Heron Therapeutics: Profits in Pain Management

01/26/2018 5:00 am EST

Focus: HEALTHCARE

Michael Cintolo

Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

Heron Therapeutics (HRTX) specializes in therapies for pain, inflammation and nausea. Shares are strong because the company shifted from R&D to commercialization in 2017, with revenue likely coming in around $29 million, explains growth stock expert Mike Cintolo, editor of Cabot Top Ten Trader.

And this year, revenues should be up an eye-popping 145% (to $71 million)! Driving the near-term growth are two treatments for chemotherapy-induced nausea and vomiting (CINV).

Sustol (approved August 2016) is the market’s first extended-release, injectable 5-HT3 receptor antagonist, and is responsible for all sales to date.

Over 100,000 units have been sold, and Q4 2017 revenue was up 16% over Q3. Cinvanti (just approved in November 2017) is an injectable NK1 receptor antagonist approved for both acute and delayed CINV.

Heron says over one million people in the U.S. receive CINV therapy each year, and while competition exists, Heron’s superior treatments appear to be displacing older treatments rapidly.


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The company is also developing local anesthetics to better address pain for up to 72 hours after surgery, a solution that could be used for over 13 million procedures around the world (and, ideally, indirectly help the opioid crisis).

Its candidate, HTX-011, has been granted fast track designation. Heron has completed enrollment in a Phase 3 pivotal trial. Data is due in the first half of 2018, and a potential NDA filing is likely later in the year.

Technically, HRTX fell from $42 in mid-2015 to $12 as 2017 began, and was still hanging around $13 mid-year when good news propelled shares as high as $18. But the stock wasn’t done building its bottom — it spent the next few months in a relatively tight ($14 to $17.5) range before kicking into gear in mid-December.

HRTX cleared resistance late in the year and extended those gains in 2018 as the firm presented at a major conference. This looks like a real breakout—dips should be buyable.

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