HRTX Gets FDA OK, So Why is Stock Down?
The short answer is HTX-011's label language that was approved by the FDA. As we discussed in our prior posts, the precise label language was going to be important for HTX-011. The FDA-approved label for HTX-011 (now ZYNRELEF) is limited to bunionectomy, open inguinal heriorrhaphy and total knee arthroplasty. HRTX was seeking a broad label, more similar to EXPAREL's label (See label indications below for ZYNRELEF and EXPAREL). EXPAREL is marketed by PCRX. It's interesting that both HRTX and PCRX are down today on HTX-011's long-awaited approval.
HRTX indicated on their call today that they felt that the FDA surprised them late in the process, with further requirements for a broad label for HTX-011: "One week prior to PDUFA, FDA informed Heron more PK and safety data would be required to support additional surgical procedures" (HRTX corporate presentation 5_13_21). HRTX indicated today that it has multiple studies in process to support expanded labeling. This is another chapter in HRTX's long and rough ride with the FDA for HTX-011, despite its Breakthrough Therapy Designation.
As we've discussed previously, EXPAREL is HRTX's first competitive target for HTX-011. EXPAREL revenue in 2020 was $413.3M (For more info see EXPAREL IQ card here). HRTX indicated today that $91M of EXPAREL'S 2019 usage was in the 3 procedures indicated on their label. From BPIQ data EXPAREL had about $400M revenue in 2019. Thus, ZYNRELEF's approved label represents about 1/4 of EXPAREL's market at this time.
HRTX provided again today, what appears to be a compelling case to compete against EXPAREL for its indicated uses. Impressive efficacy data, better financial incentives and a needle-free application should compel at least some surgeons to switch. Will the fact that surgeon's won't be able to use ZNRELEF for all the procedures in which they can use EXPAREL affect there willingness to switch for any procedures? Will decreased procedures and access to surgeons in this pandemic environment hamper HRTX's ability to convert EXPAREL users? These are a few of the questions that are important for HRTX's stock performance this year, and in the coming years. In the meantime, at current valuations, we'll likely hold our HRTX positions betting on this management teams ability and experience competing against branded drugs in similar markets.
ZYNRELEF label (https://docs.google.com/viewer?url=https%3A%2F%2Fzynrelef.com%2Fprescribing-information.pdf)
EXPAREL label (https://docs.google.com/viewer?url=https%3A%2F%2Fwww.exparel.com%2Fhcp%2Fprescribing-information.pdf)
#HRTX #HTX011 #PCRX #exparel