Form 4: Rubric Capital Boosts HRTX Stake with $35M Notes

Rubric Capital Management LP and David Rosen significantly increased their beneficial ownership in Heron Therapeutics, Inc. through purchases of common stock, convertible notes, and preferred shares.

Summary

• Rubric Capital Management LP and David Rosen acquired additional securities in Heron Therapeutics, Inc. on August 8, 2025.
• The acquisitions included 2,387,225 shares of common stock at a price of $1.50 per share.
• They also acquired Convertible Senior Unsecured Promissory Notes with a principal amount of $35,000,000.
• Additionally, 94,610 shares of Series A Convertible Preferred Stock were acquired.
• Following these transactions, the reporting persons' beneficial ownership stands at 29,100,728 shares of common stock, $33,250,000 in value of Notes (with a $35,000,000 principal amount), and 94,610 preferred shares.
• The Convertible Notes bear cash interest at a rate of 5.0% per year, with an option for the company to pay accrued interest in new Notes at a 7.0% rate prior to September 1, 2026.
• The Notes are convertible after the later of Nasdaq stockholder approval or December 31, 2025, and are scheduled to mature on the fifth anniversary of the August 12, 2025 closing date.
• The Preferred Shares are convertible into common stock at an initial conversion price of $1.50 per share, contingent upon requisite stockholder approval under Nasdaq rules.

Sentiment

Score: 9

Explanation: Significant insider investment by a 10% owner and director, indicating strong confidence and providing substantial capital to the company.

Positives

• Significant investment by a 10% owner and director, indicating strong confidence in the company's future prospects.
• The acquisition of common stock at $1.50 per share suggests a belief in potential upside from the current price point.
• The structured capital infusion through convertible notes and preferred shares provides Heron Therapeutics, Inc. with substantial funding.

Negatives

• Potential future dilution for existing shareholders from the conversion of Convertible Senior Unsecured Promissory Notes and Series A Convertible Preferred Stock into common shares.
• Heron Therapeutics, Inc. will incur interest expenses on the Convertible Senior Unsecured Promissory Notes at 5.0% cash or 7.0% if paid in new Notes.

Risks

• Conversion of the Convertible Notes and Preferred Shares into common stock is contingent on obtaining stockholder approval under Nasdaq Capital Market rules, which could delay or prevent full conversion.
• The company's election to settle Note conversions in cash, shares, or a combination introduces uncertainty regarding future share count and cash flow.

Future Outlook

The future conversion of the Convertible Senior Unsecured Promissory Notes and Series A Convertible Preferred Stock into common shares is contingent upon receiving stockholder approval under Nasdaq rules. The Notes are scheduled to mature on August 12, 2030.

Management Comments

• This Form 4 is filed by Rubric Capital Management LP and Mr. David Rosen, with respect to the securities held by certain funds and/or accounts (collectively, the "Rubric Vehicles").
• Rubric Capital serves as the investment adviser to the Rubric Vehicles.
• Mr. David Rosen serves as the Managing Member of Rubric Capital Management GP, LLC, the general partner of Rubric Capital.

Industry Context

This filing reflects a substantial investment by a major shareholder and director in a biotechnology company, indicating a strong belief in the company's specific prospects rather than a broad industry trend. Such insider activity can be a positive signal for the company's future performance within the competitive biotech landscape.

Comparison to Industry Standards

• NA (This filing details specific insider transactions and does not provide financial results or operational metrics for industry comparison.)

Management Changes

Corporate Governance

Legal Proceedings

• NA (The filing does not mention any legal proceedings.)

Related Party Transactions

• Rubric Capital Management LP and David Rosen, both identified as 10% owners and directors of Heron Therapeutics, Inc., acquired common stock, convertible notes, and preferred stock from the company, constituting related party transactions.

Stakeholder Impact

• Shareholders: Potential for future dilution if convertible notes and preferred shares are converted into common stock, but also a strong signal of confidence from a major investor and director.
• Company: Receives significant capital through the issuance of convertible notes and preferred stock, which can be used for operations or strategic initiatives.

Next Steps

• Heron Therapeutics, Inc. needs to obtain stockholder approval under Nasdaq rules for the issuance of common stock upon conversion of the Notes and Preferred Shares.
• The Convertible Notes are scheduled to mature on August 12, 2030.

Key Dates

Recommendation

A significant investment by a 10% owner and director, Rubric Capital Management LP and David Rosen, signals strong confidence in Heron Therapeutics, Inc.'s future prospects. The acquisition of common stock at $1.50, along with substantial convertible notes and preferred shares, provides the company with capital and suggests a belief in significant upside potential, despite the inherent dilution risk from future conversions. This insider activity is a strong positive indicator for investors.

Keywords

HRTX, Heron Therapeutics, Rubric Capital, Insider Trading, Form 4, Beneficial Ownership, Convertible Notes, Preferred Stock, Equity Investment, Capital Raise