Heron Therapeutics Seeks Shareholder Nod for Key Stock Issuances

TL;DR

**HRTX needs these approvals to avoid a Nasdaq delisting risk and manage debt, but expect significant dilution if approved.**

AI Summary

Heron Therapeutics, Inc. (HRTX) is seeking stockholder approval for two proposals related to the issuance of common stock that could exceed 19.99% of its outstanding shares, as required by Nasdaq Listing Rule 5635(d). The first proposal involves the conversion of convertible senior unsecured promissory notes due 2031 held by non-affiliated purchasers. The second proposal concerns the conversion of Series A Convertible Preferred Stock held by non-affiliated holders. These proposals stem from recent financial activities, including an amendment to a Working Capital Facility Agreement with Hercules Capital, Inc. on August 8, 2025, increasing term loans up to $150.0 million, with $110.0 million funded on August 12, 2025. Additionally, an exchange agreement on August 8, 2025, saw $25.0 million of existing senior unsecured convertible promissory notes due 2026 exchanged for 16,666,666 shares of common stock, and the remaining $125.0 million repaid in cash. The Board of Directors unanimously recommends a 'FOR' vote on both proposals, which are considered 'non-routine' matters.

Why It Matters

These proposals are critical for Heron Therapeutics as they enable the company to manage its debt obligations and potentially strengthen its balance sheet through equity conversions. For investors, approving these issuances could lead to significant dilution, as the new shares could exceed 19.99% of current outstanding common stock, impacting per-share value. However, failure to approve could hinder the company's ability to execute its financing strategy and potentially lead to more restrictive debt terms. In a competitive biotech landscape, efficient capital management is paramount, and these approvals are vital for Heron's operational flexibility and long-term strategic positioning against rivals.

Risk Assessment

Risk Level: medium — The risk level is medium due to the potential for significant shareholder dilution. The proposals explicitly state that the issuance of common stock upon conversion of both the convertible notes and Series A Preferred Stock 'could, under certain circumstances that may occur in the future, exceed 19.99%' of the currently outstanding shares. This level of dilution can negatively impact existing shareholders' ownership percentage and per-share value.

Analyst Insight

Investors should carefully consider the potential for dilution if these proposals pass, as it could impact the value of their existing holdings. While the Board recommends 'FOR,' shareholders should evaluate the long-term benefits of debt management against the immediate impact of increased share count. Vote 'FOR' if you believe the financing strategy is essential for the company's stability, or 'AGAINST' if dilution is a primary concern.

Key Numbers

• 19.99% — Threshold for Nasdaq Listing Rule 5635(d) (Potential percentage of outstanding common stock that could be exceeded by new issuances)
• 183,314,409 — Shares of Common Stock outstanding (Number of shares entitled to vote as of the Record Date, September 11, 2025)
• $150.0 million — Aggregate principal amount of term loans (Increased amount under the Working Capital Facility Agreement with Hercules Capital, Inc.)
• $110.0 million — Funded amount on Closing Date (Portion of term loans funded on August 12, 2025)
• $25.0 million — Existing Notes exchanged for Common Stock (Portion of senior unsecured convertible promissory notes due 2026 exchanged for equity)
• 16,666,666 — Shares issued in exchange for notes (Number of Common Stock shares issued for $25.0 million of Existing Notes)
• $125.0 million — Existing Notes repaid in cash (Remaining aggregate principal amount of senior unsecured convertible promissory notes due 2026 repaid)
• 2031 — Maturity year of convertible notes (Due date for the convertible senior unsecured promissory notes subject to Proposal 1)
• 2026 — Maturity year of existing notes (Due date for the senior unsecured convertible promissory notes that were exchanged or repaid)
• 9:00 a.m. Eastern Time — Special Meeting start time (Scheduled commencement of the virtual Special Meeting on October 13, 2025)

Key Players & Entities

• HERON THERAPEUTICS, INC. /DE/ (company) — Registrant seeking proxy approval
• Nasdaq Listing Rule 5635(d) (regulator) — Rule requiring shareholder approval for significant share issuances
• October 13, 2025 (date) — Date of the Special Meeting of Stockholders
• September 11, 2025 (date) — Record Date for voting eligibility
• Ira Duarte (person) — Signatory for the Board of Directors
• Hercules Capital, Inc. (company) — Administrative agent, collateral agent, and lender in the Loan Agreement
• $150.0 million (dollar_amount) — Aggregate principal amount of term loans under the amended Working Capital Facility Agreement
• $110.0 million (dollar_amount) — Amount funded on August 12, 2025, under the amended Loan Agreement
• 16,666,666 shares (dollar_amount) — Number of Common Stock shares exchanged for $25.0 million of Existing Notes
• Rubric Capital Management LP (company) — Party to the Note Purchase Agreement

FAQ

Risk Factors

• Nasdaq Listing Rule Compliance [high — regulatory]: The company is seeking stockholder approval to issue shares that could exceed 19.99% of outstanding stock, a threshold that requires Nasdaq Listing Rule 5635(d) compliance. Failure to obtain approval could impact the company's ability to fulfill its obligations related to convertible notes and preferred stock conversions.
• Debt Conversion and Dilution [medium — financial]: Heron Therapeutics is converting $25.0 million of existing senior unsecured convertible promissory notes due 2026 into 16,666,666 shares of common stock. This, along with potential future conversions of 2031 notes and Series A Preferred Stock, could significantly dilute existing shareholders if not managed carefully.
• Reliance on Debt Financing [medium — financial]: The company recently amended its Working Capital Facility Agreement with Hercules Capital, Inc., increasing term loans up to $150.0 million, with $110.0 million funded. This reliance on debt financing, especially convertible debt, indicates potential future cash flow pressures and refinancing risks.

Industry Context

Heron Therapeutics operates in the biotechnology sector, which is characterized by high R&D costs, long development cycles, and significant regulatory hurdles. Companies in this space often rely on debt financing and equity issuances to fund operations and clinical trials, leading to potential dilution for existing shareholders.

Regulatory Implications

The primary regulatory implication is compliance with Nasdaq Listing Rule 5635(d), which mandates shareholder approval for significant equity issuances. Failure to secure this approval could lead to delisting or other sanctions from Nasdaq, impacting the company's ability to raise capital and its stock's liquidity.

What Investors Should Do

1. Vote FOR Proposal 1: Approve the issuance of common stock related to the conversion of convertible senior unsecured promissory notes due 2031. This is necessary for the company to meet its obligations and avoid potential Nasdaq non-compliance.
2. Vote FOR Proposal 2: Approve the issuance of common stock related to the conversion of Series A Convertible Preferred Stock. This is also required to meet obligations and maintain Nasdaq compliance.
3. Review the potential dilution impact of these issuances on your existing shareholding. Understand the terms of the convertible notes and preferred stock to estimate the maximum potential dilution.

Key Dates

• 2025-08-08: Amendment to Working Capital Facility and Exchange Agreement — Increased debt facility and initiated exchange of notes for equity, setting the stage for the current proposals.
• 2025-08-12: Funding of Term Loans — $110.0 million of the increased term loans were funded, impacting the company's cash and debt position.
• 2025-09-11: Record Date for Special Meeting — Determined the stockholders entitled to vote at the Special Meeting.
• 2025-09-19: Mailing of Proxy Materials — Distribution of proxy materials to stockholders for the upcoming Special Meeting.
• 2025-10-13: Special Meeting of Stockholders — Stockholders will vote on proposals to approve share issuances related to debt and preferred stock conversions.

Glossary

DEF 14A

A filing with the SEC that provides detailed information to shareholders about matters to be voted on at a shareholder meeting. (This document is the proxy statement for Heron Therapeutics' special meeting.)

Nasdaq Listing Rule 5635(d)

A rule requiring shareholder approval for the issuance of securities in connection with certain acquisitions or in offerings that could result in a change of control or a significant dilution of existing shareholders. (This rule necessitates the stockholder vote for the proposed share issuances.)

Convertible Senior Unsecured Promissory Notes

Debt instruments that can be converted into a predetermined amount of the issuer's stock. (These notes are the subject of Proposal 1, and their conversion will lead to share issuance.)

Series A Convertible Preferred Stock

Preferred stock that carries the right to be converted into a specified number of common shares. (This preferred stock is the subject of Proposal 2, and its conversion will lead to share issuance.)

Street Name

When shares are held by a broker or bank on behalf of the beneficial owner, rather than being registered directly in the owner's name. (Explains how beneficial owners can vote their shares if they are not registered stockholders of record.)

Record Date

A specific date used to determine which shareholders are eligible to receive dividends, vote on corporate matters, or receive other distributions. (September 11, 2025, is the Record Date for determining who can vote at the Special Meeting.)

Year-Over-Year Comparison

This filing (DEF 14A) focuses on seeking stockholder approval for share issuances to facilitate debt and preferred stock conversions, a critical step driven by recent financing activities. Unlike a typical annual report, it highlights specific proposals requiring shareholder consent under Nasdaq rules, indicating a proactive approach to managing financial obligations and potential dilution, rather than a broad overview of past financial performance.

Key Financial Figures

• $0.01 — ompany’s common stock, par value $0.01 per share (“ Common Stock &#x201
• $150.0 million — principal amount of term loans of up to $150.0 million plus accrued and unpaid paid-in-kind in
• $110.0 million — he “existing debt”), with $110.0 million plus accrued and unpaid paid-in-kind in
• $25.0 million — ch (A) an aggregate principal amount of $25.0 million of the Existing Notes were exchanged fo
• $125.0 million — remaining aggregate principal amount of $125.0 million of the Existing Notes, together with al
• $35.0 million — onnection with the issuance and sale of $35.0 million aggregate principal amount of convertib
• $33.25 m — bric for an aggregate purchase price of $33.25 million, which shall convert at the optio
• $1.50 — of Common Stock at a purchase price of $1.50 per share and (B) 524,141 unregistered
• $15.00 — e of $1.50 per share (stated value of $15.00 per share) for an aggregate investment
• $27.7 m — gate investment amount of approximately $27.7 million, pursuant to exemptions from regi
• $1.80 — o Common Stock at a conversion price of $1.80 per share. The Notes will not be conver

Filing Documents

• def_14a_2025_special_mee.htm (DEF 14A) — 150KB
• img2300548_0.jpg (GRAPHIC) — 448KB
• img2300548_1.jpg (GRAPHIC) — 324KB
• 0001193125-25-209064.txt ( ) — 1213KB

From the Filing

DEF 14A 1 def_14a_2025_special_mee.htm DEF 14A DEF 14A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant Filed by a party other than the Registrant Check the appropriate box: ☐ Preliminary Proxy Statement ☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) Definitive Proxy Statement ☐ Definitive Additional Materials ☐ Soliciting Material Pursuant to 240.14a-12 HERON THERAPEUTICS, INC. (Name of Registrant as Specified in Its Charter) (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check all boxes that apply): No fee required ☐ Fee paid previously with preliminary materials ☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 HERON THERAPEUTICS, INC. Notice of Special Meeting of Stockholders to Be Held on October 13, 2025 To the Stockholders of Heron Therapeutics, Inc.: The Special Meeting of Stockholders of Heron Therapeutics, Inc., a Delaware corporation (“ Heron ,” “ Company ,” “ we ,” “ us ” and “ our ”), will be held on October 13, 2025 at 9:00 a.m. Eastern Time exclusively via the Internet at www.virtualshareholdermeeting.com/HRTX2025SM , or at any adjournments or postponements thereof (the “ Special Meeting ”), for the following purposes, as more fully described in the accompanying Proxy Statement: 1. To approve, pursuant to Nasdaq Listing Rule 5635(d), the issuance of a number of shares of the Company’s common stock, par value $0.01 per share (“ Common Stock ”) in connection with the conversion of convertible senior unsecured promissory notes due 2031 held by several non-affiliated purchasers, which could, under certain circumstances that may occur in the future, exceed 19.99% of the number of shares of the Company’s Common Stock issued and outstanding prior to such issuance; and 2. To approve, pursuant to Nasdaq Listing Rule 5635(d), the issuance of a number of shares of the Company’s Common Stock in connection with the conversion of the Company’s Series A Convertible Preferred Stock, par value $0.01 per share (“ Series A Convertible Preferred Stock ”) held by several non-affiliated holders, which could, under certain circumstances that may occur in the future, exceed 19.99% of the number of shares of the Company’s Common Stock issued and outstanding prior to such issuance. Stockholders will be able to attend the Special Meeting and vote electronically and submit questions during the Special Meeting, all by visiting www.virtualshareholdermeeting.com/HRTX2025SM . To participate in the Special Meeting, stockholders of record will need the 16-digit control number included on their proxy card. If your shares are held in street name and your voting instruction form indicates that you may vote those shares through the http://www.proxyvote.com website, then you may access, participate in, and vote electronically during the Special Meeting with the 16-digit access code indicated on that voting instruction form. Otherwise, stockholders who hold their shares in street name should contact their broker, bank, or other agent (preferably at least five days before the Special Meeting) and obtain a “legal proxy” in order to be able to attend, participate in, or vote at the Special Meeting. The Special Meeting will begin promptly at 9:00 a.m. Eastern Time. We encourage you to access the Special Meeting webcast prior to the start time. Online check-in will begin at 8:45 a.m. Eastern Time, and you should allow ample time for the check-in procedures. Only stockholders of record at the close of business on September 11, 2025 (the “ Record Date ”) will be entitled to notice of, and to vote at, the Special Meeting. BY ORDER OF THE BOARD OF DIRECTORS /s/ Ira Duarte Cary, North Carolina September 19, 2025 2 IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON OCTOBER 13, 2025: YOUR VOTE IS IMPORTANT You are cordially invited to attend the Special Meeting. Instructions on how to participate in the Special Meeting and demonstrate proof of stock ownership are included in the accompanying Proxy Statement and posted at www.virtualshareholdermeeting.com/HRTX2025SM . The webcast of the Special Meeting will be archived for one year after the date of the Special Meeting at www.virtualshareholdermeeting.com/HRTX2025SM. You will not be able to attend the Special Meeting in person. Whether or not you expect to virtually attend the Special Meeting, you are urged to cast your vote as soon as possible. You may vot