FDA Approval Of Heron Therapeutics' Lead Product Has Lake Street Recommending A Buy

The FDA has approved Heron Therapeutics Inc’s HRTX lead product Sustol and now the company appears poised to benefit from “existing multi-billion dollar market opportunities,” Lake Street Capital Markets’ Bruce D. Jackson said in a report. He assigned a Buy rating on Heron Therapeutics, with a price target of $45.

Following FDA approval, Sustol is on track for a launch in Q4 this year. Analyst Jackson expects Heron Therapeutics’ CINV [chemotherapy-induced nausea and vomiting] franchise to achieve peak sales of more than $500 million. The target market is estimated at more than $1.5 billion.

Compelling Strategic Approach

“Heron is developing novel therapeutics using its proprietary polymer-based technologies to improve the profile of already-approved pharmaceutical compounds; these attributes include: faster onset of action; enhanced drug availability; and improved efficacy and safety,” Jackson wrote.

The approach followed by the company increases the probability of success, accelerates development timelines, and lowers the cost of development per compound.

Post-Operative Pain Management Opportunity

Heron Therapeutics' lead pain candidate, HTX-011, is being developed for post-operative pain management. This represents a global market opportunity of more than $7 billion, the analyst noted. He expects regulatory filing of HTX-011 in 2017, commercialization in 2018, and peak sales of about $1 billion.

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