What happened
Shares of Heron Therapeutics (HRTX 1.75%) stormed higher by 47% over the first 3 1/2 days of trading this week, according to data provided by S&P Global Market Intelligence. The big gain came in response to the appointment of Craig Collard as Chief Executive Officer (CEO) and Adam Morgan as Chairman.
So what
What's all the fuss about? Under former CEO Barry Quart, Pharm.D., Heron chronically underperformed from a commercial standpoint. In its latest quarterly report, the company's much-hyped non-opioid pain relief medicine Zynrelef generated a paltry $3.9 million in sales during the three-month period.
This alternative to opioids in some acute-care settings was once thought to have the potential to haul in hundreds of millions in sales on an annual basis. This lack of execution by Heron's former management caused the biotech's shares to shed an eye-popping 91% of their value over the past five years.
NASDAQ: HRTX
Key Data Points
This discontent among Heron's shareholder base isn't without merit. Despite sporting multiple commercial-stage products in pain relief and supportive oncology care, the biotech posted a net loss of $182 million in 2022. Heron thus exited 2022 with a cash runway of less than a year -- that is, if it can't significantly lower its burn rate in 2023.
Now what
How can this new management alter Heron's near-term trajectory? In his last position, Collard oversaw the sale of Veloxis Pharmaceutics A/S to Asahi Kasei Corp.
Although it has dramatically underperformed to date, Heron's pain relief franchise might appeal to multiple big pharmas. Investors appear to be piling into this beaten-down biotech on the belief that Collard may sell the company at a hefty premium. Time will tell.
