In a bid to bolster its financial position, Heron Therapeutics, a biotech company, has announced significant cost-cutting measures, including a 25% reduction in its workforce. This move comes just over a year after the company previously let go of a third of its staff.
The cost reduction plan is part of a larger restructuring effort aimed at extending Heron’s cash runway. The focus is on trimming operational expenditures in research and development (R&D) and general expenses. Additionally, the company has successfully renegotiated and right-sized key vendor contracts to further reduce external spending.
These cost-cutting measures are expected to result in approximately $75 million in savings through 2025. Of this, $45 million will be achieved through operational savings, while $31 million will come from reduced external spending. However, the layoffs will incur expenses of $5.9 million in 2023.
To support its financial position, Heron Therapeutics has also announced a $30 million private financing round. Together with the cost reductions, this financing is expected to be the final fundraising needed before the company achieves cash flow positivity, as stated by Chairman Adam Morgan.
The decision to implement these cost-saving measures follows a challenging period for Heron, which previously underwent layoffs in June 2022 that impacted a third of its workforce. In addition to staff reductions, the company has seen a shakeup in its leadership, with new executives filling key positions.
Heron Therapeutics has a track record of successfully bringing four products to the market to address post-operative pain and side effects, as well as post-chemotherapy nausea. Despite generating some revenue from these products, the company’s cumulative revenue has been overshadowed by expenses. In the first quarter, Heron reported $29.6 million in net product sales, while operating expenses reached $62.7 million.
The company’s focus on cost-cutting measures and its new management team’s review of its business aim to position Heron for a sustainable future. However, there was no mention of the development status of HTX-034, the sole non-approved product in Heron’s pipeline, which is under development for postoperative pain management.