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Oppenheimer raises Heron Therapeutics' price target 47% on promise of post-op painkiller

Analysts forecast peak sales of US$1bn for the San Diego biotech’s HTX-011 treatment for postoperative pain

Surgeons performing surgery
HTX-011 achieved the primary endpoints in two studies

Oppenheimer analysts have raised their price target for Heron Therapeutics’ on the long-term sales potential of the San Diego biotech's HTX-011, a treatment for postoperative pain that aims to reduce patient dependence on opioids.

Heron Therapeutics received Breakthrough Therapy designation Thursday from the US Food and Drug Administration for HTX-011. Breakthrough Therapy designation accelerates the development and review of drugs that treat serious conditions and show signs of offering major improvement over existing therapies.

“The FDA's breakthrough designation of HTX-011 implies a belief that HTX-011 possesses substantial benefits over currently available products. Based on the volume of positive data and FDA optimism, we believe that HTX-011 will have deeper market penetration and could demand premium pricing to PCRX's Exparel,” Oppenheimer analysts wrote in a note released Thursday night.

“We adjust our model accordingly,” they added.

READ: Small-Cap Snapshot: Heron Therapeutics shares rocket after it receives positive FDA response to pain treatment HTX-011

Bearing the new developments in mind, the analyst estimated HTX-011 peak sales of US$1bn in the long-term and increased his price target to US$50 from US$34.

HTX-011 is a long-acting, extended-release formulation of the local anesthetic bupivacaine in a fixed-dose combination with the anti-inflammatory meloxicam for the management of postoperative pain.  

Heron unveiled positive results from two mid-stage studies of patients having knee replacement or breast enhancement surgery. Study 209 was a Phase 2b clinical study in patients undergoing total knee arthroplasty to evaluate the safety and pharmacokinetics of HTX-011 locally administered into the surgical site.

On the other hand, Study 211 was a Phase 2b dose-finding study in patients undergoing breast enhancement to evaluate HTX-011’s efficiency when administered via ultrasound-guided lateral and medial pectoral nerve block before surgery. 

HTX-011 achieved the primary endpoints in both studies.

Shares were up slightly to US$40.24.

Investment Thesis

While this does not ensure FDA approval, it’s certainly an extremely important independent indicator regarding HTX-011’s benefit relative to other available therapies

“Our conviction for Heron Therapeutics lies in its post-surgical pain opportunity where we view HTX-011's positive Phase 3 data as supporting the case that HTX-011 has a compelling and differentiated product profile relative to Pacira Pharmaceutical Inc.’s (NASDAQ:PCRX) market-leading Exparel,” wrote the analysts. “In addition, we believe that the HTX-011 program is highly de-risked.”

Quick facts: Heron Therapeutics Inc

Price: 15.55 USD

NASDAQ:HRTX
Market: NASDAQ
Market Cap: $1.41 billion
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