HRTX 10-K & 10-Q changes, risk factors and insider trading

If our suppliers or contract manufacturers are unable to manufacture in commercially viable quantities, or perform as expected, we could face delays in our ability to commercialize our Products, our costs will increase and sales of our Products ,Products, may be severely hindered.

Additional capital willmay be needed in the future to enable us to implement our business plan, and we may be unable to raise capital, which would force us to limit or cease our operations.

Changes in government policies, laws, and regulations and with respect to the government workforce may have a negative impact on our business and the markets in which we operate.

Future utilization of net operating loss carryforwards or research and development credit carryforwards may be impaired due to recent changes in ownership.

the perception of physicians and other members of the health carehealthcare community of the safety and efficacy and cost-competitiveness relative to that of competing products;

our ability to maintain successful sales, marketing and educational programs for certain physicians and other health carehealthcare providers;

OurCurrently, we only have approval to market and sell our Products in the U.S and do not have current plans to expand to international markets. Furthermore, our internal sales and marketing organization is not currently structured or staffed to launch products on an international level and, therefore, we may not be able to successfully commercialize our Products outside of the U.S. In order to commercialize our Products in jurisdictions other than the U.S., we would be required to obtain separate marketing approvals and comply with numerous and varying regulatory requirements in each foreign country. If we decide to seek the assistance of third parties with international expertise to help commercialize our Products outside of the U.S., we may not be successful in finding willing third parties and, even if we are able to find willing third parties, they might not be able to successfully obtain the approvals and take the steps needed to commercialize our Products. If we decide to commercialize our Products outside of the U.S. without the assistance of third parties with international expertise, it may take longer than expected to obtain the approvals and take the steps needed to commercialize them. As a result, we may decide to delay or abandon development efforts in certain markets. Any such delay or abandonment may have an adverse effect on the benefits otherwise expected from marketing our Products in foreign countries.

The continuing efforts of the U.S. government, insurance companies, managed care organizations and other payors of health carehealthcare costs to contain or reduce costs of health carehealthcare may adversely affect our ability to generate adequate revenues and gross margins to make our Products commercially viable. Our ability to commercialize our Products successfully will depend in part on the extent to which governmental authorities, private health insurers and other organizations establish appropriate reimbursement levels for the cost of such products and related treatments and for what uses reimbursement will be provided.

InThe the U.S., given recent federal and state government initiatives directed at lowering the total cost of health care, the U.S. Congress and state legislatures will likely continue to focus on health care reform, reducing the cost of prescription pharmaceuticals and reforming the Medicare and Medicaid systems. For example, the Patient Protection and Affordable CareSUPPORT Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, “PPACA”) encourages comparative effectiveness research. Any adverse findings for our Products from such research may negatively impact reimbursement available for our Products. Similarly, the SUPPORT Act, which was signed into law on October 24, 2018, established policies to encourage the prevention and treatment of opioid addiction and the development of non-opioid pain management treatments. Due to the SUPPORT Act, Medicare pays separately for certain non-opioid pain management drugs in ambulatory surgical centers (“"ASC”") but not in the hospital outpatient setting (“"OPPS”"). However, under the Consolidated Appropriations Act of 2023, the prior payment policy was replaced by a new three-year period of separate payment for non-opioid pain relief products in the OPPS and ASC settings for 2025 through 2027. As of January 1, 2025, Medicare has implemented this new payment methodology, which remains in effect through December 31, 2027. For 2025, ZYNRELEF is included in this new policy, effectiveas of April 1,1 2025, which means continued separate Medicare payment in the OPPS and ASC settings. While this change may improve access to ZYNRELEF, it may also lead to greater competition.

In March 2021, Congress enacted theThe American Rescue Plan Act of 2021, which removed the statutory cap on rebates that manufacturers pay to state Medicaid programs pursuant to the Medicaid Drug Rebate Program. The Infrastructure Investment and Jobs Act,Act signedof into law on November 15, 2021,2021 also included a provision requiring drug manufacturers to pay CMS a refund for certain amounts of Part B drugs that are discarded from a single-dose container or single-use package. Under the law, and a CMS Proposed Rule issued in July 2022, this refund program became effective on January 1, 2023. Neither of these pieces ofSuch legislation did not have had a material impact on the Company, through December 31, 2024.2025.

In addition, developments in Medicare hospital outpatient reimbursement for 340B-acquired drugs may further drive 340B hospital business for Heron. The 340B program allows certain hospitals and safety net providers to purchase Part B outpatient drugs from manufacturers at federally mandated discounted rates. Due to the June 2022 Supreme Court decision in American Hospital Association et al. v. Becerra et al, since January 1, 2023, the Medicare Part B hospital outpatient payment rate for 340B-acquired drugs has returned to being at the same rate as the rate for non-340B hospitals, Average Selling Price (ASP) + 6% methodology. However, pursuant to Executive Order 14273, Lowering Drug Prices by Once Again Putting Americans First, CMS announced that it will conduct a new mandatory Medicare OPPS Drug Acquisition Cost Survey from January 1, 2026, through March 31, 2026. CMS has stated that this survey will inform potential changes to payment policy beginning with the calendar year 2027 OPPS/ASC proposed rule. These actions indicate that future adjustments to Medicare payment rates for 340B‑acquired drugs may be under consideration, which could affect reimbursement dynamics for the Company’s products purchased under the 340B program in hospital outpatient settings.

EconomicMoreover, economic pressure on state budgets mayhave resultresulted in states increasingly seeking to achieve budget savings through mechanisms that limit coverage or payment for drugs. For example, individual states in the U.S. have become increasingly active in implementing regulations through state Pharmacy Drug Review Boards designed to contain drug pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures. State Medicaid programs are increasingly asking manufacturers to pay supplemental rebates and requiring prior authorization by the state program for use of any drug for which supplemental rebates are not being paid. Further,Regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. In addition, the trend toward managed health carehealthcare in the U.S., which could significantly influence the purchase of health carehealthcare services and products, may result in lower prices for our Products. While we cannot predict whether any legislative or regulatory proposals affecting our business will be adopted, the announcement or adoption of these proposals could have a material and adverse effect on our potential revenues and gross margins.

Further, we, along with our contract manufacturers, are required to comply with FDA and foreign regulatory requirements related to product testing, quality assurance, manufacturing and documentation. Our contract manufacturers may not be able to comply with the applicable FDA or foreign regulatory requirements. They may be required to pass an FDA pre-approval inspection for conformity with cGMP before we can obtain approval to manufacture our Products and our product candidates and will be subject to ongoing, periodic, unannounced inspection by the FDA and corresponding state agencies to ensure strict compliance with cGMP, and other applicable government regulations and corresponding foreign standards. If we and our contract manufacturers fail to achieve and maintain high manufacturing standards in compliance with cGMP, or fail to scale up manufacturing processes in a timely manner, we may experience manufacturing errors resulting in defective products that could be harmful to patients, product recalls or withdrawals, delays or interruptions of production or failures in product testing or delivery, delay or prevention of filing or approval of marketing applications for our product candidates, cost overruns or other problems that could seriously harm our business. For instance, our third party suppliers and contract manufacturers have produced drug products that do not meet our specifications and quality standards. We have, and may in the future, be required to take inventory write-offs and incur other charges and expenses for products that fail to meet specifications, undertake costly remediation efforts, experience delays that affect our operations and commercialization plans or seek more costly manufacturing alternatives. Not complying with FDA or foreign regulatory requirements could result in an enforcement action, such as a product recall, or prevent commercialization of our product candidates and delay our business development activities. In addition, such failure could be the basis for the FDA or foreign regulators to issue a warning or untitled letter or take other regulatory or legal action, including recall or seizure, total or partial suspension of production, suspension of ongoing clinical trials, refusal to approve pending applications or supplemental applications, and potentially civil and/or criminal penalties depending on the matter.

Our Products may be in competition with other products for access to the facilities of third parties and, consequently, could be subject to manufacturing delays if our contractors give other companies’ products greater priority than ours. Additionally, our contractors might be required by government regulation or government authority to prioritize production of other products, such as priority-rated orders pursuant to the U.S. Government Department of Defense Operation Warp Speed under the Health Resources Priority and Allocations System regulation.products. For this and other reasons, our third-party contract manufacturers may not be able to manufacture our Products in a cost-effective or timely manner. If not manufactured in a timely manner, the manufacture of any of our Products or their submission for regulatory approval could be delayed, and our ability to deliver products to market on a timely basis could be impaired. This could increase our costs, cause us to lose revenue or market share and damage our reputation.

Some of the critical materials and components used in manufacturing our Products are, or might be, sourced from single suppliers. An interruption in the supply of a key material could significantly delay our research and development process or increase our expenses for commercialization or development products. Specialized materials must often be manufactured for the first time for use in drug delivery technologies, or materials may be used in thethese technologies in a manner different from their customary commercial uses. The quality of materials can be critical to the performance of a drug delivery technology, so a reliable source that provides a consistent supply of materials is important. Materials or components needed for our drug delivery technologies may be difficult to obtain on commercially reasonable terms, particularly when relatively small quantities are required or if the materials traditionally have not been used in pharmaceutical products. Our reliance on a single vendor for certain components used in the manufacturing of our Products also subjects our business to risk associated with the geographic areas in which those single vendors reside, which could include natural or man-made disasters, including severe weather, epidemics, pandemics, acts of war or terrorism, armed conflict, geopoliticalresource instabilityshortages or resourcegeopolitical shortages.instability, including as a result of increased tariffs and changing regulations and policies that may disrupt global markets or escalate tensions between countries. Such adverse events could cause global supply chain interruptions that could increase our costs and, to the extent such interruptions impair our ability to have sufficient inventory, cause us to lose revenue or market share. We continually evaluate our supply chains to identify potential risks and needs for additional manufacturers and other suppliers for the manufacturing of our Products. Establishing additional or replacement suppliers for certain raw materials in our proprietary polymers, if required, may not be accomplished quickly, or at all, and may involve significant expense. If we are able to find a replacement supplier, we would need to evaluate and qualify such replacement vendor and its ability to meet quality and compliance standards. Any change in suppliers or the manufacturing process for our Products could require additional regulatory approval and result in operational delays.

Some of our suppliers may experience disruption to their respective supply chains due to the adverse events or conditions, including the effects of a pandemic or disease outbreak, the imposition of tariffs and other trade protective measures, rising geopolitical tensions, armed conflictconflict, regulatory and policy changes or other factors, which could delay, prevent or impair our development or commercialization efforts.

We obtain certain critical materials and components used in manufacturing our Products from third-party suppliers whose operations might be directly or indirectly affected by adverse events or conditions, including the effects of a pandemic or disease outbreak, the imposition of tariffs and other trade protective measures, rising geopolitical tensions,tensions and political instability, armed conflictconflict, regulatory or otherpolicy factors (including, without limitation,changes, adverse weather conditions, political instability, war, civil unrest, economic instability, outbreaks of disease, or other public health emergencies and the impact of any such U.S. or foreign government responseconditions and public fears regarding any of the foregoing).foregoing. For example, inthe particular,increase in recenttariffs years,between the U.S. and certain countries has escalated geopolitical tensions and may significantly disrupt the global markets and supply chains. Tensions between mainland China and Taiwan have further escalated, with China accelerating the development of military capabilities and threatening the use of military force to gain control over Taiwan in certain circumstances. Similarly, thegeopolitical ongoingconflicts armed conflict betweenin Russia and UkraineUkraine, remainsthe Middle East, South America and elsewhere remain unpredictable and could escalate into a broader armed conflict and additional economic sanctions or countermeasures by the U.S.,affected the United Nationscountries or otherothers, countrieswhich againstcould Russia.exacerbate market and economic instability. If we are unable to obtain these critical materials and components in sufficient quantities and in a timely manner, the manufacture, development, testing and clinical study of our Products might be delayed or infeasible, which could significantly harm our business.

Further, the recent geo-political conflicts have created extreme volatility in the global financial markets and are expected to have further global economic consequences, including continued disruptions of the global supply chain and energy markets and heightened volatility of commodity prices. Any such instability or disruption may have adverse consequences on us or the third parties on whom we rely, including as a result of a general downturn in global economic conditions, changes in government regulations, deterioration in the credit or equity markets, or more direct impacts on operational matters. This conflict may also give rise to or amplify the other risks described herein including risks relating to cybersecurity, global economic conditions, government regulations and supply chains, which could adversely affect our business, operations and financial condition and results.

conflicting and changing laws and regulationsregulations, suchincluding astariffs and export and import restrictions;

To achieve and sustain profitability, we must, alone or in cooperation with others, successfully develop, obtain regulatory approval for, manufacture, market and sell our Products, including our current work commercializing our Products .Products. We have incurred substantial expenses in our efforts to develop and commercialize our Products and we may never generate sufficient revenue to become profitable or to sustain profitability.

Additional capital willmay be needed in the future to enable us to implement our business plan, and we may be unable to raise capital, which would force us to limit or cease our operations.

As of December 31, 2024,2025, we had cash, cash equivalents and short-term investments of $59.3$46.6 million and indebtedness under our Senior Convertible Notes and Working Capital Facility totalingAgreement, $175.5dated million.August We9, expect2023 thatwith weHercules willCapital, needInc., toas refinance,administrative oragent, otherwisecollateral satisfy,agent, and lender, as amended (the “Working Capital Facility Agreement”) and our currentsenior indebtednessunsecured ofconvertible $175.5notes milliondue to2031 fully(the fund"2031 ourConvertible currentNotes") businesstotaling plan$147.1 and meet all of our commitments.million. Historically, we have financed our operations, including technology and product research and development, primarily through Product sales ofand our common stock, product salesequity and debt financings.

the unanticipated delays due to manufacturing difficulties, supply constraints or changes in the regulatory environment, including as a result of geopolitical uncertainty, or other factors; and general market conditions.

New debt financing we enter into typically involves covenants that restrict our operations. These restrictive covenants may include, among other things, limitations on borrowing and specific restrictions on the use of our assets, as well as prohibitions on our ability to create liens, pay dividends, redeem capital stock or make investments. For example, under a working capital facility agreement that we entered into with Hercules Capital, Inc. as administrative agent and collateral agent, and the lenders party thereto (the "Working Capital Facility Agreement" and the facility thereunder, the "Working Capital Facility"), we are required to hold cash of no less than $8.5 million, if our market capitalization is less than $400 million. The Working Capital Facility Agreement also contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, and dividends and other distributions, subject to certain exceptions. Our outstanding senior unsecured convertible notes due 2026, (the "Senior Convertible Notes") also impose certain negative covenants on the Company, including on the incurrence of certain indebtedness, the creation of certain liens and selling royalty interests in Company assets. In the event that additional funds are obtained through arrangements with collaborative partners, these arrangements may require us to relinquish rights to some of our technologies, product candidates or Products on terms that are not favorable to us or require us to enter into a collaboration arrangement that we would otherwise seek to develop and commercialize ourselves. If adequate funds are not available, we may default on our indebtedness, be required to further delay, reduce the scope of, or eliminate one or more of our product development programs and reduce personnel-related and other costs, which would have a negative impact on our business.

TheOur termsWorking Capital Facility Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of ourother Seniorindebtedness, Convertibleand Notesdividends requireand usother distributions, subject to seek approval from the holders of such notes before taking certain actions, including incurring certain additional indebtedness, modifying the terms of certain existing indebtedness, creating liens or selling royalty interests in Company assets.exceptions. Our Senior2031 Convertible Notes also contain provisions that trigger events of default onfor incurring certain additional indebtedness or any default of our financial obligations under certain material contractsagreements we may enter into. As a result, we may not be able to raise funds through the issuance of additional debt or selling of royalty interests in the future, which could impair our ability to finance our business obligations or pursue business expansion initiatives.

We rely on independent third parties to provide certain services to us. We structure our relationships with these outside servicesservice providers in a manner that we believe results in an independent contractor relationship, not an employee relationship.relationship Anbased independenton contractor is generally distinguished from an employee by his or hertheir degree of autonomy and independence in providing certain services. A high degree of autonomy and independence is generally indicative of an independent contractor relationship, while a high degree of control is generally indicative of an employment relationship. Tax or other regulatory authorities may challenge our characterization of services providers as independent contractors both under existing laws and regulations and under laws and regulations adopted in the future. We are aware of a number of judicial decisions and legislative proposals that could bring about major reforms in worker classification, including the California legislature’s 2019 passage of California Assembly Bill 5 (“AB 5”). AB 5 purports to codify a new test for determining worker classification that is widely viewed as expanding the scope of employee relationships and narrowing the scope of independent contractor relationships. There is limited guidance from the regulatory authorities charged with its enforcement, and there is a significant degree of uncertainty regarding its application. In addition, AB 5 has been the subject of widespread national discussion and it is possible that other jurisdictions, including New York, may enact similar laws. As a result, there is significant uncertainty regarding what the state, federal and foreign worker classification regulatory landscape will look like in future years. The current economic climate indicates that the debate over worker classification will continue for the foreseeable future. If such regulatory authorities or state, federal or foreign courts were to determine that our servicesservice providers are employees and not independent contractors, we would, among other things, be required to withhold income taxes, to withhold and pay Social Security, Medicare and similar taxes, to pay unemployment and other related payroll taxes, and to provide certain employee benefits. We could also be liable for unpaid past taxes and other costs and subject to penalties. As a result, any determination that the servicesservice providers we characterize as independent contractors are ourdetermined to be employees could have a negative impact on our business, financial condition and results of operations.

We are subject to health carehealthcare fraud and abuse regulations that are enforced by the federal government and the states in which we conduct our business, as well as foreign jurisdictions in which we may conduct business. Healthcare providers, physicians and third-party payors play a primary role in the recommendation and prescription of any drug product with marketing approval. Our future arrangements with third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute our Products with marketing approval. Restrictions under applicable federal, state and foreign healthcare laws and regulations include, but are not limited to, the following:

the Federal health carehealthcare programs’ Anti-Kickback Law, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, lease, order or recommendation of, any good or service for which payment may be made under federal health carehealthcare programs such as the Medicare and Medicaid programs;

federal false claims laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other federal health carehealthcare programs that are false or fraudulent. This false claims liability may attach in the event that a company is found to have knowingly submitted false average sales price, best price or other pricing data to the government or to have unlawfully promoted its drug products;

federal “"sunshine”" laws, now known as Open Payments, that require transparency regarding financial arrangements with health carehealthcare providers, such as the reporting and disclosure requirements imposed by the federal Physician Payments Sunshine Act within PPACA on drug manufacturers regarding any “"payment or transfer of value”" made or distributed to physicians, other healthcare professionals, and teaching hospitals as well as ownership and investment interests held by such physicians and their family; and state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers; and increasingly complex standards for complying with foreign laws and regulations, including those of the EU, that may differ substantially from country to country and may conflict with corresponding U.S. laws and regulations.

The risk of being found in violation of these laws is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Moreover, certain health carehealthcare reform legislation has strengthened many of these laws. For example, the PPACA, among other things, amends the intent requirement of the federal anti-kickback and criminal health carehealthcare fraud statutes to clarify that a person or entity does not need to have actual knowledge of this statute or specific intent to violate it. In addition, PPACA provides that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the false claims statutes. Finally, some states, such as California, Massachusetts and Vermont, mandate implementation of commercial compliance programs to ensure compliance with these laws.

In addition, a number of states have laws that require pharmaceutical companies to track and report payments, gifts and other benefits provided to physicians and other health carehealthcare professionals and entities.

Health careHealthcare reform could increase our expenses and adversely affect the commercial success of our Products.

any delay in completion of clinical trials caused by a regional, national or global disturbance where we or our collaborative partners are enrolling patients in clinical studies, such as aglobal pandemicpandemics (includingand COVID-19),other public health emergencies, war, terrorist activities, cyberattack,activities or war, political unrest, cyberattacks, a natural or man-made disaster or any other reason or event, resulting in increased costs;

Results of operations. This section provides an analysis of our results of operations presented in the accompanying consolidated statements of operations and comprehensive loss by comparing the results for the year ended December 31, 20242025 to the results for the year ended December 31, 2023 and the results for the year ended December 31, 2023 to the results for the year ended December 31, 2022.2024.

Net product sales include revenue recognized for sales of ZYNRELEF, APONVIE, CINVANTI, and SUSTOL (collectively, our “"Products”") to a limited number of specialty distributors and full line wholesalers (collectively, “Customers”our "customers"), less applicable sales allowances. The revenues we generate are dependent upon and subject to several factors, including those discussed in the "Risk Factors" section of this Annual Report on Form 10-K. Refer to the “"Critical Accounting Estimates”" section of this Annual Report on Form 10-K for further details on our revenue recognition policy.

Other income (expense), net primarily consists of interest expense, income earned on our cash, cash equivalents and short-term investments, the amortization of debt issuance costs related to our Senior Convertible Notes payable, the amortization ofand debt discount related to our 2026 Convertible Notes, 2031 Convertible Notes and our Working Capital Facility,Facility Agreement, and write-off of property and equipment.

The discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principlesU.S. generally accepted inaccounting theprinciples U.S.("GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to revenue recognition, investments, inventory,inventory and the related reserves, accrued clinical and manufacturing liabilities, income taxestaxes, stock-based compensation and stock-basedaccounting compensation.for debt and equity transactions. We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

We believe our estimated allowance for product returns and GPO discounts requires a high degree of judgment and is subject to change based on our experience and certain quantitative and qualitative factors. We allow the majority of our Customerscustomers to return product for credit forbeginning three months prior to the product expiration date and up to 12 months after itsthe product expiration date. As such, there may be a significant period of time between the time the product is shipped and the time the credit is issued on returned product. We estimate anticipated GPO discounts based on the applicable contractual terms. We regularly monitor our estimates and record adjustments when trends, contract terms or other significant events indicate that a change in estimates is appropriate. To date, our estimates have not differed materially from actuals. However, subsequent changes in estimates may result in a material change to our product sales allowances, which could materially affect our results of operations and financial condition.

We estimate certain costs and expenses and accrue for these liabilities as part of our process of preparing financial statements. Examples of areas in which subjective judgment may be required include, among other things, costs associated with services provided by contract organizations for preclinical and clinical development, and manufacturing of our Products. We accrue for costs incurred as the services are being provided by monitoring the status of the services provided, and the invoices received from our external service providers. In the case of clinical trials, we rely on estimates of the progress of the clinical trials and related expenses incurred. Changes to estimatesRevisions are recorded to research and development expense or inventory in the period in which the facts that gavegive rise to the revision become known. ToHistorically, date, our estimatesrevisions have not differedresulted materiallyin frommaterial thechanges actualto costsresearch incurred.and development expense or inventory. However, subsequenta changesmodification in estimates maycould result in a material changecharge to our accruals, which could also materially affect our results of operations and financial condition.operations.

We make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain deferred tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes for each of the jurisdictions in which we operate. This process involves estimating our current tax exposure under the most recent tax laws and assessing temporary differences resulting from differing treatment of items for tax and financial statement purposes. AtOn December 31, 2024,2025, we established a valuation allowance to offset our deferred tax assets due to the uncertainty of realizing future tax benefits from our net operating loss carryforwards and other deferred tax assets. To date, our estimates have not materially changed. However, subsequent changes in estimates may result in a significant change to our deferred tax assets and liabilities, which could materially affect our results of operations and financial condition.

Total acute care net product sales increased 87.5%65.1% during the year ended December 31, 2023,2025, as compared to the prior year, primarily driven by an increase in the units sold as a result of increase in market share and new customers tofor theboth products,ZYNRELEF asand well as commercial launch of APONVIE in the U.S. in March 2023.APONVIE.

Total oncology net product sales increaseddecreased 5.8%7.8% during the year ended December 31, 2024,2025, as compared to the prior year, primarily driven by an increase in thegross to net adjustments to maintain market share of 23.0% and a decrease in SUSTOL units sold.sold of 6.7%, offset by an increase in CINVANTI units sold of 21.8%.

Cost of product sales increased 18.6%7.0% or $2.7 million during the year ended December 31, 2023,2025, as compared to the prior year and as a percentage of sales, increaseddecreased 0.2%0.1% during the same period,period. The increase in cost of product sales during the year ended December 31, 2025 was primarily driven by a 20.8%an increase duein the units sold and product mix, which contributed $0.5 million to the increase in cost of product sales and an increase in inventory reserves recorded.and Thiswrite-offs increaserecorded wasof partially$2.1 offset by a 1.8% decrease due to scaled production achievedmillion in latethe 2022,year resultingended inDecember a31, lower cost per unit.2025.

Research and development expense decreased 57.4%25.5% or $4.3 million during the year ended December 31, 2024,2025, compared to the prior year and as a percentage of sales, decreased 19.2%3.6% during the same period,period. The decrease is primarily due to decreased headcountpersonnel and related costs as a result of the$2.2 restructuringmillion implementeddue into terminations during the year ended December 31, 2023, as well as a decrease in corresponding non-cash, stock-based compensation expense.2024. The decrease is also partially due to APONVIE$1.7 becomingmillion commercially availablemore in Marchasset 2023, which resulted in lower research and development expensewrite-offs in the year ended December 31, 2024 forthan APONVIE.in the year ended December 31, 2025.

General and administrative expense decreasedincreased 18.8%2.3% or $1.2 million during the year ended December 31, 2024,2025, compared to the prior year and as a percentage of sales, decreased 14.8%1.7% during the same period,period. primarilyThe dueincrease toin decreased headcountgeneral and relatedadministrative costs,expenses as a result of the restructuring implemented induring the year ended December 31, 2023,2025 and operational efficiencies. These decreases were offset by increased legal costswas due to ongoinga patent$0.9 million increase in expenses due to timing and an increase of $0.3 million in legal expenses primarily due to timing of litigation.

Sales and marketing expense decreasedincreased 30.4%4.2% or $2.0 million during the year ended December 31, 2024,2025, compared to the prior year and as a percentage of sales, decreased 20.6%0.9% during the same period,period. The increase in sales and marketing expense was primarily due to decreasedan headcountincrease in marketing costs of $2.7 million, primarily related to the promotion of ZYNRELEF. This increase was offset by a net decrease in personnel and related costs,costs of $0.6 million as a result of an increase in headcount during the restructuringyear implementedended December 31, 2025 contributing $1.3 million in expense, offset by a decrease in stock compensation expense of $1.9 million primarily due to one-time stock compensation expense in the year ended December 31, 2023, and operational efficiencies.2024.

Other (expense) income, net decreasedincreased $2.1$15.6 million during the year ended December 31, 2024,2025, compared to the prior year, primarily due to the loss on debt extinguishment of $11.3 million, an increase in interest expense associated with theour Workingdebt Capitalagreements, Facilityof Agreement,$3.6 whichmillion, wasand entereda intodecrease Augustin 2023.interest income of $0.7 million as a result of lower interest rates.

As of December 31, 2024,2025, we had cash, cash equivalents and short-term investments of $59.3$46.6 million. Based on our current operating plan and projections, management believes that the Company’s existing cash, cash equivalents and short-term investments will be sufficient to meet the Company’s anticipated cash requirements for a period of at least one year from the date this Annual Report on Form 10-K is filed with the U.S. Securities and Exchange Commission. However, we expect that we will need to refinance, or otherwise satisfy, our current indebtedness of $175.5 million to fully fund our current business plan and meet all commitments discussed below. We continuously evaluate our liquidity and capital resources, including access to external capital, in light of current economic and market conditions and our operational performance.

Our net loss for the year ended December 31, 20242025 was $13.6$20.2 million, or $0.09$0.12 per share, compared to a net loss of $110.6$13.6 million, or $0.80$0.09 per share, for the same period in 2023, and $182.0 million or $1.67 per share for the same period in 2022.2024.

Our net cash used in operating activities for the year ended December 31, 20242025 was $22.5$27.6 million, compared to $58.8$22.5 million for the same period in 2023.2024. The decreaseincrease in net cash used in operating activities was primarily due to a decrease in net loss as a result of decreases in operating spend and stock-based compensation expenses, primarily as a result of the restructuring implemented in 2023, offset by the net increase in write-offs of property and equipment of $3.8 million during the year ended December 31, 2024, and changes in working capital, specificallyspecifically, purchases of inventory, accounts receivable due to timing of collections, inventory as a result of write-offs incurred, prepaid assets due to the timing of payments,collections and accounts payable and accrued expenses, including payroll and employee liabilitiesexpenses due to the timing of payments and reduced headcount.payments.

Our net cash provided by investing activities for the year ended December 31, 20242025 was $18.7$16.0 million, compared to $18.0$18.7 million for the same period in 2023.2024. The increasedecrease in cash provided by investing activities was primarily due to net maturities of short-term investments of $20.4$16.2 million for the year ended December 31, 2024,2025, compared to net maturities of short-term investments of $19.5$20.4 million for the same period in 2023.2024, offset by a decrease in purchases of property and equipment of $1.4 million during the year ended December 31, 2025 as compared to the prior year.

Our net cash provided by financing activities for the year ended December 31, 20242025 was $0.9$14.4 million, compared to $54.1$0.9 million for the same period in 2023.2024. The decreaseincrease in cash provided by financing activities was primarily due to net proceeds of $54.1$13.4 million received from debt and equity financings completed in the third quarter of 2023.2025. ThereThe were no comparable transactionsincrease in the year ended December 31, 2024. The net cash provided by financing activities for the year ended December 31, 20242025 was also a result of an increase in proceeds from transactions under the Employee Stock Purchase Plan and the equity incentive plan.plan of $0.1 million.

As of December 31, 2024,2025, $150.0$111.2 million in aggregate principal amountamount, ofincluding accumulated paid-in-kind interest, under the SeniorWorking ConvertibleCapital NotesFacility Agreement were outstanding (see Note 8 to the Consolidated Financial Statements included in this Annual Report on Form 10-K). The SeniorWorking ConvertibleCapital NotesFacility matureagreement onmatures MaySeptember 26,1, 2026, unless earlier converted, redeemed or repurchased.2030.

AtOn December 31, 2024,2025, purchase obligations primarily consisted of non-cancellable commitments with third-party manufacturers in connection with the manufacturing of our Products. Total purchase obligations of $49.2$19.0 million were not included in our consolidated financial statements for the year ended December 31, 2024,2025, withall $37.4of millionwhich due in one year and $11.8 millionare due within twoone years.year. We intend to use our current financial resources to fund our commitments under these purchase obligations.

We enter into agreements with contract manufacturing organizations for the manufacture and supply of commercial materials and drug product. In some of our agreements with contract manufacturing organizations, we are required to meet minimum purchase obligations. Under certain of these agreements, we may be subject to penalties in the event that we prematurely terminate these agreements. At this time, due to the variability associated with clinical site agreements, contract research organization agreements and contract manufacturing agreements, we are unable to estimate with certainty the future costs we will incur. We intend to use our current financial resources to fund our obligations under these commitments.

Investing in our common stock involves risks. We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. The risks and uncertainties that we believe are most important for you to consider are discussed in Part I, Item 1A. "Risk Factors" in our 2025 Annual Report, Quarterly Reports on Form 10-Q, and other reports, including our financial statements and the related notes thereto, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the information contained in the section entitled "Forward-Looking Statements." The occurrence of any of the events or developments described below could adversely affect our business, financial condition, results of operations and prospects. In such an event, the market price of our common stock could decline and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. Other than the factors described below, there are no material changes to the risk factors described in our 2025 Annual Report.

Our Working Capital Facility Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, and dividends and other distributions, subject to certain exceptions. Our 2031 Convertible Notes also contain provisions that trigger events of default for incurring certain additional indebtedness or any default of our obligations under certain material agreements we may enter into. As a result, we may not be able to raise funds through the issuance of additional debt in the future, which could impair our ability to finance our business obligations or pursue business expansion initiatives. In addition, our Working Capital Facility Agreement contains a minimum cash covenant, a minimum revenue covenant and a minimum EBITDA covenant. OurOn abilityAugust to7, comply2026, withwe theseentered restrictionsinto a Waiver, Consent, and covenants,Fourth including meeting any financial ratios and tests, may be affected by events beyond our control. We are in compliance with all covenants as of the period covered by this Quarterly Report on Form 10-Q. We cannot provide any assurances that we will be ableAmendment to maintain compliance with such restrictions and covenants in the future. In the event of a default under the Working Capital Facility Agreement or(the any“Fourth futureAmendment debtto agreement,the ourWorking lendersCapital couldFacility declareAgreement”) allto outstandingthe principal,Initial togetherWorking withCapital accruedFacility Agreement, as amended by the First Amendment to the Working Capital Facility Agreement, the Second Amendment to the Working Capital Facility Agreement and unpaidthe interest,Third Amendment to bethe immediatelyWorking dueCapital Facility Agreement. The Fourth Amendment to the Working Capital Facility Agreement, among other things waives the minimum revenue and payable.minimum IfEBITDA financial covenants for the paymentfiscal quarter ended June 30, 2026 and revises the minimum revenue covenant, the minimum EBITDA covenant and the minimum cash covenant effective as of the debtreporting isperiod accelerated,ending cashAugust flows31, from our operations may be insufficient to repay such debt in full.2026.

As a company listed on Thethe Nasdaq Capital Market, we must meet certain financial and liquidity criteria to maintain such listing. IfOn June 25, 2026, we violatereceived Nasdaq’sa maintenanceletter requirementsfrom Nasdaq, notifying us that, for the continuedprevious listing of our common stock, our common stock may be delisted. For the 2730 consecutive business daysday fromperiod Marchprior 10,to 2026the throughdate Aprilof 16,the 2026,letter, the closing bid price of our common stock was below $1.00 and that we did not meet the $1.00 per share minimum bid price required for continued listing on Nasdaq.the PursuantNasdaq toCapital Market under Nasdaq Listing Rule 5550(a)(2). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), awe failurehave been provided an initial period of 180 calendar days, or until December 22, 2026, to meetregain compliance with Nasdaq’s bid price requirement. If, at any time before December 22, 2026, the continuedbid listing requirementprice for minimumour pricecommon shallstock becloses determinedat to$1.00 existor if the deficiency continuesmore for a periodminimum of 3010 consecutive business days.days, Uponwe receiptwill of notice from Nasdaq of such failure, a registrant has an initial 180-calendar dayregain compliance periodwith tothe regainbid compliance,price andrequirement. ifIf awe registrant isare unable to regain compliance during this initial 180-calendar day compliance period, such registrantwe may be eligible for an additional 180-day180-calendar day compliance period, subject to meeting other continued listing standards and providing written notice to Nasdaq of itsour intent to cure the deficiency. A registrant regains compliance by having a closing bid price of at least $1.00 per share of common stock for a minimum of 10 consecutive business days, unless Nasdaq exercises its discretion to extend this 10-day period pursuant to Nasdaq Listing Rule 5810(c)(3)(H).

Results of Operations. This section provides an analysis of our results of operations presented in the accompanying condensed consolidated statements of operations and comprehensive loss by comparing the results for the three and six months ended MarchJune 31,30, 2026 and 2025.

Liquidity and Capital Resources. This section provides a discussion of our financial condition and liquidity, an analysis of our cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025, and a discussion of our outstanding commitments and contingencies that existed as of MarchJune 31,30, 2026.

CINVANTI is an IV formulation of aprepitant, a substance NK1 receptor antagonist. CINVANTI is the first IV formulation to directly deliver aprepitant, the active ingredient in EMEND® capsules. Aprepitant (including its prodrug, fosaprepitant) is a single-agent NK1 receptor antagonist to significantly reduce nausea and vomiting in both the acute phase (0–24 hours after chemotherapy) and the delayed phase (24–120 hours after chemotherapy). CINVANTI is the first and only IV formulation of an NK1 receptor antagonist indicated for the prevention of acute and delayed nausea and vomiting associated with Highly Emetogenic Cancer ("HEC") and nausea and vomiting associated with Moderately Emetogenic Cancer ("MEC") that is free of synthetic surfactants, including polysorbate 80.

There are no other material recent events during the three or six months ended MarchJune 31,30, 2026.

There are no other material changes to our material trends and developments disclosures included in our 2025 Annual Report during the three or six months ended MarchJune 31,30, 2026.

On August 6, 2025, we entered into a Framework Agreement (the “Framework Agreement”) with Patheon Austria GmbH & Co KG (“Patheon”) and Thermo Fisher Scientific Inc. (solely for purposes as specified therein). Under the Framework Agreement, Patheon will manufacture and supply specific quantities of certain products, continue to perform certain ongoing stability studies related to such products and provide warehousing services, subject to the terms of a manufacturing and supply agreement previously entered into by us and Patheon, as amended by the amendments set forth in the Framework Agreement. We are required to purchase certain quantities of such products through December 31, 2026, but our monthly payment for such products may be reduced for unreleased products or non-conforming products if the products are not released by specified release dates. On November 13, 2025, we entered into Amendment No. 1 to Framework Agreement, pursuant to which certain payment terms were amended. On July 20, 2026, we entered into Amendment No. 2 to Framework Agreement (the "Amendment No. 2 to Framework Agreement"), pursuant to which certain scheduled payments were deferred. The Framework Agreement was effective on August 6, 2025 and will be in effect through and terminate automatically on December 31, 2026, other than with respect to any ongoing project addendums for stability studies entered into prior to December 31, 2026.2026 and the payment of the scheduled payments deferred pursuant to Amendment No. 2 to Framework Agreement.

We have entered into two operating leases for laboratory and office space. Our laboratory and office space in San Diego, California, a portion of which hashad been subleased to a third party, hashad a lease term that expiresexpired on December 31, 2025. Our one five-year option to renew this lease on expiration applies only with respect to the portion of the premise that has not been subleased. The lease for office space in Cary, North Carolina ishas expectedcommenced to commence no later thanon May 25,1, 2026 and expireexpires 111 months from the lease commencement date, with the option to extend for one additional period of 84 months upon written notice. As the lease commencement date has not yet occurred, no right-of-use asset or lease liability has been recognized in the accompanying condensed consolidated financial statements. We provided the landlord with a letter of credit for $0.2 million, which is included within cash and cash equivalents in the condensed consolidated balance sheet.

Our critical accounting estimates include: revenue recognition, investments, inventory and the related reserves, accrued clinical and manufacturing liabilities, income taxes, stock-based compensation and accounting for debt and equity transactions. There are no material changes to our critical accounting estimates disclosures included in our 2025 Annual Report, during the three or six months ended MarchJune 31,30, 2026.

Results of Operations for the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

The following table summarizes the results of our operations for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):

Total acute care net product sales increased by $3.3$4.7 million or 32.3%43.9% during the three months ended MarchJune 31,30, 2026, as compared to the comparablethree periodmonths inended June 30, 2025. The increase was primarily attributable to an increase in the units sold as a result of an increase in market share and new customers for both ZYNRELEF and APONVIE.

Total oncologyacute care net product sales decreasedincreased by $7.5$8.0 million or 26.3%38.2% during the threesix months ended MarchJune 31,30, 2026, as compared to the comparablesix periodmonths inended June 30, 2025. The decreaseincrease was primarily attributable to aan decreaseincrease in the units sold.sold as a result of an increase in market share and new customers for both ZYNRELEF and APONVIE.

Cost of product sales increased by $2.2$1.7 million or 25.8%17.4% during the three months ended MarchJune 31,30, 2026, as compared to the comparablethree periodmonths inended June 30, 2025 and as a percentage of sales increased 8.9%4.2% during the same period.

Gross profit for the three months ended MarchJune 31,30, 2026 was 69.4%,69.3%, compared to 78.3%73.5% forduring the comparablethree periodmonths inended June 30, 2025.

The increase in cost of product sales for the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, is primarily attributable to an increase of $0.3$0.5 million of inventory reserves and write-offs recorded and an increase of $1.9$1.2 million in the cost of units sold, primarily due to the increase in number of units sold and supplier mix.

Research and development expense increaseddecreased by $0.1$0.2 million or 4.7%,7.9%, during the three months ended MarchJune 31,30, 2026 compared to the samethree periodmonths inended June 30, 2025. The increase in costsdecrease is primarily attributable to ana increasedecrease in contractpersonnel servicesexpense dueof to$0.2 timing.million as a result of reduction in headcount.

General and administrative expense decreased by $0.6$3.2 million or 4.4%,22.1%, during the three months ended MarchJune 31,30, 2026 compared to the samethree periodmonths inended June 30, 2025. The decrease in costs is primarily attributable to a decrease in rentlegal expensefees of $1.0$2.6 million due to the terminationtiming of leases andlitigation, a decrease in legalrent expensesexpense of $0.9 million due to timingthe San Diego, California lease termination, and a decrease in expense with vendors of litigation$0.3 proceedings.million, due to less services provided by outside vendors. These decreases were offset by an increase in personnel related costs and stock compensation expense of $1.1$0.6 million due to an increase in headcount.

Sales and marketing expense increased by $2.0$2.6 million or 16.2%,22.3%, during the three months ended MarchJune 31,30, 2026 compared to the samethree periodmonths inended June 30, 2025. The increase is primarily attributable to an increase in personnel related costs and stock compensation expense of $1.0$1.9 million duerelated to an increase in headcount,headcount and an increase in marketing expense,spend, primarily related to ZYNRELEF, of $1.0$0.7 million.

For the three months ended MarchJune 31,30, 2026, other expense, net was $3.3$3.4 million, compared to $0.5$0.7 million, for the samethree periodmonths inended June 30, 2025. The increase in expense is relatedprimarily attributable to thean increase in interest expense of $2.3 million as a result of the debt refinancing completed in 2025 and the loss of sublease income of $0.3 million due to the San Diego, California lease termination.

As of MarchJune 31,30, 2026, we had cash, cash equivalents and short-term investments of $44.8$42.7 million. Our net loss for the three months ended MarchJune 31,30, 2026 was $8.1$5.5 million, or loss per share of $0.04,$0.03, compared to net loss of $2.4 million, or loss per share of $0.02, for the same period in 2025. Our net loss for the six months ended June 30, 2026 was $13.6 million, or loss per share of $0.07, compared to net income of $2.6$0.3 million, or nil earnings per share of $0.02,share, for the same period in 2025. We have incurred significant operating losses and negative cash flows from operations and had an accumulated deficit of $1.9 billion as of MarchJune 31,30, 2026. From our inception through MarchJune 31,30, 2026, we have financed our growth and operations, including technology and product research and development, primarily through the issuance of common stock, convertible notes and warrants, product sales and debt financings. Based on our current operating plan and projections, management believes that the Company's cash, cash equivalents and short-term investments will be sufficient to meet the Company's anticipated cash requirements for a period of at least one year from the issuance of the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect, which would have a material impact on our operations.

We continuously evaluate our liquidity and capital resources, including access to external capital, in light of current economic and market conditions and our operational performance. Our future cash requirements and the adequacy of our available funds will depend on many factors, primarily including our ability to generate revenue and the scope and costs of our commercial and research and development activities. We were in compliance with all covenants of the Third Amendment to the Working Capital Facility Agreement as of March 31, 2026. In the event of a default under the Working Capital Facility Agreement or any future debt agreement, our lenders could declare all outstanding principal, together with accrued and unpaid interest, to be immediately due and payable. If the payment of the debt is accelerated, cash flows from our operations may be insufficient to repay such debt in full.

Our net cash used in operating activities for the threesix months ended MarchJune 31,30, 2026 and 2025 was $1.5$3.8 million and $8.9$19.7 million, respectively. The decrease in net cash used in operating activities of $7.4$15.9 million or 82.6%,81.0%, was primarily attributable to variability in payments for operating assets and liabilities including, inventory, prepaid expenses and other assets, accounts payable and accrued clinical and manufacturing liabilities, offset by the net loss of $8.1$13.6 million for the threesix months ended MarchJune 31,30, 2026 compared to net income of $2.6$0.3 million for the threesix months ended MarchJune 31,30, 2025, as well as payments for inventory, accounts payable, and accrued clinical and manufacturing liabilities.2025.

Our net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 was $0.9$4.2 million compared to net cash provided by investing activities for the threesix months ended MarchJune 31,30, 20252025, which was $2.3$9.6 million. The change in net cash used in investing activities of $3.2$13.8 million, was primarily attributable to net purchases of short-term investments of $0.5$3.7 million for the threesix months ended MarchJune 31,30, 2026 compared to net maturities of short-term investments of $2.3$9.9 million for the threesix months ended MarchJune 31,30, 2025.

Our net cash used in financing activities for the threesix months ended MarchJune 31,30, 2026 was $0.05$0.03 million, compared to net cash provided by financing activities for the threesix months ended MarchJune 31,30, 2025, which was $0.06$0.9 million.

There are no material changes to our material cash requirements disclosures included in our 2025 Annual Report during the three and six months ended MarchJune 31,30, 2026.