What happened

Heron Therapeutics (NASDAQ:HRTX), a commercial-stage biopharma company, is having a tough go of it today. The company's shares were down by 28.6% as of 10:21 a.m. EDT on Monday. 

The culprit? Ahead of the opening bell, Heron announced that the Food and Drug Administration rejected its non-opioid painkiller HTX-011. Heron stated that the drug's regulatory filing was declined because of four non-clinical issues.

A man getting punched in the face.

Image source: Getty Images.

So what

HTX-011 is the company's most important value driver by a wide margin. If this closely watched pain medication ever gains marketing approval in both the U.S. and the EU, it should easily achieve annual sales in excess of $1 billion. That's an enormous revenue stream for a company that ended last week with a market cap of less than $2 billion. As such, it's not exactly surprising to see investors backing away from the stock after this latest regulatory setback. 

Now what

Per today's press release, Heron said that it plans to resubmit the drug's regulatory application as soon as possible. What this means is that the company could have HTX-011 back under consideration by the FDA within the next three months, and an approval in hand by year's end. That's not a surefire outcome by any means, but it is a real possibility.  

All told, this small-cap biotech arguably presents a rather intriguing risk-to-reward ratio in the wake of this double-digit pullback. Aggressive investors, in turn, might want to consider scooping up some shares soon.          

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.