Q3 2022 Eton Pharmaceuticals Inc Earnings Call

November 10, 2022

Okay.

Good afternoon, and welcome to it sounds pharmaceuticals third quarter, 'twenty 'twenty financial 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 the call over to David <unk> Senior Vice President of business development and Investor Relations at Eton Pharmaceuticals. Please proceed.

Thank you operator.

Afternoon, everyone and welcome to <unk> third quarter 2022 conference call.

Afternoon, we issued a press release that outlines the topics we plan to discuss on today's call.

At least is available on our website you can farm a dot com.

Joining me on our call today, we have Sean Brent Johnson, our CEO and James <unk>. 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 <unk> pharma Dot com.

Before we begin I would like to remind everyone that remarks made during the 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 brings Nelson.

Thanks, David and good afternoon, everyone and thank you for joining us to discuss third quarter results with another strong quarter for the company with total revenue up 315% compared to the prior year period.

Revenue from product sales and royalties continue to increase sequentially with a 37% jump from Q2, representing the seventh straight quarter of growth driven primarily by a Kennedy sprinkle.

Kirkland Lake asset.

Feedback from parents and physicians continues to be overwhelmingly positive about all Kennedy sprinkle, the first and only hydrocortisone treatment designed specifically to provide accurate dosing for newborns and children with adrenal insufficiency.

The product addresses a huge unmet need for a low dose option.

Third quarter sales of <unk> were up 19% over the second quarter and we continue to see steady growth in prescriptions each month coming from both new prescribers as well as existing prescribers, who have added new patients after seeing positive results from their initial patients.

We're excited about the $100 million market opportunity and believe the product has a long runway to grow for many years to come.

The second product driving our Q3 revenue growth was card WOMAC asset.

We continue to see a strong reception for the product with revenue increasing 40% over the prior quarter.

Columbia gas at a lower cost alternative to carpet globe and what the cost of carbon glow exceeding $1 million annually for some patients prescribers, who have been very excited that we brought at a lower cost alternative to market.

While still offering a patient support services that they have grown accustomed to for rare disease products.

The prescribers and patients also appreciate the fact that our tablets do not require refrigeration, which provide an additional convenience benefit to patients.

For Columbia gas of tablets have now been commercially available for three full quarters and we believe we remain on track to capture approximately 25% to 35% market share of the estimated $50 million plus market.

We were thrilled to add a third commercial product to our rare disease portfolio during the quarter with our recently announced acquisition of bedtime anhydrous for oral solution for the treatment of homelessness dinardo betting is a powerful tuck in acquisition for US. It is an FDA approved rare disease product an ideal strategic fit for <unk>.

<unk> commercial infrastructure and is expected to be accretive to our 2023 earnings the product at the same metabolic geneticists prescriber base that we already have relationships with.

So we believe we are uniquely positioned to commercialize this product. The addition of <unk> to our portfolio will help strengthen our relationship with these doctors and allow us to increase our frequency of communication with them, which may also benefit will make asset sales.

We expect the product to contribute multiple millions of dollars of revenue annually with very little incremental cost to us.

We have already heard from a number of prescribers that are eager to begin prescribing our product.

And we are working with our supply chain partners to make the product available as soon as possible.

Also during the quarter, we were pleased to see the FDA approval for donor site. The first and only FDA approved oral liquid formulation of <unk> and anti convulsant used to treat patients with epilepsy.

This application was filed with the FDA by Eaton and then became part of our multi product neurology oral solution agreement with us already pharmaceuticals.

This was the seven FDA approval that our team has been a part of and I'm very proud of all the hard work put into the program over the last few years.

<unk> will be responsible for commercializing the product and we will receive a $5 million payment upon launch of the product.

We are entitled to receive additional milestone payments as well as an ongoing royalty on commercial sales.

I am pleased to report that the product was launched in October which triggered the second milestone payment of $5 million, which will be recorded as revenue in our fourth quarter results. Since this launch occurred after the third quarter ended this $5 million benefit was not reflected in the cash balance that we've reported today.

Now I'd like to turn on.

Over to the late stage pipeline candidates, which we are also very excited about our dehydrated alcohol.

And as close to finalizing the FDA response.

Now that we thoroughly addressed each of the Fda's concerns and requests our goal is to have it resubmitted later this month and we feel confident about the likelihood of approval. We expect that our submission will be assigned a six month review cycle, which would allow for approval and launch of the product in the middle of next year.

This product is a very compelling market opportunity based on the latest <unk> data the annualized market opportunity its approximately $80 million, we expect to be one of only two players in this market and are protected by orphan drug exclusivity salt products should take a significant share of the market.

We also made strong progress this quarter on our 400 product candidate. This is a pediatric endocrinology product that had been requested extensively by physicians and parents that we've engaged with while promoting <unk> sprinkle. We have successfully manufactured our registration batches, which should allow us to file the NDA for the product before the end of <unk>.

'twenty three.

We expect to be able to share additional details about this product shortly.

The other product is consistently requested by pediatric endocrinology community as our Danielle Hydrocortisone auto injector, which is under development as a rescue treatment for adrenal crisis.

This innovative product would solve a major hurdle to current treatment as many caregivers and patients are intimidated by the dilution mixing and administration complexities associated with a solid core tip Lyophilize kit that is the standard of care today.

The complexity of the standard treatment often limits a child's ability to participate in sports or other extra curricular activities were apparent or train caregiver is not available to administer treatment.

Due to a slight delay at the European manufacturer, we now think that product's NDA can be filed in early 2024, rather than the end of 2023, but we remain very optimistic about the opportunity to bring this product to patients.

With this attractive late stage pipeline commercial products that are still in the early innings of their launch we're extremely excited about the outlook for 2023 and beyond our Kennedy sprinkle in cargo Megass. It alone are poised to deliver a major growth for the company in 2023.

We are now, adding and the launch of that team as well to that and the expected launch of dehydrated alcohol in the middle of next year. These products should allow us to deliver very attractive revenue growth and more importantly help us reach profitability in 2023 for more information about our financial position I will now turn the call over to James James.

Thank you Sean.

Our third quarter revenue was $3 2 million compared to zero point $8 million in the third quarter of 2021 or a 315% increase.

In both periods revenue was comprised entirely of product sales and royalties.

Gross profit for the quarter was $2.01 million compared with 0.1 million in the prior year period.

R&D expenses for the quarter, <unk> 7 million compared with $2 7 million in the prior year period.

The decrease was primarily due to a $1 1 million fee related to the by orphan and <unk> projects in the prior year period and decreased development costs for new product candidates as we approach commercialization.

General and administrative expenses for the quarter were $4 2 million compared with $3 3 million in the prior year period.

The increase in G&A expenses was mainly due to incremental marketing and compensation to support our product sales growth.

Really offset by decreased legal and consulting expenses.

Total company net loss was 3.01 million for the third quarter compared to a net loss of $6 1 million in the prior year period.

Eton finished the third quarter with $13 4 million of cash on hand.

This does not include the $5 million milestone payment for the Zona state launch, we expect to receive in the fourth quarter.

Our operating cash flow during the quarter was negative $1 7 million.

As Sean mentioned, we are confident that our cash on hand licensing payments and royalty income will give us the flexibility to support our ongoing commercial growth and continue investing in new product opportunities.

This concludes our remarks on third quarter results and with that I will turn it over to the operator for Q&A.

Thank you, ladies and gentlemen to ask a question on the phone line you will need to press star one on your telephone keypad.

Please proceed with any questions in the queue.

Net phone questions at this time.

Thank you operator, we can take the E mailed questions that we've received.

First question I guess this one's for James your G&A expense declined significantly from $5 3 million in Q2 to $4 $2 million. This quarter what type of run rate are you expecting going forward.

The decrease in G&A from Q2 to Q3 was driven primarily by a handful of onetime items that occurred in Q2.

Some severance share based comp and legal fees. So Q3 was a better representation, we expect approximately $4 5 million in G&A going forward.

Next question.

For Sean can you provide an update on the dehydrated alcohol resubmission sure. The Resubmission is.

Largely complete we are expecting to have that.

Daily submitted before the end of this month and.

If not it would be probably early December due to the holidays.

That.

You did have a.

Most likely six months review process, so that would put us in the second quarter in terms of approval.

There is potential obviously it could be a three month review.

Well certainly let.

Folks know once we get guidance from the agency.

And our last question is when do you expect to launch <unk>.

So thats networks.

They were excited to launch that product, obviously as quickly as possible, we're working with our supply chain partners to make it available Theres No show Stoppers, it's just a matter of going through the operational process of producing the batches and then.

Having them tested and release side.

Early next year.

There is a good timeframe comfortable with and.

Great opportunity.

Fits well with our curriculum like asset sales team.

Yes, the doctor so far looking forward to us bringing that to market.

That's the end of our E mailed questions. Thank you everyone for joining us today.

Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.

The conference will begin shortly to raise your hand during Q&A you can dial one one.

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The conference will begin shortly to raise Johan during Q&A you.

You can dial one one.

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Good afternoon.

Welcome to Eagle Pharmaceuticals, third quarter 2022 financial 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 the call over to David Campbell Senior Vice President of business development and Investor Relations at Eton Pharmaceuticals. Please proceed.

Thank you operator.

Afternoon, everyone and welcome to <unk> third quarter 2022 conference call.

Good 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 you can farm a dotcom.

Please see the forward looking statement 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 brings yeltsin.

Thanks, David Good afternoon, everyone and thank you for joining us to discuss third quarter results with another strong quarter for the company with total revenue up 315% compared to the prior year period.

Revenue from product sales and royalties continue to increase sequentially with a 37% jump from Q2, representing the seventh straight quarter of growth driven primarily by al Kindi sprinkle.

Kirkland Lake assets.

The product addresses a huge unmet need for a low dose option.

Third quarter sales of <unk> were up 19% over the second quarter and we continue to see steady growth in prescriptions each model coming from both new prescribers as well as existing prescribers, who have added new patients after seeing positive results from their initial patients.

We're excited about the $100 million market opportunity and believe the product has a long runway to grow for many years to come.

The second product driving our Q3 revenue growth was Kirkland Lake assets.

We continue to see a strong reception for the product with revenue increasing 40% over the prior quarter Kirkland and gas at a lower cost alternative to carpet below and what the cost of carbon globe exceeding $1 million annually for some patients prescribers have been very excited that we brought at a lower cost alternative to market.

While still offering a patient support services that they have grown accustomed to for rare disease products.

Our prescribers and patients also appreciate the fact that our tablets do not require refrigeration, which provides an additional convenience benefit for patients.

We were thrilled to add a third commercial product to our rare disease portfolio during the quarter with our recently announced acquisition of <unk> and hydrus for oral solution for the treatment of almost cystinuria methane is a powerful tuck in acquisition for US. It is an FDA approved branded this product an ideal strategic fit for <unk>.

<unk> commercial infrastructure and is expected to be accretive to our 2023 earnings. The product has the same metabolic geneticists prescriber base that we already have relationships with.

We expect the product to contribute multiple millions of dollars of revenue annually with very little incremental cost to us.

We've already heard from a number of prescribers that are eager to begin prescribing our product.

And we are working with our supply chain partners to make the product available as soon as possible.

Also during the quarter, we were pleased to see the FDA approval of persona side, the first and only FDA approved oral liquid formulation of <unk> and anti convulsant used to treat patients with epilepsy.

This application was filed with the FDA by Eaton and then became part of our multi product neurology oral solution agreement with us already pharmaceuticals.

This was the seventh FDA approval that our team has been a part of and I'm very proud of all the hard work put into the program over the last few years.

They're already will be responsible for commercializing the product and we will received a $5 million payment upon launch of the product.

We are entitled to receive additional milestone payments as well as an ongoing royalty on commercial sales.

I am pleased to report that the product was launched in October which triggered the second milestone payment of $5 million, which will be recorded as revenue on our fourth quarter results. Since this launch occurred after the third quarter ended this $5 million benefit was not reflected in the cash balance that we've reported today.

Now I'd like to turn art.

Over to the late stage pipeline candidates, which we are also very excited about our dehydrated alcohol Eaton is close to finalizing the FDA response.

Now that we thoroughly addressed each of the Fda's concerns and requests our goal is to have it resubmitted later this month and we feel confident about the likelihood of approval.

We expect that our submission will be assigned a six month review cycle, which would allow for approval and launch of the product in the middle of next year.

We also made strong progress this quarter on our 8400 product candidates.

This is a paediatric endocrinology product that had been requested extensively by physicians and parents that we've engaged with while promoting <unk> sprinkle.

We have successfully manufactured a registration batches, which should allow us to file the NDA for the product before the end of 2023.

We expect to be able to share additional details about this product shortly.

The other product is consistently requested by pediatric endocrinology community as our Danielle Hydrocortisone auto injector, which is under development as a rescue treatment for adrenal crisis.

The complexity of the standard treatment often limits a child's ability to participate in sports or other extracurricular activities were apparent or train caregiver is not available to administer treatment.

With its attractive late stage pipeline commercial products that are still in the early innings of their launch we're extremely excited about the outlook for 2023 and beyond.

Kenny Sprinkle in card Columbia gas it alone are poised to deliver major growth for the company in 2023.

We are now, adding and the launch of that team as well to that and the expected launch of the hydrated alcohol in the middle of next year. These products should allow us to deliver very attractive revenue growth and more importantly help us reach profitability in 2023 for more information about our financial position I'll now turn the call over to James James.

Thank you Sean.

Our third quarter revenue was $3 2 million compared to zero point $8 million in the third quarter of 2021 or a 315% increase in.

In both periods revenue was comprised entirely of product sales and royalties.

Gross profit for the quarter was $2.01 million compared with $0 1 million in the prior year period.

R&D expenses for the quarter, <unk> 7 million compared with $2 7 million in the prior year period.

General and administrative expenses for the quarter were $4 2 million compared with $3 3 million in the prior year period.

The increase in G&A expenses was mainly due to incremental marketing and compensation to support our product sales growth.

Partially offset by decreased legal and consulting expenses.

Total company net loss was 3.01 million for the third quarter compared to a net loss of $6 1 million in the prior year period.

Eton finished the third quarter with $13 4 million of cash on hand.

This does not include the $5 million milestone payment for the Zona state launch, we expect to receive in the fourth quarter.

Our operating cash flow during the quarter was negative $1 7 million.

This concludes our third quarter results and with that I will turn it over to the operator for Q&A.

Thank you, ladies and gentlemen to ask a question on the phone line you will need to press star one on your telephone keypad.

Brian Wildman. Please proceed there's any questions in the queue.

Net phone questions at this time.

Thank you operator, we can take the email questions that we've received first question I guess this one's for James Your G&A expense declined significantly from $5 3 million in Q2 to $4 $2 million. This quarter what type of run rate are you expecting going forward.

The decrease in G&A from Q2 to Q3 was driven primarily by a handful of onetime items that occurred in Q2.

Some severance share based comp and legal fees.

Q3 was a better representation, we expect approximately $4 $5 million in G&A going forward.

Next question.

For Sean can you provide an update on the dehydrated alcohol resubmission sure. The Resubmission is.

Largely complete we are expecting to have that.

Ideally submitted before the end of this month.

If not it would be really early December due to the holidays, So I expect that.

Either to have a.

Most likely a six month review process, so that would put us in the second quarter in terms of approval.

There is potential obviously it could be a three month review.

Well certainly let.

Folks know once we get guidance from the agency.

And our last question is when do you expect to launch <unk>.

So that's the.

And we're excited to launch that product, obviously as quickly as possible, we're working with our supply chain partners to make it available Theres No show Stoppers, it's just a matter of going through the operational process of producing the batches and then.

Having them tested and release side.

Early next year.

There is a good timeframe comfortable with and.

Great opportunity its fits well with our critical Nick asset sales team.

Yes, the doctor so far we're looking forward to us bringing that to market.

Okay.

That's the end of our E mailed questions. Thank you everyone for joining us today.

Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.

Q3 2022 Eton Pharmaceuticals Inc Earnings Call

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