What happened

Heron Therapeutics (NASDAQ:HRTX), a commercial-stage biotech developing medicines to address unmet medical needs, saw its shares end Monday higher by a healthy 26.9%. The catalyst?

Heron's stock bolted northward in response to two late-stage readouts for its non-opioid pain medication, HTX-011, in patients undergoing bunionectomy (a type of bunion surgery) and hernia repair, respectively.

Chalkboard with the word "Pain" written on it, and an eraser.

Image Source: Getty Images.

Digging into the details, HTX-011 reportedly generated statistically significant reductions in both pain intensity and opioid use through a 72-hour period following surgery, compared to patients receiving either a placebo or bupivacaine solution.

So what

If approved, Heron's experimental pain medication is expected to compete directly against Pacira Pharmaceuticals' (NASDAQ:PCRX) FDA-approved Exparel, a liposomal formulation of bupivacaine. Last year, Pacira's drug hauled in a noteworthy $280 million in sales.  

Now what

Heron is on track to file a New Drug Application for HTX-011 in the second half of this year. While HTX-011's commercial opportunity as a competitor to Exparel is substantial, the drug's ability to reduce opioid use in the postoperative setting could open up a far larger market.

If the FDA grants HTX-011 a broad label in the postoperative setting, for instance, the drug should be able to easily surpass Exparel's commercial trajectory and perhaps even go on to become a blockbuster-level product (sales in excess of $1 billion per year).

Having said that, Heron is still in the process of learning how to effectively market drugs, so an approval doesn't necessarily mean that HTX-011 will get off to a roaring start. In fact, the company would probably be better off putting itself up for sale in the event HTX-011 does get a green light from the FDA early next year. 


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