Eton Pharmaceuticals Reports Third Quarter 2022 Financial Results
10 Nov 2022
CollaborateFinancial StatementAcquisition
Eton Pharmaceuticals Reports Third Quarter 2022 Financial Results
Q3 2022 revenue of $3.2 million, product sales and royalty revenue up 315% from prior year and 37% from Q2 2022
Strong sales growth of ALKINDI SPRINKLE® and Carglumic Acid
Third commercial product, Betaine Anhydrous, added to rare disease portfolio
DEER PARK, Ill., Nov. 10, 2022 (GLOBE NEWSWIRE) -- 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 September 30, 2022.
“Our third quarter results reflect the continued momentum we’re seeing across our product portfolio. Product sales and royalties jumped 315% over the prior year period and 37% from the second quarter of 2022, marking the seventh straight quarter of sequential revenue growth. Physicians and patients are responding positively to ALKINDI SPRINKLE and Carglumic Acid, and both products still have long runways for growth ahead of them,” said Sean Brynjelsen, CEO of Eton Pharmaceuticals.
“During the quarter, we added a third FDA-approved rare disease product. Betaine Anhydrous shares the same prescriber base as Carglumic Acid and makes for an ideal fit for our metabolic genetics sales force. With two commercial products in the market, the upcoming launch of Betaine, and the potential for additional product launches in 2023 and 2024, we are very excited about what lies ahead for the Company,” concluded Brynjelsen.
Third Quarter and Recent Business Highlights
Reported seventh straight quarter of sequential growth in product sales and royalty revenue. Eton reported total third quarter 2022 revenue of $3.2 million, comprised entirely of product sales and royalty revenue, representing growth of 315% over the prior year and 37% over the second quarter of 2022.
Increasing adoption of Carglumic Acid. Now in its third full calendar quarter since launch, the product continues to see a strong reception from prescribers and patients. Carglumic Acid sales grew 40% over the second quarter and the company believes it remains on track to reach its goal of capturing 25-35% market share of the estimated $50 million market.
Acquisition of a third FDA-approved rare disease product. During the quarter, Eton announced the acquisition of Betaine Anhydrous. The product shares the same metabolic geneticist prescriber base as Carglumic Acid and is expected to be accretive to Eton’s earnings in 2023.
FDA Approval of Zonisade™. The product is part of Eton’s multi-product neurology oral solution agreement with Azurity Pharmaceuticals. Azurity is solely responsible for commercializing the product; Eton is entitled to receive milestone payments and royalties on net sales of the product. Zonisade was launched in October, triggering a $5 million milestone payment to Eton that will be recognized in the fourth quarter.
Third Quarter Financial Results
Net Sales: Net sales for the third quarter of 2022 were $3.2 million compared with $0.8 million in the prior year period. In both periods, revenue was comprised entirely of product sales and royalties, and the increase was primarily driven by growth in ALKINDI SPRINKLE and the launch of Carglumic Acid in late 2021.
Gross Profit: Gross profit for the third quarter of 2022 was $2.0 million compared with $0.1 million in the prior year period.
Research and Development (R&D) Expenses: R&D expenses for the third quarter of 2022 were $0.7 million compared to $2.7 million in the prior year period. The decrease was primarily due to $1.1 million in expenses related to Biorphen® and Rezipres® conversion projects in the prior year period, and decreased development costs for new product candidates.
General and Administrative (G&A) Expenses: G&A expenses for the third quarter of 2022 were $4.2 million compared to $3.3 million in the prior year period. Cash G&A expenses for the third quarter of 2022 were $3.2 million, compared to $2.4 million in the prior year period. The increase in G&A expenses was mainly due to incremental marketing and compensation to support product sales growth, partially offset by lower legal and consulting expenses.
Net Income/Loss: Net loss for the third quarter of 2022 was $3.0 million or $0.12 per basic and diluted share compared to a net loss of $6.1 million or $0.24 per diluted share in the prior year period.
Cash Position: As of September 30, 2022, the company had cash and cash equivalents of $13.4 million. The Company expects to receive a $5.0 million milestone payment for the launch of Zonisade during the fourth quarter.
Conference Call and Webcast Information
As previously announced, Eton Pharmaceuticals will host a its third quarter 2022 conference call as follows:
DateNovember 10, 2022Time4:30 p.m. ET (3:30 p.m. CT)Register (audio only):Click HereWebcast (live and replay):Click here
The webcast can be accessed under “Events & Presentations” in the Investors section of the company’s website at https://ir.etonpharma.com. The webcast will be archived and made available for replay on the company’s website approximately two hours after the call and will be available for 30 days.
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.
About Eton Pharmaceuticals
Eton Pharmaceuticals, Inc. is an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases. The Company currently has three FDA approved products in ALKINDI SPRINKLE®, Carglumic Acid tablets, and Betaine Anhydrous for oral solution, and three late-stage pipeline candidates under development with dehydrated alcohol injection, ZENEO® hydrocortisone autoinjector, and ET-400. In addition, the Company receives royalties on three FDA-approved products and is entitled to receive milestone payments on other products. For more information, please visit our website at www.etonpharma.com.
Investor Relations:
Lisa M. Wilson, In-Site Communications, Inc.
T: 212-452-2793
E: lwilson@insitecony.com
Eton Pharmaceuticals, Inc.Condensed Statements of Operations(In thousands, except per share amounts)(Unaudited) For the three months ended For the nine months ended September 30, September 30, September 30, September 30, 2022 2021 2022 2021 Revenues: Licensing revenue$— $— $5,000 $14,000 Product sales and royalties 3,219 775 7,753 1,739 Total net revenues 3,219 775 12,753 15,739 Cost of sales: Licensing revenue — — 990 1,500 Product sales and royalties 1,201 654 3,805 955 Total cost of sales 1,201 654 4,795 2,455 Gross profit 2,018 121 7,958 13,284 Operating expenses: Research and development 744 2,678 3,052 5,554 General and administrative 4,169 3,290 14,228 10,539 Total operating expenses 4,913 5,968 17,280 16,093 (Loss) income from operations (2,895) (5,847) (9,322) (2,809) Other (expense) income: Interest and other expense, net (150) (247) (611) (731)Gain on PPP loan forgiveness — — — 365 Gain on equipment sale — — — 181 (Loss) income before income tax expense (3,045) (6,094) (9,933) (2,994) Income tax expense — — — — Net (loss) income $(3,045) $(6,094) $-9,933 $(2,994)Net loss (income) per share, basic $(0.12) $(0.24) $(0.40) $(0.12)Net loss (income) per share, diluted$(0.12) $(0.24) $(0.40) $(0.12)Weighted average number of common shares outstanding, basic 25,365 25,276 25,066 25,181 Weighted average number of common shares outstanding, diluted 25,365 25,276 25,066 25,181
Eton Pharmaceuticals, Inc.Condensed Balance Sheets(in thousands, except share and per share amounts) September 30, 2022 December 31, 2021 (Unaudited) Assets Current assets: Cash and cash equivalents$13,378 $14,406 Accounts receivable, net 1,498 5,471 Inventories 481 550 Prepaid expenses and other current assets 1,063 3,177 Total current assets 16,420 23,604 Property and equipment, net 73 115 Intangible assets, net 4,973 3,621 Operating lease right-of-use assets, net 42 104 Other long-term assets, net 12 21 Total assets$21,520 $27,465 Liabilities and stockholders’ equity Current liabilities: Accounts payable$1,054 $1,774 Current portion of long-term debt 708 1,418 Accrued liabilities 2,899 1,366 Total current liabilities 4,661 4,558 Long-term debt, net of discount and including accrued fees 5,678 5,262 Operating lease liabilities, net of current portion — 15 Total liabilities 10,339 9,835 Commitments and contingencies (Note 11) Stockholders’ equity Common stock, $0.001 par value; 50,000,000 shares authorized;
25,297,037 and 24,626,004 shares issued and outstanding at September 30,
2022 and December 31, 2021, respectively 25 25 Additional paid-in capital 115,202 111,718 Accumulated deficit (104,046) (94,113)Total stockholders’ equity 11,181 17,630 Total liabilities and stockholders’ equity$21,520 $27,465
Eton Pharmaceuticals, Inc.Condensed Statements of Cash Flows(In thousands)(Unaudited) Nine months ended
Nine months ended
September 30, 2022
September 30, 2021
Cash flows from operating activities Net loss$(9,933) $(2,994) Adjustments to reconcile net loss to net cash provided by operating activities: Stock-based compensation 3,332 2,518 Depreciation and amortization 1,522 325 Debt discount amortization 96 110 Gain on forgiveness of debt — (365)Gain on sale of equipment — (181)Changes in operating assets and liabilities: Accounts receivable 3,973 (337)Inventories 69 908 Prepaid expenses and other assets 2,129 (283)Accounts payable (720) 699 Accrued liabilities 1,513 (4)Net cash provided by operating activities 1,981 396 Cash flows from investing activities Proceeds from sale of equipment — 700 Purchase of product license rights (2,750) — Purchases of property and equipment (26) (5)Net cash (used in) provided by investing activities (2,776) 695 Cash flows from financing activities Repayment of long-term debt (385) (150)Proceeds from employee stock purchase plan and stock option exercises 152 473 Net cash (used in) provided by financing activities (233) 323 Change in cash and cash equivalents (1,028) 1,414 Cash and cash equivalents at beginning of period 14,406 21,295 Cash and cash equivalents at end of period$13,378 $22,709 Supplemental disclosures of cash flow information Cash paid for interest$545 $603
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