Heron lays off 25% of employees and renegotiates vendor contracts to save money
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.
From the Biotech Insider archive. This article dates from Sep 29, 2023 and is preserved as first published.
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 company also said it’s reducing external spending, having just “completed renegotiation and right-sizing of key vendor contracts.
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.
