedix has filed a current report on Form 8-K describing the transaction in greater detail. Stockholders are urged to read the eight-K and any other relevant documents filed with the SEC carefully and in their entirety when they become available, because they do and will contain important information about the proposed transaction. This call is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. It is now my pleasure to turn the call over to Joe Todisco, Chairman and Chief Executive Officer of CorMedix.

Joe, please go ahead. Thank you, Dan, and good afternoon, everyone.

Today is an important day for CorMedix. This morning, we announced a definitive agreement to acquire substantially all of the assets of Heron Therapeutics, adding four commercial-stage products, ZYNRELEF, APONVIE, CINVANTI, and SUSTOL, as well as assumed a multi-product development agreement under which one NDA is currently pending at FDA. These assets are highly complementary to our hospital and acute care-focused commercial platform. The transaction has been unanimously approved by the boards of directors of both companies. I want to thank Craig Collard, Heron's Chief Executive Officer, the Heron board, and the entire Heron team for their partnership in getting us to this point. We expect the transaction to be immediately accretive to earnings and free cash flow upon closing.

Additionally, we also expect to generate total operating cost synergies of $45 million-$60 million on an annualized run rate basis by year-end 2027, driven by our ability to leverage our robust commercial, general administrative, and public company infrastructure to support the Heron assets. We believe our experience garnered from integrating Melinta positions us well to execute an efficient integration and to realize these synergies. For those who have followed CorMedix over the last year, this transaction should look familiar. Our strategy was clear and consistent, to build a diversified portfolio of differentiated products used in institutional settings of care and to deploy our capital in a disciplined manner to fuel sustainable growth. With the acquisition of Melinta Therapeutics in 2025, we augmented our commercial, market access, and medical organization that calls on hospitals, infusion centers, dialysis clinics, and customers in other institutional settings of care.

The Heron portfolio is synergistic and complementary to that footprint. Each of the four commercial products is administered in hospitals, ambulatory surgical centers, or infusion centers, and they share overlapping call points with our existing business across hospital pharmacy and therapeutics committees, group purchasing organizations, integrated delivery networks, and ambulatory surgical centers. Let me briefly walk through what we are acquiring. ZYNRELEF is an extended-release solution of bupivacaine and meloxicam for postoperative pain. APONVIE is an aprepitant injectable emulsion for the prevention of postoperative nausea and vomiting. Together, ZYNRELEF and APONVIE represent the fastest-growing products in the Heron portfolio, and we believe they are positioned for continued expansion in the hospital and ambulatory surgical care settings. CINVANTI, an aprepitant injectable emulsion, and SUSTOL, an extended-release granisetron injection, are established products for the prevention of chemotherapy-induced nausea and vomiting.

In addition to these four commercial products, the deal perimeter includes a multi-product licensing agreement covering development programs, including a pending NDA for an undisclosed injectable product. Collectively, the acquired products represent an established trailing 12-month revenue base of approximately $150 million in net product revenue across acute care and hematology/oncology supportive care. We see four pillars to the strategic rationale for this transaction. First, scale and diversification. The Heron portfolio meaningfully expands our revenue base, further diversifies our revenue mix across acute care and hematology/oncology supportive care, and provides additional strategic growth opportunities for our business. Second, commercial and operational leverage. We expect to deploy Heron's products through our existing infrastructure, supplemented with a subset of legacy Heron employees, which supports the $45 million-$60 million in annual operating cost synergies we expect to realize in 2027 on a run rate basis.

Third, growth from the acute care franchise. We view ZYNRELEF in particular as an asset with significant untapped potential, as hospitals and surgery centers increasingly adopt non-opioid approaches to post-surgical pain. Fourth, pipeline optionality. CINVANTI and SUSTOL complement our emerging presence in hematology and oncology with the upcoming PDUFA date for REZZAYO prophylaxis, for which we anticipate FDA action in the first quarter of 2027. Before I walk through the transaction terms, financing, and financial impact, I want to spend a moment on the Heron business and what this transaction means for Heron stakeholders. Over the past several years, the Heron team has built a portfolio of products that aim to advance the standard of care for acute care and hematology/oncology patients, and they should be proud of what they've accomplished.

As many of you know, Heron's board has been conducting a review of strategic alternatives, and we are pleased that this process has resulted in today's agreement. The transaction provides Heron meaningful upfront value through a combination of cash and CorMedix stock. At the same time, the stock component, the ZYNRELEF earn-out, and the royalty on the hematology/oncology supportive care products gives Heron the opportunity to continue participating in the success of the products its team has built. Importantly, we believe CorMedix is the right home for these products. We have the scale, financial strength, and institutional commercial focus to drive growth of ZYNRELEF and APONVIE, and to ensure that we maximize the opportunity for CINVANTI, SUSTOL, and other products we may launch under the multi-product development agreement.

The overlap in customers and call points of our two organizations is meaningful, and we truly see this as a one plus one equals three type transaction. Turning now to the terms of the transaction. Under the agreement, CorMedix will pay upfront consideration of $145 million in cash, plus approximately 14.6 million shares of CorMedix common stock. The number of shares was determined during negotiations by dividing $105 million by $7.20 per share, and is fixed, subject to customary adjustment for stock splits and similar events. It will not be adjusted for changes in CorMedix share price prior to closing. Based on last Friday's closing share price of $5.32 a share, the stock consideration has a value of approximately $77.6 million.