Just more than a year after letting go of a third of its staff, Heron Therapeutics is turning back to the layoff well to extend its financial runway.
The company is cutting 25% of its team as part of a larger restructuring to extend its cash runway, Heron announced Monday. The cost reduction plan is focused on trimming “operational expenditures” in R&D and general expenses.
The company also said it’s reducing external spending, having just “completed renegotiation and right-sizing of key vendor contracts.” Chief Financial Officer Ira Duarte did not immediately respond to a request for comment on what the renegotiation entails.
The total amount of cost reductions is expected to be around $75 million through 2025, with $45 million coming from operational savings and $31 million stemming from less outside spending. The layoffs are expected to result in $5.9 million in expenses in 2023. Heron also announced a $30 million private financing Monday, which, paired with these reductions, is expected to be the last fundraising needed before attaining cash flow positivity, according to chairman Adam Morgan in a release.
It’s a bold statement that follows a difficult year for Heron, which included a round of layoffs in June 2022 that impacted a third of the workforce. Heron’s leadership has also been renovated, with a new CEO, CFO, chief development officer and VP of sales for acute care joining the team recently. New CEO Craig Collard, who was announced in April, said in a release that the cost-saving measures follow a review of the company’s business by the new management team.
“While making some of these decisions was difficult, I believe they are necessary to better position Heron for a sustainable future,” he said.
Heron has successfully brought four products to markets to treat either post-operative pain and side effects or post-chemotherapy nausea, but the cumulative revenue has so far been dwarfed by expenses. The biotech reported $29.6 million in net product sales in the first quarter, slightly higher than the $23.5 million made in the first quarter of 2022. But total operating expenses were $62.7 million in the first quarter, which was some $23 million less than the first quarter of 2022.
Heron made no mention in its latest update regarding HTX-034, the sole non-approved product in Heron’s pipeline. The asset is under development for postoperative pain management for 5-7 days, and while results have been submitted and posted on the U.S. clinical trial record, they’ve yet to complete a quality control review.