Heron Therapeutics, a biotechnology company focused on improving patient lives through innovative therapies, recently announced a cost reduction plan and corporate restructuring in order to drive profitability. The company underwent a strategic review of its business, resulting in actions that are expected to save approximately $75 million in cash through 2025.
The cost reduction plan includes streamlining operational expenditures, such as research and development and general administrative expenses. These efforts aim to achieve profitability by late 2024. As part of the plan, Heron also renegotiated and right-sized key vendor contracts, which is projected to save over $31 million in cash by 2025.
In addition to the cost reduction plan, Heron conducted a corporate restructuring that will reduce its employee base by 25%. While this move will result in non-recurring cash expenses of around $5.9 million in 2023, it is a necessary step to position the company for long-term success.
Heron’s new management team believes that these operational changes, along with a recent $30 million equity financing, will enable the company to maximize its commercial capabilities and unlock the significant value of its assets. With a focus on product optimization and innovative commercial strategies, Heron aims to optimize its performance and achieve cash flow positivity.
Craig Collard, Chief Executive Officer of Heron, stated, While making some of these decisions was difficult, I believe they are necessary to better position Heron for a sustainable future. Going forward, we are focused on enhancing the value of our products while running an efficient business that delivers value to our shareholders.
Adam Morgan, Chairman of Heron’s Board of Directors, added, Based on our current operational plan, we believe this financing will be the last equity raise needed prior to achieving cash flow positivity.
Heron Therapeutics is dedicated to developing best-in-class treatments to address unmet patient needs in acute care and oncology. The company’s advanced science, patented technologies, and innovative approach to drug discovery have allowed them to create and commercialize a portfolio of products that aim to advance the standard of care for patients.
While these operational changes represent a significant step in realigning Heron’s corporate infrastructure, the company remains committed to continually optimizing operational expenses going forward. The focus on efficient operations, along with a strategic plan that leverages the growth potential of its portfolios, will position Heron for long-term success.
Heron is expected to share more details about its strategic plan during the second-quarter earnings call. With its cost reduction plan and corporate restructuring in place, the company is taking crucial steps towards achieving profitability and delivering value to its shareholders.
