Heron Therapeutics (NASDAQ: HRTX) - San Diego-based biotechnology company, founded in the USA in 1983. Business is focused on helping patients, undergoing chemotherapy, and relief of postoperative pain. In the distant past, the company's shares were more expensive 1000 $ for pike, and now dropped to 10-12 $.
Where does the money come from
The commercial strategy of the business is focused on the unmet needs of different groups of patients and is now engaged in research in the field of oncology and surgery.. The company has already brought several drugs to the U.S. market to relieve postoperative pain and relieve symptoms., caused by different courses of chemotherapy.
Portfolio of drugs under development
So far, Heron Therapeutics has successfully commercialized three of its products..
Zynrelef. For the first time 72 hours relieves pain in adult patients, who have undergone major knee surgery. Approved by the Food and Drug Administration (FDA) 1 July 2021 and became an alternative to traditional opioids, the use of which is associated with the risk of addiction. Approved in 31 European country.
Cinvanti and Sustol. Drugs for adult patients with cancer. Prevents nausea & vomiting, caused by the passage of primary and repeated courses of chemotherapy of varying degrees of aggressiveness.
The company has two drugs for adults at the clinical stage of development: HTX-034 to relieve postoperative pain in the first 5-7 days and HTX-019, which prevents bouts of nausea and vomiting in patients, who have undergone surgery. For the latter, it is planned to apply for FDA approval in the fourth quarter of 2021..
What's wrong
Coronavirus strikes back. Last year, the pandemic and lockdowns significantly hurt the company's business.: medical facilities were closed and patients simply could not get their appointments from doctors., prescription drug manufacturers suffered losses. Now the situation with vaccination and MEASURES to prevent COVID-19 has improved significantly., but at the same time, the world is plunging into panic over the new delta strain.. With such a prospect, new restrictive measures and other negative consequences of the pandemic cannot be ruled out., which may adversely affect Heron Therapeutics, - the company itself mentions this on the 20th page of the report for the second quarter of 2021.
The upcoming rise in interest rates in the United States. This fact also does not add optimism.: it will become more expensive for companies to service their own debt, and the tightening of monetary policy in the country may well begin in November. This problem potentially dominates the entire biotechnology sector., where companies traditionally have high R&D spending, chronic unprofitability and a significant amount of borrowed funds in accounts.
Volume of short positions and insider sales. According to the data Finviz, even with a relatively low share price of Heron Therapeutics, they still remain in the order of 30% shorts are a lot. The history of insider transactions does not add positive: over the past year, employees and management have only sold stock in their employer.
What good
Revenue recovers. After the annual figure in 2020 fell by almost half, for the two quarters of 2021, the company has already earned almost the same amount., how many for the previous year. It's all about, that the pandemic has dealt a significant blow to prescription drug manufacturers: many medical facilities were closed for quarantine and patients could not get to see doctors, to get your appointments.
The debt load does not look excessive. Heron Therapeutics' Debt Ratio has been rising for the past four years., but is at an acceptable value 0,6 point means, that the company's liabilities are 60% of its total assets.
New drug. In the fourth quarter of 2021, the company plans to apply to the FDA for approval of its new drug.: HTX-019 planned to be used to prevent attacks of postoperative nausea and vomiting. The potential market for this development Heron Therapeutics estimates in 20 times more, than for already registered Sustol and Cinvanti, who cope with similar negative symptoms in cancer patients on chemotherapy.
What's the bottom line?
Biotechnology is the sphere of great hopes of many investors for grandiose ups and their own disappointments from the rapid fall in stock prices.. As a typical representative of the sector, Heron Therapeutics is not very suitable for conservative investing: the company's prospects are vague, no dividends, and debt grows.
At the same time, possible high volatility, high risk and attractive price make shares a good target for speculative trades. Join the Bears, try to play against the trend in the long or even stay away - everyone is better to decide for themselves on the basis of their strategy and rules of risk control.
