Eton Pharmaceuticals Reports Second Quarter 2023 Financial Results
- Total Q2 revenue of $12.0 million and net income of $4.6 million
- Product sales and royalty revenue of $6.5 million up 175% from Q2 2022 and 22% from Q1 2023
- $21.6 million of cash on hand
- Launched Betaine Anhydrous
- Management to hold conference call today at 4:30pm ET
DEER PARK, Ill., Aug. 10, 2023 (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 June 30, 2023.
"With record product sales, the launch of Betaine Anhydrous, and positive cash flow and earnings, Eton's second quarter was exceptional. It was the company's tenth straight quarter of sequential product revenue growth, driven by robust demand and record results for ALKINDI SPRINKLE® and Carglumic Acid. Given our strong performance through the first half of the year, we have increased our revenue expectation and now anticipate reaching approximately $30 million in total revenue this year," said Sean Brynjelsen, CEO of Eton Pharmaceuticals.
"With attractive growth prospects for our existing commercial products, the targeted 2024 launch of ET-400, and the financial resources to continue adding new products, Eton is very well positioned to deliver long-term growth and achieve our goal of having 10 commercial rare disease products on the market by the end of 2025," concluded Brynjelsen.
Second Quarter and Recent Business Highlights
Tenth straight quarter of sequential growth in product sales and royalty revenue. Eton reported second quarter 2023 product sales and royalty revenue of $6.5 million, representing 175% growth over the prior year period and 22% growth over the first quarter of 2023.
Record sales of ALKINDI SPRINKLE. ALKINDI SPRINKLE saw another record revenue quarter. The Company's goal is to reach 400 active patients by the end of the year.
Record sales of Carglumic Acid. Carglumic Acid also posted another quarter of record revenue. The product is benefiting from the Company's recently expanded sales force as well as the launch of Betaine Anhydrous, which shares the same prescriber base and has resulted in increased interactions with metabolic geneticists.
Strong launch of Betaine Anhydrous. Betaine Anhydrous was launched in May and has already seen strong adoption by patients. The Company's Eton Cares patient support program has received favorable reviews from both patients and prescribers.
Product candidate ET-400 on track for an NDA submission in Q4 2023. The Company is preparing for an NDA submission in the fourth quarter, which could result in an approval and commercial launch in 2024. ET-400 is a proprietary liquid formulation of hydrocortisone that, if approved, would be sold alongside ALKINDI SPRINKLE, and would provide patients with an additional treatment option. The Company believes ET-400 will accelerate patient adoption, with total combined peak sales of ALKINDI SPRINKLE and ET-400 expected to exceed $50 million annually.
Monetized royalty interests and strengthened financial position. During the quarter, Eton sold its remaining milestone and royalty interests in ZONISADE®, EPRONTIA®, and the lamotrigine product candidate. In exchange for its interests, Eton received a payment of $5.5 million, which it intends to reinvest in the acquisition of rare disease products. In the second quarter, the company also received a $0.8 million break-up fee associated with its participation as the stalking horse bidder in an auction process. The Company finished the quarter with $21.6 million of cash and cash equivalents.
Second Quarter Financial Results
Net Revenue: Net sales for the second quarter of 2023 were $12.0 million compared with $7.4 million in the prior year period. Net sales included $5.5 million of licensing payments received during the quarter related to the sale of Eton's neurology product royalties and milestones to Azurity Pharmaceuticals, compared to $5.0 million of licensing revenue in the prior year period related to the sale of multiple hospital products to Dr. Reddy's.
Product sales and royalty revenue were $6.5 million for the second quarter of 2023 compared with $2.4 million in the prior year period, an increase of 175% over the prior year period and 22% over the first quarter of 2023. The year-over-year increase in product sales and royalty revenue was primarily driven by growth in ALKINDI SPRINKLE and Carglumic Acid tablets.
Gross Profit: Gross profit for the second quarter of 2023 was $9.7 million compared with $4.6 million in the prior year period. The growth was driven by the sale of the Company's neurology product royalties as well as growth in ALKINDI SPRINKLE and Carglumic Acid. Gross profit for the prior year period included $1.8 million of non-cash expenses related to the hospital products divestment.
Research and Development (R&D) Expenses: R&D expenses for the second quarter of 2023 were $1.1 million compared to $0.7 million in the prior year period. The increase was primarily due to a $0.5 million milestone payment resulting from the successful manufacturing of registration batches of product candidate ET-600.
General and Administrative (G&A) Expenses: G&A expenses for the second quarter of 2023 were $4.7 million compared to $5.3 million in the prior year period. The decrease in G&A expenses was mainly due to decreased FDA fees and legal fees associated with products sold to Dr. Reddy's in June 2022.
Net Income: Net income for the second quarter of 2023 was $4.6 million or $0.18 per basic and diluted share compared to a net loss of $1.6 million, or $0.06 per basic and diluted share in the prior year period.
Cash Position: As of June 30, 2023, the Company had cash and cash equivalents of $21.6 million.
Conference Call and Webcast Information
As previously announced, Eton will host its second quarter 2023 conference call as follows:
| Date: Time: Register* (Audio Only) | Thursday, August 10, 2023 4:30 p.m. ET (3:30 p.m.CT) 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: [email protected].
The live webcast can 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.
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 is an innovative pharmaceutical company focused on developing, acquiring, and commercializing innovative products to address unmet needs in patients suffering from rare diseases. The Company currently has three commercial rare disease products, ALKINDI SPRINKLE® for the treatment of pediatric adrenocortical insufficiency, Carglumic Acid for the treatment of hyperammonemia due to N-acetylglutamate synthase (NAGS) deficiency, and Betaine Anhydrous for the treatment of homocystinuria. The Company has four additional product candidates in late-stage development: dehydrated alcohol injection, which has received Orphan Drug Designation for the treatment of methanol poisoning, ZENEO® hydrocortisone autoinjector for the treatment of adrenal crisis, ET-400 for the treatment of adrenocortical insufficiency, and ET-600 for the treatment of diabetes insipidus. 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: [email protected]
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, | ||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenues: | |||||||||||||||
| Licensing revenue | $ | 5,500 | $ | 5,000 | $ | 5,500 | $ | 5,000 | |||||||
| Product sales and royalties | 6,497 | 2,358 | 11,801 | 4,534 | |||||||||||
| Total net revenues | 11,997 | 7,358 | 17,301 | 9,534 | |||||||||||
| Cost of sales: | |||||||||||||||
| Licensing revenue | — | 990 | — | 990 | |||||||||||
| Product sales and royalties | 2,315 | 1,755 | 4,273 | 2,604 | |||||||||||
| Total cost of sales | 2,315 | 2,745 | 4,273 | 3,594 | |||||||||||
| Gross profit | 9,682 | 4,613 | 13,028 | 5,940 | |||||||||||
| Operating expenses: | |||||||||||||||
| Research and development | 1,125 | 690 | 1,660 | 2,308 | |||||||||||
| General and administrative | 4,674 | 5,263 | 10,019 | 10,059 | |||||||||||
| Total operating expenses | 5,799 | 5,953 | 11,679 | 12,367 | |||||||||||
| Income (loss) from operations | 3,883 | (1,340 | ) | 1,349 | (6,427 | ) | |||||||||
| Other income (expense): | |||||||||||||||
| Other income | 800 | — | 800 | — | |||||||||||
| Interest and other expense, net | (124 | ) | (218 | ) | (250 | ) | (461 | ) | |||||||
| Total other income (expense) | 676 | (218 | ) | 550 | (461 | ) | |||||||||
| Income (loss) before income tax expense | 4,559 | (1,558 | ) | 1,899 | (6,888 | ) | |||||||||
| Income tax expense | — | — | — | — | |||||||||||
| Net income (loss) | $ | 4,559 | $ | (1,558 | ) | $ | 1,899 | $ | (6,888 | ) | |||||
| Net income (loss) per share, basic | $ | 0.18 | $ | (0.06 | ) | $ | 0.07 | $ | (0.28 | ) | |||||
| Weighted average number of common shares outstanding, basic | 25,593 | 25,126 | 25,560 | 24,915 | |||||||||||
| Net income (loss) per share, diluted | $ | 0.18 | $ | (0.06 | ) | $ | 0.07 | $ | (0.28 | ) | |||||
| Weighted average number of common shares outstanding, diluted | 25,983 | 25,126 | 25,949 | 24,915 | |||||||||||
Eton Pharmaceuticals, Inc.
Condensed Balance Sheets
(in thousands, except share and per share amounts)
| June 30, 2023 | December 31, 2022 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 21,566 | $ | 16,305 | ||||
| Accounts receivable, net | 3,084 | 1,852 | ||||||
| Inventories | 816 | 557 | ||||||
| Prepaid expenses and other current assets | 867 | 1,290 | ||||||
| Total current assets | 26,333 | 20,004 | ||||||
| Property and equipment, net | 46 | 72 | ||||||
| Intangible assets, net | 4,392 | 4,754 | ||||||
| Operating lease right-of-use assets, net | 149 | 188 | ||||||
| Other long-term assets, net | 12 | 12 | ||||||
| Total assets | $ | 30,932 | $ | 25,030 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,300 | $ | 1,766 | ||||
| Current portion of long-term debt | 1,540 | 1,033 | ||||||
| Accrued liabilities | 5,748 | 3,662 | ||||||
| Total current liabilities | 9,588 | 6,461 | ||||||
| Long-term debt, net of discount and including accrued fees | 4,553 | 5,384 | ||||||
| Operating lease liabilities, net of current portion | 66 | 107 | ||||||
| Total liabilities | 14,207 | 11,952 | ||||||
| Commitments and contingencies (Note 11) | ||||||||
| Stockholders' equity | ||||||||
| Common stock, $0.001 par value; 50,000,000 shares authorized; 25,561,994 and 25,353,119 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively | 26 | 25 | ||||||
| Additional paid-in capital | 117,934 | 116,187 | ||||||
| Accumulated deficit | (101,235 | ) | (103,134 | ) | ||||
| Total stockholders' equity | 16,725 | 13,078 | ||||||
| Total liabilities and stockholders' equity | $ | 30,932 | $ | 25,030 | ||||
Eton Pharmaceuticals, Inc.
Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
| Six months ended | Six months ended | |||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Cash flows from operating activities | ||||||||
| Net income (loss) | $ | 1,899 | $ | (6,888 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Stock-based compensation | 1,657 | 2,383 | ||||||
| Depreciation and amortization | 424 | 1,352 | ||||||
| Debt discount amortization | 61 | 66 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,232 | ) | 4,637 | |||||
| Inventories | (259 | ) | 19 | |||||
| Prepaid expenses and other assets | 423 | 1,827 | ||||||
| Accounts payable | 537 | (475 | ) | |||||
| Accrued liabilities | 2,045 | 763 | ||||||
| Net cash provided by operating activities | 5,555 | 3,684 | ||||||
| Cash flows from investing activities | ||||||||
| Purchases of product license rights | — | (750 | ) | |||||
| Purchases of property and equipment | — | (26 | ) | |||||
| Net cash used in investing activities | — | (776 | ) | |||||
| Cash flows from financing activities | ||||||||
| Repayment of long-term debt | (385 | ) | (385 | ) | ||||
| Proceeds from employee stock purchase plan and stock option exercises | 272 | 117 | ||||||
| Payment of tax withholding related to net share settlement of stock option exercises | (181 | ) | — | |||||
| Net cash used in financing activities | (294 | ) | (268 | ) | ||||
| Change in cash and cash equivalents | 5,261 | 2,640 | ||||||
| Cash and cash equivalents at beginning of period | 16,305 | 14,406 | ||||||
| Cash and cash equivalents at end of period | $ | 21,566 | $ | 17,046 | ||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid for interest | $ | 426 | $ | 378 | ||||
| Cash paid for income taxes | $ | — | $ | — | ||||
