Heron Therapeutics, a San Diego biotechnology company that makes cancer and pain-management therapies, is cutting a quarter of its workforce and taking measures to save money.
The goal is to run a lean operation that can achieve profitability in late 2024, according to Monday’s announcement. The latest cost-saving measures are projected to save the company approximately $75 million through 2025.
The restructuring is the result of an internal review of the business by its new management team. Heron Therapeutics did not respond to the Union-Tribune’s request for comment.
“While making some of these decisions was difficult, I believe they are necessary to better position Heron for a sustainable future,” said CEO Craig Collard in the announcement. “The emphasis on efficient operations, combined with a focus on product optimization and innovative commercial strategies that leverage the growth potential of the oncology and acute care portfolios, will position us well to optimize the company’s future performance.”
Heron Therapeutics plans to do this by reducing research and development spending as well as istrative expenses. Part of this effort involves renegotiating vendor contracts to save about $31 million in cash through 2025.
The company will reduce its headcount by 25 percent. The layoffs will cost the business a one-time expense of $5.9 million.
Heron employed 203 full-time employees as of Dec. 31, 2022, according to its annual financial report. More than half of its workforce, 117 employees, worked in sales and marketing, 63 in research and development and 23 in general istrative roles.
The California Employment Development Department, which tracks layoffs across the state, said Monday it has not received a WARN notice from Heron Therapeutics.
Last year, Heron embarked on a similar cost-cutting endeavor when it cut a little more than one-third of its workforce.
Latest SD biotech layoff: Heron Therapeutics restructures and cuts 34% of its workforceThe business restructuring signals a shift for the biotech and follows changes in Heron’s leadership in recent months.
The company’s chairman and CEO of nearly 10 years, Barry Quart, was replaced in April. The roles of chairman and CEO were separated, and the number of board was reduced. Other positions in the C-suite were also changed including the chief commercial officer, chief development officer, chief financial officer as well as vice president positions.
The company has four drugs approved by the U.S. Food and Drug istration, two of which treat nausea and vomiting triggered by chemotherapy. Heron rolled out its product, Zynrelef, a drug that dulls post-surgical pain, in May 2021, following years of back-and-forth with the FDA.
Most recently, Heron rolled out its newest commercial drug Aponvie, which is a novel IV alternative to pills for post-operation nausea relief. The FDA approved Aponvie in September and it became commercially available in March.
While its commercial products have sales, Heron Therapeutics is not yet profitable.
The company reported in its 2022 annual financial filing that it has “incurred significant operating losses and negative cash flows from operations.”
At the end of 2022, Heron had cash, cash equivalents and short-term investments of $84.9 million and noted in its annual filing that it historically funded operations through the sale of stocks and debt financing. In comparison to the previous year, Heron had $157.6 million.
In addition to the corporate restructuring plan, Heron announced that it is selling more than 20 million stocks to private investors with expected gross proceeds of $30 million.
Heron’s shares ended trading Monday up 16 cents at $1.54 on the Nasdaq exchange.
