Eton Pharmaceuticals Inc. Q1 2023 Earnings Call
Good afternoon, and welcome to the Etom Pharmaceuticals first quarter 2023 financial results 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.
This call is being recorded at the company's request at this time I'd like to turn it over to David Krempa, Chief business Officer at E. Com Pharmaceuticals. Please proceed.
Thank you operator, good afternoon, everyone and welcome to Eaton's first quarter 2023 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, even pharma dot com.
Joining me on our call today, we have sharper Johnson, our CEO and James Gruber, our CFO .
In addition to taking live questions on today's call, we will be answering questions that are emailed to us.
Passengers can send their questions to Investor relations at Eaton pharma dotcom.
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 FCC.
Now I will turn the call over to our CEO Sean Brynjolfsson.
Thank you David Good afternoon, everyone and thank you for joining us today.
I'm excited to talk with all of you to go over our first quarter results as well as our outlook for the rest of the year and beyond as previously.
As we communicated we knew 2023 was going to be a major inflection point in Eaton's history.
We speak to more than double product sales watch new rare disease products and reach profitability.
I'm pleased to say we're off to a very good start with the exceptional first quarter results, we announced today.
It was another quarter of record product sales for Eaton, our ninth straight sequential product revenue growth.
Total product sales and royalty revenue was $5 4 million, an increase of 52% over the fourth quarter of 2022 and up 144% from the quarter of 2022.
Can you sprinkle in Columbia gas at both reported record sales in the quarter.
Or can you sprinkle saw strong growth in patients on treatment during the quarter, having a rep solely focused on how can be during interactions with pediatric endocrinologists has allowed for more in depth discussions, which I believe we believe increases the likelihood of a position changing their prescribing habits and may reduce the number of visits required to do so.
<unk> also launched a new <unk> sprinkled direct to consumer marketing campaign during the quarter and have implemented initiatives to further increase our engagement with the adrenal insufficiency patient community throughout 2023.
Even with our strong El Candy sales in Q1 huge opportunity remains in front of us. So a large percentage of patient population remains unconverted. We are optimistic that this provides us with a long runway of growth for the product which is patented throughout 2034.
We believe our expanded sales force can help increase the pace of adoption in our <unk> 400 product will further accelerate adoption our patent pending <unk> 400 product, which will be sold alongside our candy sprinkle as a new treatment alternative remains on track for an NDA submission at the end of this year.
This could provide for potential commercial launch in 2024, we continue to believe our kidney sprinkle in 8400 have the potential for combined peak sales of more than $50 million annually.
Moving over to Paralympic asset Paralympic asked that also had a very strong quarter aided in part by a few significant conversions in the quarter, which we believe were a direct result of our expanded sales force.
We will be leveraging the relationships, we have successfully developed commercializing Kirkland lake assets for the launch of <unk> anhydrous, which shares the same prescriber base.
We are pleased to announce this week that that team is now commercially available with batch and we will be offering our full patient and provider services through our <unk> cares program.
Caris will provide prescription fulfillment insurance benefits investigation, and educational support as well as financial assistance and other services designed to help eligible patients access treatment.
Even prior to the launch we have received strong interest from patients and providers trying to gain the product from us. So we believe we are well positioned for launch we believe <unk> has the potential to generate several million dollars in annual revenue with minimal incremental investment in SG&A.
I've been very pleased with the performance of our sales force thus far.
As a reminder, the final members of our expanded 12 person sales team were fully trained and in the field in February we believe the expanded for US helps contribute to the record sales of both products in the first quarter and we expect the benefit of this larger team to be even more pronounced in the second half of the year as new members develop deeper relationships with prescribers.
An additional benefit of the expanded team is that hit us allowed us to increase our attendance and presence at medical conferences, including many smaller regional conferences, our commercial team will be attending more than 35 medical conferences. This year.
Our second potential product launch this year as our dehydrated alcohol injection as many of you are aware of the product has been assigned a <unk> date of June 27th by the FDA, we have been in regular communication with the FDA and believe we have fully addressed or will shortly address all of the agencies information requests.
As a result, we have implemented a launch execution plan with our commercial partner that will allow for the launch of the product as quickly as possible. After the <unk> date, if it is approved.
During the quarter. We also acquired <unk> 600, and innovative product candidate under development for a rare pediatric endocrinology condition that would address a significant unmet need.
600 has the same prescriber base as our candy sprinkle, which makes it a perfect strategic fit.
<unk> have repeatedly expressed the need for this product and we believe we can address this unmet need if all goes according to plan, we expect to file the NDA in 2024.
Our short to our short term goal for 2023 was to more than double product sales. This year and as you can see with the impressive first quarter results were well on our way to achieving that longer term. Our goal is to have 10 commercial rare disease products on market by the end of 2025. The launch of that team is now our third commercial product we are in a very solid position.
We believe our current pipeline can deliver for more.
Confident that we will continue to find and close attractive business development transactions that can provide at least three more commercial products by the end of 2025.
In recent months, we have seen an increasing number of pharmaceutical companies that have attractive commercial late stage assets, but are facing financial challenges due to less favorable capital markets environment. They are struggling to raise needed capital and ultimately will not be able to advance our commercialized products by themselves given our strong cash position our prudent spending.
And our expectation to be profitable in the near future. We believe we are an ideal position to capitalize on these type of opportunities as we move forward.
I hope everyone is pleased today with the results as I and our team has put in a lot of hard work behind the scenes in recent quarters and years to lay the groundwork for results that are starting to materialize. We knew 2023 was going to be a critical year for the company and we are off to a terrific start the outlook could not be better Kurt limbic acid in our Kelly sprinkle, which were already <unk>.
At impressive rates now have the power of a dedicated in house sales force behind them, we have launched <unk>, which will further add growth we have the potential to launch dehydrated alcohol in the coming months and on top of all of that we continue to execute on our internal development and external business development activities to advance our vision of creating a profitable.
<unk> diverse portfolio of commercial rare disease products. In summary, we are just getting started we are getting some great traction ad.
Look forward to sharing more good news as we move forward in the quarters ahead, Thank you and with that I'll turn it over to James Our Chief Financial Officer to discuss the financial James.
Thank you Sean.
Our first quarter revenue was $5 3 million compared to $2 2 million in the first quarter of 2022 or a 144% increase.
In both periods revenue was comprised entirely of product sales and royalties and the increase was driven by growth in our <unk> sprinkle and card limbic asset.
Sequentially product sales and royalty revenue grew 52% compared to the fourth quarter of 2022.
We expect product sales to continue growing quarter over quarter throughout the rest of this year and beyond.
R&D expenses for the quarter were zero point $5 million compared with $1 6 million in the prior year period.
Due primarily to decreased development costs for new product candidates.
We expect to see a slight increase in R&D spend in future quarters due to development activities and payments related to <unk> 406 hundred.
General and administrative expenses for the quarter were $5 3 million compared with $4 8 million in the prior year period.
Due primarily to incremental employee related expenses associated with our sales force expansion.
The increased costs related to the sales force expansion are being partially offset by lower legal costs. The elimination of the co promotion Commission paid to our marketing partner and the elimination of expenses associated with supporting products that were divested in 2022.
Q1 is seasonally our highest quarter of expense and we still anticipate our full year G&A expense to be approximately $20 million.
Total company net loss was $2 7 million for the quarter compared to a net loss of $5 3 million in the prior year period.
Net loss per basic and diluted share was <unk> 10 during the quarter compared to a net loss per basic and diluted share of <unk> 21 in the prior year period.
<unk> finished the first quarter with $14 7 million of cash on hand, and our operating cash burn during the quarter was $1 5 million.
We remain confident that our cash position is sufficient to allow us to execute our plans and continue pursuing bolt on transactions and new product developments.
This concludes our remarks on first quarter results and with that we'll turn it back over to the operator for Q&A.
At this time in order to ask a question. Please press star one on your telephone Lake soon to be announced to withdraw your question. Please press star one.
Please standby, while we compile the Q&A roster.
And do you have a question from Rob Brown <unk> root.
Wainwright <unk> co. Your line is now open.
Alright, thanks, very much for taking my questions.
So in light of the robust revenue that Youre seeing can you give us your updated thoughts on whether or not you anticipate potentially expanding the field sales force and if so.
And what cadence and on what timeline.
Sure Hi, Rob.
Yes.
We have decided to keep our sales force at where its app for the next quarter or two but as sales ramp up and we bring in new products, we will be ultimately expanding that I don't see a significant increase in SG&A at least for the next few quarters, we believe the sales force.
Is the right size for where we're at today, obviously for the future will need to plan accordingly.
But it's.
So far so good with the results and as you can see we're very pleased with their performance I think that youll see that accelerate there will come a point, though.
Maybe necessary to add additional head count.
And can you give us an update on what you expect to be the next steps.
The legal front on the legal front with respect to.
Your collaboration with Dr. <unk> in particular, what you expect the outlook to be there.
At this point in time.
Sure the assisting appeal has been filed its in process.
We remain confident of winning that ultimately that would <unk>.
Translate into a $20 million commercial payment our commercialization milestone payment to Eaton I would expect that that exact timing, obviously is always tough to predict when youre talking about.
Court cases, but we think it will likely be sometime in 2024 I have read several of the briefing documents and I think Dr. <unk> already has.
He has done a very good job with their case so far.
Very good track record of winning.
Lastly, with respect to R&D do you anticipate that this is likely to trend up meaningfully in the course of the coming quarters say over the remainder of 2023.
Or do you expect the number for the first quarter to be more or less where it is going to stay.
Given some of these upcoming activities, including the preparation for filing of <unk> 600.
Yes.
The first quarter.
Our R&D spending R&D spending for the rest of the year is going to tick up a little bit higher than it was in first quarter, just due to the timing of development activities with both <unk> 406 hundred.
So it would not be reasonable to assume Q1 is not representative of full year spend so we do expect it to tick up a little bit.
Not multiples, but slight increases over Q1.
And last question for me if you look at the potential evolution of gross margin.
Which of the newer product.
For example, <unk>.
Hi dress.
400 down the Pike <unk> 600 are likely to be the most significant positive contributor to improvement in gross margin.
Okay.
Yes, Hey, Rob the biggest gross margin.
Beneficiaries would be <unk> 406 hundred.
The <unk>, we do have a 35% profit split to are the original licensing partner that comes out of the Cogs line. So the gross profit is a little bit lower because of that payment, but <unk> 480, 600, it will be very high margin with relatively low royalty obligations. So they should boost the overall company grew.
Margin.
Thank you.
Again in order to ask a question. Please press star one on your telephone.
And I see no more questions at this time I will now turn the call back to David Gladstone.
Thank you we do have one E. Mailed question that we haven't covered yet today. It was asking for an update on <unk> 400 can you provide any color on the indication it is going for.
Sure So with 84 under a this is one of our most exciting pipeline products as you know.
As we stated in our press release sold alongside can be sprinkle. The indication would also be for three and a quarter call and sufficiency and we would envision.
There is roughly 10000 patients that could benefit from this but we're really going after about 3000 doors on a 6% under primarily is the patient population in.
It may be indicated all the way up to 18.
We think it would mainly be used in that zero to six range. So that's about what we can say at this point I think as the year progresses, and our patent tickets issued will share more information about the product suffice to say physicians are very excited about it and it's one that we've spoken to.
A couple of dozen doctors that specialize in this area.
Yes.
It will fulfill an unmet need today.
Thank you everyone for joining us today, that's the end of the E mailed questions that we've received.
This concludes today's conference call. Thank you for your participation you may now disconnect.
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