What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-06 compared with 2024-11-12 · 81 added, 98 removed, 91 unchanged (66% of the section changed)

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The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the U.S.

Securities and Exchange Commission (“SEC”) on March 12, 2024 (the "2023 Annual Report").

Securities and Exchange Commission (“SEC”) on February 27, 2025 (the "2024 Annual Report").

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws.

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• our ability to successfully commercialize, market and achieve market acceptance of ZYNRELEF ® (bupivacaine and meloxicam) extended-release solution (“ZYNRELEF”), APONVIE ® (aprepitant) injectable emulsion (“APONVIE”), CINVANTI ® (aprepitant) injectable emulsion (“CINVANTI”), and SUSTOL ® (granisetron) extended-release injection (“SUSTOL” and together with ZYNRELEF, APONVIE and CINVANTI, our "Products") in the United States (“U.S.”) , and our positioning relative to products that now or in the future compete with our Products or product candidates;

• our estimates regarding the potential market opportunities for our Products and our product candidates, if approved, and our ability to capture the potential additional market opportunity from the expanded ZYNRELEF label recently approved in the U.S.;

• our ability to establish and maintain successful commercial arrangements like our co-promotion agreement with CrossLink Life Sciences, LLC ("CrossLink");

• the realization of anticipated benefits from our co-promotion agreement with CrossLink;

• our ability to establish and maintain successful commercial arrangements like our co-promotion agreement with CrossLink Network, LLC ("CrossLink Network");

• the realization of anticipated benefits from our co-promotion agreement with CrossLink Network;

• the outcome of our pending abbreviated new drug application litigation;

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• whether study results of our Products and product candidates are indicative of the results in future studies;

• the results of the commercial launch of APONVIE in the U.S.;

• our ability to successfully launch VAN in the US;

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• our estimates regarding our capital requirements;

• the impact of our 2023 restructuring activities, including the reduced headcount and external spend;

• our inability or delay in achieving profitability;

• the impact of evolving legal and regulatory requirements and interpretations thereof, including emerging environmental, social and governance requirements and the recent U.S.

• the impacts of general business, financial market, and economic conditions, including the impact of conflicts in Ukraine and the Middle East, global pandemics such as COVID-19, tariffs and other trade protection measures, and other sources of volatility, which could adversely affect our financial condition, results of operations and cash flows;

• the impact of evolving legal and regulatory requirements and interpretations thereof, including the U.S.

Supreme Court decision regarding deference to federal administrative agencies' interpretations of federal statutes;

• our ability to obtain additional financing and raise capital as necessary to fund operations or pursue business opportunities;

• those risks listed under the section entitled "Risk Factors" in Part I, Item 1A of the 2023 Annual Report.

• the impact of global economic and political developments on our business, including economic slowdowns or recessions and market disruptions that may result from, among others, global conflicts, economic sanctions, an inflationary environment, which could harm our commercialization effort, as well as the value of our common stock and our ability to access capital markets, and

• those risks listed under the section entitled "Risk Factors" in Part I, Item 1A "Risk Factors" of the 2024 Annual Report and Part II, Item IA "Risk Factors" in this Quarterly Report on Form 10-Q.

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance.

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Acute Care Product Portfolio

Our Acute Care Product Portfolio consists of ZYNRELEF, which is approved in the U.S.

for the management of postoperative pain and APONVIE, which is approved in the U.S.

for the prevention of postoperative nausea and vomiting.

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.

ZYNRELEF was initially approved by the FDA in May 2021, and we commenced commercial sales in the U.S.

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In each of 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.

In September 2024, the FDA approved the prior approval supplement (“PAS”) for the addition of a vial access needle (“VAN”) in the ZYNRELEF co-packaged combination product kit.

The introduction of the VAN will replace the current vented vial spike and has the potential to simplify aseptic preparation, while also significantly reducing ZYNRELEF's withdrawal time down to between twenty and forty-five seconds.

The user-friendly "container-like" design of the VAN may enhance the safe use of ZYNRELEF, increase adoption, and improve the preparation process.

The VAN is expected to be available for use in the fourth quarter of 2024.

In January 2024, we entered into a five-year 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.

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

In total, we anticipate that approximately 650 representatives will be added to Heron’s sales network over 2024.

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 setting of care.

ZYNRELEF is approved for use in adults for postsurgical analgesia for up to 72 hours after soft tissue and orthopedic surgical procedures including foot and ankle, and other orthopedic surgical procedures in which direct exposure to articular cartilage is avoided.

In September 2024, the FDA approved the prior approval supplement (“PAS”) application for ZYNRELEF Vial Access Needle ("VAN"), which will replace the current vented vial spike.

In addition, in December 2022, H.R.

2617, the omnibus spending bill was approved by Congress.

The bill includes the Non-Opioids Prevent Addiction in the Nation (NOPAIN) Act which directs CMS to provide separate Medicare reimbursement for non-opioid treatments that are used to manage pain during surgeries conducted in hospital outpatient departments or in ambulatory surgical centers.

2617, the omnibus spending bill was approved by Congress, which includes the Non-Opioids Prevent Addiction in the Nation (NOPAIN) Act which directs CMS to provide separate Medicare reimbursement for non-opioid treatments that are used to manage pain during surgeries conducted in hospital outpatient departments or in ambulatory surgical centers.

To qualify, the non-opioid treatment must demonstrate the ability to replace, reduce, or avoid intraoperative or postoperative opioid use or the quantity of opioids prescribed in a clinical trial or through data published in a peer-reviewed journal.

The hospital outpatient prospective payment system and ambulatory surgical center proposed rule for calendar year 2025 includes ZYNRELEF as a qualifying non-opioid requiring CMS to provide separate Medicare reimbursement in both the hospital outpatient department and ambulatory surgical center settings from January 1, 2025, through December 31, 2027.

APONVIE is the first and only intravenous formulation of a substance P/neurokinin-1 (“NK1”) receptor antagonist indicated for postoperative nausea and vomiting (“PONV”) in adults.

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

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”) in adults.

APONVIE is indicated for the prevention of PONV in adults.

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

APONVIE is the first and only intravenous formulation of a substance P/neurokinin-1 (“NK1”) receptor antagonist indicated for PONV.

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

Oncology Care Product Portfolio

Our Oncology Care Product portfolio consists of SUSTOL and CINVANTI, which are both approved in the U.S.

for the prevention of chemotherapy-induced nausea and vomiting.

SUSTOL was approved by the FDA in August 2016, and we commenced commercial sales in the U.S.

in October 2016.

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-HT3”) 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).

SUSTOL is the first extended-release 5-HT3 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”).

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.

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 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.

in January 2018.

In each of February 2019 and October 2019, the FDA approved an expansion of CINVANTI of its administration and indication, respectively.

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 IV formulation of aprepitant, a substance NK1 receptor antagonist.

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Aprepitant (including its prodrug, fosaprepitant) is a single-agent NK1 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 IV formulation of an NK1 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.

NK1 receptor antagonists are typically used in combination with 5-HT3 receptor antagonists.

Unlike CINVANTI many other injectable NK1 receptor antagonists currently approved in the U.S.

CINVANTI is the first and only IV formulation of an NK1 receptor antagonist indicated for the prevention of acute and delayed nausea and vomiting associated with Highly Emetogenic Cancer ("HEC") and nausea and vomiting associated with Moderately Emetogenic Cancer ("MEC") that is free of synthetic surfactants, including polysorbate 80.

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 HEC including high-dose cisplatin as a single-dose regimen, delayed nausea and vomiting associated with initial and repeat courses of MEC as a single-dose regimen, and nausea and vomiting associated with initial and repeat courses of MEC as a 3-day regimen.

NK1 receptor antagonists are typically used in combination with 5-hydroxytryptamine ("5-HT3") receptor antagonists.

The only other injectable NK1 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.

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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.

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

in January 2018.

SUSTOL is the first extended-release 5-HT3 receptor antagonist approved for the prevention of acute and delayed nausea and vomiting associated with both MEC and anthracycline and cyclophosphamide ("AC") combination chemotherapy regimens.

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 MEC or AC combination chemotherapy regimens.

SUSTOL is an extended-release, injectable 5-HT3 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).

SUSTOL was approved by the FDA in August 2016, and we commenced commercial sales in the U.S.

in October 2016.

Biochronomer Technology

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The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

We evaluate our estimates on an ongoing basis, including those related to revenue recognition, investments, inventory and the related reserves, accrued research and development expenses, income taxes and stock-based compensation.

We evaluate our estimates on an ongoing basis, including those related to revenue recognition, investments, inventory and the related reserves, accrued clinical and manufacturing liabilities, income taxes and stock-based compensation.

We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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Our critical accounting estimates include:

revenue recognition, investments, inventory and the related reserves, accrued research and development expenses, income taxes, and stock-based compensation.

revenue recognition, investments, inventory and the related reserves, accrued clinical and manufacturing liabilities, income taxes, and stock-based compensation.

There have been no material changes to our critical accounting estimates disclosures included in our 2024 Annual Report.

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See Note 3 to the condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

Results of Operations for the Three and Nine Months Ended September 30, 2024 and 2023

Results of Operations for the Three Months Ended March 31, 2025 and 2024

Comparison of Results of Operations

Three Months Ended March 31,

($ in thousands)

Net product sales

For the three and nine months ended September 30, 2024, net product sales were $32.8 million and $103.5 million, respectively, compared to $31.4 million and $92.8 million, respectively, for the same periods in 2023.

Net Product Sales – Acute Care

For the three and nine months ended September 30, 2024, net product sales of ZYNRELEF were $6.3 million and $17.1 million, respectively, compared to $4.4 million and $12.0 million, respectively, for the same periods in 2023.

For the three and nine months ended September 30, 2024, net product sales of APONVIE were $1.1 million and $2.6 million, respectively, compared to $0.3 million and $0.9 million, respectively, for the same periods in 2023.

The increase in net product sales for both ZYNRELEF and APONVIE is attributed to an increase in the units sold in 2024 as compared to 2023.

Net Product Sales – Oncology Care

For the three and nine months ended September 30, 2024, net product sales of CINVANTI were $22.6 million and $73.2 million, respectively, compared to $23.3 million and $70.6 million, respectively, for the same periods in 2023.

For the three and nine months ended September 30, 2024, net product sales of SUSTOL were $2.8 million and $10.6 million, respectively, compared to $3.4 million and $9.3 million, respectively, for the same periods in 2023.

The decrease in net product sales for CINVANTI for the three months ended September 30, 2024, as compared to 2023 is attributed to an increase in units sold, offset by increased gross to net adjustments.

The decrease in net product sales for SUSTOL for the three months ended September 30, 2024, as compared to 2023 is attributed to a decrease in units sold.

The increase in net product sales for both CINVANTI and SUSTOL for the nine months ended September 30, 2024 as compared to 2023 is attributed to an increase in the units sold.

Cost of product sales

For the three and nine months ended September 30, 2024, cost of product sales was $9.5 million and $28.4 million, respectively, compared to $18.2 million and $55.2 million, respectively, for the same periods in 2023.

Cost of product sales primarily included raw materials, labor and overhead related to the manufacturing of our Products, as well as shipping and distribution costs.

For the three and nine months ended September 30, 2024, cost of product sales included charges of $0.8 million and $2.4 million, respectively relating to reserves and write-offs of inventory.

For the three and nine months ended September 30, 2023, cost of product sales included charges of $7.5 million and $20.3 million, respectively, relating to the write-off of inventory.

The remaining decrease in cost of product sales is attributed to a decrease in cost per units for CINVANTI and ZYNRELEF, as large-scale manufacturing was validated and approved in late 2022.

Operating expenses:

Research and development

General and administrative

Sales and marketing

Income (loss) from operations

Net Product Sales

Three Months Ended March 31,

Acute Care Net Product Sales

Oncology Net Product Sales

Total Net Product Sales

Total acute care net product sales increased 89.4% or $4.9 million during the three months ended March 31, 2025, as compared to the comparable period in 2024, primarily driven by an increase in the units sold due to an increase in market share and new customers for both ZYNRELEF and APONVIE, which contributed approximately $4.1 million of the total increase in acute care net product sales.

Total oncology net product sales decreased 2.2% during the three months ended March 31, 2025, as compared to the comparable period in 2024.

The decrease is attributed to market competition and is expected to continue through 2025.

Cost of Product Sales

Cost of product sales increased by 0.2% during the three months ended March 31, 2025, as compared to the comparable period in 2024 and as a percentage of sales decreased 2.7% during the same period.

Gross profit for the three months ended March 31, 2025 was 78.3%, compared to 75.6% for the comparable period ended March 31, 2024.

The increase in gross profit without a corresponding increase in cost of product sales is attributed to a lower cost per unit for the units sold in the three months ended March 31, 2025 as a result of production efficiencies compared to the same period ended March 31, 2024, partially offset by an increase in the units sold.

Research and Development Expense

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Three Months Ended

September 30,

Nine Months Ended

September 30,

SUSTOL-related costs

ZYNRELEF-related costs

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APONVIE-related costs

Personnel and related costs

SUSTOL-related costs

Personnel costs and other expenses

Stock-based compensation expense

Total research and development expense

For the three and nine months ended September 30, 2024, research and development expense was $4.5 million and $13.5 million, respectively, compared to $9.3 million and $31.3 million, respectively, for the same periods in 2023.

The decrease in research and development expense was primarily due to our decreased headcount and related costs as a result of the restructuring implemented in 2023, as well as a decrease in non-cash, stock-based compensation expense.

The decrease is also due to decreases in costs related to ZYNRELEF, as large-scale manufacturing was approved in 2022, and APONVIE, as a result of the product becoming commercially available in March 2023.

Research and development expense decreased by 50.5% or $2.3 million during the three months ended March 31, 2025, compared to the comparable period in 2024 and as a percentage of sales, decreased 7.4% during the same period.

The decrease is primarily related to decreases in headcount and related costs, as well as a decrease in development activities.

General and Administrative Expense

For the three and nine months ended September 30, 2024, general and administrative expense was $12.4 million and $41.3 million, respectively, compared to $15.9 million and $51.3 million, respectively, for the same periods in 2023.

The decrease was primarily due to our decreased headcount and related costs as a result of the restructuring implemented in 2023 and operational efficiencies.

General and administrative expense decreased by 15.2% or $2.3 million during the three months ended March 31, 2025, compared to the comparable period in 2024 and as a percentage of sales, decreased 10.5% during the same period.

The decrease is primarily related to decreased headcount in 2024 and related costs, which represents approximately $1.5 million of the total decrease, and decreased legal expenses of $0.5 million related to the timing of patent litigations.

Sales and Marketing Expense

For the three and nine months ended September 30, 2024, sales and marketing expense was $11.0 million and $36.0 million, respectively, compared to $13.0 million and $55.3 million, respectively, for the same period in 2023.

The decrease was primarily due to our decreased headcount and related costs as a result of the restructuring implemented in 2023 and operational efficiencies.

Sales and marketing expense increased by 7.6% or $0.9 million during the three months ended March 31, 2025, compared to the comparable period in 2024, and as a percentage of sales, decreased by 1.4% during the same period.

The increase in sales and marketing expense is attributed to increased marketing and sales spend to support revenue growth of the acute care products, of approximately $1.0 million.

Other (Expense) Income, Net

For the three and nine months ended September 30, 2024, other expense, net was $0.4 million and $1.5 million, respectively, compared to other (expense) income, net of ($0.1) million and $0.6 million, respectively, for the same period in 2023.

The increase in other expense, net is attributed to increased interest expense as a result of the working capital facility agreement entered into in August 2023 (see Note 8 for further discussion of our working capital facility agreement) and the write-off of property and equipment during the three months ended June 30, 2024, which was associated with a project for which we had a one-time settlement related to a legal dispute.

Other (expense) income, net decreased 131.7% during the three months ended March 31, 2025, compared to the comparable period in 2024, primarily due to the one time settlement gain contingency related to a legal dispute in 2024.

Liquidity and Capital Resources

The Company's short-term and long-term liquidity requirements primarily arise from funding (i) sales and marketing expenses, (ii) general and administrative expenses including salaries, bonuses and commissions, (iii) working capital requirements, and (iv) research and development expenses, and (v) payments related to our outstanding convertible notes.

As of September 30, 2024, we had cash, cash equivalents and short-term investments of $70.9 million.

Based on our current operating plan and projections, management believes that the Company's cash, cash equivalents, short-term investments and working capital facility, will be sufficient to meet the Company's anticipated cash requirements for a period of at least the next twelve months from the date this Quarterly Report on Form 10-Q is filed with the SEC.

As of March 31, 2025, we had cash, cash equivalents and short-term investments of $50.7 million.

Based on our current operating plan and projections, management believes that the Company's cash, cash equivalents, and short-term investments, will be sufficient to meet the Company's anticipated cash requirements for a period of at least the next twelve months from the date this Quarterly Report on Form 10-Q is filed with the SEC.

However, we expect these financing sources will not be sufficient to repay the $150.0 million of Senior Convertible Notes coming due in May 2026.

We expect to finance our future cash needs, including refinancing of our indebtedness through a combination of debt financing transactions, equity offerings, collaborations or a combination of these approaches.

If we issue additional equity securities or securities convertible into equity securities to raise funds, our stockholders will suffer dilution of their investment, and in the case of preferred equity securities or convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock, and such issuances may adversely affect the market price of our common stock.

Our ability to raise additional funds may also be adversely impacted by negative global economic conditions and disruptions to, and volatility in, the credit and financial markets in the U.

and worldwide or other factors, including those addressed under the section entitled "Risk Factors" in Part I, Item 1A "Risk Factors" of the 2024 Annual Report and Part II, Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q.

There can be no assurance that we will be successful in acquiring additional funding at levels sufficient to fund our operations or on terms favorable or acceptable to us, if at all.

If adequate funds are not available, we may default on our indebtedness, be required to further delay, reduce the scope of, or eliminate one or more of our product development programs and reduce personnel-related and other costs, which would have a negative impact on our business.

We continuously evaluate our liquidity and capital resources, including access to external capital, in light of current economic and market conditions and our operational performance.

Our future cash requirements and the adequacy of our available funds will depend on many factors, primarily including our ability to generate revenue and the scope and costs of our commercial and research and development activities.

Our net loss for the three and nine months ended September 30, 2024 was $4.8 million, or $0.03 per share, and $17.2 million, or $0.11 per share, respectively, compared to $25.0 million, or $0.17 per share, and $99.8 million, or $0.75 per share, respectively, for the same period in 2023.

Our net cash used in operating activities for the nine months ended September 30, 2024 and September 30, 2023 was $10.7 million and $61.2 million, respectively.

The decrease in net cash used in operating activities was primarily due to a decrease in net loss as a result of decreases in operating spend and stock-based compensation expenses, primarily as a result of the restructuring implemented in 2023, the $4.3 million of write-offs of property and equipment during the nine months ended September 30, 2024, and changes in working capital, specifically accounts receivable due to timing of collections, inventory as a result of write-offs incurred, prepaid assets due to the timing of payments, and accounts payable and accrued expenses, including payroll and employee liabilities due to the timing of payments and reduced headcount.

Our net cash provided by investing activities for the nine months ended September 30, 2024, and September 30, 2023 was $7.3 million, and $26.8 million, respectively.

The decrease in cash provided by investing activities was primarily due to net maturities of short-term investments of $8.4 million for the nine months ended September 30, 2024 compared to $28.1 million for the nine months ended September 30, 2023.

Our net cash provided by financing activities for the nine months ended September 30, 2024, and September 30, 2023 was $0.5 million, and $53.9 million, respectively.

The decrease in cash provided by financing activities is a result of proceeds from the 2023 private placement and note financing, which did not recur in 2024.

Our net income for the three months ended March 31, 2025 was $2.6 million, or $0.02 per share, compared to a net loss of $3.2 million, or $0.02 per share, for the same period in 2024.

Our net cash used in operating activities for the three months ended March 31, 2025 and March 31, 2024 was $8.9 million and $9.5 million, respectively.

The decrease in net cash used in operating activities was primarily due to the net income for the three months ended March 31, 2025, compared to the net loss for the prior period in 2024, decreases in operating spend and stock-based compensation expenses, and changes in working capital, specifically accounts receivable due to timing of collections, prepaid assets due to the timing of payments, and accounts payable and accrued expenses, including payroll and employee related liabilities due to the timing of payments and reduced headcount.

Our net cash provided by investing activities for the three months ended March 31, 2025, and March 31, 2024 was $2.3 million, and $1.3 million, respectively.

The increase in net cash provided by investing activities was primarily due to net maturities of short-term investments of $2.3 million for the three months ended March 31, 2025 compared to $1.3 million for the three months ended March 31, 2024.

Our net cash provided by financing activities for the three months ended March 31, 2025, and March 31, 2024 was $0.06 million, and $0.01 million, respectively.

Historically, we have financed our operations, including technology and product research and development, primarily through sales of our common stock, product sales and debt financings.

QUANTITATIVE AND QUALITATI VE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting companies.

Quantitative and qualitative disclosures about market risk appear in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Quantitative and Qualitative Disclosures about Market Risk” in the Company’s 2024 Annual Report on Form 10-K.

There were no material changes to this information during the three months ended March 31, 2025.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis