Q3 2021 Eton Pharmaceuticals Inc Earnings Call
Yes.
Good afternoon, and welcome to the E Tron Pharmaceuticals third quarter, 'twenty, 'twenty, one financial and operating results conference call.
At this time all participants are in a listen only mode.
Following the formal remarks, we will open the call up for your questions. Please be advised that this call is being recorded at the company's request.
At this time I'd like to turn it over to David Krempa, Senior Vice President of business development and Investor Relations at Eton Pharmaceuticals. Please proceed.
Thank you operator, good afternoon, everyone and welcome to Eaton's third quarter 2021 Conference call. This afternoon, we issued a press release that outlines the topics we plan to discuss on today's call. The release is available on our website Eaton pharma dotcom Joy.
Joining me on our call today, we have Sean been jellison, our CEO and Wilson Troutman, our CFO. In addition to taking live questions on today's call. We will also be answering questions that are emailed to us investors can send their questions to investor relations at Eton pharma Dot com.
Before we begin I would like to remind everyone that statements made during this call may contain forward looking statements and involve risks and uncertainties that could cause actual results to differ materially from those contained in these forward looking statements. Please see the forward looking statements disclaimer in our earnings release and the risk factors in the company's filings with.
The FCC.
Now I will turn the call over to our CEO Sean Brynjolfsson.
Thank you David and thank you everyone for joining us. This afternoon as we're preparing for three new product launches and the initiation of a major co promotion partnership in the coming weeks I don't think there's ever been a more exciting time for me to talk to investors.
We couldnt be happier with the way we were exiting 2021, the new acquisition of an approved rare disease product a major co promotion arrangement launching in December and the upcoming launches of approach here and rosy for us.
These major catalyst combined with the expectation for at least three additional product approvals and launches next year set us up for what should be a fantastic 2022.
I will start with an al Kindi update and exciting partnership with Thomas that we announced this morning.
<unk> sales continue to grow month over month quarter over quarter, and we believe that can grow even faster. So we're implementing some major commercial changes.
We're now about six months into holding in person meetings with doctors the feedback to US has been clear our kidney sprinkle is critical to giving patients and doctors the ability to precisely treat adrenal insufficiency.
Ever changing doctors prescribing habits has been a higher touch activity than we originally expected.
For decades, pediatric endocrinologists have been using hydrocortisone tablets and are used to the status quo. We found that in person demonstrations and multiple face to face interactions has been the key to making doctors comfortable changing their prescribing habits. Ultimately would have taken us a significant amount of time to convert the market took MD <unk>.
Given the capacity constraints on our current internal sales force, we had only reached approximately 10% of the physicians face to face. So the very exciting announcement regarding our co promotion with <unk> increases our presence more than 10 fold. We believe this co promotion partnership is a very attractive opportunity for Eaton for a number of reasons.
<unk>.
First eat will gain more than 60, new sales reps with existing and established relationships with pediatric endocrinologists for comparison, we have less than five.
So this is a.
Significant growth in terms of our ability to reach out and have multiple face to face interactions with physicians. These reps can make a difference on day, one alone hiring our own large a team of sales reps within tech relationships with Pete Undoes would've been extremely challenging costly and time consuming.
Secondly, based on the structure of the deal we only pay for success Tomo receives a sales commission on the incremental sales of our Kindi. Furthermore, tomer has committed to hitting certain growth rates during the term of the agreement.
A few other words regarding the deal structure Eaton retains ownership of the asset is also responsible for the pricing contracting branding and our marketing strategies and at the end of the three year term, we expect sales to be well on their way to reaching peak conversion levels and we still have approximately 10 years left on the products patents, we expect this <unk>.
<unk> to have a favorable impact on our earnings in 2022 due to both higher sales and lower expenses.
Specifically, we will no longer need to take on the additional expense of expanding an internal sales force and the incremental growth produced by Thoma are above and beyond what we would have achieved on our own will more than pay for the sales commission they earn which at the end of the day. It means more profit for all parties.
Tomas pediatric endocrinology sales force has proven to be very successful.
We are confident they are the right partner for al Kindi their sales reps currently set ourself and salvi and orphan treatment for central precocious puberty also known as CPP.
This product was launched in May of 2020 and has many characteristics similar to al Kindi, such as marketing size and position <unk> has been very successful in France. All of these product launch despite the COVID-19 challenges and has already seen over 500 patients adopt the treatment just 18 months into launch.
Our current plan is to have the <unk> team fully trained and promoting al Kindi in December. We believe this will provide a nearly immediate boost to the al kindi growth rate, which should be evident in the first half of 2022.
Yes.
Next I want to discuss our recent acquisition of <unk> asset tablets.
You seldom find an attractive rare disease product that is ready for immediate commercial launch. So we're very excited about this opportunity.
Our product as a therapeutic equivalent of carbo glue that is listed in the Fda's registered as a b rated.
Our product is indicated for the treatment of hyper ammonium due to nags deficiency car.
Carbo Glu is widely regarded as one of the most expensive drugs in the world based on the products recommended dosing in multiple media articles, we believe that the annual cost of treatment can exceed $1 million annually for some patients are generic version of carpet Glu will offer these patients a lower cost alternative.
Next deficiency is extremely rare.
One recent published study found around 98 cases globally and existing literature, given the small patient population. We believe the market may require individualized support for each patient and we plan to offer robust patient services similar to what we currently provide for al Kindi patients.
Given our experience without Kennedy, we believe we are well positioned to deliver a seamless experience for Kirk Olympic asset patients.
In terms of the market opportunity carbo is not tracked in <unk>, but based on government spending data and record data is publicly reported financials. We estimate that the current sales of the product or more than $50 million annually.
Our goal is to eventually capture 25% to 35% of these patients.
Launch activities are currently underway and we expect to make the product available before the end of the year.
With our existing infrastructure for all Kindi already in place, we expect very little incremental cost to commercialize crude WOMAC asset.
Now turning to the recent approval of our Pronto approach here is indicated for the treatment of epilepsy and migraine and was approved earlier this month.
It is the first and only FDA approved liquid formulation of Topiramate.
This was a product that Eaton initially internally initiated internally back in 2018, and I'm very proud of all the hard work from our team that went into taking a branded product idea from that stage all the way to FDA approval in only three years.
Truly rare within the branded drug endy.
<unk> NDA is filed today.
<unk> was one of three neurology oral liquids, we sold towards already earlier. This year authority will be responsible for marketing the product and expects to launch later in the year.
Eaton will receive a $5 million payment upon launch of royalty and product sales and is also entitled to receive an additional $15 million in commercial milestones based on the sales of the three product basket.
The other two products in the US already transaction appear on pace for approval in the first half of 2022.
The <unk> application remains under FDA review, and we believe the only issue outstanding as the inspection of the product's U K based manufacturing facility. The agency was unable to inspect the facility prior to the applications original producer date and they now have assigned the application of new approval date of January 29.
We hope to see the product approved on that date, but the FDA has yet to conduct reschedule its inspection of the UK facility.
The third product Lamotrigine oral suspension saw positive developments this quarter our partner successfully completed the human factor study and is expected to submit the results to the FDA. Later. This month this should allow for a potential approval of the product in the first half of 2022 as a reminder, in addition to the $5 million milestone.
We expect to receive upon the approach here launch we also are entitled to $5 million for each of the launches of <unk> and Lamotrigine.
Finally, we had positive developments in our orphan drug candidate dehydrated alcohol injection after receiving a CRM letter from the FDA over the summer each and held a meeting with the FDA to discuss the letter and proposed responses. We believe the meeting was both productive and successful we left the meeting feeling confident that we can deliver.
Ever everything the agency has asked for and expect to submit the response in the coming months to allow for potential approval and launch in 2022.
Before I turn it over to Wilson.
We'd like to thank our shareholders for their continued support after four years of focus on development and regular regulatory activities. We are poised to see the fruits of our labor become apparent in very short order. It is clear that our prospects have never been stronger the recent cargo limbic asset acquisition and now the <unk> co promotion should allow us to deliver meaningful.
Full revenue in 2022 and beyond more than we had expected just a month ago with our very strong cash position three new product launches in the coming months and the expectation for an additional three product approvals and launches next year. We are extremely excited as we look forward to the coming quarters with that I will turn it over to Wilson to discuss our financial results Wilson.
Thank you Shannon Eton reported revenue of <unk> 8 million for the third quarter of 2021, there was no material revenue in the third quarter of 2020.
<unk> gross profit for the third quarter of 2021 was <unk> 2 million and reflected the impact of the zero point $4 million write down for excess inventory.
By orphan and cold stack the.
Gross profit for the prior year quarter was not material.
R&D expenses for the third quarter of 2021 were $2 7 million compared to $2 8 million for the prior year period.
Expenses in the third quarter of 2021 were elevated due to expenses related to the development of by orphan and measured price file container conversions.
R&D expenses in the third quarter of 2020 included a onetime $1 5 million NDA filing fee.
General and general and administrative expenses for the third quarter of 2021 were $3 3 million compared to $3 4 million in the prior year period.
This decrease was largely due to elevated spending in the prior year period related to launch preparation activities. We all can be sprinkle.
The third quarter of 2021 included <unk> 9 million of noncash expenses.
As a result of these factors <unk> reported a net loss of $6 1 million for the third quarter of 2021 compared to a net loss of $6 5 million in the prior year period.
Eton reported diluted earnings per share of a negative zero to 424 per share in the third quarter of 2021 compared to a negative <unk> 31 per share in the prior year period.
Cash and cash equivalents through 'twenty $2 7 million as of September 32021.
<unk> expects to receive a $5 million milestone cash payment in December from the recent approval of the frontier, which is said to pyramid oral solution product.
Operator, we are now open for questions.
Ladies and gentlemen, if you have a question at this time. Please press. The Star then the number one key RNA Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
Our first question is from Ram <unk> with H C. Wainwright Your line is open.
Yeah.
Hi, This is Bob Allen dialing in for Ron for Rajiv can you hear me okay.
Yes.
Awesome great.
Firstly would you be able to provide any color in terms of registration congestion pricing.
Yes.
What is the best way for me to answer that is that we.
We believe the pricing will be.
In excess of where by orphanage priced currently.
We know that the.
The hospitals pay around $15 to $20 for compounded ephedrine sometime.
Sometimes it can be lower but.
From our surveys from our data that seems to be about where they've been.
We know that Theres, another ready to you as a federal on the market and we believe they charge a little over 20, so we would imagine we're going to be somewhere.
A little less than that because it's in an agile format, but.
It certainly will not be.
Commodity pricing.
Believe the value offered and the convenience as long as the longer shelf life are all positive in terms of patient experience.
Alright, thanks for the color.
Co promotion agreement with solar farm that's.
That's pretty exciting.
Just curious.
Good morning.
So the question is consolidate until at least already promoting to the pediatric committee.
Yes, so I'll just repeat the question for anybody that Couldnt hear.
The question had to deal with the synergies and the I guess the fit with.
Tom or being able to promote.
Candy.
And fifth Salvi. It really is primarily mostly let's just say the same call point.
Certainly these are pediatric endocrinologists.
One of the reasons. We did this deal frankly was that it was just a good strategic fit best kind of deal you can do is a deal that works for both sides. So we know that Eaton will benefit, but we also know Tamara will benefit and thats the kind of deal I like doing.
I don't know that it would make sense for other companies, but for tomo. It certainly was a great I think it's going to be a great deal for them.
For us at least at this point in our history.
It allows us the opportunity to save some expenses on that side.
We believe it will be very successful so I have no doubt about it.
Great.
Final question from me, how should we think about that.
The company.
Thank you Owen beyond given on this call.
It's coming out.
Thanks.
Well I think our press release and some of my words earlier I touched on that.
Your work.
Let's say startup company.
Going into our fifth year as shown we've been up and running for over four years.
All it takes at least three years to build your pipeline to do the deals to file navigate the FDA.
We're at a point now it really is an inflection point, where youre going to see multiple products approved multiple sources of revenue.
Our ability to maybe do larger transactions.
I couldnt be happier, where we're at we're in a nice cash position we have no.
No needs for going and raising additional cash so I'm very excited about the company and.
We're attracting top talent within the organization.
We expect to expand our team in the coming months as as the need arises.
Great. Thanks for taking my question.
Our pleasure.
Again, if you have a question at this time. Please press the Star then the number one key on your Touchtone telephone.
I am showing no further questions in the queue I would now turn the conference back to Mr. Kramm back to go over the email questions.
Thank you operator, we do have a couple of questions ill start first one how do you feel about your cash position is it enough to launch all of these products you are planning to launch.
We feel great about our cash position as I indicated earlier, we do have more than enough cash to launch all the products.
We will receive milestone payments for the oral solutions and were really not even.
Having to launch those those are those are done through reserve any of those authorities products, but that cash.
<unk> will also help us to launch other products that we've got in our pipeline. So I think we've done a good job of balancing.
Cost outlay with.
<unk> the revenue as it comes to them.
And.
I believe the <unk> acid launch for example should cost us very little it's basically going to be contracted product and we don't imagine there'll be a lot of detailing necessary. It's really a product that has a need and we think the insurance companies will want a lower cost product.
Yes.
Suppose I could also add that due to the fact that we've got additional revenue sources coming in and we really have reduced our cash burn and we'll reduce it over the coming quarters.
I think our R&D expenses.
Expenses in the past quarter was a bit elevated because of some.
Some conversion products are by orphan and <unk> and we're converting those to vials.
I would say thats likely will be a bit lower.
And then what you saw in the third quarter.
So I think hopefully that answers the question.
Another question, we had is where do you expect to price <unk> acid relative to the brand product.
Okay, everybody wants to know the pricing question.
We're still engaged in prelaunch discussions with payers I think that has a large influence but.
I would expect to price to that approximate 10% to 15% discount to the brand.
Thats generally whats done for our first generic.
Our low lower price should save the healthcare system millions of dollars.
So the value proposition is there.
Given the dynamics in the market and all of the patient support programs and so we don't were not really expecting.
<unk> a race to the bottom like you see in some traditional products win.
Generics enter the market you may end up with 345 generics at a given point in <unk>.
Certainly end up at a commodity pricing level, but this is a little bit different we certainly want to add the value of the lower priced option, but we still.
Still think it'll be a high value product.
Yes so.
We have one more he said what is the sales commission being paid to Tamara Nicole promote deal.
Well im not going to disclose the exact rate for competitive reasons, but.
I would say that our margins remain attractive on the product even after product cost of royalties to diurnal and the sales commission that Tamara, we still expect to be netting more than 50% of the sales.
<unk> as I said earlier is compensated on incremental sales above and beyond at the same time, it'll be a meaningful product for them with meaningful revenue I think that.
If you want to have a good partner yet you really have to go in that as a partnership so at the end of the day, that's probably the best way for me to answer that is to say that we'll make more revenue. We believe will make more revenue and more profit by partnering with toll more than not partner at <unk>. So you do this make or buy decision on weather.
You want to.
Do something like this and with tomo. It certainly made sense because they are already in that space and so the yes, we give up we'll give up something but we're not we're also getting something and what we're getting is what we believe will be higher revenue than a go it alone strategy.
I think that hopefully covers that question as well anything else.
That's it for the email questions. So I'll turn it back to the operator, if theres any other questions on the phone.
Yes, Sir we do have a question from Ram ready.
Private investor.
Your line is now open.
Hi, Rob.
Hey, how are you Andy expert to an important topic.
So we would expect to be profitable next year.
We had some profitability of the first quarter. This year, but profitability is number one for me from my perspective, that's what it's about that's why we try to keep our expenses low and since we'll be launching three products this quarter.
And we have another three products launching hopefully in the first half of next year.
We would expect to be profitable at least for the second half of the year.
And perhaps even for the full year.
As precise as I can get I hope that answers your question.
Okay. Thank you.
Youre welcome.
Yeah.
Thank you there are no questions at this time presenters do you have any final remarks.
No I would just again like to thank everyone for joining the call today.
Look forward to providing updates to the shareholders.
With that I believe we can adjourn the call and I wish everyone.
Happy holidays in the weeks and months to come.
Thank you.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may all disconnect.
Yes.
Okay.
[music].
Yes.
Yes.
Okay.
Okay.
Okay.
Okay.
[music].
Yes.
Okay.
Yes.
Hum.
Yes.
[music].
[music].
Good afternoon, and welcome to the Ito Pharmaceuticals third quarter, 2021 financial and operating results conference call. At this time all participants are in a listen only mode. Following the formal remarks, we will open the call up for your questions. Please.
Please be advised that this call is being recorded at the company's request.
At this time I'd like to turn it over to David Krempa, Senior Vice President of business development and Investor Relations at Eton Pharmaceuticals. Please proceed.
Thank you operator, good afternoon, everyone and welcome to <unk> third quarter 2021 Conference call. This afternoon, we issued a press release that outlines the topics we plan to discuss on today's call. The release is available on our website Eaton pharma dot com.
Joining me on our call today, we have Sean <unk>, our CEO and Wilson Troutman, our CFO. In addition to taking live questions on today's call. We will also be answering questions that are emailed to us investors can send their questions to investor relations at Eden pharma Dot com.
Before we begin I would like to remind everyone that statements made during this call may contain forward looking statements and involve risks and uncertainties that could cause actual results to differ materially from those contained in these forward looking statements.
Please see the forward looking statements disclaimer in our earnings release and the risk factors in the company's filings with the SEC.
Now I will turn the call over to our CEO Sean Brynjolfsson.
Thank you David and thank you everyone for joining us. This afternoon as we're preparing for three new product launches and the initiation of a major co promotion partnership in the coming weeks I don't think there's ever been a more exciting time for me to talk to investors.
We couldnt be happier with the way we were exiting 2021, the new acquisition of an approved rare disease product a major co promotion arrangement launching in December and the upcoming launches of our product and royalty for us.
These major catalyst combined with the expectation for at least three additional product approvals and launches next year set us up for what should be a fantastic 2022.
I will start with an al Kindi up to an exciting partnership with Thomas that we announced this morning.
<unk> sales continue to grow month over month quarter over quarter, and we believe they can grow even faster. So we're implementing some major commercial changes.
We're now about six months into holding in person meetings with doctors the feedback to US has been clear our kidney sprinkle is critical to giving patients and doctors the ability to precisely treat adrenal insufficiency.
However, changing doctors prescribing habits has been a higher touch activity than we originally expected.
Decades, pediatric endocrinologists have been using hydrocortisone tablets and are used to the status quo. We found that in person demonstrations and multiple face to face interactions has been the key to making doctors comfortable changing their prescribing habits. Ultimately would have taken us a significant amount of time to convert the market to a candy given.
The capacity constraints on our current internal sales force, we had only reached approximately 10% of the physicians face to face. So the very exciting announcement regarding our co promotion with <unk> increases our presence more than tenfold. We believe this co promotion partnership is a very attractive opportunity for even for a number of reasons.
<unk>.
First even will gain more than 60, new sales reps with existing and established relationships with pediatric endocrinologists.
For comparison, we have less than five.
So this is.
Our significant growth in terms of our ability to reach out and have multiple face to face interactions with physicians. These reps can make a difference on day, one along hiring our own large team of sales reps within tech relationships with Pete and those would have been extremely challenging costly and time consuming.
Secondly, based on the structure of the deal we only pay for success Tomo receives a sales commission on the incremental sales of our kindred. Furthermore, <unk> has committed to hitting certain growth rates during the term of the agreement.
A few other words regarding the deal structure Eaton retains ownership of the asset is also responsible for the pricing contracting branding and marketing strategies and at the end of the three year term, we expect sales to be well underway to reaching peak conversion levels and we still have approximately 10 years left on the products patents we.
We expect this partnership to have a favorable impact on our earnings in 2022 due to both higher sales and lower expenses specifically.
Specifically, we will no longer need to take on the additional expense of expanding an internal sales force and the incremental growth produced by Thoma are above and beyond what we would have achieved on our own will more than pay for the sales commission they earn which at the end of the day. It means more profit for all parties.
Tomas pediatric endocrinology sales force has proven to be very successful.
We are confident they are the right partner for our <unk> their sales reps currently set ourselves consolidator in orphan treatment for central precocious puberty also known as CPP.
This product was launched in May of 2020 and has many characteristics similar to all attending such as marketing size and position <unk> has been very successful and consolidate product launch. Despite the COVID-19 challenges and has already seen over 500 patients adopt the treatment just 18 months into launch.
Our current plan is to have the <unk> team fully trained and promoting al Kindi in December. We believe this will provide a nearly immediate boost to the <unk> growth rate, which should be evident in the first half of 2022.
Yes.
Next I want to discuss our recent acquisition of <unk> asset tablets.
You seldom find an attractive rare disease product that is ready for immediate commercial launch. So we're very excited about this opportunity.
Our product as a therapeutic equivalent of Carver Globe that is listed in the Fda's Register as a b rated.
Our product is indicated for the treatment of hyper ammonium due to an AG sufficiency.
<unk> is widely regarded as one of the most expensive drugs in the world based on the products recommended dosing in multiple media articles, we believe that the annual cost of treatment can exceed $1 million annually for some patients.
Our generic version of carbon global offer these patients a lower cost alternative.
Next deficiency is extremely rare.
One recent published study found around 98 cases globally and existing literature, given the small patient population. We believe the market may require individualized support for each patient and we plan to offer robust patient services similar to what we currently provide for all kidney patients.
Given our experience without Kennedy, we believe we are well positioned to deliver a seamless experience for cargo limbic asset patients.
In terms of the market opportunity carbo is not tracked and IQ via but based on government spending data and record data is publicly reported financials. We estimate that the current sales of the product or more than $50 million annually or.
Our goal is to eventually capture 25% to 35% of these patients.
The launch activities are currently underway and we expect to make the product available before the end of the year.
With our existing infrastructure for all Kennedy already in place, we expect very little incremental cost to commercialize <unk> WOMAC asset.
Now turning to the recent approval of <unk> approach here is indicated for the treatment of epilepsy and migraine and was approved earlier this month.
It is the first and only FDA approved liquid formulation of Topiramate. This was a product that Eaton initially internally initiated internally back in 2018, and I'm very proud of all the hard work from our team that went into taking a branded product idea from that stage all the way to FDA approval in only three years.
Truly rare within the branded drug.
NDA is filed today.
<unk> was one of three neurology oral liquids, we sold towards already earlier. This year is already will be responsible for marketing the product and expected to launch later in the year.
Eaton will receive a $5 million payment upon launch a royalty on product sales and is also entitled to receive an additional $15 million in commercial milestones based on the sales of the three product basket.
The other two products in the US already transaction appear on pace for approval in the first half of 2022.
The <unk> application remains under FDA review, and we believe the only issue outstanding as the inspection of the product's U K based manufacturing facility. The agency was unable to inspect the facility prior to the applications original producer date and they now have assigned the application of new approval date of January 29.
We hope to see the product approved on that date, but the FDA has yet to conduct reschedule its inspection of the UK facility.
The third product Lamotrigine oral suspension saw positive developments this quarter our partner successfully completed the human factor study and is expected to submit the results to the FDA. Later. This month this should allow for a potential approval of the product in the first half of 2022 as a reminder, in addition to the $5 million milestone.
Since we expect to receive upon the approach here launch. We also are entitled to a $5 million for each of the launches of <unk> and Lamotrigine.
Finally, we had positive developments in our orphan drug candidate dehydrated alcohol injection after receiving a CRM letter from the FDA over the summer Eaton held a meeting with the FDA to discuss the letter and proposed responses. We believe the meeting was both productive and successful we left the meeting feeling confident that we can.
Over everything the agency has asked for and expect to submit the response in the coming months to allow for potential approval and launch in 2022.
Before I turn it over to Wilson now.
I would like to thank our shareholders for their continued support after four years of focus on development and regular regulatory activities. We are poised to see the fruits of our labor become apparent in very short order. It is clear that our prospects have never been stronger the recent cargo limbic asset acquisition and now the <unk> co promotion should allow us to deliver meaning.
<unk> revenue in 2022 and beyond more than we had expected just a month ago with our very strong cash position three new product launches in the coming months and the expectation for an additional three product approvals and launches next year. We are extremely excited as we look forward to the coming quarters with that I will turn it over to Wilson to discuss our financial results Wilson.
Thank you Shannon Eton reported revenue of <unk> 8 million for the third quarter of 2021, who has no material revenue in the third quarter of 2020.
Eaton's gross profit for the third quarter of 2021 was <unk> 2 million and reflected the impact of the 0.4 million write down for excess inventory by orphan <unk> stack.
The gross profit for the prior year quarter was not material.
R&D expenses for the third quarter of 2021 were $2 7 million compared to $2 8 million for the prior year period.
R&D expenses in the third quarter of 2021 were elevated due to expenses related to the development of by orphan and registration file container conversions.
R&D expenses in the third quarter of 2020 included a onetime $1 5 million NDA filing fee.
General and general and administrative expenses for the third quarter of 2021 were $3 3 million compared to $3 4 million in the prior year period.
This decrease was largely largely due to elevated spending in the prior year period related to launch preparation activities drill can be sprinkle.
The third quarter of 2021 included <unk> 9 million of noncash expenses.
As a result of these factors each reported a net loss of $6 1 million for the third quarter of 2021 compared to a net loss of $6 5 million in the prior year period.
<unk> reported diluted earnings per share of a negative zero to 424 per share in the third quarter of 2021 compared to a negative <unk> 31 per share in the prior year period.
Cash and cash equivalents through 'twenty $2 7 million as of September 32021.
<unk> expects to receive a $5 8 million milestone cash payment in December from the recent approval of <unk>, which is to pyramid oral solution product.
Operator, we are now open for questions.
Ladies and gentlemen, if you have a question at this time. Please press. The Star then the number one key are now touchtone telephone.
Western has been answered or you wish to remove yourself from the queue. Please press the pound key.
Our first question is from Ram <unk> with H C. Wainwright Your line is open.
Hi, This is Bob Allen dialing in for Ross and Roger can you hear me okay.
We can yes.
Awesome great.
Firstly would you be able to provide any color.
The registration Jensen pricing.
What is the best way for me to answer that as well.
We believe the pricing will be.
<unk>.
In excess of where by orphanage priced currently.
We know that the.
The hospitals pay around $15 to $20 for compounded ephedrine sometimes.
Sometimes it can be lower but.
From our surveys from our data that seems to be about where they've been.
We know that there is another ready to you as a federal on the market and we believe they charge a little over 20, so we would imagine we're going to be somewhere.
A little less than that because it's in an agile format, but.
It's it's certainly.
We will not be.
Commodity pricing.
Believe the value offered and the convenience as long as the longer shelf life are all positive in terms of patient experience.
Alright, thanks for the color.
Co promotion agreement with solar farm, that's pretty exciting.
Yes.
Good morning, Scott.
This consolidates it sounds like <unk> already promoting pediatric matches.
Yes, so I'll just repeat the question for anybody that Couldnt hear.
The question had to deal with the synergies and I guess the fit.
Tom or being able to promote.
Candy and set salvi.
Is it primarily mostly also save the same call point.
Certainly these are pediatric endocrinologists.
One of the reasons. We did this deal frankly was that it was just a good strategic fit best kind of deal you can do is a deal that works for both sides. So we know that Eaton will benefit, but we also know tomo will benefit and thats the kind of deal I like doing.
I don't know that it would make sense for other companies, but for tomo. It certainly was a great I think it's going to be a great deal for them.
And for Us at least at this point in our history.
That allows us the opportunity to save some expenses on that side.
We believe there'll be very successful so I have no doubt about it.
Yes.
Great.
Final question from me, how should we think about that.
The company.
Thank you Owen beyond given on a couple of thoughts coming out within the next few quarters.
Well I think our press release and some of my words earlier I touched on that.
Your work.
Let's say startup company.
We're going into our fifth year as shown we've been up and running for over four years.
All it takes at least three years to build your pipeline to do the deals to file navigate the FDA.
We're at a point now it really is an inflection point, where youre going to see multiple products approved multiple sources of revenue.
Our ability to maybe do larger transactions.
I couldnt be happier, where we're at we're in a nice cash position we have no.
No needs for going and raising additional cash so I am very excited about the company and.
We're attracting top talent within the organization.
We expect to expand our team in the coming months as knee as the need arises.
Great. Thanks for taking my question.
Pleasure.
Again, if you have a question at this time. Please press Star then the number one key on your Touchtone telephone.
I am showing no further questions in the queue I would now turn the conference back to Mr. Crumbaugh, you'll go over the email questions.
Thank you operator, we do have a couple of questions ill start first one how do you feel about your cash position is it enough to launch all of these products you are planning to launch.
We feel great about our cash position as I indicated earlier, we do have more than enough cash to launch all of the products.
We will receive milestone payments for the oral solutions and were really not even.
Having to launch those those are those are done through <unk> products, but that cash.
<unk> will also help us to launch other products that we've got in our pipeline. So I think we've done a good job of balancing.
Cost outlay with.
<unk> the revenue as it comes in.
I believe that Kirk limbic acid launch for example should cost us very little it's basically going to be contracted product.
We don't imagine there'll be a lot of detail any necessary, it's really a product that has a need and we think the insurance companies will want a lower cost product.
Yes.
Suppose I could also add that due to the fact that we've got additional revenue sources coming in and we really have reduced our cash burn and we'll reduce it over the coming quarters.
I think our R&D expenses.
Expenses in the past quarter was a bit elevated because of some.
Some conversion products are by orphan and <unk> now, we're converting those to vials.
I would say thats likely will be a bit lower.
And then what you saw in the third quarter.
So I think hopefully that answers the question.
Another question, we had is where do you expect to price <unk> acid relative to the brand product.
Okay, everybody wants to know the pricing question.
We're still engaged in prelaunch discussions with payers I think that has a large influence but.
I would expect to price to that approximate 10% to 15% discount to the brand.
Thats generally whats done for our first generic.
Our low lower price should save the healthcare system millions of dollars.
So the value proposition is there.
Given the dynamics in the market in all patient support programs and so we're not we're.
We're not really expecting a race to the bottom like you see in some traditional products win.
Generics enter the market you may end up with 345 generics at a given point in <unk>.
Certainly end up at a commodity pricing level, but this is a little bit different we certainly want to add the value of the lower priced option, but we still.
I think it will be a high value product.
Yes so.
We have one more he said what is the sales commission being paid to <unk> and the co promote deal.
Well im not going to disclose the exact rate for competitive reasons, but.
I would say that our margins remain attractive on the product even after product costs and royalties to diurnal and the sales commission that Tamara, we still expect to be netting more than 50% of the sales.
Thomas as I said earlier is compensated on incremental sales above and beyond at.
At the same time, it'll be a meaningful product for them with meaningful revenue I think that.
If you want to have a good partner yet you really have to go in that as a partnership.
No.
At the end of the day, that's probably the best way for me to answer that is to say that we'll make more revenue. We believe will make more revenue and more profit by partnering with toll them or they're not partner of <unk>. So you do this make or buy decision on whether you want to do.
Do something like this and with tomo It certainly made sense, because they're already in that space and so the yes.
Yes, we give up we gave up something but we're not we're also getting something and what we're getting is what we believe will be higher revenue than a go it alone strategy.
That's I think that hopefully covers that question as well anything else.
That's it for the email questions. So I'll turn it back to the operator, if theres any other questions on the phone.
Yes, Sir we do have a question from Ram ready.
A private investor.
Your line is now open.
Hi, Rob.
Yeah, Hey, how are you Andy expert to an important topic.
So we would expect to be profitable next year.
We had some profitability in the first quarter this year, but profitability is number one for me from my perspective, that's what it's about that's why we try to keep our expenses low and since we'll be launching three products this quarter.
And we have another three products launching hopefully in the first half of next year.
We would expect to be profitable at least for the second half of the year and perhaps even for the full year.
About as precise as I can get I hope that answers your question.
Okay. Thank you.
Youre welcome.
Yeah.
Thank you there are no questions at this time presenters do you have any final remarks.
No I would just again like to thank everyone for joining the call today, we always look forward to providing updates to the shareholders.
With that I believe we can adjourn the call and I wish everyone.
Happy holidays in the weeks and months to come.
Thank you.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may all disconnect.