Heron Therapeutics' new drug Zynrelef, an opioid alternative for postoperative pain, has been slated by Evercore analysts to be a potential blockbuster, but its early launch is hitting turbulence.
The drug had a rocky road to approval, being hit with two complete response letters that delayed its FDA approval until May of last year and then with a more restrictive label than it had hoped. Now, its launch is well underway, and Jefferies analysts aren't seeing a strong trajectory.
In a new note to clients, Jefferies said it was a “tough fourth quarter” for Zynrelef and that “it will take a longer time than expected to gain clarity on launch trajectory.”
Zynrelef’s fourth-quarter sales were just $0.8 million, largely missing Jefferies' expectations of around $4 million.
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Jefferies does believe better times are ahead, with Heron’s management telling the firm that in the first quarter, it has seen “increased demand” from January to February. Jefferies quotes figures from Heron noting demand for the drug is up 42% on its fourth-quarter numbers. Heron also pointed out there is a “lessening COVID-19 impact.”
Then, in June 2020, the FDA doled out an incredibly rare second CRL, this time for “non-clinical” issues. When it Zynrelef finally did cross the finish line, there was relief all around for the company, though again, things weren’t easy: It nabbed a skinnier label than it had first hoped, restricting its full sales potential.
The drug was cleared as a post-surgical analgesic in adults for up to 72 hours after total knee replacement, bunionectomy and groin hernia repair. Heron had hoped it would win approval for use after other surgical procedures as well, but that was denied in its approval label.
Overall, Jefferies says, “we will gain better clarity on the launch trajectory in the next 2-3 Qs.” The firm maintains the peak sales forecast it issued when Zynrelef was approved of $545 million.
Analysts at Evercore, though, at the time of its approval said they still expected the drug “to gradually emerge as a blockbuster therapy in the surgical setting.”
Jefferies analysts, however, took a more cautious stance. They predicted Zynrelef’s broader use would be in smaller surgeries, while in larger procedures, it would be used to complement Pacira Pharmaceuticals’ opioid alternative Exparel.
While Zynrelef “won’t be able to compete with Exparel in the all-important field of regional analgesia,” the Jefferies team wrote last May, they still see a “very large market opportunity” for both companies given the need for opioid alternatives for pain management.