ETON Eton Pharmaceuticals Inc

Eton Pharmaceuticals, Inc (“Eton” or “the Company”) (Nasdaq: ETON), an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases, today reported financial results for the quarter ended June 30, 2024.

“We are pleased to report another quarter of record product sales as Carglumic Acid and ALKINDI SPRINKLE® continue to deliver impressive growth. During the quarter we also launched PKU GOLIKE under our commercial infrastructure and received a favorable reception from the PKU community. Our five existing commercial products have the potential to deliver strong organic growth for many years to come, and we plan to accelerate that growth with our internal pipeline and business development activities,” said Sean Brynjelsen, CEO of Eton Pharmaceuticals.

“We have made tremendous recent progress advancing our pipeline, which we believe will set us up to deliver even greater growth in 2025 and beyond. Our NDA for ET-400 was recently accepted for review and assigned a target action date in early 2025. Pre-launch commercialization activities for the product are underway and we anticipate launching it shortly after the expected approval. In addition, our ET-600 product candidate is now ready to start its pivotal study in Q3, after passing a pilot study earlier this year. This should allow for an early 2025 NDA submission, which would further boost the Company’s long-term growth prospects” concluded Brynjelsen.

Second quarter and Recent Business Highlights

14th straight quarter of sequential growth in product sales and royalty revenue. Eton reported second quarter 2024 product sales of $9.1 million, representing 40% growth over the prior year period, and 14% over the first quarter of 2024, driven primarily by the ongoing growth of ALKINDI SPRINKLE and Carglumic Acid. The Company expects to continue to see sequential quarter-over-quarter growth of product sales through the remainder of 2024 and beyond.

NDA for ET-400 submitted and accepted by the FDA. During the second quarter of 2024, Eton submitted an NDA for ET-400, its proprietary patented formulation of hydrocortisone oral solution. The FDA accepted the NDA and assigned it a Prescription Drug User Fee Act (PDUFA) target action date of February 28, 2025. Eton anticipates initiating production of launch quantities in the fourth quarter of 2024, to allow for a commercial launch promptly after the expected approval. Eton believes the introduction of ET-400 will allow the Company to capture a greater percentage of the oral hydrocortisone market and, together with ALKINDI SPRINKLE, can achieve combined peak sales of more than $50 million annually.

Acceleration of growth for ALKINDI SPRINKLE. ALKINDI SPRINKLE reported 63% year over year revenue growth in Q2 2024. Product sales are benefiting from the Company’s internal sales force, which has now been in place for more than a year and has seen increased production, as well as recent initiatives including the launch of the sampling program and the Company’s strong presence at Endocrinology medical conferences and patient advocacy events in the first half of 2024.

Continued Carglumic Acid outperformance. Sales of Carglumic Acid continue to exceed the Company’s expectations. The product reported strong growth in the second quarter and has already added additional patients in the third quarter of 2024. The recent launches of Betaine Anhydrous, Nitisinone, and now PKU GOLIKE have also helped increase the frequency of the Company’s interactions with potential Carglumic Acid prescribers.

Launched PKU GOLIKE, a medical formula for patients with phenylketonuria (PKU). After acquiring PKU GOLIKE in the first quarter, the Company launched the product under Eton’s commercial infrastructure in April at the Genetic Metabolic Dieticians International Conference. The product has been well received and the Company has already seen an increased number of patient referrals since the initiation of its promotional activities.

Anticipated initiation of ET-600 pivotal study. Eton expects to initiate a pivotal bioequivalence study for ET-600, the Company’s product candidate for diabetes insipidus, in the third quarter. Earlier this year, the product passed its pilot bioequivalence study, and the company anticipates submitting an NDA for the product in early 2025

Second Quarter Financial Results

Net Revenue: Net sales for the second quarter of 2024 were $9.1 million compared to $12.0 million in the prior year period. Net sales in the prior year period included $5.5 million of licensing payments related to the divestment of Eton’s neurology product royalties.

Product sales and royalty revenue were $9.1 million for the second quarter of 2024, an increase of 40% compared to $6.5 million in the prior year period, and an increase of 14% over the first quarter of 2024. The year-over-year increase in product sales and royalty revenue was primarily driven by growth in ALKINDI SPRINKLE and Carglumic Acid.

Gross Profit: Gross profit for the second quarter of 2024 was $5.6 million compared to $9.7 million in the prior year period.

Research and Development (R&D) Expenses: R&D expenses for the second quarter of 2024 were $3.0 million compared to $1.1 million in the prior year period. The increase was primarily due to the payment of a $2.0 million NDA filing fee for ET-400.

General and Administrative (G&A) Expenses: G&A expenses for the second quarter of 2024 were $5.6 million compared to $4.7 million in the prior year period, mainly due to increased sales and marketing expenses, employee-related expenses, and one-time legal fees related to business development activities.

Net Income: Net loss for the second quarter of 2024 was $2.9 million or $0.11 per basic and diluted share, including the $2.0 million ET-400 filing fee. In the prior year period, net income was $4.6 million, or $0.18 per basic and diluted share, and included $5.5 million from the sale of Eton’s royalty interests.

Cash Position: As of June 30, 2024, Eton had cash and cash equivalents of $17.7 million. The Company generated $1.3 million of operating cash flow during the quarter, including the $2.0 million ET-400 filing fee. The company expects to continue to generate positive operating cash flow for the remainder of 2024.

Conference Call and Webcast Information
As previously announced, Eton Pharmaceuticals will host a its second quarter 2024 conference call as follows:
Date	August 8, 2024
Time	4:30 p.m. ET (3:30 p.m. CT)
Dial in* (Audio Only)	Click Here
Webcast:	Click Here

In addition to taking live questions from participants on the conference call, management will be answering emailed questions from investors. Investors can email questions to: investorrelations@etonpharma.com.

The live webcast can also be accessed on the Investors section of Eton’s website at https://ir.etonpharma.com/. An archived webcast will be available on Eton’s website approximately two hours after the completion of the event and for 30 days thereafter.

*Conference call participants should register to obtain their dial-in and passcode details. Please be sure to register using a valid email address.

About Eton Pharmaceuticals

Eton is an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases. The Company currently has five commercial rare disease products: ALKINDI SPRINKLE®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone. The Company has three additional product candidates in late-stage development: ET-400, ET-600, and ZENEO® hydrocortisone autoinjector. For more information, please visit our website at www.etonpharma.com.

Forward-Looking Statements

Statements contained in this press release regarding matters that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements associated with the expected ability of Eton to undertake certain activities and accomplish certain goals and objectives. These statements include but are not limited to statements regarding Eton’s business strategy, Eton’s plans to develop and commercialize its product candidates, the safety and efficacy of Eton’s product candidates, Eton’s plans and expected timing with respect to regulatory filings and approvals, and the size and growth potential of the markets for Eton’s product candidates. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Words such as “believes,” “anticipates,” “plans,” “expects,” “intends,” “will,” “goal,” “potential” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon Eton’s current expectations and involve assumptions that may never materialize or may prove to be incorrect. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of various risks and uncertainties, which include, without limitation, risks associated with the process of discovering, developing and commercializing drugs that are safe and effective for use as human therapeutics, and in the endeavor of building a business around such drugs. These and other risks concerning Eton’s development programs and financial position are described in additional detail in Eton’s filings with the Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made. Eton undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.

Investor Relations:Lisa M. Wilson, In-Site Communications, Inc.T: 212-452-2793E: lwilson@insitecony.com

Eton Pharmaceuticals, Inc.Condensed Statements of Operations(In thousands, except per share amounts)(Unaudited)
	For the three months ended								For the six months ended
	June 30,				June 30,				June 30,				June 30,
	2024				2023				2024				2023
Revenues:
Licensing revenue	$	—			$	5,500			$	—			$	5,500
Product sales and royalties		9,074				6,497				17,040				11,801
Total net revenues		9,074				11,997				17,040				17,301
Cost of sales:
Licensing revenue		—				—			$	—				—
Product sales and royalties		3,448				2,315				6,407				4,273
Total cost of sales		3,448				2,315				6,407				4,273
Gross profit		5,626				9,682				10,633				13,028
Operating expenses:
Research and development		2,970				1,125				3,621				1,660
General and administrative		5,591				4,674				10,747				10,019
Total operating expenses		8,561				5,799				14,368				11,679
Income (loss) from operations		(2,935	)			3,883				(3,735	)			1,349
Other income (expense):
Other income		—				800				—				800
Interest expense, net		(52	)			(124	)			(63	)			(250	)
Total other income (expense)		(52	)			676				(63	)			550
Income (loss) before income tax expense		(2,987	)			4,559				(3,798	)			1,899
Income tax expense		54				—				54				—
Net income (loss)	$	(3,041	)		$	4,559			$	(3,852	)		$	1,899
Net income (loss) per share, basic	$	(0.12	)		$	0.18			$	(0.15	)		$	0.07
Weighted average number of common shares outstanding, basic		25,778				25,593				25,771				25,560
Net income (loss) per share, diluted	$	(0.12	)		$	0.18			$	(0.15	)		$	0.07
Weighted average number of common shares outstanding, diluted		25,778				25,983				25,771				25,949

Eton Pharmaceuticals, Inc.Condensed Balance Sheets(in thousands, except share and per share amounts)
	June 30, 2024				December 31, 2023
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	17,694			$	21,388
Accounts receivable, net		4,873				3,411
Inventories		2,068				911
Prepaid expenses and other current assets		799				1,129
Total current assets		25,434				26,839
Property and equipment, net		45				58
Intangible assets, net		6,122				4,739
Operating lease right-of-use assets, net		210				92
Other long-term assets, net		12				12
Total assets	$	31,823			$	31,740
Liabilities and stockholders’equity
Current liabilities:
Accounts payable	$	2,133			$	1,848
Debt, net of unamortized discount		4,658				5,380
Accrued liabilities		11,425				9,013
Total current liabilities		18,216				16,241
Operating lease liabilities, net of current portion		145				22
Total liabilities		18,361				16,263
Commitments and contingencies (Note 11)
Stockholders’equity
Common stock, $0.001 par value; 50,000,000 shares authorized; 25,745,802 and 25,688,062 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		26				26
Additional paid-in capital		121,358				119,521
Accumulated deficit		(107,922	)			(104,070	)
Total stockholders’equity		13,462				15,477
Total liabilities and stockholders’equity	$	31,823			$	31,740

Eton Pharmaceuticals, Inc.Condensed Statements of Cash Flows(In thousands)(Unaudited)
	Six months ended				Six months ended
	June 30, 2024				June 30, 2023
Cash flows from operating activities
Net loss	$	(3,852	)		$	1,899
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Stock-based compensation		1,661				1,657
Depreciation and amortization		513				385
Non-cash lease expense		36				39
Debt discount amortization		48				61
Changes in operating assets and liabilities:
Accounts receivable		(1,462	)			(1,232	)
Inventories		(1,157	)			(259	)
Prepaid expenses and other assets		330				423
Accounts payable		284				537
Accrued liabilities		2,381				2,045
Net cash (used in) provided by operating activities		(1,218	)			5,555
Cash flows from investing activities
Purchases of product license rights		(1,868	)			—
Purchases of property and equipment		(14	)			—
Net cash used in investing activities		(1,882	)			—
Cash flows from financing activities
Repayment of long-term debt		(770	)			(385	)
Proceeds from employee stock purchase plan and stock option exercises		176				272
Payment of tax withholding related to net share settlement of stock option exercises		—				(181	)
Net cash used in financing activities		(594	)			(294	)
Change in cash and cash equivalents		(3,694	)			5,261
Cash and cash equivalents at beginning of period		21,388				16,305
Cash and cash equivalents at end of period	$	17,694			$	21,566
Supplemental disclosures of cash flow information
Cash paid for interest	$	362			$	426
Cash paid for income taxes	$	—			$	—
Supplemental disclosures of non-cash transactions in investing and financing activities
Right-of-use assets and liabilities obtained due to lease renewal	$	153			$	—