Last dismissal of SD biotech: Heron Therapeutics restructures and cuts 34% of its workforce
Heron Therapeutics, a San Diego-listed biotech company that makes cancer and pain therapies, is laying off a third of its workforce in a corporate restructuring that could help it save $43 million. dollars per year.
Heron expects the move to help expand its available cash and allow it to focus on its acute care and oncology treatments, the company said.
A spokesperson for Heron said in an email Wednesday that “with a very high cost of capital and ongoing market disruptions due to COVID, capital conservation is critical.”
Heron will drop from 302 employees to less than 200 by the end of this year, a 34% reduction in the workforce, the company said. The majority of the job cuts – 70% – will come from the research and development department. Of the company’s total workforce, 129 employees were involved in research and development, according to Heron’s annual report.
The company has three drugs approved by the US Food and Drug Administration, two of which treat nausea and vomiting triggered by chemotherapy. Heron launched its product, Zynrelef, a drug that eases post-surgical pain, in May 2021 after years of back and forth with the FDA.
Although the first two years of the pandemic have brought meteoric growth for local life sciences and investors have poured money into new research, the recent cutbacks at Heron are not an anomaly. A score of layoffs by industry publication, FierceBiotechnoted Heron, which went public in 2014, among 61 biotech companies to cut staff this year.
Barry Quart, president and CEO of Heron, said in a June 30 statement that this cost-cutting strategy is a result of “current market realities and macro headwinds facing many biotech companies.” at the commercial stage.
Quart, the company’s top executive since 2013, called the layoffs difficult but “necessary to address the challenging operating landscape and better position Heron to improve the lives of patients while creating long-term value for patients.” shareholders”.
These “macro headwinds” and “challenging operating landscape” that Quart refers to in his statement point to the bear market looming over the biotech industry.
Apart from the wild swings of in the stock market, companies like Heron are still dealing with the lingering effects of the pandemic.
Serge Belanger, principal analyst at Needham and Company, LLC, said he’s seen this happen across the industry, primarily for public companies.
Belanger also noted that Heron’s product, Zynrelef, has not met with the huge success expected in 2021 due to the time it takes for hospitals to adopt new therapies in addition to COVID-19 overtaking medical operations. That said, Heron is looking at its commercial products in the future, and Belanger is optimistic about the market potential of its post-surgical pain management drug.
As stocks turn, it has become harder for investors to fund life science companies, so biotechs are looking for other ways to cut spending and expand what they have.
“It goes through cycles, and we just came out of a cycle where … people were throwing money at these things,” Bélanger said of big investments in life sciences companies. In recent months, San Diego has seen a decline in venture capital funding, much like the rest of the country.
“They have reached high valuations and we are now hopefully at the end of the other extreme of this cycle,” he said.
At the end of last year, Heron had cash, cash equivalents and short-term investments of $157.6 million and noted that it has historically funded its operations through the sale of stock and the debt financing, according to SEC filings.
Heron stock closed Wednesday at $3.01, down 2.59%, on the Nasdaq stock exchange.