Q3 2025 Eton Pharmaceuticals Inc Earnings Call
Good afternoon and welcome to the Eton Pharmaceuticals Q3 2025 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 kempe, Chief business officer at Eton Pharmaceuticals, please proceed.
Thank you, operator. Good afternoon, everyone and welcome to Eaton's third quarter 2025 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.com.
Joining me on our call. Today we have Sean bellson, our CEO James Gruber, our CFO and epic trinkets, our chief commercial officer
In addition to 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 Eaton.
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 brendel
Thank you, David. Good afternoon, everyone. And thank you for joining us today.
thrilled to report another record quarter for the company with triple digit year-over-year, Revenue growth
I look forward to discussing the underlying drivers in more detail and highlighting some of our initiatives that help deliver this growth. In addition, we will have made significant progress with our development activities which are not reflected in this quarter's numbers but will Propel our revenue and earnings growth for many years to come.
Third quarter product, Revenue was 22.5 million.
An increase of 129% year-over-year.
And up 19% compared to the second quarter.
It was our 19th straight quarter of sequential product Revenue growth.
Driven by strong year-over-year growth from a, kindy, Sprinkle, and come acid as well as additions from the recently. Acquired products, Incorrect and gals in which are both tracking ahead of our deal models.
Elk. Kenny sprinkle
Has delivered reliable growth for many years and shows, no signs of stopping for glennach acid had previously plateaued, but we had a few new patient ads in recent months that helped deliver the year-over-year increase, which was nice to see.
In addition to delivering on the top line.
We remain focused on profitability and I am pleased to share that we generated 12 million dollars of cash from operations in the quarter.
On is committed to controlling our expenses and I am proud to report that even though our revenue is growing rapidly, we were able to reduce our adjusted sgna expense sequentially from the second quarter to the third quarter.
Continuing to control our operating expenses in tandem with strong revenue growth will position us for significant margin expansion.
We reported adjusted EBITDA of $2.9 million in the quarter. This figure was weighed down by some non-recurring costs related to the X us transition, which James will provide more details on. So, we expect to deliver even stronger EBITDA in the quarters ahead.
Now turning to product specific commentary, I'll start with incorrect which has been our largest revenue contributor this year.
Incorrect, revenue and patient, count continue to track. Well, ahead of our original projections for the product.
Prior to our acquisition, the product and the condition had from low awareness. Our efforts to improve education and awareness of paid off allowing us to deliver significant growth. So far this year
Our commercial team has done an excellent job on the relaunch. Through our rare disease specialists, Outreach to healthcare providers, our conference engagements and peer-to-peer presentations, as well as collaborating closely with patients and patient advocacy groups. We have been able to substantially grow awareness and increase product usage, in a matter of months.
When eaten took the product over in December 2024, there were only 67 active patients on therapy.
By August, we share that we had reached our, 100 patient goal, 5 months ahead of schedule.
We continue to add a number of new patients starts during the last 3 months, but we saw a higher number of patients aged out and discontinued treatment during the same period.
Which results in our net active patient count remaining relatively flat around 100.
In severe primary insulin growth like Factor 1 deficiency. Success is partially measured, not only by how many patients are on therapy. But in addition, we're truly drives outcomes as how early the treatment begins and how well it's optimized.
Early initiation during the critical growth window in appropriate vial. Utilization are key to maximizing efficiency and during the treatment duration.
Since we have an inherited, several older pediatric patients in December during transition, we saw a large group of age outs coming through from that cohort.
Our Focus remains on. Both expanding new patient starts and driving growth through earlier, diagnosis and optimized dosing to ensure every patient achieves, their full therapeutic potential.
We believe these efforts will increase the average duration of treatment, I expect to continue bringing new patients into treatment and continue growing. The net patient count.
as a reminder incorrect is approved for Pediatric patients H2 and up with severe primary igf-1 deficiency
These are patients who present with extremely short stature and need igf supplementation to grow.
once patients, reach their adult height which is, typically around, 18 years old,
We Believe with our ongoing educational and awareness campaigns. We will start seeing patients diagnosed earlier in life which would likely lead to a longer duration of therapy.
Eaten is confident in the long-term growth opportunity for the product. And as we expect to continue converting, more of the estimated 200 patients in the US that meet the current label. In addition, we remain committed to expanding access to even more children in need through the harmonization of the US.
And EU definitions of severe, primary 1 deficiency.
Last month, we submitted a meeting request to the FDA, with our proposed, clinical study, to support the harmonization, we expect to have the fda's feedback by the end of December. And if they are in agreement, we would initiate the study in 2026.
Given the European patient registry data that has been collected over the last 15 years. We believe that anchor likes is a safe and effective treatment for patients with igf-1 levels between minus 2 and minus 3 standard deviations.
We are confident our proposed study would confirm that for the FDA.
And if successful in harmonizing the labels, it could potentially increase the incorrect market opportunity, roughly 5-fold.
Alkindi, was another major contributor to our Q3 Revenue growth and I am proud of the team's ability to continue generating consistent growth.
As you remember, starting in January, we split our sales force into 2 teams 1 of which, which is now 100% dedicated to Pediatric Endocrinology.
We think has contributed to Elk kidney sprinkles, strong year, and 2025 is the product's fifth calendar year in market, and remains on Pace to be the strongest year of its history by number of patients on therapy and number of new patient referrals.
So far, we have not been seeing much of any cannibalization of alkindi from the launch of kivy.
Though, all candy continues to see strong growth, we developed and launched kivy to address. The needs of patients. That did not like the texture of the alkine granules or prefer the convenience of a liquid dosage form.
Kivy is the first and only FDA approved oral solution of hydrocortisone.
Can Divya lost, simple and accurate dosing tailored to patient needs and does not require refrigeration mixing or shaking.
the FDA approved can divvy for patients 5 and over the agency restricted, the age due to a limited amount of existing safety data on 3 of the inactive ingredients in the formulation when being used in combination,
Unfortunately, the largest unmet need for this product is among young children under 5 years old. As a result, the label restriction has weighed on the adoption of Condition Divvy.
However, our team has been working on a plan to address this.
When we first heard of the fda's Restriction, this summer, we immediately developed a new formula with substantially lower levels of the acip. And in September, we held a meeting with the FDA to discuss this new formulation.
We believe the meeting was successful as bfda indicated. They would be receptive to a label expansion with our revised formulation
In response, we will conduct a bio equivalency study which is scheduled to start by January 2026 and I expect to submit the new formulation as a supplement to our existing NDA in the second quarter of 2026.
The FDA indicated a 10-month review for the formulation, so this could allow for an approval by the first quarter of 2027.
We believe this label expansion would have significantly accelerate adoption of the product.
Even with the current kivy label.
We continue to see attractive long-term growth for our adrenal insufficiency franchise.
Eaton has only converted less than 15% of the estimated 5,000 Target patients in the United States. So, we see a long Runway of growth ahead of us.
We remain confident that alkindi and candyevie can combine for Peak sales of more than 50 million with the current kivy label and ultimately higher levels. If the label is expanded,
Another bright spot in our portfolio this quarter was Gala.
As I mentioned, we're extremely pleased with his performance.
It now has over 200. Active patients a number. We originally set is our year end, 2025 Target,
The product is continuing to grow, well, ahead of our original expectations, and we couldn't be happy with the team's efforts to support this. Relaunch
We've been surprised by the low level of awareness that the product had of both among Physicians and patients.
Even though Galen is the only FDA approved, zinc therapy for Wilson disease, many patients and prescribers were unaware of it. Misinformed or mistakenly believed the product was discontinued after a prior shortage in 2020 and subsequent lack of promotion.
we view this lower awareness, as a positive for the long-term growth, prospects for gals in
Well we have worked to do educating the market. It is clear that this represents a substantial growth opportunity as we inform patients, Healthcare practitioners and caregivers and raise awareness of this critical medication.
Our entry into Wilson disease, has been warmly received by patients and healthcare providers.
Before our relaunch very few Pharmacy, Stock gals in out of pocket, costs were high and there was a lack of Support Services to help patients navigate the insurance process.
We have now implemented, full patient, Support Services increased access to medication and substantially reduced out-of-pocket costs for patients. These changes have resonated with the patient community and we have heard, strong, positive feedback, and appreciation for the new programs.
In October our team attended, the Wilson disease association, annual Summit, where patients caregivers and leading Physicians gathered to discuss diagnosis treatment and management of the disease.
Our team was able to engage with numerous patients and prescribers helping to drive awareness and give us the chance to better. Understand the struggles that patients and prescribers are dealing with working to understand the needs of patients, caregivers and Healthcare Providers is a top priority for us and our vision, to be a champion of those in the Wilson disease community.
Our expanded access and patient, Support Services, have made a major impact on Wilson disease patients, but we think we can make an even greater impact on their lives. With et700, our extended release version of Gin
currently Galen is Taken 3 times per day, with patients fasting both before, and after, and this cumbersome regimen leads to high rates of non-compliance
Eaten is heard directly from patients and caregivers just how challenging the current dosing schedule is and we know there's a very strong interest in an extended release version.
Eaten is working quickly and making meaningful progress, with our development of et700. We've already developed the proprietary formulation filed, our patents and met with the FDA to discuss the regulatory pathway. We are now at near production of clinical studies supply and starting our clinical program with our positron.
Mission tomography or pet study, scheduled to begin in the first quarter.
This study is a proof of concept study designed to verify that a proprietary delayed release. Formulation is able to effectively block copper absorption in patients with less frequent dosing.
We expect to receive topline results from the study in the middle of 2026. If positive, it would support the initiation of a dose-ranging pivotal clinical study later in the year.
Switching back to our Pediatric, Endocrinology portfolio, during the quarter, we had another piece of good news, when the FDA accepted our et600, NDA submission for review and assigned it a February 25th, pdufa date.
We developed the et600 and direct response to an unmet need expressed by pediatric, endocrinologists for an oral solution of desmopressin to treat Central diabetes and citus.
If approved et600 would be the first oral liquid formulation available and would allow for the small precise titratable doses required to treat, pediatric patients.
The review of the product appears to be proceeding. Well, and we've scheduled the production of inventory at risk in preparation for an anticipated commercial. Launch shortly after the Padua Target action date.
Pre-launch marketing activities, including key thought leader engagements, advisory boards and patient F, focus groups are also underway.
We recently held an et600 Advisory board with key opinion leaders at the National endoc Conference. We continue to hear positive feedback and strong excitement for the product since et600 shares. The same Pediatric Endocrinology call points as Oke
Kivy and incorrect Eaton, can leverage our well-established relationships and existing commercial Footprints. And we expect to be able to hit the ground running upon launch next year.
It is clear that our business is set up for very attractive, long-term growth for many years to come.
However, we believe that we can accelerate our growth through additional Business Development transactions.
I remain confident that we have the necessary skills and capabilities to execute value-creating acquisitions and believe that our track record speaks for itself.
We continue to explore opportunities to acquire additional strategically, aligned ultra rare disease products, where eaten is positioned to add value.
With 37 million in cash, on our balance sheet in a diversified growing business. That is already generating strong ibida. We have plenty of capacity to finance Acquisitions, large or small.
We'll continue to approach opportunities from a position of strength and with our customary discipline
2025 has been a transformational year for us highlighted by 3, high value, commercial product launches record levels of product sales and profitability and the submission of an NDA for et600.
We continue to push Full Speed Ahead to close out the year strong and position us for an even more impressive 2026
next year, we expect a number of critical Milestones including
Continued, strong Revenue growth from alcini, sprinkle Inc, Galen and kivy.
Increased profitability and operating margin expansion.
The expected launch of et600.
The submission of our revised formulation of kivy.
The completion of our et700 pilot study.
And the initiation of our incorrect label harmonization clinical study.
As you can see, we have some very exciting and event-filled quarters ahead of us and we look forward to keeping all of you up to date on our progress.
We thank you for your continued support. And with that, I'll hand it over to James our Chief Financial Officer to discuss the financials James.
Thank you, Sean.
Our third quarter Revenue, increased 118% to 22.5 million compared to 10.3 million in the third quarter of 2024, and revenue is primarily comprised of product sales in both periods.
Third quarter Revenue included. 0.9 million of product revenue from the sale of finished product inventory to ipsen and esteve to facilitate the ownership transition of incorrect in certain European countries, and these sales are expected to be non-recurring.
In addition 2.4 million of Revenue was derived from an initial loading order of semi-finished. Incorrect, inventory for esteve
When Eton out-licensed the rights to Xus Incorrect and entered into a long-term supply agreement with Esteve, Eton will provide semi-finished goods to Esteve at a fixed transfer price.
The company expects, these ongoing purchases to produce roughly 2 to 3 million of annual revenue.
However, the ordering patterns may be inconsistent and not occur every quarter.
Revenue growth in the quarter was driven primarily by increased sales of elk kindi, sprinkle and keramik acid.
Plus the addition of sales from Anchor X and Gals in.
While Sean mentioned that the incorrect net active patient count was relatively flat.
We saw a less favorable payer mix in the third quarter, which resulted in lower Revenue per patient compared to the second quarter.
Eaten expects us product sales to continue to grow sequentially in the fourth quarter, compared to the third quarter.
But given that, some of the third quarter incorrects related xus, revenue is not expected to recur. Total product sales may be flat or slightly declined in Q4 relative to Q3.
Cost of sales for the third quarter, was 14.6 Million compared to 4.0 million in the third quarter of 2024 and increase of 10.6 million driven by increased sales volumes and approximately 7.4 million of costs associated with the transition of the xus distribution of incorrect.
Adjusted gross profit was 10.2 million in the third quarter representing an adjusted gross margin of 45%.
Compared to adjusted gross profit of 6.6 million and adjusted gross margin of 64% and the prior year period.
Adjusted gross margin in the quarter was negatively impacted by incorrect xus related costs, including the transition of xus distribution and the supply agreement with a stebe.
R&D expenses for the quarter or 1.1 million and increase of 0.6 million compared to the prior year. Period 2 primarily to increase expenses associated with our et700 and ET 800 development activities.
General and administrative expenses for the quarter were 8.1 million compared with 5.3 million in the prior year period.
due primarily to an increase in product advertising and launch year promotional expenses,
higher stock based compensation expense.
And an increase in compensation and benefit expenses, due to an increase in general and administrative headcount.
General and administrative expenses were down. 1.6 million compared to the second quarter of 2025.
on an adjusted basis, which removes the impact of share-based compensation, transaction, related costs, and other 1-time expenses GNA, expense, was 6.9 million compared to 4.3 million in the prior year, period and 7.6 in the SE second quarter of 2025
and we were pleased to see this sequential decline in spending.
As we have discussed previously, the first half of this year had increased GNA expenses associated with their 3 product launches and we expect adjusted GNA spending in the second half of the year to remain materially lower.
Adjusted ebit da for the third quarter of 2025 was 2.9 Million compared to 2.0 million in the third quarter of 2024.
Total Company. Net loss was 1.9 million for the quarter compared to net income of 0.6 million in the prior year period.
Net loss per basic and diluted share during the quarter was 7 cents compared to a net income for basic and diluted. Share of 2 cents and the prior year period.
On a non-gaap basis. We reported net income of 1.5 million for the third quarter of 2025
compared to 1.9 million in the prior year, period and diluted earnings per share of 4 cents for the third quarter of 2025.
Compared to $0.07 per share and the prior year period.
Eaten finished the third quarter with 37.1 million in cash on hand and we generated 12.0 million in operating cash flow during the quarter.
This includes a 4.3 million payment received from Estee for the international rights to incorrect.
This concludes our remarks on third quarter results and with that, we'll turn it back over to the operator for Q&A.
Thank you. At this time. We will conduct the question and answer session. And as a reminder to ask a question, you will need to press star 1, 1 on your telephone and wait for your name to be announced.
To withdraw your question. Please press star 1 1 again.
Please stand by. We will compile the Q&A roster.
Our first question comes from the line of Chase Knickerbocker of Craig Holland here in the line is now open.
Good afternoon. Um, thanks for taking the questions, James maybe just first, uh, a quick 1. Um, if you back out those that, you know, 2 to 3 million in O us kind of related revenue on those inventory shipments.
and then the associated costs that got into cogs, can you just um, give us what kind of
Call it uh profarma. Gross margins would be kind of on the on the core us business.
Would have been sorry.
Sir. Uh, so adjusted, the Gap, gross margins with all that information with the xus INRI activity in there was 35%
Adjusted was 45% and if we remove all of that, incorrect X, us activity. It's north of just over 70% for the quarter.
um, and then Sean maybe just
as we think about that re acceleration for Al kendi is it truly just that kind of refocusing of the sales force, um you know, kind of solely on pendo or they're kind of other drivers that you would uh you would point to, as far as kind of how that that sequential Revenue growth has accelerated so far through 25
That's why we came out with the liquid version and so we've got um, we want to be able to offer that. We think that will really jump start the growth next year but right now it's uh, it's a steady increase in Elk. Indie patients. Uh, in addition to the kyvion, as we said during the uh, during the call. Um, we don't see a lot of cannibals cannibalization, really. It's, uh, it's additive.
Got it. And then maybe just an incorrect. Um, first could you just, if you wouldn't mind, give that gross ADS number since August, just so we can kind of get a sense for demand generation? And then just second on incorrect.
Um, you know, any additional thoughts or details that you can give us as far as that trial design that you submitted to FDA. That we're waiting to hear feedback on, you know, kind of timelines. Number of patients that sort of thing as far as how you're thinking.
So on the numbers were roughly where we were at um on our last call and it had to do with a number of ads, but then we had a number of folks go off. But now we're seeing more ads. We just saw a number of ads just the past week in terms of the new scripts. So, um, you know, we're going to see if we can hit that 110 number, uh, by the end of next month and uh, you know, but uh, I would say that we're very pleased with the product overall. It's um, we knew it was going to slow down a little bit, but it's, it's a little bit lumpy in terms of when people come on and off the product, we, we had that significant increase in q1 and going a little bit in the Q2.
So that's that. And then regarding the uh, the clinical uh We've submitted it. We expect to get feedback from the FDA and the coming weeks and I do think that, um, that will be favorable and hopefully we can uh, start enrolling patients in the first half of next year.
Last 1 for me um maybe just as we look start to look into 2026 as you guys prepare your budget. Um any any initial thoughts that you'd be willing to give us just as far as how you're thinking about Top Line growth next year. Um you know looks like the street is is somewhere kind of mid to high 20s. As far as Topline growth goes from a percentage perspective I mean do you have any initial thoughts that you'd be willing to give on 26?
Sure, I'll let uh, David answer that 1.
Okay, so we send on the prepared remarks, you know, we expect significant growth to continue for influx scales and alkindi can divvy. Um, so we're expecting Healthy Growth, but we're not going to get into any directional guidance yet. When we report, our Q4 numbers, we will have something to share with you.
Got it. Thank you guys.
Thank you.
Our next question comes from the line of Madison, Elsa of B. Riley. Your line is now open.
Hey, good afternoon, and thank you for taking our questions and congrats on the progress and multiple positive updates.
Question about the incorrect. Um, Us registry. Would this take place at the same sites that are active in the global, uh, registry trial. There are a few sites in that global registry that are us-based.
And then if you it would be, yeah, em Madison. That would be just the US, it would just be a us sites. Um, we would not be enrolling, folks overseas.
Right, would it be at separate sites, then that are activated in global registry. I think there are about 7 us sites that are active, um, as part of that global registry.
It would probably be different sites Madison. If 1 of those sites did have um a meaningful number of patients within that negative -2 to -3 standard deviation, we would consider adding them but it'll probably be different sites within the US.
understood and then maybe if you could comment on how important or how you're ranking, the uh, potential business development opportunities, uh, as we look to the end of the year and even into kind of next year and and Beyond
well, we, um
To Acquisitions for the sake of doing Acquisitions, they have to be the right fit and uh, you know, with or without the Acquisitions, we're going to continue to grow. We've got a good, um, you know, pipeline of internal products, but I believe we will close, uh, transactions. We will end up with, um, I'll say, I'll say at least 2 additional product launches next year.
I understand that's helpful. Sean. Thank you.
Thank you.
Our next question comes from the line of swam. Pakula of HC, Wainwright, your line is now open.
Thank you. Um, good afternoon, Sean and James uh
I'm David, um,
Quick question on incorrect. You know you said some, there were some patients, who discontinued, but as you are putting on some patients. So generally, you know, what are the reasons for the discontinuation? And, you know, um, is, is there anything, um, either your sales force or, or or some amount of detailing additional detailing needed, you know, for, for, for, uh, kind of stopping that that, um, um, getting off the drug.
Hi. RK primarily its patients aging out. So discontinuation is almost misleading. Okay. All the kids are going to be on it until they stop growing. So typically around age 18, they will age out, they no longer need it, so it is expected and normal and you're always going to have it. That's the vast majority of the discontinuation. We see, very little of what you think about as traditional discontinuous where uh somebody stops taking treatment before they reach their full adult or their full height. Um, they're primarily because there's no other Alternatives, it's not something like alkindi where they try to go to something else.
So uh, it was primarily age us. I think we are starting to promote and educate the market better. We think we are getting patients that are being diagnosed earlier, so their total duration on therapy is going to be longer. You know, they're going to age out around 18 regardless of when they start. But if we can get them diagnosed and starting much earlier, that's going to lead to much better outcomes for the patients, and they're going to be um, treatment much longer. So we think our average age is Shifting much lower than it was when we inherited the business at the start of the year.
Thank you. Thanks for that. And James, um, you know, you gave us um,
You guided for a for a 70%, gross margin, you know, into the fourth quarter, but but in general 1, if I start thinking about, you know, um, um, Beyond 25 and 26 to 28 or 29, um, as you start seeing the new formulation of kiwi, come on board, and whatnot. You know, how, what would be the Cadence of of the gross margin, uh, over the time period?
Yeah. Okay. We have uh stated before we think we could get to north of 75% by 2028 and how we get there is as the
The majority of our, our product Revenue growth is concentrated in the products where we own more of the economics in kivy, you know, Ki and enryu. Um, that product mix shifts more toward those higher products, which will continue to increase our margin profile over the next several years.
And then last question, um, Sean in general. You know what's the pricing power that you have with your products and um, you know, do you are you seeing any pressures at all either, um, from the from the government or or from some of your private payers?
Oh no, I'd say, we're always trying to be on the lower end in terms of the pricing for the compared to the number of patients. Uh, so we're a company that applies itself on pricing products, uh, appropriately. We don't, um, we don't believe that the, you know, all the pricing discussions will fall down into the orphan drug products. You know, we're talking about many of these, um, you know, these diseases have only a few hundred patients. And so, uh, for them to start putting pressure on those products.
Thank you. Thanks, thanks for taking my questions.
Thanks. Okay.
Thank you.
Thank you for your participation. In today's conference, this does conclude the program. You may now disconnect