Heron Therapeutics Inc (NASDAQ:HRTX) just announced topline from its two lead pain management phase II trials . The trials were set up to investigate the efficacy of the company’s lead post operative pain candidate, HTX-011, in patients that have just had a bunionectomy or hernia repair. Heron has had a rollercoaster couple of years – it’s Sustol NDA has been with the FDA for what seems like forever, and as yet there’s no public sign of a resolution. There are rumors that the FDA has said it will approve the drug, but with a restrictive label, and that the delay is rooted in Heron’s attempts to lift some of the restriction. These are just rumors, however, and nothing is confirmed. That means milestones and upside catalysts come from the remaining pipeline, and specifically, this pain management drug.

With this in mind, here’s a look at the drug and the data.

So, as mentioned, it’s called HTX-011, and it’s a reformulation of a currently approved SOC called bupivacaine. The reformulation sees it combined with an anti inflammatory agent called meloxicam. Bupivacaine is an anesthetic, designed for injection administration, normally in the spine. HTX-011 is redesigned to allow for site specific delivery, and the combination of an anti inflammatory and an anesthetic, according to Heron’s thesis, reduces the need for systemic opioids in many cases. Anything that reduces the need for opioid administration is a good thing in the US right now, so there’s a large potential market for the drug if Heron can demonstrate efficacy and tolerability ahead of an NDA submission.

So what did the data show?

Let’s look at the bunionectomy trial first. The primary endpoint was the difference as compared to placebo in pain intensity as measured by a standard measurement in this space called the Summed Pain Intensity (SPI) score in the first 24 hours’ post-surgery (SPI 0-24). The study compared the SPIs of HTX-011, bupivacaine on its own and a placebo. Compared to placebo, the drug scored a 66% reduction in SPI 0-24. Compared to bupivacaine, the drug scored a 66% reduction in SPI 0-24. Similar results derived from an alternative administration, site block rather than infiltration, but to a slightly higher degree – 69% and 71% respectively. In other words, endpoint hit, and to a high degree.

And the hernia trial? The primary endpoint for this one was the difference as compared to placebo in pain intensity, again measured by SPI 0-24. The drug registered a 29% reduction in pain, as measured by SPI-024. Further, and just as importantly, the pain reduction was sustained across a 48-hour period, and time to opioid rescue (which is exactly what it sounds like) was extended by 110% compared to placebo.

Again, endpoint hit with flying colors.

So what’s next? Well, the company is set to move into a phase III pivotal, which is reportedly going to be broad based. While the protocol is not yet available, we are assuming this means it will recruit across a range of different therapeutic areas – i.e. target the reduction in post operative pain across different surgery recovery patients. Just as with the protocol, there’s no confirmation on exactly when the investigation will kick off, but we expect to get rolling before the end of this year. It should be a pretty quick trial, these sorts of pain management trials generally are, and so we could be looking at topline as early as mid-2017 if enrollment runs smoothly.

What’s the market potential for HTX-011 if Heron can carry it through to commercialization? As mentioned above, anything that can potentially save the government some of the money it currently spends on opioid addiction related costs has the potential to draw considerable revenues. Analysts put a peak sales estimates of $800 million on the drug, which looks optimistic, but is nonetheless achievable if Heron can roll out and execute on a strong commercialization strategy.

So, to sum up, data was good, we’ve got a phase III coming up and an approval would bring with it the potential for $800 million in annual sales.