What changed in this filing

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Item 1. Business

2024-03-12 compared with 2023-03-29 · 262 added, 328 removed, 1156 unchanged (34% of the section changed)

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in July 2021.

In December 2021, the FDA approved our sNDA for ZYNRELEF, which significantly expanded the indication statement.

ZYNRELEF is currently indicated for use in adults for soft tissue or periarticular instillation to produce postsurgical analgesia for up to 72 hours after foot and ankle, small-to-medium open abdominal, and lower extremity total joint arthroplasty surgical procedures.

In December 2021 and January 2024, the FDA approved an expansion of ZYNRELEF's indication.

ZYNRELEF is approved for small-to-medium open abdominal, lower extremity total joint arthroplasty, soft tissue and orthopedic surgical procedures including foot and ankle, and other procedures in which direct exposure to articular cartilage is avoided.

ZYNRELEF is a dual-acting local anesthetic that delivers a fixed-dose combination of the local anesthetic bupivacaine and a low dose of the nonsteroidal anti-inflammatory drug meloxicam.

ZYNRELEF is the first and only modified-release local anesthetic to be classified by the FDA as an extended-release product because ZYNRELEF demonstrated in Phase 3 studies significantly reduced pain and significantly increased proportion of patients requiring no opioids through the first 72 hours following surgery compared to bupivacaine solution, the current standard-of-care local anesthetic for postoperative pain control.

In December 2022, we submitted an sNDA to the FDA requesting expansion of the indication statement for ZYNRELEF to broadly cover soft tissue and orthopedic surgical procedures.

This sNDA is based on safety and pharmacokinetic data from clinical trials in total shoulder arthroplasty, spinal surgery, abdominoplasty, and C-section showing comparable results to the previously completed pivotal safety and efficacy trials of ZYNRELEF.

The FDA accepted the sNDA for filing and set a Prescription Drug User Fee Act goal date of October 23, 2023.

In the fourth quarter of 2022, we validated large-scale manufacturing of our proprietary polymer and ZYNRELEF, which will allow for the manufacturing of millions of doses of ZYNRELEF annually at a significantly reduced cost of product sales.

In March 2022, CMS approved a 3-year transitional pass-through status of ZYNRELEF, which became effective on April 1, 2022, for separate reimbursement outside of the surgical bundle payment in the Hospital Outpatient Department (HOPD) setting of care.

In January 2024, we entered into a five-year distributor partnership with CrossLink Life Sciences, LLC (“Crosslink ” ) to expand the sales network supporting ZYNRELEF.

Crosslink will be the lead partner in the U.S.

to expand ZYNRELEF promotion for orthopedic indications.

The partnership will launch in several phases, initially at a regional level, followed by an expanded national rollout.

In total, approximately 650 representatives will be added to Heron ’ s sales network over the year.

In the fourth quarter of 2022, we validated large-scale manufacturing of our proprietary polymer and ZYNRELEF, which will allow for the manufacturing of ZYNRELEF annually at a significantly reduced cost of product sales.

In March 2022, the Centers for Medicare and Medicaid Services (“CMS”) approved a 3-year transitional pass-through status of ZYNRELEF, which became effective on April 1, 2022, for separate reimbursement outside of the surgical bundle payment in the Hospital Outpatient Department (“HOPD”) setting of care.

In addition, in December 2022, H.R.

2617, the omnibus spending bill was approved by Congress that includes a provision requiring CMS to pay for certain non-opioids outside the existing bundled payment for surgeries for the period January 1, 2025 through December 31, 2027.

ZYNRELEF was granted a marketing authorization by the European Commission (“EC”) in September 2020.

As of January 1, 2021, ZYNRELEF is approved in 31 European countries including the countries of the EU and EEA and the United Kingdom.

ZYNRELEF is indicated in Europe for the treatment of somatic postoperative pain from small- to medium-sized surgical wounds in adults.

ZYNRELEF was granted a marketing authorization by the European Commission in September 2020 and by the United Kingdom ( “ U.K.

” ) Regulatory Authority in January 2021.

In August 2023, we cancelled the U.K.

ZYNRELEF marketing authorization and, in October 2023, we cancelled the ZYNRELEF marketing authorization in the European Union (“EU ” ) as we do not plan to commercially launch ZYNRELEF in the U.K., the EU, or the other countries in the European Economic Area.

Health Canada issued a Notice of Compliance to commercialize ZYNRELEF in March 2022.

ZYNRELEF is indicated in Canada for instillation into the surgical wound for postoperative analgesia after bunionectomy, open inguinal herniorrhaphy, and total knee arthroplasty surgical procedures.

Based on prior agreements with the FDA, Heron already has clinical studies underway, which we plan to submit to Health Canada to expand the indication statement.

As we build large-scale manufacturing capacity to meet the anticipated commercial demand in the U.S.

and the rest of the world, we are developing a coordinated global marketing strategy.

APONVIE (HTX-019)

In the second quarter of 2023, we withdrew our new drug submission, as we do not plan to commercially launch ZYNRELEF in Canada.

APONVIE was approved by the FDA in September 2022 and became commercially available in the U.S.

in March 2023.

APONVIE is indicated for the prevention of postoperative nausea and vomiting (“PONV ”

APONVIE is indicated for the prevention of postoperative nausea and vomiting (“PONV ” ) in adults.

CMS granted pass-through payment status for APONVIE, effective April 1, 2023.

APONVIE is the first and only intravenous (IV) formulation of a substance NK 1 receptor antagonist indicated for PONV.

APONVIE is the first and only intravenous (“IV ” ) formulation of a substance P/neurokinin-1 (“NK 1 ”) receptor antagonist indicated for PONV.

Delivered via single 30-second IV injection, APONVIE has demonstrated rapid achievement of therapeutic drug levels ideally suited for the surgical setting.

HTX-034, our next-generation product candidate for postoperative pain management, is an investigational non-opioid, fixed-dose combination, extended‑release solution of the local anesthetic bupivacaine, the nonsteroidal anti-inflammatory drug meloxicam and aprepitant that further potentiates the activity of bupivacaine.

HTX-034 is formulated in the same proprietary polymer as ZYNRELEF .

By combining two different mechanisms that each enhance the activity of the local anesthetic bupivacaine, HTX-034 is designed to provide superior and prolonged analgesia.

Local administration of HTX-034 in a validated preclinical postoperative pain model resulted in sustained analgesia for 7 days.

In May 2020, we initiated a Phase 1b/2 clinical study in patients undergoing bunionectomy of HTX-034.

In the Phase 1b portion of this Phase 1b/2 double-blind, randomized, active-controlled, dose-escalation study in 33 patients undergoing bunionectomy, the reduction in pain intensity observed was greater with the lowest dose of HTX-034 evaluated (containing 21.7 mg of bupivacaine plus meloxicam and aprepitant) than with the bupivacaine 50 mg solution through 96 hours.

In addition, 45.5% of HTX-034 patients remained opioid-free through Day 15 with median opioid consumption of 2.5 milligram morphine equivalents (same as one 5 mg oxycodone pill) through 72-hours, a 71% reduction compared to bupivacaine solution.

We initiated the expanded Phase 2 portion of the study for HTX-034 in the first quarter of 2021.

We have temporarily postponed work on HTX-034 to understand the studies needed for a broad indication for ZYNRELEF, which could impact development planning for HTX-034.

We are pausing the HTX-034 program to focus on the efficacy supplement to further expand the ZYNRELEF indication to broadly include soft tissue and orthopedic surgical procedures.

Oncology Care Product Portfolio

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SUSTOL is indicated in combination with other antiemetics in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of moderately emetogenic chemotherapy (MEC) or anthracycline and cyclophosphamide (AC) combination chemotherapy regimens.

SUSTOL is an extended-release, injectable 5-hydroxytryptamine type 3 (“5-HT 3 ”) receptor antagonist that utilizes our Biochronomer Technology to maintain therapeutic levels of granisetron for ≥5 days.

The SUSTOL global Phase 3 development program was comprised of two, large, guideline-based clinical studies that evaluated SUSTOL’s efficacy and safety in more than 2,000 patients with cancer.

SUSTOL’s efficacy in preventing nausea and vomiting was evaluated in both the acute phase (0–24 hours following chemotherapy) and the delayed phase (24–120 hours following chemotherapy).

The SUSTOL global Phase 3 development program was comprised of two, large, guideline-based clinical studies that evaluated SUSTOL’s efficacy and safety in more than 2,000 patients with cancer.

SUSTOL’s efficacy in preventing nausea and vomiting was evaluated in both the acute phase (0–24 hours following chemotherapy) and the delayed phase (24–120 hours following chemotherapy).

SUSTOL is the first extended-release 5-HT 3 receptor antagonist approved for the prevention of acute and delayed nausea and vomiting associated with both MEC and AC combination chemotherapy regimens.

A standard of care in the treatment of breast cancer and other cancer types, AC regimens are among the most commonly prescribed HEC regimens, as defined by both the National Comprehensive Cancer Network (“NCCN”) and the American Society of Clinical Oncology (“ASCO”).

A standard of care in the treatment of breast cancer and other cancer types, AC regimens are among the most commonly prescribed Highly Emetogenic Cancer (“HEC”) regimens, as defined by both the National Comprehensive Cancer Network (“NCCN”) and the American Society of Clinical Oncology (“ASCO”).

In February 2017, the NCCN included SUSTOL as a part of its NCCN Clinical Practice Guidelines in Oncology for Antiemesis Version 1.2017.

The NCCN has given SUSTOL a Category 1 recommendation, the highest-level category of evidence and consensus, for use in the prevention of acute and delayed nausea and vomiting in patients receiving HEC or MEC regimens.

The guidelines now identify SUSTOL as a “preferred”

agent for preventing nausea and vomiting following MEC.

The guidelines now identify SUSTOL as a “preferred” agent for preventing nausea and vomiting following MEC.

Further, the guidelines highlight the unique, extended-release formulation of SUSTOL.

In January 2018, a product-specific billing code, or permanent J-code (“J-code”), for SUSTOL became available.

The new J-code was assigned by the Centers for Medicare and Medicaid Services (“CMS”) and has helped simplify the billing and reimbursement process for prescribers of SUSTOL.

In January 2018, a product-specific billing code, or permanent J-code (“J-code”), for SUSTOL became available.

The new J-code was assigned by CMS and has helped simplify the billing and reimbursement process for prescribers of SUSTOL.

CINVANTI was approved by the FDA in November 2017, and we commenced commercial sales in the U.S.

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CINVANTI, in combination with other antiemetic agents, is indicated in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of highly emetogenic cancer chemotherapy (HEC) including high-dose cisplatin as a single-dose regimen, delayed nausea and vomiting associated with initial and repeat courses of moderately emetogenic cancer chemotherapy (MEC) as a single-dose regimen, and nausea and vomiting associated with initial and repeat courses of MEC as a 3-day regimen.

CINVANTI is an intravenous (“IV”) formulation of aprepitant, a substance P/neurokinin-1 (“NK 1 ”) receptor antagonist.

CINVANTI is an IV formulation of aprepitant, a substance NK 1 receptor antagonist.

CINVANTI is the first IV formulation to directly deliver aprepitant, the active ingredient in EMEND ® capsules.

Aprepitant (including its prodrug, fosaprepitant) is the only single-agent NK 1 receptor antagonist to significantly reduce nausea and vomiting in both the acute phase (0–24 hours after chemotherapy) and the delayed phase (24–120 hours after chemotherapy).

CINVANTI is the first and only IV formulation of an NK 1 receptor antagonist indicated for the prevention of acute and delayed nausea and vomiting associated with HEC and nausea and vomiting associated with MEC that is free of synthetic surfactants, including polysorbate 80.

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The only other injectable NK 1 receptor antagonist currently approved in the U.S.

for both acute and delayed chemotherapy induced nausea and vomiting (“CINV”), EMEND ® IV (fosaprepitant), contains polysorbate 80, a synthetic surfactant, which has been linked to hypersensitivity reactions, including anaphylaxis, and infusion site reactions.

The CINVANTI formulation does not contain polysorbate 80 or any other synthetic surfactant.

Our CINVANTI data has demonstrated the bioequivalence of CINVANTI to EMEND IV, supporting its efficacy for the prevention of both acute and delayed nausea and vomiting associated with HEC and nausea and vomiting associated with MEC.

Results also showed CINVANTI was better tolerated in healthy volunteers than EMEND IV, with significantly fewer adverse events (“AEs”) reported with CINVANTI.

Results also showed CINVANTI was better tolerated in healthy volunteers than EMEND IV, with significantly fewer adverse events reported with CINVANTI.

In January 2019, a J-code for CINVANTI became available.

The new J-code was assigned by CMS and has helped simplify the billing and reimbursement process for prescribers of CINVANTI.

In February 2019, the FDA approved our sNDA for CINVANTI, for IV use, which expanded the administration of CINVANTI beyond the initially approved administration method (a 30-minute IV infusion) to include a 2-minute IV injection.

In February 2019, the FDA approved our Supplemental New Drug Application ( “ sNDA ”) for CINVANTI, for IV use, which expanded the administration of CINVANTI beyond the initially approved administration method (a 30-minute IV infusion) to include a 2-minute IV injection.

In October 2019, the FDA approved our sNDA for CINVANTI to expand the indication and recommended dosage to include the 130 mg single-dose regimen for patients receiving MEC.

In the fourth quarter of 2022, we validated larger-scale manufacturing of CINVANTI, which will significantly reduce the cost of product sales.

In the fourth quarter of 2022, we validated larger-scale manufacturing of CINVANTI, which significantly reduced the cost of product sales in 2023 and will continue going forward.

Biochronomer Technology

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The sales force is supported by sales management, internal sales support, an internal marketing group and distribution support.

In January 2024, we entered into a distributor partnership with Crosslink to expand the sales network supporting ZYNRELEF.

Crosslink will be the lead partner in the U.S.

to expand ZYNRELEF promotion for orthopedic indications.

In total, approximately 650 representatives will be added to Heron’s sales network over the year.

Our Products are distributed in the U.S.

through a limited number of specialty distributors and full line wholesalers (collectively, “Customers”) that resell to healthcare providers and hospitals, the end users of our Products.

through a limited number of specialty distributors and full line wholesalers that resell to healthcare providers and hospitals, the end users of our Products.

The biotechnology and pharmaceutical industries are extremely competitive.

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Our potential competitors in these markets may succeed in developing products that could render our Products and our product candidates obsolete or noncompetitive.

In the U.S., ZYNRELEF competes in, and HTX-034, if successfully developed, will compete in, the postoperative pain management market with MARCAINE TM (bupivacaine hydrochloride injection, solution, marketed by Pfizer Inc.) and generic forms of bupivacaine;

ZYNRELEF competes in the postoperative pain management market with MARCAINE TM (bupivacaine hydrochloride injection, solution, marketed by Pfizer Inc.) and generic forms of bupivacaine;

NAROPIN ® (ropivacaine, marketed by Fresenius Kabi USA, LLC) and generic forms of ropivacaine;

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and potentially other products in development for postoperative pain management that reach the U.S.

In the EU, ZYNRELEF will, and HTX-034, if successfully developed will also, face significant competition.

Currently there are numerous generic local anesthetics and other non-opioids for postoperative pain management available in the EU, and other products in development for postoperative pain management may also reach the EU market.

For example, in November 2020 the EC granted a marketing authorization for EXPAREL ® (bupivacaine liposome injectable suspension, marketed by Pacira BioSciences, Inc.

in the U.S.) for postsurgical analgesia, and EXPAREL was launched in the EU in the fourth quarter of 2021.

ZYNRELEF will compete with MARCAINE TM (bupivacaine hydrochloride injection, solution, marketed by Pfizer Inc.);

SENSORCAINE ® (bupivacaine and epinephrine injection, marketed by Aspen Pharmacare Canada Inc.);

NAROPIN ® (ropivacaine and hydrochloride, marketed by Aspen Pharmacare Canada Inc.);

and potentially other products in development for postoperative pain management that reach the Canadian market.

APONVIE competes in the PONV prevention market with generic ondansetron, the current standard of care, generic aprepitant, and BARHEMSYS ® (amisulpride, marketed by Eagle Pharmaceuticals, Inc.);

TAK-951 (a peptide agonist under development (PH2) by Takeda Pharmaceutical Company Limited for PONV and not approved anywhere globally for any use);

and potentially other products in development for PONV prevention that reach the market.

CINVANTI faces significant competition.

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No other 5-HT 3 receptor antagonist is specifically approved for the prevention of delayed CINV associated with a HEC regimen.

In the U.S., APONVIE will compete in the PONV prevention market with generic ondansetron, the current standard of care, generic aprepitant, and BARHEMSYS ® (amisulpride, marketed by Eagle Pharmaceuticals, Inc.);

TAK-951 (a peptide agonist under development (PH2) by Takeda Pharmaceutical Company Limited for PONV and not approved anywhere globally for any use);

and potentially other products in development for PONV prevention that reach the market.

Manufacturing and Clinical Supplies

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We currently have long-term commercial supply agreements with certain third-party manufacturers.

Our manufacturing and processing agreements require that all third-party contract manufacturers and processors produce active pharmaceutical ingredients, excipients and finished products in accordance with the FDA’s current Good Manufacturing Practices (“cGMP”) and all other applicable laws and regulations.

We maintain confidentiality agreements with potential and existing manufacturers in order to protect our proprietary rights related to our Products, our product candidates and our Biochronomer Technology.

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Currently, CINVANTI is covered by 10 patents issued in the U.S.

and by three patents issued (or registered) in foreign countries including Korea and Japan.

and by five patents issued (or registered) in foreign countries including Korea and Japan.

patents covering CINVANTI have expiration dates ranging from September 2035 to February 2036;

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Currently, SUSTOL is covered by 6 patents issued in the U.S.

and by 18 patents issued (or registered) in foreign countries including France, Germany, Hong Kong,

Ireland, Italy, Japan, Spain, Sweden, Switzerland, Taiwan, and the United Kingdom.

and by 18 patents issued (or registered) in foreign countries including France, Germany, Hong Kong, Ireland, Italy, Japan, Spain, Sweden, Switzerland, Taiwan, and the United Kingdom.

patents covering SUSTOL expire in September 2024;

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APONVIE is covered by 10 patents issued in the U.S.

and by three patents issued (or registered) in foreign countries including Korea and Japan.

and by five patents issued (or registered) in foreign countries including Korea and Japan.

patents covering APONVIE have expiration dates ranging from September 2035 to February 2036;

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• submission in the U.S.

of an Investigational New Drug application (“IND”), for clinical trials conducted in the U.S.;

• adequate and well-controlled human clinical trials to establish safety and efficacy of the product;

submission and review of an NDA in the U.S.;

inspection of the facilities used in the manufacturing of the drug to assess compliance with the FDA’s current cGMP regulations.

• submission and review of a New Drug Application (“NDA”) in the U.S.;

• inspection of the facilities used in the manufacturing of the drug to assess compliance with the FDA’s current cGMP regulations.

The FDA monitors the progress of trials conducted in the U.S.

under an IND and may, at its discretion, re-evaluate, alter, suspend or terminate testing based on the data accumulated to that point and the FDA’s risk/benefit assessment with regard to the patients enrolled in the trial.

The FDA may also place a hold on one or more clinical trials conducted under an IND for a drug if it deems warranted.

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Preclinical studies include laboratory evaluation of the product and animal studies to assess the potential safety and effectiveness of the product.

Most of these studies must be performed according to Good Laboratory Practices (“GLP”), a system of management controls for laboratories and research organizations to ensure the consistency and reliability of results.

Most of these studies must be performed according to Good Laboratory Practices, a system of management controls for laboratories and research organizations to ensure the consistency and reliability of results.

An IND is the request for authorization from the FDA to administer an investigational new drug product to humans.

The IND includes information regarding the preclinical studies, the investigational product’s chemistry and manufacturing, supporting data and literature and the investigational plan and protocol(s).

Clinical trials may begin 30 days after an IND is received, unless the FDA raises concerns or questions about the conduct of the clinical trials.

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We have filed INDs in the U.S.

and Clinical Trial Applications (“CTAs”) in the EU, and we may file additional INDs and CTAs in the future.

We cannot assure that submission of any additional INDs or CTAs for any of our product candidates will result in authorization to commence clinical trials.

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Each clinical trial must be reviewed and approved at each institution at which the study will be conducted by an independent Institutional Review Board in the U.S., referred to as an Ethics Committee in the EU and other markets or Research Ethics Board in Canada.

The Institutional Review Board, Ethics Committee or Research Ethics Board (hereafter collectively referred to as “IRB”) will consider, among other things, ethical factors, safety of human subjects and the possible liability of the institution arising from the conduct of the proposed clinical trial.

In addition, clinical trials in the U.S.

and other regions must be performed according to current Good Clinical Practices (“cGCP”), which are enumerated in FDA regulations and guidance documents.

and other regions must be performed according to current Good Clinical Practices, which are enumerated in FDA regulations and guidance documents.

Some studies include oversight by an independent group of experts, known as a data safety monitoring board, which authorizes whether a study may move forward based on certain data from the study and may stop the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds.

The FDA or other regulatory authorities may order the temporary, or permanent, discontinuation of a clinical trial at any time, or impose other sanctions, if it or they believe that the clinical trial is not being conducted in accordance with regulatory requirements or presents an unacceptable risk to the clinical trial patients.

An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements, or it may impose other conditions.

Clinical trials typically are conducted in sequential phases:

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Additional studies and follow-up may be conducted to document a clinical benefit where drugs are approved under accelerated approval regulations and based on surrogate endpoints.

In clinical trials, surrogate endpoints are alternative measurements of the symptoms of a disease or condition that are substituted for measurements of observable clinical symptoms.

In clinical trials, surrogate endpoints are alternative measurements of the symptoms of a disease or condition that are substituted for

measurements of observable clinical symptoms.

In the U.S., failure to timely conduct Phase 4 clinical trials and follow-up could result in withdrawal of approval for products approved under accelerated approval regulations.

Clinical Data Review and Approval in the U.S.

The data from the clinical trials, together with preclinical data and other supporting information that establishes a drug candidate’s safety, are submitted to the FDA in the form of an NDA, or sNDA (for approval of a new indication if the product candidate is already approved for another indication).

Under applicable laws and FDA regulations, the FDA reviews the NDA within 60 days of receipt of the NDA submission to determine whether the application will be accepted for filing based on the FDA’s threshold determination that the NDA is sufficiently complete to permit substantive review.

If deemed complete, the FDA will “file”

the NDA, thereby triggering substantive review of the application.

If deemed complete, the FDA will “file” the NDA, thereby triggering substantive review of the application.

The FDA can refuse to file any NDA that it deems incomplete or not properly reviewable.

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If the FDA approves the NDA, it will issue an approval letter authorizing the commercial marketing of the drug with prescribing information for specific indications.

As a condition of NDA approval, the FDA may require a risk evaluation and mitigation strategy (“REMS”), to help ensure that the benefits of the drug outweigh the potential risks.

REMS can include medication guides, communication plans for healthcare professionals, and elements to assure safe use.

Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured.

Moreover, product approval may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy.

Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.

In many cases, the outcome of the review, even if generally favorable, is not an actual approval, but a “complete response”

that generally outlines the deficiencies in the submission, which may require substantial additional testing or information before the FDA will reconsider the application.

If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter.

In many cases, the outcome of the review, even if generally favorable, is not an actual approval, but a “complete response” that generally outlines the deficiencies in the submission, which may require substantial additional testing or information before the FDA will reconsider the application.

If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter.

Satisfaction of FDA requirements or similar requirements of state, local and foreign regulatory agencies typically takes several years and requires the expenditure of substantial financial resources.

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The FDA may also request or require additional Phase 4 clinical trials after a product is approved.

The results of Phase 4 clinical trials can confirm the effectiveness of a product candidate and can provide important safety information to augment the FDA’s voluntary adverse drug reaction reporting system.

Any products manufactured or distributed by us pursuant to FDA approvals would be subject to continuing regulation by the FDA, including recordkeeping requirements and reporting of adverse experiences with the drug.

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Section 505(b)(2) Applications

Some of our product candidates may be eligible for submission of applications for approval under the FDA’s Section 505(b)(2) approval process, which provides an alternate path to FDA approval for new or improved formulations or new uses of previously approved products.

Section 505(b)(2) was enacted as part of the Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Act, and allows approval of NDAs that rely, at least in part, on studies that were not conducted by or for the applicant and to which the applicant has not obtained a right of reference.

Such studies can be provided by published literature, or the FDA can rely on previous findings of safety and efficacy for a previously approved drug.

If the 505(b)(2) applicant can establish that reliance on the FDA’s previous approval is scientifically appropriate, it may eliminate the need to conduct certain preclinical studies or clinical trials of the new product.

Section 505(b)(2) applications may be submitted for drug products that represent a modification ( e.g.

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The FDA may approve the new product candidate for all, or some, of the label indications for which the referenced product has been approved, as well as for any new indication sought by the Section 505(b)(2) applicant.

The law governing Section 505(b)(2) or FDA’s current policies may change in such a way as to adversely affect our applications for approval that seek to utilize the Section 505(b)(2) approach.

Such changes could result in additional costs associated with additional studies or clinical trials and delays.

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Some of these hazardous materials are considered to be controlled substances and subject to regulation by the U.S.

Drug Enforcement Agency (“DEA”).

Controlled substances are those drugs that appear on one of 5 schedules promulgated and administered by the DEA under the Controlled Substances Act (“CSA”).

Drug Enforcement Agency (“DEA”).

Controlled substances are those drugs that appear on one of 5 schedules promulgated and administered by the DEA under the Controlled Substances Act (“CSA”).

The CSA governs, among other things, the distribution, recordkeeping, handling, security and disposal of controlled substances.

We must be registered by the DEA in order to engage in these activities, and we are subject to periodic and ongoing inspections by the DEA and similar state drug enforcement authorities to assess ongoing compliance with the DEA’s regulations.

Any failure to comply with these regulations could lead to a variety of sanctions, including the revocation, or a denial of renewal, of the DEA registration, injunctions or civil or criminal penalties.

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Arrangements with third-party payors and customers may expose us to applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute our Products and any other product candidates for which we obtain marketing approval.

Regulations under applicable federal and state healthcare laws and regulations include the federal health care programs’

Anti-Kickback Law, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral or purchase of any good or service for which payment may be made under federal health care programs such as the Medicare and Medicaid programs.

Regulations under applicable federal and state healthcare laws and regulations include the federal health care programs’ Anti-Kickback Law, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral or purchase of any good or service for which payment may be made under federal health care programs such as the Medicare and Medicaid programs.

Remuneration has been broadly defined to include anything of value, including cash, improper discounts, and free or reduced-price items and services.

Many states have similar laws that apply to their state health care programs as well as private payors.

In addition, the False Claims Act (“FCA”) imposes liability on persons who, among other things, present or cause to be presented false or fraudulent claims for payment by a federal health care program.

The FCA has been used to prosecute persons submitting claims for payment that are inaccurate or fraudulent, that are for services not provided as claimed, or for services that are not medically necessary.

Actions under the FCA may be brought by the United States Department of Justice (“DOJ”) or as a qui tam action by a private individual in the name of the government.

Violations of the FCA can result in significant monetary penalties and treble damages.

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Moreover, recent health care reform legislation has strengthened many of these laws.

For example, the Patient Protection and Affordable Care Act (“PPACA”), among other things, amends the intent requirement of the federal anti-kickback and criminal health care fraud statutes to clarify that a person or entity does not need to have actual knowledge of this statute or specific intent to violate it.

In addition, PPACA provides that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the false claims statutes.

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Federal and State Sunshine Laws

We must comply with federal and state “sunshine”

laws, now known as Open Payments that require transparency regarding financial arrangements with health care providers.

This would include the reporting and disclosure requirements imposed by the PPACA on drug manufacturers regarding any “payment or transfer of value”

made or distributed to physicians and teaching hospitals.

We must comply with federal and state “sunshine” laws, now known as Open Payments that require transparency regarding financial arrangements with health care providers.

This would include the reporting and disclosure requirements imposed by the PPACA on drug manufacturers regarding any “payment or transfer of value” made or distributed to physicians and teaching hospitals.

Failure to submit required information can result in civil monetary penalties.

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Foreign Corrupt Practices Act

We are subject to the Foreign Corrupt Practices Act of 1997 (“FCPA”).

The FCPA and other similar anti-bribery laws in other jurisdictions, such as the U.K.

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regulators, with more frequent and aggressive investigations and enforcement proceedings by both the DOJ and the U.S.

Securities and Exchange Commission (“SEC”).

A determination that our operations or activities are not, or were not, in compliance with U.S.

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Other internal or government investigations or legal or regulatory proceedings, including lawsuits brought by private litigants, may also follow as a consequence.

We have a policy against using Company funds for political purposes, and we incurred no costs in 2021 associated with legal or regulatory fines or settlements associated with violations of bribery, corruption or anti-competitive standards.

We have a policy against using Company funds for political purposes, and we incurred no costs in 2022 or 2023 associated with legal or regulatory fines or settlements associated with violations of bribery, corruption or anti-competitive standards.

Patient Privacy and Data Security

We are required to comply, as applicable, with numerous federal and state laws, including state security breach notification laws, state health and personal information privacy laws and federal and state consumer protection laws, and to govern the collection, use and disclosure of personal information.

For example, the California Consumer Privacy Act (“CCPA”) became effective on January 1, 2020 and gave California residents expanded rights to access and request deletion of their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used.

Additionally, the California Privacy Rights Act (the “CPRA”), a ballot measure that was approved by California voters on November 3, 2020 and became operative on January 1, 2023, amends and expands the CCPA and its accompanying obligations, including through yet-to-be-finalized implementing regulations from a new enforcement agency, the California Privacy Protection Agency.

Additionally, the California Privacy Rights Act, a ballot measure that was approved by California voters on November 3, 2020 and became operative on January 1, 2023, amends and expands the CCPA and its accompanying obligations, including through yet-to-be-finalized implementing regulations from a new enforcement agency, the California Privacy Protection Agency.

Other states, such as Virginia and Colorado, have also passed comprehensive data privacy and security laws, and similar laws are being considered in several other states, as well as the federal and local levels.

Other countries also have developed, or are developing, laws governing the collection, use and transmission of personal information, such as the General Data Protection Regulation in the EU that became effective in May 2018 and the Personal Information Protection and Electronic Documents Act that became effective in Canada in April 2000.

In addition, most healthcare providers who utilize our Products or who may utilize other products we may sell in the future are subject to privacy and security requirements under the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology and Clinical Health Act, and its implementing regulations (collectively, “HIPAA”).

We are not a HIPAA covered entity, do not intend to become one, and we do not operate as a business associate to any covered entities.

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As of December 31, 2023, Heron employed 126 full-time employees, 72 of whom are involved in sales and marketing activities, 39 of whom are involved in research and development activities and 15 of whom are involved in general and administrative activities.

In 2022, Heron reduced headcount, across all functions, in order to enable us to decrease costs and focus our resources more on commercial activities to support revenue growth.

Our 2022 voluntary turnover rate of 18% was aligned with industry average voluntary turnover but increased from the prior year due to employee concerns of job stability following our restructuring, and still amid an ongoing period of high employee resignations across all industries (commonly referred to as the “Great Resignation”).

In 2023, Heron reduced headcount, across all functions, in order to enable us to decrease costs and focus our resources on commercial activities to support revenue growth.

Our 2023 voluntary turnover rate of 17% was slightly above industry average voluntary turnover due to employee concerns of job stability following our restructuring and extensive leadership changes.

None of our employees are represented by a labor union or covered by a collective bargaining agreement.

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We continually evaluate business needs and opportunities in addition to balancing in-house expertise and capacity with that of outsourced resources.

Currently, we outsource substantial clinical study work to clinical research organizations and drug manufacturing work to contract manufacturers.

Currently, we outsource drug manufacturing work to contract manufacturers in addition to a few other specialty tasks for which we do not have in-house expertise.

Drug development is a complex endeavor that requires deep expertise and experience across a broad array of disciplines.

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Bonus opportunity and equity compensation increase as a percentage of total compensation based on level of responsibility.

Actual bonus payouts for all employees except our senior executives are based on a weighting of Company and individual performance, which varies based on level of responsibility.

Actual bonus payout for our senior executives is based exclusively on Company performance, as will be more fully described in our Definitive Proxy Statement to be filed with the SEC related to our 2023 Annual Meeting of Stockholders.

Heron supports our employees’

further development with individualized development plans, mentoring, coaching, internal development workshops, and certain financial support, including company-paid external conference attendance and tuition reimbursement.

Heron sponsors professional society memberships for all employees, as well as memberships for interested female employees in a women’s advocacy organization supporting women in Science, Technology, Engineering and Math.

Developing and maintaining a positive corporate culture is a priority for Heron.

We collected feedback from employees about their working experience during 2022 through direct employee surveys and many individual discussions to identify opportunities to enhance our corporate culture, especially in a very challenging year.

A cross-functional team was established to identify and implement initiatives in response to such employee feedback in order to ensure a positive, productive and inclusive work environment.

This work continues as an ongoing effort.

Actual bonus payouts for all employees except our most senior executives are based on a weighting of Company and individual performance, which varies based on level of responsibility.

Actual bonus payout for our most senior executives is based exclusively on Company performance, as will be more fully described in our Definitive Proxy Statement to be filed with the SEC related to our 2024 Annual Meeting of Stockholders.

Heron supports our employees’ further development with individualized development plans, mentoring, coaching, internal development workshops, and certain financial support, including company-paid external conference attendance and tuition reimbursement.

We also monitor employee compliance with applicable laws and regulations through a third party ethics and compliance hotline system that facilitates anonymous internal and external reporting of complaints or concerns.

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In 2023, 50% of our Section 16 officers were female.

We believe diversity is a competitive advantage and through initiatives established in our recruiting strategy and documented in our Affirmative Action Plan, we expanded our recruiting efforts in 2022 to reach underrepresented candidates and plan to continue doing so on an ongoing basis.

We believe diversity is a competitive advantage and through initiatives established in our recruiting strategy and documented in our Affirmative Action Plan, we continued outreach in 2023 to underrepresented candidates for positions undergoing recruitment and will continue doing so on an ongoing basis.

Heron also monitors pay practices and decisions to ensure pay equity for minority and female employees when compared to non-minority and male employees in same or similar positions and when considering objective factors related to position qualifications.

Heron is committed to upholding basic human rights and complies with all laws and practices that prohibit child labor, forced or indentured labor, human trafficking and unfair wages.

Heron’s Injury and Illness Prevention Plan documents procedures to reduce work-related injuries and occupational illnesses.

In 2022, Heron had two Occupational Safety and Health Administration-reportable work-related injuries and did not experience any work-related deaths.

In response to the COVID-19 pandemic, we continued a remote work arrangement for non-laboratory employees and additional safety measures for employees continuing critical on-site work.

In addition, we provided cell phone and home internet stipends to reimburse all employees for additional expenses related to working from home.

Heron’s Injury and Illness Prevention Plan documents procedures to reduce work-related injuries and occupational illnesses.

In 2023, Heron had three Occupational Safety and Health Administration-reportable work-related injuries or illnesses.

One was related to a COVID-19 infection and resulted in all of the missed workdays reported.

We did not experience any work-related deaths.

Company Information

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We file our annual, quarterly and special reports, proxy statements and other information with the SEC.

Our filings with the SEC are also available to the public on the SEC’s website at http://www.sec.gov .

Additional information regarding us, including our audited financial statements and descriptions of our business, is contained in the documents incorporated by reference in this Annual Report on Form 10-K.

Our common stock is traded on The Nasdaq Capital Market, under the symbol “HRTX.”

RISK FACTO RS

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• If our suppliers or contract manufacturers are unable to manufacture in commercially viable quantities, we could face delays in our ability to commercialize our Products and product candidates, our costs will increase and sales of our Product and product candidates, if approved, may be severely hindered.

The evolving effects of the COVID-19 pandemic and associated global economic instability could have further adverse effects on our business, including our commercialization efforts, supply chain, regulatory activities, clinical development activities and other business operations.

• The global economic instability could have further adverse effects on our business, including our commercialization efforts, supply chain, regulatory activities, clinical development activities and other business operations.

• We have a history of losses, we expect to generate losses in the near future, and we may never achieve or maintain profitability.

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The success of our business is substantially dependent on our ability to commercialize our Products and our product candidates.

Although members of our management team have prior experience launching new drugs, ZYNRELEF, APONVIE, CINVANTI and SUSTOL are the first four products that we have launched and, if HTX-034 is approved in the U.S., it would be the fifth product that we launch in the U.S.

ZYNRELEF, approved for commercial sale in the U.S., Canada, EU, the other countries in the EEA, and the United Kingdom, would be our first Product to be made commercially available in Canada or Europe.

Although members of our management team have prior experience launching new drugs, ZYNRELEF, APONVIE, CINVANTI and SUSTOL are the first four products that we have launched.

Further, even if our sales organization performs as expected, the revenue that we may receive from the sales of our Products and our product candidates, if approved, may be less than anticipated due to factors that are outside of our control.

These factors that may affect revenue include:

the scope of our approved Product labels, including any expanded indication statement of ZYNRELEF in the U.S.;

The factors that may affect revenue include:

• the scope of our approved Product labels, including our recently expanded indication statement of ZYNRELEF in the U.S.;

• the perception of physicians and other members of the health care community of the safety and efficacy and cost-competitiveness relative to that of competing products;

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• the availability of raw materials necessary to manufacture our Products and our product candidates;

our ability to access third parties to manufacture and distribute our Products and our product candidates on acceptable terms or at all and those third parties’

ability and/or willingness to fully perform their obligations;

• our ability to access third parties to manufacture and distribute our Products and our product candidates on acceptable terms or at all and those third parties’ ability and/or willingness to fully perform their obligations;

• regulatory developments related to the manufacture or continued use of our Products and our product candidates;

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• the extent and effectiveness of sales and marketing and distribution support for our Products and our product candidates;

the extent of the evolving effects of the COVID-19 pandemic on our business;

our competitors’

activities, including decisions as to the timing of competing product launches, generic entrants, pricing and discounting;

• our competitors’ activities, including decisions as to the timing of competing product launches, generic entrants, pricing and discounting;

• any other material adverse developments with respect to the commercialization of our Products and our product candidates.

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We have established an internal commercial organization for the sale, marketing and distribution of our Products in the U.S.

In order to successfully commercialize ZYNRELEF and any other Products or product candidates we obtain regulatory approval for in Canada or Europe, we must increase our sales, marketing, distribution and other non-technical capabilities or make arrangements with third parties to perform these services.

The development of a sales organization to market our Products and product candidates is expensive and time consuming, and we cannot be certain that we will be able to successfully develop this capacity or that this function will execute as expected.

If we are unable to establish and maintain adequate sales, marketing and distribution capabilities, whether independently (including as a result of our recent reduction in force) or with third parties, we may not be able to generate product revenue and our business and results of operations will suffer.

If we are unable to establish and maintain adequate sales, marketing and distribution capabilities, whether independently or with third parties, we may not be able to generate product revenue and our business and results of operations will suffer.

Our internal sales and marketing organization is not currently structured or staffed to launch products on an international level and, therefore, we may not be able to successfully commercialize our Products or product candidates outside of the U.S.

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without the assistance of third parties with international expertise, it may take longer than expected to obtain the approvals and take the steps needed to commercialize them.

As a result, we may decide to delay or abandon development efforts in certain markets.

As a result, we may decide to delay or abandon development efforts in certain

Any such delay or abandonment may have an adverse effect on the benefits otherwise expected from marketing our Products or product candidates in foreign countries.

If we enter into arrangements with third parties to help commercialize our Products and product candidates, we would be dependent on the subsequent success of these other parties in performing their responsibilities.

Such third parties may not perform their obligations under our agreements with them.

We cannot control the amount and timing of such third parties' resources that will be devoted to commercializing our Products and product candidates pursuant to our collaborative agreements with them.

For example, we have entered into a Co-Promotion Agreement with Crosslink Network, LLC (“Crosslink”) pursuant to which the Company has committed to pay Crosslink certain agreed-upon compensation to co-promote the sale of certain products;

however, if Crosslink fails to perform as anticipated for any reason, it could adversely impact our financial condition and be detrimental to our future business prospects.

In addition, under the terms of the Co-Promotion Agreement, Crosslink was appointed as the Company’s exclusive co-promoter of ZYNRELEF within the U.S.

If we cannot establish satisfactory pricing of our Products or product candidates, if approved, that is also acceptable to the U.S.

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Congress and state legislatures will likely continue to focus on health care reform, reducing the cost of prescription pharmaceuticals and reforming the Medicare and Medicaid systems.

For example, the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, “PPACA”) encourages comparative effectiveness research.

Any adverse findings for our Products from such research may negatively impact reimbursement available for our Products.

Similarly, the SUPPORT Act, which was signed into law on October 24, 2018, encourages the prevention and treatment of opioid addiction and the development of non-opioid pain management treatments.

Although it is too early to assess the impact of the SUPPORT Act, it could potentially increase competition for ZYNRELEF and, if approved, HTX-034, and have other negative impacts on our business.

Similarly, the SUPPORT Act, which was signed into law on October 24, 2018, established policies to encourage the prevention and treatment of opioid addiction and the development of non-opioid pain management treatments.

Currently, due to the SUPPORT Act, Medicare pays separately for certain non-opioid pain management drugs in ambulatory surgical centers (“ASC”) but no in the hospital outpatient setting (“OPPS”).

As ZYNRELEF is already separately paid in both settings due to a different policy, the changes from the SUPPORT Act may increase competition for ZYNRELEF.

Recently, the Consolidated Appropriations Act of 2023 established a three-year period of separate payment for non-opioid pain relief products in the OPPS and ASC settings for 2025 through 2027.

Beginning January 1, 2025, Medicare will provide separate payment via a different methodology than currently for qualified non-opioids for pain relief in the OPPS and ASC settings through December 31, 2027.

This new policy could potentially increase access for ZYNRELEF but may increase competition.

In March 2021, Congress enacted the American Rescue Plan Act of 2021, which removed the statutory cap on rebates that manufacturers pay to state Medicaid programs pursuant to the Medicaid Drug Rebate Program.

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The Infrastructure Investment and Jobs Act, signed into law on November 15, 2021, also included a provision requiring drug manufacturers to pay CMS a refund for certain amounts of Part B drugs that are discarded from a single-dose container or single-use package.

Under the law, and a CMS Proposed Rule issued in July 2022, this refund program became effective on January 1, 2023.

Further, the Inflation Reduction Act of 2022 (“IRA”), signed into law in August 2022, includes various provisions intended to address drug-pricing issues (such as provisions empowering the federal government to negotiate the price of some high-cost, single-source Medicare Part B and Part D drugs (with the new pricing to take effect in January 2026 or thereafter) and requiring rebates for certain Part B and Part D drugs if their price increases outpace inflation).

Although it is too early to assess the impact of these provisions on our Products and product candidates, they could impact our product pricing or increase our rebate obligations.

Under the law, and a CMS Proposed Rule issued in July 2022, this refund program became effective on January 1, 2023 and could potentially result in refund obligations.

Although it is too early to assess the impact of these provisions on our Products and product candidates, our Products would be unlikely to be selected for price negotiation given their low Medicare expenditures relative to other drugs.

However, Medicare inflation rebates may impact our product pricing or increase our rebate obligations.

In addition, developments in Medicare hospital outpatient reimbursement for 340B-acquired drugs may further drive 340B hospital business for Heron.

The 340B program allows certain hospitals and safety net providers to purchase Part B outpatient drugs from manufacturers at federally mandated discounted rates.

Due to the June 2022 Supreme Court decision in American Hospital Association et al.

Becerra et al, since January 1, 2023, the Medicare Part B hospital outpatient payment rate for 340B-acquired drugs has returned to being at the same rate as the rate for non-340B hospitals, Average Selling Price (ASP) + 6% methodology.

As evidenced by developments such as these, low prices of our Products and product candidates in the U.S.

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For example, if legislation is passed or regulations are adopted that tie the prices of U.S.

pharmaceuticals to the cost of pharmaceuticals in other countries and if ZYNRELEF is subject to pricing regulations in the EU or in other countries in which it is approved that keep its price low in those jurisdictions, then this could lower the potential price of the product in the U.S., thereby limiting the revenue we would be able to generate from it.

Additionally, on September 24, 2020, the FDA published the Importation Rule.

Although it is too early to assess the impact of the Importation Rule, it could potentially reduce U.S.

revenues for any of our Products or product candidates that are also approved in Canada, including ZYNRELEF, and potentially have other negative impacts on our business.

pharmaceuticals to the cost of pharmaceuticals in other countries, then this could lower the potential price of the product in the U.S., thereby limiting the revenue we would be able to generate from it.

Economic pressure on state budgets may result in states increasingly seeking to achieve budget savings through mechanisms that limit coverage or payment for drugs.

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governmental pricing and contracting programs, we could be subject to additional reimbursement requirements, penalties and fines, which could have a negative impact on our business, financial condition, and results of operations.

The Medicare program and certain government pricing programs, including the Medicaid drug rebate program, the Public Health Services’

340B drug pricing program, and the pricing program under the Veterans Health Care Act of 1992 impact the reimbursement we may receive from sales of our Products, our product candidates or any other products that are approved for marketing in the U.S.

The Medicare program and certain government pricing programs, including the Medicaid drug rebate program, the Public Health Services’ 340B drug pricing program, and the pricing program under the Veterans Health Care Act of 1992 impact the reimbursement we may receive from sales of our Products, our product candidates or any other products that are approved for marketing in the U.S.

Pricing and rebate calculations vary among programs.

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Regulatory approval may also be delayed, limited or prevented by other factors.

If we delay or abandon our efforts to develop any of our Products for expanded indications, or product candidates for approval, we may not be able to generate sufficient revenues to

become profitable, and our reputation in the industry and in the investment community would likely be significantly damaged, each of which would cause our stock price to decrease significantly.

If we delay or abandon our efforts to develop any of our Products for expanded indications, or product candidates for approval, we may not be able to generate sufficient revenues to become profitable, and our reputation in the industry and in the investment community would likely be significantly damaged, each of which would cause our stock price to decrease significantly.

Interim, topline or preliminary data from our clinical trials that we announce or publish may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

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In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular drug, product candidate or our business.

If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain expanded indications for our Products, or to obtain approvals for and commercialize our product candidates, our business, operating results, prospects or financial condition may be harmed.

Products, or to obtain approvals for and commercialize our product candidates, our business, operating results, prospects or financial condition may be harmed.

Although the FDA might grant Fast Track, Breakthrough Therapy and Priority Review or similar designations to our Products and product candidates, there can be no assurance that any of our Products or product candidates that receive similar designations in the U.S.

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Priority Review designation is for drugs that, if approved, would be significant improvements in the safety or effectiveness of the treatment or prevention of serious conditions.

product candidates that receive Fast Track or Breakthrough Therapy designation may receive more frequent interactions with the FDA regarding the product candidate’s development plan and clinical trials and may be eligible for the FDA’s Rolling Review and Priority Review.

Priority Review designation is intended to direct overall attention and resources of the FDA to the evaluation of such applications and means that the FDA’s goal is to take action on such applications within 6 months, compared to 10 months under standard review.

We can provide no assurances that any of our Products or product candidates that receive Fast Track, Breakthrough Therapy, Priority Review or similar designations in the U.S.

or in any other regulatory jurisdictions will receive regulatory approval any sooner than other Products or product candidates that do not have such designations, or at all.

The FDA or any foreign regulatory authorities may also withdraw or revoke Fast Track, Breakthrough Therapy, Priority Review or similar designations, or elect to treat designated candidates in a manner different from what was originally indicated, if they determine that any of our Products or product candidates that receive such designations no longer meet the

relevant criteria.

Failure to realize the potential benefits of these designations could materially and adversely affect our business, financial condition, cash flows and results of operations.

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We rely on third parties to conduct our preclinical testing and conduct our clinical trials, and their failure to perform their obligations in a timely and competent manner may delay development and commercialization of our Products and product candidates and our business could be substantially harmed.

We have used contract research organizations (“CROs”) to oversee or provide selected services for our clinical trials for our Products and our product candidates, and we expect to use the same or similar organizations for our future clinical trials and pipeline programs.

There can be no assurance that these CROs will perform their obligations at all times in a competent or timely fashion, and we must rigorously oversee their activities in order to be confident in their conduct of these trials on our behalf.

If the CROs fail to commit resources to our Products or product candidates, our clinical programs could be delayed, terminated or unsuccessful, and we may not be able to obtain initial or expanded regulatory approvals for, or successfully commercialize, them.

If the CROs fail to commit resources to our Products or product candidates, our clinical programs could be delayed, terminated or unsuccessful, and we may not be able to obtain

initial or expanded regulatory approvals for, or successfully commercialize, them.

Different cultural and operational issues in foreign countries could cause delays or unexpected problems with patient enrollment or with the data obtained from those locations.

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Outsourcing these functions involves risk that third parties may not perform to our standards, may not produce results in a timely manner, or may fail to perform at all.

If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines or if the quality or accuracy of the preclinical results or clinical data they obtain is

compromised due to the failure to adhere to test requirements, our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our Products and product candidates.

If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines or if the quality or accuracy of the preclinical results or clinical data they obtain is compromised due to the failure to adhere to test requirements, our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our Products and product candidates.

As a result, our results of operations and the commercial prospects for our Products and product candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed.

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The manufacture of pharmaceutical products is a highly complex process in which a variety of difficulties may arise, including product loss due to material failure, equipment failure, vendor error, operator error, labor shortages, inability to obtain material, equipment or transportation, physical or electronic security breaches and natural or man-made disasters.

Problems with manufacturing processes could result in product defects or manufacturing failures, which could require us to delay shipment of products or recall products previously shipped, or could impair our ability to expand into new markets or supply products in existing markets.

ability to expand into new markets or supply products in existing markets.

We may not be able to resolve any such problems in a timely manner, if at all.

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At times, our contract manufacturers or other third parties might not perform their obligations under long-term commercial manufacturing agreements or other agreements, which could impede the manufacturing of our Products and our product candidates and could require us to incur additional costs, including legal fees, as we seek to enforce our contractual rights.

Our reliance on

third-party suppliers and contract manufacturers also subjects our business to risks associated with geographic areas in which those parties reside, which could include natural or man-made disasters, including epidemics, pandemics, acts of war or terrorism, or resource shortages.

Our reliance on third-party suppliers and contract manufacturers also subjects our business to risks associated with geographic areas in which those parties reside, which could include natural or man-made disasters, including epidemics, pandemics, acts of war or terrorism, or resource shortages.

Due to regulatory and technical requirements, we may have limited ability to shift production to a different third-party should the need arise.

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In addition, such failure could be the basis for the FDA or foreign regulators to issue a warning or untitled letter or take other regulatory or legal action, including recall or seizure, total or partial suspension of production, suspension of ongoing clinical trials, refusal to approve pending applications or supplemental applications, and potentially civil and/or criminal penalties depending on the matter.

Our Products and product candidates may be in competition with other products for access to the facilities of third parties and, consequently, could be subject to manufacturing delays if our contractors give other companies’

products greater priority than ours.

Additionally, our contractors might be required by government regulation or government authority to prioritize production of other products, such as priority-rated orders pursuant to the U.S.

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Such adverse events could cause global supply chain interruptions that could increase our costs and, to the extent such interruptions impair our ability to have sufficient inventory, cause us to lose revenue or market share.

We continually evaluate our supply chains to identify potential risks and needs for additional

manufacturers and other suppliers for the manufacturing of our Products and product candidates.

We continually evaluate our supply chains to identify potential risks and needs for additional manufacturers and other suppliers for the manufacturing of our Products and product candidates.

Establishing additional or replacement suppliers for certain raw materials in our proprietary polymers, if required, may not be accomplished quickly, or at all, and may involve significant expense.

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Any change in suppliers or the manufacturing process could require additional regulatory approval and result in operational delays.

Some of our suppliers may experience disruption to their respective supply chains due to the adverse events or conditions, including the effects of the COVID-19 pandemic, rising geopolitical tensions, armed conflict or other factors, which could delay, prevent or impair our development or commercialization efforts.

We obtain certain critical materials and components used in manufacturing our Products and our product candidates from third-party suppliers whose operations might be directly or indirectly affected by adverse events or conditions, including the effects of the COVID-19 pandemic, rising geopolitical tensions, armed conflict or other factors (including, without limitation, adverse weather conditions, political instability, war, civil unrest, economic instability, outbreaks of disease, or other public health emergencies and the impact of any such U.S.

Some of our suppliers may experience disruption to their respective supply chains due to the adverse events or conditions, including the effects of a pandemic or disease outbreak, rising geopolitical tensions, armed conflict or other factors, which could delay, prevent or impair our development or commercialization efforts.

We obtain certain critical materials and components used in manufacturing our Products and our product candidates from third-party suppliers whose operations might be directly or indirectly affected by adverse events or conditions, including the effects of a pandemic or disease outbreak, rising geopolitical tensions, armed conflict or other factors (including, without limitation, adverse weather conditions, political instability, war, civil unrest, economic instability, outbreaks of disease, or other public health emergencies and the impact of any such U.S.

or foreign government response and public fears regarding any of the foregoing).

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Similarly, if we are unable to ramp up production of prospective product candidates to coincide with the regulatory approval of those product candidates, our ability to generate revenue and profits in the short term would be adversely impacted.

If our competitors are able to meet demand with their products before we are able to produce and sell inventory, our ability to gain market share will be adversely impacted, which could materially and adversely

affect our business, financial condition, cash flows and results of operations.

In addition, if regulatory approval of any of our product candidates comes earlier than anticipated, as a result of preferential designations designed to hasten the approval process or otherwise, and we have not built up sufficient inventory to meet commercial demand, our ability to generate additional revenue sooner as a result of those early approvals may be diminished.

We face intense competition from other companies developing products for the management of postoperative pain or the prevention of CINV and PONV.