Q1 2024 Eton Pharmaceuticals Inc Earnings Call

Operator: Good afternoon, and welcome to the Eton Pharmaceuticals first quarter 2024 financial results conference call. At this time, all participants are in 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, Chief Business Officer, Eton Pharmaceuticals. Please proceed.

Good afternoon, and welcome to the Eton Pharmaceuticals first quarter 2024 financial results Conference call.

David C. Krempa: At this time all participants are in listen only mode. Following the formal remarks, we will open the call up for your questions.

Operator: Please be advised that this call is being recorded at the company's request.

Operator: At this time I'd like to turn it over to David Krempa, Chief business Officer at Eton Pharmaceuticals.

David C. Krempa: Please proceed.

David C. Krempa: Thank you, Operator. Good afternoon, everyone, and welcome to Eton's first quarter 2024 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, etonpharma.com. Joining me on our call today are Sean Brynjelsen, 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.

David C. Krempa: Thank you operator, good afternoon, everyone and welcome to Eaton's first quarter 2024 conference call. This afternoon, we issued a press release that outlines the topics we plan to discuss on today's call.

David C. Krempa: Relief is available on our website Eaton pharma dot com.

David C. Krempa: Joining me on our call today, we have sharper gel for our CEO and James Gruber our CFO.

David C. Krempa: There shouldn't be taking live questions on today's call. We will be answering questions that are emailed to us investors can send their questions to investor relations at <unk> pharma Dot com.

David C. Krempa: Investors can send their questions to investorrelations at etonpharma.com. Before we begin, I would like to remind everyone that remarks 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.

David C. Krempa: Before we begin I would like to remind everyone that remarks 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.

David C. Krempa: 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 Brynjelsen. Thank you, David. Good afternoon, everyone.

David C. Krempa: Please see the forward looking statements disclaimer in our earnings release and the risk factors in the company's filings with the SEC.

Sean E. Brynjelsen: Now I will turn the call over to our CEO, Sean Brent Johnson.

Sean E. Brynjelsen: Thank you David Good afternoon, everyone and thank you for joining us today.

Sean E. Brynjelsen: Thank you for joining us today. After a strong finish to 2023, I am pleased to say we carry this momentum into 2024, delivering our 13th straight quarter of sequential product revenue growth. It has been a very productive start to 2024 for the company, and we have a number of exciting items to discuss today. In addition to posting record revenue sales in Q1, we also acquired a new commercial growth asset in PKU, Golike.

Sean E. Brynjelsen: After a strong finish to 2023 I'm pleased to say we carry this momentum into 2020 for delivering our 13th straight quarter of sequential product revenue growth.

Sean E. Brynjelsen: It's been a very productive start to 2024 for the company.

Sean E. Brynjelsen: And we have a number of exciting items to discuss today.

Sean E. Brynjelsen: In addition to posting record revenue sales in Q1.

Sean E. Brynjelsen: We also acquired a new commercial broke out certain PK you go like.

Sean E. Brynjelsen: We launched Nutitinone capsules, and more importantly, Eton submitted our new drug application for ET400. We are pleased to deliver another quarter of strong revenue growth and to do so while maintaining our disciplined cost structure. Revenue from product sales grew by more than 50% year-over-year to $8.0 million, while our SG&A spending actually declined by 4% year-over-year. As you can see, now that we have our infrastructure in place, there is significant operating leverage in our business.

Sean E. Brynjelsen: With Washington, Snow capsules, and more importantly, even submitted our new drug application for <unk> 400.

Sean E. Brynjelsen: We were pleased to deliver another quarter of strong revenue growth and to do so while maintaining our disciplined cost structure Rob.

Sean E. Brynjelsen: Revenue from product sales grew by more than 50% year over year to $8 1 million, while our SG&A spending actually declined by 4% year over year.

Sean E. Brynjelsen: As you can see now that we have our infrastructure in place there was significant operating leverage in our business we.

Sean E. Brynjelsen: We believe we could support a revenue level many multiples over our current run rate with only a modest increase in our SG&H spending. This should allow us to deliver substantial earnings as we scale our revenue towards our goal of being a $100 million plus revenue company in the coming years. Our record product sales in the quarter were driven primarily by strong growth in both kerguelmic acid and alkali sprinkle.

Sean E. Brynjelsen: We believe we could support a revenue level many multiples over our current run rate with only a modest increase in our SG&A spending.

Sean E. Brynjelsen: This should allow us to deliver substantial earnings as we scale our revenue towards our goal of being a $100 million plus revenue company in the coming years.

Sean E. Brynjelsen: Our record product sales in the quarter were driven primarily by strong growth in both her outfit and all came to sprinkle.

Sean E. Brynjelsen: I remain very encouraged by the trajectory of our carbolic acid product as it continues to exceed our expectations. We believe we have now captured more than 50% of the patient population, but the product continues to grow, and we have added additional patients in Q1 and also additional ones in Q2. Perglumic is a part of our metabolic portfolio that expanded from two products to four products in the first quarter, as we launched Nauismone capsules and acquired PKU Goliath.

Sean E. Brynjelsen: I remain very encouraged by the trajectory of our Columbia gas of product as it continues to exceed our expectations.

Sean E. Brynjelsen: We believe we have now captured more than 50% of the patient population, but the product continues to grow and we've added additional patients in Q1.

Sean E. Brynjelsen: And also additional ones in Q2.

Sean E. Brynjelsen: Kirk will make us a part of our metabolic portfolio of expanded from two products to four products in the first quarter as we launched <unk> capsules and acquired PKU cohort.

Sean E. Brynjelsen: As you may know, mucosinone capsules launched in February, and we were able to add a number of patients before the end of the quarter. The market for Nitricinone is estimated to be around $50 million annually, but there are already a number of competitors in the market, so we have modest expectations for this product. We view the opportunity similar to the way we view Betaine. Neither one offers a large revenue opportunity on its own, but they require very little incremental expense to commercialize since we already have the metabolic infrastructure in place.

Sean E. Brynjelsen: As you May know <unk> capsules launched in February and we were able to add a number of patients before the end of the quarter.

Sean E. Brynjelsen: The market for nutritional is estimated to be around $50 million annually.

Sean E. Brynjelsen: There are already a number of competitors in the market. So we have modest expectations for this product we viewed the opportunities similar to the way we can get back to them. Neither one offers a large revenue opportunity on its own but they require very little incremental expense to commercialize since we already have the metabolic infrastructure in place.

Sean E. Brynjelsen: Perhaps more importantly, the expanded portfolio helps us strengthen our relationship and increase the frequency of interactions with high-value curcuminic acid prescribers. And now, with our recent goal-like acquisition, ticinone and betaine can help drive additional opportunities to cross-sell goal-like, which I will spend a few minutes talking about. I was very excited to close this acquisition in March, and I believe it adds another compelling growth asset to our metabolic portfolio. Golight is a medical formula for patients with phenylketonuria, also known as PKU. PKU patients lack the enzyme needed to break down phenylalanine, which is an amino acid-soluble protein. For these patients, eating protein results in the buildup of phenylalanine, which can cause neurological problems, including seizures and brain damage.

Sean E. Brynjelsen: Perhaps more importantly, the expanded portfolio helps us strengthen our relationship and increase the frequency of interactions with high value Kirk WOMAC acid prescribers.

Sean E. Brynjelsen: And now with our recent go like acquisition, but just alone in bed chain can help drive additional opportunities to cross sell go like which I will spend a few minutes talking about.

Sean E. Brynjelsen: I was very excited to close this acquisition in March and I believe it has another compelling growth asset for our metabolic portfolio.

Sean E. Brynjelsen: As a result, many of these PKU patients must take specialized no- or low-protein medical formulas such as PKU Goliath. Just like our other metabolic products, Golike is distributed by a specialty distributor that handles dispensing and patient support. The product is typically covered by insurance, and it is prescribed by healthcare professionals. I believe Go Life is a compelling opportunity, and I'm excited about it for a number of reasons. First, Golike is a very strategic fit with our corporate strategy and commercial infrastructure.

Sean E. Brynjelsen: <unk> is a medical formula for patients with Phenylketonuria also known as PKU PTA.

Sean E. Brynjelsen: PKU patients like the enzyme needed to break down funnel element, which is an amino acid protein.

Sean E. Brynjelsen: For these patients really protein results in the buildup of panel alanine, which can cause neurological problems, including seizures and brain damage.

Sean E. Brynjelsen: As a result, many of these PKU patients must take specialized no or low protein medical formula such as PKU would go light.

Sean E. Brynjelsen: Just like our other metabolic products go like is distributed by a specialty distributor that handle suspension and patient support.

Sean E. Brynjelsen: Product is typically covered by insurance and it is prescribed by health care professionals.

Sean E. Brynjelsen: I believe go life is a compelling opportunity and I'm excited about it for a number of reasons first go like is very strategic fit with our corporate strategy and commercial infrastructure. The product serves a ultra orphan population of an estimated 8000 PKU patients in the United States. These patients rely on medical formulas and the condition is.

Sean E. Brynjelsen: The product serves an ultra-orphan population of an estimated 8,000 TKU patients in the United States. These patients rely on medical formulas, and the condition is managed by metabolic geneticists and their support staff, the same healthcare professionals that we are actively engaged with on our other metabolic products. Secondly, Golike is an attractive product that we believe has significant advantages over the competition. Historically, PKU patients have relied on medical providers or medical powders that must be mixed and drunk multiple times each day as meal replacements. Go-Like has a number of benefits. It comes in a convenient and ready-to-eat bar format.

Sean E. Brynjelsen: Managed by metabolic geneticists and their support staff the same health care professionals that we are actively engaged with on our other metabolic products.

Sean E. Brynjelsen: We believe it is significantly better tasting, and it smells better than competitor products, and it is a patented delayed-release amino acid technology designed to keep patients full for longer periods of time. And finally, Go Life offers a compelling financial opportunity. We paid less than two times annual revenue for the product and expect to see significant revenue growth for years to come. Golight granules were launched at the end of 2022, and Golight bars were launched in mid-2023.

Sean E. Brynjelsen: Secondly go like as an attractive product that we believe has significant advantages over the competition.

Sean E. Brynjelsen: Historically PKU patients have relied on medical providers are medical powders that must be mixed and drank multiple times each day as meal replacements go like as a number of benefits. It comes in a convenient and ready to eat bar format.

Sean E. Brynjelsen: We believe it is significantly better tasting better smelling the competitive competitor products and it is a patented delayed released immunoassay technology designed to keep patients fall for longer periods of time.

Sean E. Brynjelsen: And finally, <unk> offered a compelling financial opportunity, we paid less than two times annual revenue for the product and expect to see significant revenue growth for years to come.

Sean E. Brynjelsen: Alright granules were launched at the end of 2022 and go like bars were launched in mid 2023. So the product is still in its infancy stages of launch.

Sean E. Brynjelsen: The product is still in the infancy stages of launch, but we believe our larger commercial footprint and existing relationships with the metabolic community can help accelerate the product's adoption. The U.S. market for PKU gold-like medical formulas is estimated to be approximately $100 million annually.

Sean E. Brynjelsen: We believe our larger commercial footprint in existing relationships with the metabolic community can help accelerate the product adoption.

Sean E. Brynjelsen: The U S market for PKU go like medical Formula is estimated to be approximately $100 million annually.

Sean E. Brynjelsen: With goals like attractive product benefits and our commercial infrastructure, our goal is to capture at least 10% market share or $10 million annually in the coming years. Our sales team launched the product under Eton's ownership at the Metabolic Dietitians International Conference in mid-April, and we received very strong interest and positive feedback from the dietitian community at the conference. This further reinforced our belief that Golight provides an improved patient experience and should see significant growth in the years to come as we raise awareness and education in the community. Now, switching to the endocrinology side of our business. Now Kendi Sprinkle also posted record sales and significant growth in the quarter.

Sean E. Brynjelsen: With gold likes attractive product benefits in our commercial infrastructure. Our goal is to capture at least 10% market share or $10 million annually in the coming years.

Sean E. Brynjelsen: Our sales team launched the product under <unk> ownership at the metabolic Dietitians International Conference in mid April and we received very strong interest and positive feedback from the dietician community at the conference.

Sean E. Brynjelsen: This further reinforced our belief that <unk> provides an improved patient experience and should see significant growth in the years to come as we raise awareness and education in the community.

Sean E. Brynjelsen: Switching now to the endocrinology side of our business now can sprinkle also posted record sales and significant growth in the quarter.

Sean E. Brynjelsen: As discussed in our previous call, we recently introduced a sampling program, and our commercial team has been very active at medical conferences so far this year, including exhibiting at the Pediatric Endocrine Society meeting last week. We have seen growth in new patient prescriptions so far, and most patients who try Alkindi have a positive experience and remain on therapy. Eton does, however, continue to see patients that choose to discontinue treatment due to the texture of the granules.

Sean E. Brynjelsen: As we discussed in our previous call. We recently introduced a sampling program and our commercial team has been very active at medical conferences. So far this year, including exhibiting at the pediatric Endocrine Society meeting last week.

Sean E. Brynjelsen: We have seen growth in new patient prescriptions, so far and most patients who try al Kindi have a positive experience and remain on therapy.

Sean E. Brynjelsen: Aten does however continue to see patients that choose to discontinued treatment due to the texture of the granules.

Sean E. Brynjelsen: As Alkindi continues to grow, we have a number of initiatives underway to lessen this discontinuation rate, including revamping our educational and administrative materials, but we also believe ET400 will most adequately address this issue. In addition to reducing discontinuation, ET400 will provide an important treatment alternative to the large contingent of patients that use a liquid product today. Either a suspension formulation from a compounder that is not FDA approved, or their own version that they make at home by crushing tablets and mixing them with water, or have been resistant to L-Tindy Sprinkle because they want to stay with a liquid dosage form.

Sean E. Brynjelsen: As al Kindi continues to grow we have a number of initiatives underway to lessen this discontinuation rate, including revamping, our education and administrative materials, but we also believe <unk> 401, most adequately address the tissue.

Sean E. Brynjelsen: In addition to reducing discontinuation 8400 will provide an important treatment alternative to the large contingent of patients that use the liquid product today.

Sean E. Brynjelsen: Either suspension formulation from a compound or that is not FDA approved or their own version that they make at home by crushing tablets and mixing them with water.

Sean E. Brynjelsen: Or have been resistant shell can be sprinkled because they wanted to stay with our liquid dosage form we.

Sean E. Brynjelsen: We believe that this portion of the population, which could include several thousand patients, will be pleased with the accurate dosing in a liquid form that ET-400 will provide once it is approved. On our last call, I mentioned that we had passed our clinical study, which was the final hurdle in the submission of the EQ-400 NDS. I am now thrilled to say that we submitted the NDA last week. We anticipate that the FDA will assign the application a 10-month review, allowing for potential approval during the first quarter of 2025.

Sean E. Brynjelsen: We believe that this portion of the population, which could include several thousand patients will be pleased with the accurate dosing in a liquid form that ESG for Honeywell provided once it is approved.

Sean E. Brynjelsen: On our last call I mentioned that we had passed our clinical study, which was the final hurdle and submission of the Q4 hundred NDA.

Sean E. Brynjelsen: I am now thrilled to say that we submitted the NDA last week, we anticipate that the FDA will assign the application of 10 months review, allowing for potential approval during the first quarter of 2025.

Sean E. Brynjelsen: Our team has begun preparing launch activities in order to be in a position to efficiently and effectively commercialize the product shortly after approval. I remain confident that once approved, the commercialization of ET400 will significantly accelerate the company's growth trajectory, and we believe that ET400 and Alkiddy Sprinkle will achieve combined peak sales of over $50 million annually. We also continue to make progress with ET600, a product candidate under development for the treatment of diabetes insipidus. ET600 is another new pediatric endocrinology product that we hope to launch soon after ET400.

Sean E. Brynjelsen: Our team has begun preparing launch activities in order to be in a position to efficiently and effectively commercialize the product shortly after approval.

Sean E. Brynjelsen: I remain confident that once approved the commercialization of <unk> 400 will significantly accelerate the company's growth trajectory and we believe that <unk> 400, al kidney sprinkle will achieve combined peak sales of over $50 million annually.

Sean E. Brynjelsen: We also continue to make progress with <unk> 600, a product candidate under development for the treatment of diabetes and <unk> <unk>.

Sean E. Brynjelsen: <unk> 600 is another new pediatric endocrinology product that we hope to launch soon after each of 400.

Sean E. Brynjelsen: The product was passed as pilot in an equivalency study, and we are on track to run a pivotal study in the second half of this year. Our team expects to submit the NDA in early 2025 for potential approval near the end of 2025. I think it is clear that our five commercial products plus our attractive late-stage pipeline position us well for sustained long-term growth. That being said, we continue to look for business development opportunities that can propel us even further.

Sean E. Brynjelsen: The product was passed as pilot Bioequivalence study and we are on track to run a pivotal study in the second half of this year.

Sean E. Brynjelsen: Our team expects to submit the NDA in early 2025 for potential approval near the end of 2025.

Sean E. Brynjelsen: I think it is clear that our five commercial products plus our attractive late stage pipeline position us well for sustained long term growth.

Sean E. Brynjelsen: That being said, we continue to look for business development opportunities that can propel us even further our business development team is currently focused on commercial revenue generating products are available capital positions us for a large value creating acquisition and.

Sean E. Brynjelsen: Our business development team is currently focused on commercial revenue-generating products, and our available capital positions us for a large value-creating acquisition. And given our current valuation and expected growth, we would intend to use primarily debt for any such acquisition. As an example of our capacity, in April, we were the runner-up bidder in a bankruptcy auction for Iger Biopharmaceuticals' Zocinvy product. While we did not win the auction, we were able to quickly arrange committed capital within a matter of days to support a $46 million bid.

Sean E. Brynjelsen: And given our current valuation and expected growth, we would intend to use primarily debt for any such acquisition.

Sean E. Brynjelsen: As an example of our capacity in April we were the runner up bidder in the bankruptcy auction for iger biopharmaceutical. So can be product, while we did not win the auction we were able to quickly a range committed capital within a matter of days to support a $46 million bid.

Sean E. Brynjelsen: While we submitted a competitive offer for the asset, at the end of the day, we are not interested in overpaying for any asset. Given our attractive current financial position, our strong organic growth potential, and the expectation for ET400 to deliver significant tailwinds next year, we have the luxury of being able to remain extremely disciplined on M&A. While we would like to add a larger asset to the product portfolio, I am cautiously optimistic that we can do so.

Sean E. Brynjelsen: While we submitted a competitive offer for the asset at the end of the day, we are not interested in overpaying for any asset given our attractive current financial position, our strong organic growth potential and the expectation for <unk> 400 to deliver significant tailwind next year, we have the luxury of being able to remain extremely disciplined on M&A.

Sean E. Brynjelsen: While we would like to add a larger asset to the product portfolio.

Sean E. Brynjelsen: We certainly do not need to. Our existing portfolio and pipeline position us to reach our profitability goals in the coming years. And with that, I'll turn it over to James, the Chief Financial Officer, to discuss the financials.

Sean E. Brynjelsen: Cautiously optimistic that we can do so we certainly do not need to our existing portfolio and pipeline positions us to reach our profit profitability goals in the coming years and with that I'll turn it over to James <unk>, Our Chief financial officer to discuss the financials.

Sean E. Brynjelsen: James.

James R. Gruber: Our first quarter revenue was $8.0 million, compared to $5.3 million in the first quarter of 2023, an increase of 50%. In both periods, revenue was comprised entirely of product sales and royalties, and the increase was primarily due to increased sales volume of our Akundi Sprinkle and Cargillumic Acid products. We expect product sales to continue to grow quarter over quarter throughout the rest of this year and beyond.

James: Thank you Sean.

James: Our first quarter revenue was 8.0 million compared to $5 3 million in the first quarter of 2023, an increase of 50%.

James R. Gruber: In both periods revenue was comprised entirely of product sales and royalties and the increase was primarily due to increased sales volume of our <unk> sprinkle and cargo limbach acid products.

James R. Gruber: We expect product sales to continue to grow quarter over quarter throughout the rest of this year and beyond.

James R. Gruber: Gross profit for the quarter was $5.0 million, compared to $3.3 million in the prior year period. R&D expenses for the quarter were $0.7 million compared to $0.5 million in the prior year period, and the increase was primarily due to development activities related to ET-400. We expect an increase in second quarter R&D expenses with a $2 million filing fee for ET-400.

James R. Gruber: Gross profit for the quarter was 5.0 million compared with $3 3 million in the prior year period.

James R. Gruber: R&D expenses for the quarter were zero point $7 million compared with zero point $5 million in the prior year period, and the increase was primarily due to development activities related to <unk> 400.

James R. Gruber: While we expect an increase in second quarter, R&D expenses with a $2 million filing fee for <unk> 400.

James R. Gruber: We expect total R&D spend for 2024 to remain at approximately $4 million excluding the one-time filing. General and administrative expenses for the quarter were $5.2 million, compared with $5.3 million in the prior year period, with the decrease due to a slight reduction in employee-related expenses and logistics costs. We expect general and administrative expenses to remain relatively constant throughout the remainder of 2024, even with the recent PKU-GOLIK acquisition and the Ticinone

James R. Gruber: We expect total R&D spend for 2024 to remain at approximately $4 million, excluding the one time filing fee.

James R. Gruber: General and administrative expenses for the quarter were $5 2 million compared with $5 3 million in the prior year period with the decrease due to a slight reduction in employee related expenses and logistics costs.

James R. Gruber: We expect general and administrative expenses to remain relatively constant throughout the remainder of 2024, even with the recent PKU go like acquisition and the <unk> launch.

James R. Gruber: Total company net loss was $0.8 million for the quarter, compared to a net loss of $2.7 million in the prior year period. Net loss per basic and diluted share was $0.03 during the quarter, compared to a net loss per basic and diluted share of $0.10 in the prior year period. Given our current expectations surrounding the timing of R&D activities, we expect to report positive quarterly net income by the end of this year.

James R. Gruber: Total company net loss with zero point $8 million for the quarter compared to a net loss of $2 7 million in the prior year period.

James R. Gruber: Net loss per basic and diluted share was <unk> during the quarter compared to a net loss per basic and diluted share of <unk> 10 in the prior year period.

James R. Gruber: Given our current expectation surrounding the tightening of R&D activities. We expect to report positive quarterly net income by the end of this year.

James R. Gruber: Eton finished the first quarter with $16.7 million of cash on hand, and our operating cash burden during the quarter was $2.5 million. While we achieved positive operating cash flow in the second half of 2023, the first quarter of 2024 was impacted by a one-time milestone payment of $1.0 million related to 2023 Alkindy Sprinkle sales achievement, a payment of $0.5 million for inventory associated with the PKU GOLIKE product equity, and by the calendarization of marketing and promotion spending that is heavily weighted in the first half of the year.

James R. Gruber: <unk> finished the first quarter with $16 7 million of cash on hand, and our operating cash burn during the quarter was $2 5 million.

James R. Gruber: While we achieved positive operating cash flow in the second half of 2023. The first quarter of 2024 was impacted by a onetime milestone payment of 1.0 million related to 2023 can be sprinkled sales achievement.

James R. Gruber: Payment of zero point $5 million for inventory associated with the PKU go like product acquisition and by the calendar rotation of marketing and promotion spend.

James R. Gruber: Heavily weighted in the first half of the year.

James R. Gruber: We remain confident that our continued sales growth and disciplined cost structure will result in positive operating cash flow throughout the remainder of 2024 and allow us to actively pursue new product opportunities. This concludes our remarks on first quarter results, and with that, I'll turn it over to the operator for Q&A. Thank you.

James R. Gruber: We remain confident in our continued sales growth and disciplined cost structure will result in positive operating cash flow throughout the remainder of 2024 and allow us to actively pursue new product opportunities.

James R. Gruber: This concludes our remarks on first quarter results and with that I'll turn it over to the operator for Q&A.

Operator: Thank you. At this time, we will conduct the question and answer session. To ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. The first question comes from the line of Chase Knickerbocker on Craig Hollum. Your line is now open.

Chase Knickerbocker: Thank you at this time, we will conduct a question and answer session.

Operator: Ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Operator: Please stand by while we compile the Q&A roster.

Operator: First question comes from the line of Chase Knickerbocker.

Chase Knickerbocker: Craig Hallum. Your line is now open.

Chase Knickerbocker: Good afternoon, guys. Thanks for taking the questions. I'm just going to kind of go product line by product line here. Maybe just to start with carglumic, Sean. You know, where are we at in that product's lifecycle? You know, do you think we can add a couple handfuls of patients this year still, or should we think of it as you kind of maintaining the patient volumes that you have, say, in one queue kind of through this year?

Chase Knickerbocker: Good afternoon, guys. Thanks for taking the question I'm missing to kind of go product line by product line here, maybe just to start on <unk> Sean.

Chase Knickerbocker: Where are we at in that product's lifecycle do you think we can add a couple of handfuls of patients.

Chase Knickerbocker: This year still or should we think about it as you kind of maintaining the patient volumes that you have San <unk> kind of through this year.

Sean E. Brynjelsen: Well, hi Chase. There's apparently still some runway. We continue to add patients. We just added three more patients in the past week. Our estimate is there are up to 100 patients. We have about a little more than half of that, and it continues to grow. We get a lot of new patients on, and they actually tend to use that same product over an extended period of time. In terms of product life, it has been a robust product for us, primarily due to the detailing, the patient services, and we think all the wraparound services that we provide for patients.

Sean E. Brynjelsen: Well hi checks.

Sean E. Brynjelsen: There's still some runway apparently.

Sean E. Brynjelsen: We continue to add patients, we just added three more patients over the past week and.

Sean E. Brynjelsen: Hi.

Sean E. Brynjelsen: Our estimate is there is up to 100 patients we have about a little more than half of that and it continues to continues to grow we get a lot of <unk>.

Sean E. Brynjelsen: New patients on which actually tend to use that.

Sean E. Brynjelsen: The same products over extended period of time.

Sean E. Brynjelsen: In terms of the product lights.

Sean E. Brynjelsen: It has been robust it's been a robust product for us primarily due to the detailing the patient services and we think all the wraparound services that we provide.

Sean E. Brynjelsen: Our patients.

Chase Knickerbocker: Got it. And then maybe on the new one, on go like this.

Sean E. Brynjelsen: Sure.

Sean E. Brynjelsen: Got it and then maybe on the new one <unk> Lake.

Sean E. Brynjelsen: You know, you're expecting quite a bit of growth there. You already know all of those physicians. How quickly do you think we can kind of get to that 10% penetration level, you know, from here? Is it, you know, three years? Is it, you know, one or two years? I mean, just kind of help us benchmark how quickly you would expect that growth considering you already know the hundred or so physicians.

Sean E. Brynjelsen: You were expecting quite a bit of growth there.

Sean E. Brynjelsen: You already know all of those physicians how quickly do you think you can kind of get to that 10% penetration level.

Sean E. Brynjelsen: From here or is it.

Sean E. Brynjelsen: Three years is it.

Sean E. Brynjelsen: One or two years I mean, just kind of help us benchmark kind of how quickly you would expect that growth considering you already know the 100 or so out and positions.

Sean E. Brynjelsen: That's a little more difficult to predict, but we have... Approximately 50% of that, let's say we want to hit 10 million in peak sales, which would be about 10% of the current market. We could actually exceed that, depending on how fast the uptake is. There are very few companies out there that are positioned as well as we are in terms of being able to promote a PKU product. So with that said, for us to hit 5 million next year and go like this is very achievable. It may be significantly higher than that, but I believe that's in the cards.

Sean E. Brynjelsen: Yes.

Sean E. Brynjelsen: It's a little more difficult to predict but we have.

Sean E. Brynjelsen: <unk>.

Sean E. Brynjelsen: Approximately 50% of that let's say, we want to hit $10 million.

Sean E. Brynjelsen: And peak sales, which will be about 10% of the current market, we actually could exceed that depending on how fast. The uptick is there are very few companies out there that are positioned as well as us in terms of being able to promote our PKU product.

Sean E. Brynjelsen: So with that said.

Sean E. Brynjelsen: For us to hit 5 million next year and go like sales is very achievable that may be significantly higher than that but I believe that's in the cards.

Chase Knickerbocker: Got it, that's helpful. And if we kind of think about LKD and the hydrocortisone portfolio before the ET-400 launch, obviously, you're seeing nice growth there still. Do you think there's kind of runway to add another kind of 100 patients from here before the ET-400 launch or just kind of help benchmark us on kind of growth in Alkindi, you know, as we're waiting for ET-400?

Speaker Change: Got it that's helpful and if we kind of think about candy.

Chase Knickerbocker: Candy in the hydrocortisone portfolio before the ETR 400 launch.

Chase Knickerbocker: Obviously, you're seeing nice growth there still do you think theres kind of runway to add another 100 patients from here before 400 launch or just kind of help benchmark.

Chase Knickerbocker: <unk> kind of growth in our candy as we're waiting for <unk> 400.

Sean E. Brynjelsen: The challenge with Alkindi is that we, it's not a challenge of getting new scripts, so we get a lot of scripts. But what happens is some of the patients do not stay on the product due to the texture issue that we've mentioned before, so we have a fairly higher rate of discontinuation than I've seen with other pharmaceutical products. It can be mitigated by education; it can be mitigated by working with doctors and caregivers, which we are doing all of those things, and we are planning some additional educational materials to go out to all of the physicians' offices, so when patients are prescribed the product, they understand it can be a challenge of texture for the child initially, and I think that for us to, you know, have growth for the product quarter over quarter. Can we add another hundred patients? It's not...

Sean E. Brynjelsen: The challenge with <unk> is that it's not a challenge of getting their scripts. So we get a lot of scripts. What happens is some of the patients do not stay on product due to the textured issue that we've mentioned before so we have a free.

Sean E. Brynjelsen: Fairly higher rate of discontinuation that I've seen in other pharmaceutical products.

Sean E. Brynjelsen: No.

Sean E. Brynjelsen: It can be mitigated by education, it could be mitigated by working with the doctors and the caregivers, which we are doing all of those things and we are planning some additional educational materials to go out too.

Sean E. Brynjelsen: All of the physician's offices, so when patients are prescribed product they understand it can be a challenge of texture with the child initially.

Sean E. Brynjelsen: Think that for us too.

Sean E. Brynjelsen: Have we have growth for the product quarter over quarter can we add another 100 patients.

Chase Knickerbocker: It's certainly an achievable goal, but it's going to hinge largely on reducing the discontinuation rate, which is really the main driver of why we did ET-400 in the first place. We look at the reasons why LKD patients go off-drug, and ET-400 handles most of those issues right out of the gate. So I think that's why we're really excited about the product. Now that it's been filed, we're already looking to produce and have product even ahead of a 10-month PDUFA date.

Speaker Change: Yes, it's certainly an achievable goal, but it is going to hinge largely on reducing the discontinuation rate which is really.

Chase Knickerbocker: Main driver of why we did 400 in the first place.

Chase Knickerbocker: Look at the reasons why al Kindi patients go off drug and <unk> 400 handles really most of those issues right out of the gate. So I think that is that's why we're really excited about the product now that it's been filed.

Chase Knickerbocker: Already looking to produce and have product even ahead of a 10 month producer date. So.

Chase Knickerbocker: So LKD numbers will continue to climb week after week. If we can reduce the discontinuations, we can add another 100 patients. If discontinuations are at the same level, it's going to be a little bit more challenging, but it's a robust product, and we're going to keep going.

Chase Knickerbocker: Our <unk> numbers will continue to get scripts week. After week, if we can reduce the discontinuation we can add another 100 patients.

Chase Knickerbocker: Discontinuation or at the same level, it's going to be a little bit more challenging, but it's a robust product and we're going to keep going.

Chase Knickerbocker: Maybe we can shift gears to AT400, and I just have a couple more guys. Thanks for the time.

Speaker Change: Got it maybe shifting gears to 84 100, and I just have a couple of more guys. Thanks for the time.

Sean E. Brynjelsen: Maybe speak to us on, you know, obviously you've established the PK bridge. Maybe just talk to us about kind of your confidence around the CMC kind of side of that submission. I mean, are you kind of working with a manufacturer who, you know, has recently kind of successfully gotten through some FDA audits along the lines of some recent approvals that they are manufacturing? Just kind of talk to us about the confidence of your manufacturing partner there.

Sean E. Brynjelsen: Maybe speak to us on obviously, you've established the PK bridge, maybe just talk to us on kind of your confidence around the CMC kind of side of that submission.

Sean E. Brynjelsen: Are you kind of are you working with a manufacturer who has recently kind of.

Sean E. Brynjelsen: Successfully gotten through some FDA audits along the lines of some recent approvals that they are manufacturing just kind of talk to us about the comprehensive year manufacturing partner there.

Sean E. Brynjelsen: Sure. The files are very similar to what we did with Topiramate and Zonisamide oral solutions. One of the manufacturers is the same as one of the products, but I won't say which one.

Speaker Change: Sure. So the files are very similar to what we did with Topiramate and <unk> oral solutions one of the manufacturers at the same as the.

Sean E. Brynjelsen: And so, we're confident in their FDA readiness. They have already gone through that process and passed our quality inspections. So, I don't feel the facility has really any risk around it.

Sean E. Brynjelsen: One of the products I won't say, which one and so we're confident in their FDA readiness. They have already gone through that process and pass our quality inspection. So I don't feel the facility is really any risk around it.

Sean E. Brynjelsen: We feel good about the way the NDA submission has been put together. It's actually been put together at a higher level than what we did for Topiramate and Zonisamide, both of which are approved in commercial products today. So, the process and the deliverables that we had in those files are exactly the same as what we have with ET400. So, I really don't see any significant barriers to launching the product on time. And we'll obviously be very timely in any inquiries we get from the FDA and make sure that that process is going as smoothly as possible.

Sean E. Brynjelsen: We feel good about the way the.

Sean E. Brynjelsen: The submission has been put together, it's actually been put together at a higher level than what we did for Topiramate and <unk> both of which are approved in commercial products today. So the.

Sean E. Brynjelsen: The process and the deliverables that we had in those files are exactly the same as what we have with <unk>.

Sean E. Brynjelsen: 400, so I really don't see.

Sean E. Brynjelsen: A significant barriers to launching the product on time and will obviously be very timely and any inquiries, we get from the FTA and make sure that that process is going smoothly as possible.

Chase Knickerbocker: And then just last from me, Sean, you know, this is really kind of a line extension with ET-400, you know, all these physicians already, you'll obviously be kind of targeting some of those discontinuated patients that ET-400 is a great fit with. How quickly should investors be thinking that you can kind of drive scripts with ET-400 post launch, just kind of speak to your confidence in how quick that launch can be? and Thanks for your time. Yeah, absolutely. Our pleasure.

Speaker Change: And then just last from me Sean.

Chase Knickerbocker: This is really kind of a line extension with <unk> 400, you know all these physicians already.

Chase Knickerbocker: Obviously be kind of targeting some of those discontinuation in patients that <unk> 400 is a great fit with how quickly should investors be thinking that you can kind of drive scripts with <unk> 400 post launch just kind of speak to your confidence on how quick that launch can be.

Sean E. Brynjelsen: So, in terms of the wrap-up to what we stated, I think, in our press release and in our comments earlier today, our goal is to get $50 million plus in revenue between these two products. I feel that, you know, within a 12-month time frame, we'll be well on our way. And I think that getting to that $50 million with 24 months of launch is achievable. So, that gives you some idea of how we're thinking about things.

Sean E. Brynjelsen: Yeah, absolutely. It is our pleasure.

Speaker Change: And thanks for sure.

Speaker Change: Yes, absolutely our pleasure so in terms of the ramp up to what we stated I think in our press release and in our comments earlier today. It was our goal is to get $50 million plus in revenue.

Sean E. Brynjelsen: Between these two products.

Sean E. Brynjelsen: Feel that.

Sean E. Brynjelsen: Within a 12 month timeframe, we'll be well on our way and I think that getting to that $50 million with a 24 months of launch is achievable. So thats gives you some idea of what how we're thinking on things.

Sean E. Brynjelsen: Of course, you know, once you get out there. We just did, for example, a panel of doctors of, I believe it was eight, maybe it was 10 doctors who specialize in treating adrenocortical insufficiency, and they could not be more excited about this product. They're some of the top prescribers in the nation. And so, for us to, you know, have conversations that are just sort of like marketing studies in advance to understand their needs is really important. We want to serve patients, and we believe we've designed a product that will meet patient needs and be well received and prescribed by doctors.

Sean E. Brynjelsen: Of course once you get out there we just did for example.

Sean E. Brynjelsen: A panel of doctors I believe it was eight maybe it was 10 doctors, who specialize in treating adrenocortical insufficiency and they could not be more excited about this product.

Sean E. Brynjelsen: Some of the top prescribers nation and so for us.

Sean E. Brynjelsen: <unk>.

Sean E. Brynjelsen: Conversations that just sort of like marketing studies and advanced to understand their needs is really important.

Sean E. Brynjelsen: Want to serve the patients and we believe we've designed the product.

Sean E. Brynjelsen: Will meet patient needs and be well received and prescribed by doctors.

Speaker Change: Great. Thanks, guys.

Operator: Alright, thank you. I'm showing no further questions at this time. This does conclude the question and answer session and the program. Thank you for your participation in today's conference. You may now disconnect.

Speaker Change: Youre welcome.

Speaker Change: Alright, Thank you I'm showing no further questions at this time. This does conclude the question and answer session and the program.

Operator: Thank you for your participation in today's conference you may now disconnect.

Operator: Okay.

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Operator: Okay.

Operator: Okay.

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