HRTX Bull, Bear & Amp View
BULL THESIS (updated 12/9/21):
-HRTX overall corporate
- HRTX should not have to raise cash for ~1 year
-HRTX's major therapeutic (Zynrelef) is now approved with growing sales and clear performance differences over major competitor
- Zynrelef (HTX-011) is an approved non-opioid post-op pain therapeutic
- Only local anesthetic demonstrating superiority to bupivacaine
(standard of care)
- Superior opioid-free results
- Large market opportunity - now approved in about 1/2 (~7 million) of the relevant elective orthopedic surgeries
- Latest 2-month sNDA approval (12/9/21) for expanded label may show that HRTX is getting better at working with the FDA
- First quarter of launch (Q3 '21) has gone as well or better than prior post-op pain med launches
- Appears to have a significant Medicare reimbursement advantage over Exparel
- HTX-019 is a IV therapeutic for post-op nausea and vomiting (PONV) that has advantages over the currently approved oral and IV competitors
- quicker onset of action, and less painful administration
- PONV is a much larger market than the CINV market (HRTX's other NV assets)
- sNDA submitted for approval in 2022
- CINVANTI & SUSTOL (CINV Franchise) - are approved therapeutics for chemo-induced nausea and vomitting (CINV)
- CINV Franchise has $21.2M revenue in Q3'21 despite considerable headwinds such as Covid and generic and other competition
Bear thesis (updated 12/9/21):
-HRTX overall corporate
- HRTX stock price has been in a downward trajectory for 3.5 years and continues to face serious commercial headwinds from Covid and competition, and they have had overall poor results with the FDA
- Zynrelef (HTX-011)
- Launching into an pandemic where there are far fewer elective surgeries
- Less than $3M of revenue in 1st quarter of launch is not impressive for a therapeutic
- Broad label with entire market for post-op pain, similar to competitor Exparel is more than 1 year away, which Exparel continues to gain traction in market
- CINVANTI & SUSTOL (CINV Franchise)
- Heavy competition from generics and IV Akynzeo and Covid provide large headwinds on revenue growth
#HRTX, #HTX011, #HTX019, #postoperative_pain
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BULL THESIS (updated 6/29/20):
HTX-011 is an exciting asset in the large, non-opioid post-op pain management space that has been shown in numerous clinical trials across numerous surgery types, to reduce pain better than generic bupivicaine, with virtually an identical and acceptable side-effect profile. It is especially effective when combined with over-the-counter pain medicines to reduce patients' needs for opioids for their pain relief. Although its CINV franchise basically includes older technologies in a genericized market, HRTX has been able to grow market share at least in its CINVANTI franchise, which will provide the company $70-$80M revenue in 2020, and SUSTOL revenue will start up again in 2021. Furthermore, the company has a healthy cash position, with what appears to be over 1.5 years of cash. The FDA's second CRL provided a buying opportunity with the stock selloff despite the fact that the company has cleared the major FDA approval hurdles, and has some final I's to dot and T's to cross. Eventually after the likely approval of HTX-011 later this year or next year, HRTX appears to be a good acquisition target for a large company that already has a sales force in the elective surgery market.
#HRTX, #HTX-011, #postoperative_pain,
Bear thesis (updated 6/29/20):
On the bear side, HRTX's current ~$1.1B enterprise value could still be considered high with $70-$80M revenue in a decreasing revenue dynamic and the possibility of another 12 months or longer before launch of HTX-011. Furthermore, for a company with a minimal R&D pipeline and less than $100M revenue, their $200M/year cash burn seems high. HTRX's therapies use old active ingredients and are not very sexy or incredibly differentiated. The competition for HRTX's lead asset, HTX-011, is significant and includes generics, and will have had years to penetrate and control the market before HTX-011 is available. The company has had 3 CRLS in recent years, and at least its regulatory execution has not been impressive. Bear's worry that this will read-thru to narrow label language for HTX-011 when approved, and poor commercial execution.
#HRTX, #HTX-011
Amp View (Updated 6/29/20):
We currently invest in HRTX and have invested in them for a few years now, and recently increased our shares with the sell-off on the day of the 2nd HTX-011 CRL. HTX-011 appears very approvable at this point, and will be good for society in our fight against the opioid crisis, and should compete well in the post-surgery pain market. Furthermore, HRTX should be rewarding for long-term investors too, especially at this further reduced valuation, since despite some rough execution on the regulatory front, HTX-011 approval appears imminent within 12 months, and very possibly in 2020. Just how rewarding, might depend on the exact label language approved by the FDA if the FDA approves HTX-011, which concerns us a bit more due to HRTX's misses with the FDA. However, we remain bullish on HRTX from a long-term perspective, with an apparently differentiated opioid-sparing pain therapeutic into a pretty large post-op pain market, and a commercial team that appears to execute well.
#HRTX, #HTX-011
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Bull thesis (6/19/20):
HTX-011 is an exciting asset in the large, non-opioid post-op pain management space that has shown in numerous clinical trials across numerous surgery types, to reduce pain better than generic bupivicaine, with virtually an identical and acceptable side-effect profile. It is especially effective when combined with over-the-counter pain medicines to reduce patients' needs for opioids for their pain relief. Although its CINV franchise basically includes older technologies in a genericized market, HRTX has been able to grow market share at least in its CINVANTI franchise, which will provide the company $70-$80M revenue in 2020, and SUSTOL revenue will start up again in 2021. After the likely approval of HTX-011 later this month, HRTX appears to be a good acquisition target for a large company that already has a sales force in the elective surgery market.
#HRTX, #HTX-011
Bear thesis (6/19/20):
On the bear side, HRTX's current ~$1.6B enterprise value could be considered high with $70-$80M revenue in a decreasing revenue dynamic. It's therapies use old active ingredients and are not very sexy or incredibly differentiated. The competition for HRTX's lead asset, HTX-011, is significant and includes generics. The company has had several PDUFA misses in its recent history and there are no guarantees for the current PDUFA. Finally, even if approved, they are launching a new product into a COVID-crushed elective surgery market.
#HRTX, #HTX-011
Amp View (6/19/20):
We currently invest in HRTX and have invested in them for a few years now. We think HRTX has a very good chance of approval by the FDA by the June 26, 2020 PDUUFA date for its non-opioid pain therapy, HTX-011. This would be good for society in our fight against the opioid crisis. Furthermore, it could be rewarding for investors too, since this derisking event if the FDA approves HTX-011 should increase the value of HRTX. Just how rewarding, might depend on the exact label language approved by the FDA if the FDA approves HTX-011. Furthermore, in this pandemic situation, the short-term upside even with approval with a broader label, may be muted. However, we remain bullish on HRTX from a long-term perspective, with an apparently differentiated post-op, opioid-sparing pain therapeutic.
#HRTX, #HTX-011