Heron Therapeutics adopts rights plan to protect $1.37 billion of tax losses

Heron Therapeutics, Inc. (Nasdaq: HRTX) has adopted a tax benefits preservation plan meant to protect its net operating loss carryforwards, which are past losses a company can use to reduce future taxable income. The company announced the plan in a press release dated August 15, 2025. Its board approved the plan unanimously, and it took effect on August 14, 2025.

Terms of the plan

The plan is a Section 382 rights plan. Heron says that under Section 382 of the Internal Revenue Code, its ability to use the losses would be substantially limited if it went through an ownership change. The plan is meant to make such a change less likely by deterring any single investor or group from acquiring beneficial ownership of 4.99% or more of the company's outstanding common stock. It expires one year from its effective date unless the board ends or extends it sooner.

Heron also says the plan satisfies a covenant to preserve the losses under a Note Purchase Agreement with Rubric Capital Management dated August 8, 2025. The release does not give the size, interest rate or maturity of that note, so the financing behind the covenant cannot be measured from the release.

Board Chairman Adam Morgan said the plan "is intended solely to protect the significant potential value of the Company's NOLs." He also said the company believes the losses can offset pre-tax income as it carries out its near-term and long-term organic and inorganic growth plan.

The release does not name any investor or group that has approached the 4.99% level, and it does not say whether any such holder exists.

What the losses are worth

Heron says it had approximately $1.37 billion of U.S. federal net operating losses as of December 31, 2024. The company says the losses may be available to offset future taxable income and that they can improve cash flow as it executes its growth strategy.

The release gives no current revenue, net loss, taxable income or cash balance. The business section of the company's latest annual report describes products and approval dates but gives no revenue, net loss or cash figure either. Readers therefore cannot compare the $1.37 billion with the company's cash position using these documents.

The business and next steps

The annual report calls Heron a commercial-stage biotechnology company focused on acute care and oncology patients. Its lead acute care product, ZYNRELEF, combines the local anesthetic bupivacaine with the anti-inflammatory drug meloxicam. The FDA first approved it in May 2021, and U.S. sales began in July 2021. The report says Phase 3 studies showed it significantly reduced pain and increased the share of patients needing no opioids through 72 hours after surgery, compared with bupivacaine solution. Those are the company's own findings, and the business section does not give trial sizes or endpoints.

The report also says a proposed CMS rule for 2025 would cover ZYNRELEF for separate Medicare payment in hospital outpatient and ambulatory surgery settings from January 1, 2025 through December 31, 2027. The report describes that rule as proposed, and the release does not say whether it was finalized.

The company's other products are APONVIE, an intravenous substance P/neurokinin-1 receptor antagonist for postoperative nausea and vomiting, approved in September 2022 and sold from March 2023, and CINVANTI, an intravenous form of aprepitant approved in November 2017 and launched in January 2018. The report says CINVANTI competes with EMEND IV (fosaprepitant), which it calls the only other injectable NK1 antagonist approved in the U.S. for both acute and delayed chemotherapy-induced nausea and vomiting. It notes that EMEND IV contains polysorbate 80, which has been linked to hypersensitivity reactions, including anaphylaxis. The report says CINVANTI was better tolerated than EMEND IV, but the tolerability result it cites comes from healthy volunteers, not patients.

Heron says it will file the full details of the rights plan and the related rights in a separate Form 8-K. The release gives no date for that filing. Until it appears, the 4.99% threshold, the one-year term and the Rubric covenant are the only plan terms the release sets out.

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