Heron Therapeutics, Inc. 2026 Q2 Earnings Call

Thank you, operator. Good morning, everyone. Thank you for joining us on the Heron Therapeutics conference call today to discuss the company's financial results for the second quarter of 2026. With me today from Heron are Craig Collard, Chief Executive Officer, Ira Duarte, Executive Vice President, Chief Financial Officer, Bill Forbes, Executive Vice President, Chief Development Officer, Mark Hensley, Chief Operating Officer, and Kevin Warner, Senior Vice President, Medical Affairs Strategy and Engagement. For those of you participating via conference call, slides are made available via webcast and can also be accessed via the investor relations page of our website following the conclusion of today's call. Before we begin, let me quickly remind you that during the course of this conference call, the company will make forward-looking statements. We caution you that any statement that is not a statement of historical fact is a forward-looking statement.

This includes remarks about the company's projections, expectations, plans, beliefs, and future performance, all of which constitute forward-looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. These statements are based on judgment and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The risks and uncertainties associated with the forward-looking statements made in this conference call and webcast are described in the safe harbor statement in today's press release and in Heron's public periodic filings with the SEC. Except as required by law, Heron assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so.

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

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

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

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

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

Go ahead, Mark. Thanks, Craig.

Starting on slide six with the overall net sales picture. Total net sales of $37.7 million in the second quarter, up from $34.7 million in the first quarter. On the acute care side, $15.3 million combined. ZYNRELEF at $11.1 million, up from $10.2 million, and APONVIE at $4.2 million, up from $3.4 million. On the oncology side, $22.3 million combined. CINVANTI at $21.8 million and SUSTOL at $0.5 million, continuing the planned wind down As always, ordering and channel patterns move quarter to quarter.

The cleaner read on adoption is average daily units and ordering accounts, which is what I will focus on. Turning to slide seven. There are two charts on this slide. Average daily units on the left, ordering accounts on the right, and both continue their upward trend. Net sales were $11.1 million, up 9% from the first quarter and up 35% from a year-ago. The number I would anchor on is demand. Average daily units grew 19% year-over-year. Lastly, I would add, IGNITE 2.0 is active across 3,150 accounts, up from 2,260 in IGNITE 1.0. This remains a site-by-site, case-by-case adoption curve. Unit growth was real this quarter, but it was below the rate we planned, and the work now is converting that access into cases and protocols in the accounts we are already in.

Moving to APONVIE. The same two views for APONVIE, and both charts show the steady climb. Net sales were approximately $4.2 million, up 74% from a year-ago and up 26% from the first quarter. Share in the NK1 segment reached 23%, up two points sequentially. Average daily units grew 59% year-over-year, and ordering accounts in June were up 42% from June of last year. P&T approvals now stand at 1,810 accounts, representing 6.7 medium to high-risk procedures annually. Demand through the quarter was steady. Now turning to CINVANTI. Average daily units on the left have held a consistent level of utilization over the past two years, and ordering accounts on the right, 1,241 in June, are in line with the 12-month average of about 1,200. Net sales were $21.8 million, up from $20.5 million in the first quarter and down about 10% from a year-ago.

That year-over-year decline is the branded competition we have discussed on prior calls. The more recent picture is one of stability. Utilization has held steady, and share in June was 25%, in line with its 12-month average. The REIGNITE work on formulary position and our contracting relationships are the levers we control, and they are the foundation of how we would compete against any future entrant. Lastly, SUSTOL continues its planned wind down, as we've discussed on prior calls. To wrap up the commercial section, ZYNRELEF average daily units grew 19% year-over-year. APONVIE reached 23% share of the NK1 segment. CINVANTI declined year-over-year against branded competition, but has held steady in recent months. The defensive contracting and formulary work is in place. That is the demand picture as it stands. I will now turn the call over to Ira to cover our financials.

Go ahead, Ira. Thank you, Mark.