Form 4: Rubric Capital Converts Preferred Stock to Heron Common

Rubric Capital Management LP and David Rosen reported the conversion of Series A Convertible Preferred Stock into 946,100 shares of Heron Therapeutics common stock, increasing their indirect common stock holdings to over 30 million shares.

Summary

• Rubric Capital Management LP and David Rosen, both 10% owners and directors of Heron Therapeutics, Inc. (HRTX), filed a Form 4.
• The filing reports a transaction on October 15, 2025, involving the automatic conversion of Series A Convertible Preferred Stock into Common Stock.
• 94,610 Series A Convertible Preferred Shares were converted into 946,100 shares of Common Stock at a conversion price of $1.50 per share.
• Following this transaction, Rubric Capital and David Rosen indirectly beneficially own 30,046,828 shares of Heron Therapeutics Common Stock.
• They also indirectly beneficially own $35,000,000 in Convertible Senior Unsecured Promissory Notes.
• These Notes convert at an initial rate of 555.5556 shares per $1,000 principal amount, are convertible after December 31, 2025, and mature on March 1, 2031.
• The Notes bear cash interest at 5.0% per year, with an option for the company to pay interest in new Notes at 7.0% per year prior to September 1, 2026.
• The filing also corrects the maturity date of the Convertible Senior Unsecured Promissory Notes as previously reported in an August 12, 2025, Form 4.

Sentiment

Score: 7

Explanation: The conversion of preferred stock into common stock by a significant insider and 10% owner, Rubric Capital Management LP and David Rosen, can be interpreted as a positive signal of confidence in the company's equity. While the filing is primarily a factual report of a transaction, the increased common stock ownership by a key stakeholder is generally viewed favorably. The details of the convertible notes, including the option for the company to pay interest in kind, introduce some financial complexity but are part of an existing financing structure.

Positives

• Increased indirect beneficial ownership of common stock by a significant shareholder and director, Rubric Capital Management LP and David Rosen, to 30,046,828 shares, potentially signaling confidence in Heron Therapeutics' future.
• The conversion of preferred shares into common stock simplifies the capital structure by reducing the number of preferred shares outstanding.

Negatives

• NA

Risks

• The company's ability to elect to settle Note conversions in cash, shares of Common Stock, or a combination, introduces potential dilution risk for existing shareholders if settled in shares.
• The option for the company to pay interest on the Convertible Senior Unsecured Promissory Notes in new Notes at a higher rate (7.0% vs 5.0%) prior to September 1, 2026, could lead to further debt accumulation or dilution.

Future Outlook

The Convertible Senior Unsecured Promissory Notes will become convertible after December 31, 2025, and will mature on March 1, 2031. The company retains the option to pay accrued and unpaid interest on these notes in new notes at a 7.0% rate until September 1, 2026.

Management Comments

• NA

Industry Context

This Form 4 filing is a standard regulatory disclosure of an insider transaction, specifically the conversion of preferred stock and the reporting of convertible notes. It does not inherently provide broader industry context or trends, but rather reflects a specific capital structure event for Heron Therapeutics.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• NA

Related Party Transactions

• The conversion of Series A Convertible Preferred Stock and the beneficial ownership of Convertible Senior Unsecured Promissory Notes by Rubric Capital Management LP and David Rosen, who are both 10% owners and directors of Heron Therapeutics, Inc., constitute related party transactions.

Stakeholder Impact

• Shareholders: Potential for future dilution if the Convertible Senior Unsecured Promissory Notes are converted into common stock or if interest is paid in new notes. Increased common stock ownership by a major insider could be seen as a positive signal.
• Creditors (Noteholders): The terms of the Convertible Senior Unsecured Promissory Notes, including interest rates and conversion options, directly impact the noteholders.

Next Steps

• Conversion of Convertible Senior Unsecured Promissory Notes after December 31, 2025.
• Potential payment of interest on Notes in new Notes prior to September 1, 2026.
• Maturity of Convertible Senior Unsecured Promissory Notes on March 1, 2031.

Key Dates

Recommendation

The filing primarily reports a factual insider transaction (conversion of preferred stock to common stock) and beneficial ownership of convertible notes. While the increased common stock holding by a 10% owner and director (Rubric Capital Management LP and David Rosen) could be interpreted as a positive signal of confidence, a Form 4 alone does not provide sufficient comprehensive financial or operational data to warrant a strong buy or sell recommendation. Investors should consider this information in conjunction with the company's broader financial performance, strategic outlook, and market conditions. The existence of convertible notes with potential future dilution also warrants a cautious approach.

Keywords

HERON THERAPEUTICS, HRTX, Rubric Capital Management, David Rosen, SEC Form 4, Beneficial Ownership, Common Stock, Preferred Stock Conversion, Convertible Notes, Insider Transaction, Equity Conversion