Eton Pharmaceuticals Reports Second Quarter 2022 Financial Results

·11 min read
Eton Pharmaceuticals
Eton Pharmaceuticals
  • Total Q2 2022 revenue of $7.4 million, up 139% from prior year

  • Recently launched ALKINDI SPRINKLE® and Carglumic Acid continue to show robust growth

  • Divestiture of hospital products division to focus on rare disease strategy

  • U.S. Food and Drug Administration (FDA) Approval of Zonisade™ (zonisamide oral suspension)

DEER PARK, Ill., Aug. 11, 2022 (GLOBE NEWSWIRE) -- Eton Pharmaceuticals, Inc (Nasdaq: ETON), an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases, today reported financial results for the second quarter ended June 30, 2022.

“The second quarter of 2022 was a critical inflection point for the company. With the completion of the hospital products divestiture, we are now 100% focused on our rare disease strategy and are well capitalized to execute on our mission to be a leading rare disease company. Sales of our recently launched ALKINDI SPRINKLE® remain strong, with 293% year-over-year revenue growth, and feedback from the patient and physician communities continues to be overwhelmingly positive. Carglumic Acid also delivered another impressive quarter, with sales growing 100% sequentially. Physicians and patients appreciate the convenience of the room-temperature-stable product as well as the significant financial savings to the healthcare system compared to the competing product. We believe both products have long runways ahead of them and we are excited about the opportunities to add additional rare disease products to our portfolio this year,” said Sean Brynjelsen, CEO of Eton Pharmaceuticals.

Second Quarter and Recent Business Highlights

  • Sold hospital products for up to $50 million, finalizing Eton’s transition to a dedicated rare disease company. In June, Eton sold Biorphen®, Rezipres®, and Cysteine Hydrochloride to Dr. Reddy’s Laboratories, allowing Eton to focus solely on its rare disease product portfolio.

  • Reported sixth straight quarter of sequential growth in product sales and royalty revenue. For the second quarter of 2022, Eton reported total revenue of $7.4 million, an increase of 139% over the prior year period. Product sales and royalty revenue were $2.4 million during the quarter, an increase of 316% over the prior year period.

  • Continued growth in ALKINDI SPRINKLE®. ALKINDI SPRINKLE sales grew 293% over the second quarter of 2021 and 34% over the first quarter of 2022, demonstrating a strong desire for the low-dose treatment options that ALKINDI SPRINKLE offers.

  • Strong adoption of Carglumic Acid tablets. Carglumic Acid sales in the second quarter of 2022 grew 100% over the first quarter of 2022. Physicians and patients continue to appreciate the convenience of Eton’s room-temperature-stable product and the significant financial savings that the product delivers to the U.S. healthcare system relative to the competing product.

  • FDA Approval of Zonisade™ (zonisamide oral suspension). In July, Zonisade was approved by the FDA. Azurity Pharmaceuticals will be solely responsible for commercializing the product and Eton will receive a $5 million milestone payment upon launch and an ongoing royalty on commercial sales.

  • Progressed R&D pipeline to support additional new product launches in coming years. During the quarter, the company made progress addressing the FDA’s requests on dehydrated alcohol injection and expects to resubmit the application for the product later this year, which could allow for approval and launch of the product in 2023. The company continues to progress development of ZENEO® hydrocortisone autoinjector, which could be filed with the FDA in 2023. In addition, the company has initiated development of two additional high-value rare disease products.

Second Quarter Financial Results

Net Sales: Net sales for the second quarter of 2022 were $7.4 million compared with $3.1 million in the prior year period. Net sales included $5.0 million of licensing payments related to the sale of the hospital products division to Dr Reddy’s Laboratories during the quarter, and $2.5 million of licensing payments related to the Azurity Pharmaceuticals transaction in the second quarter of 2021.

Product sales and royalty revenue were $2.4 million for the second quarter of 2022 compared with $0.6 for the second quarter of 2021. Product sales and royalty revenue in the second quarter of 2022 were negatively impacted by a $0.2 million inventory allowance adjustment resulting from the divestiture of Rezipres®. Excluding the impact of this adjustment, product sales and royalty revenue would have increased 351% over the prior year period and 18% over the first quarter of 2022. The increase in product sales and royalty revenue was primarily driven by growth in ALKINDI SPRINKLE and the launch of Carglumic Acid tablets.

Gross Profit: Gross profit for the second quarter of 2022 was $4.6 million compared with $2.9 million in the prior year period. Gross profit for the second quarter of 2022 included $1.8 million of non-cash expenses related to the divestment of the hospital products. The growth was primarily due to increased licensing income, growth in ALKINDI SPRINKLE, and the launch of Carglumic Acid tablets.

General, and Administrative (G&A) Expenses: G&A expenses for the second quarter of 2022 were $5.3 million compared to $3.2 million in the prior year period. Cash G&A expenses for the second quarter of 2022 were $3.9 million, compared to $2.9 million in the prior year period. The increase in cash SG&A expenses was primarily driven by increased employee expenses and increased sales and marketing expenses to support the growth of the company’s commercial products.

Research & Development (R&D) Expenses: R&D expenses for the second quarter of 2022 were $0.7 million compared to $2.0 million in the prior year period. The prior year period included a $0.5 million milestone payment related to the company’s ZENEO hydrocortisone autoinjector.

Net Income/Loss: Net income for the second quarter of 2022 was a loss of $1.6 million or $0.06 per basic and diluted share compared to a loss of $2.0 million or $0.08 per basic and diluted share in the prior year period.

Cash Position: As of June 30, 2022, the company had cash of $17.0 million. The company is entitled to receive an additional $5.0 million milestone payment upon the launch of the recently approved Zonisade™ product.

Conference Call and Webcast Information:
As previously announced, Eton Pharmaceuticals will host its second quarter 2022 conference call as follows:

Date

August 11, 2022

 

 

Time

4:30 p.m. ET (3:30 p.m. CT)

 

 

Toll Free (U.S).)

1-800-715-9871

 

 

International

1-646-307-1963

 

 

Conference ID

9229889

 

 

The webcast can be accessed under “Events & Presentations” in the Investors section of the company’s website at https://ir.etonpharma.com. The webcast will be archived and made available for replay on the company’s website approximately two hours after the call and will be available for 30 days.

Forward-Looking Statements
Statements contained in this press release regarding matters that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements associated with the expected ability of Eton to undertake certain activities and accomplish certain goals and objectives. These statements include but are not limited to statements regarding Eton’s business strategy, Eton’s plans to develop and commercialize its product candidates, the safety and efficacy of Eton’s product candidates, Eton’s plans and expected timing with respect to regulatory filings and approvals, and the size and growth potential of the markets for Eton’s product candidates. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Words such as "believes," "anticipates," "plans," "expects," "intends," "will," "goal," "potential" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon Eton’s current expectations and involve assumptions that may never materialize or may prove to be incorrect. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of various risks and uncertainties, which include, without limitation, risks associated with the process of discovering, developing and commercializing drugs that are safe and effective for use as human therapeutics, and in the endeavor of building a business around such drugs. These and other risks concerning Eton’s development programs and financial position are described in additional detail in Eton’s filings with the Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made. Eton undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.

About Eton Pharmaceuticals
Eton Pharmaceuticals, Inc. is an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases. The company currently commercializes ALKINDI SPRINKLE® and Carglumic Acid tablets and has two additional rare disease products under development, dehydrated alcohol injection and the ZENEO® hydrocortisone autoinjector. In addition, the company is entitled to receive milestone payments or royalties on seven different products.


Eton Pharmaceuticals, Inc.
Condensed Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

 

 

 

 

 

 

 

For the three months ended

 

 

For the six months ended

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Licensing revenue

$

5,000

 

 

$

2,500

 

 

$

5,000

 

 

$

14,000

 

Product sales and royalties

 

2,358

 

 

 

567

 

 

 

4,534

 

 

 

964

 

Total net revenues

 

7,358

 

 

 

3,067

 

 

 

9,534

 

 

 

14,964

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Licensing revenue

 

990

 

 

 

 

 

 

990

 

 

 

1,500

 

Product sales and royalties

 

1,755

 

 

 

174

 

 

 

2,604

 

 

 

301

 

Total cost of sales

 

2,745

 

 

 

174

 

 

 

3,594

 

 

 

1,801

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

4,613

 

 

 

2,893

 

 

 

5,940

 

 

 

13,163

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

690

 

 

 

1,990

 

 

 

2,308

 

 

 

2,876

 

General and administrative

 

5,263

 

 

 

3,228

 

 

 

10,059

 

 

 

7,249

 

Total operating expenses

 

5,953

 

 

 

5,218

 

 

 

12,367

 

 

 

10,125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from operations

 

(1,340

)

 

 

(2,325

)

 

 

(6,427

)

 

 

3,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other expense, net

 

(218

)

 

 

(237

)

 

 

(461

)

 

 

(484

)

Gain on PPP loan forgiveness

 

 

 

 

365

 

 

 

 

 

 

365

 

Gain on equipment sale

 

 

 

 

181

 

 

 

 

 

 

181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income before income tax expense

 

(1,558

)

 

 

(2,016

)

 

 

(6,888

)

 

 

3,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(1,558

)

 

$

(2,016

)

 

$

(6,888

)

 

$

3,100

 

Net loss (income) per share, basic

$

(0.06

)

 

$

(0.08

)

 

$

(0.28

)

 

$

0.12

 

Net loss (income) per share, diluted

$

(0.06

)

 

$

(0.08

)

 

$

(0.28

)

 

$

0.12

 

Weighted average number of common shares outstanding, basic

 

25,126

 

 

 

25,211

 

 

 

24,915

 

 

 

25,133

 

Weighted average number of common shares outstanding, diluted

 

25,126

 

 

 

25,211

 

 

 

24,915

 

 

 

26,486

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eton Pharmaceuticals, Inc.
Condensed Balance Sheets
(in thousands, except share and per share amounts)

 

 

 

 

 

 

 

June 30, 2022

 

 

December 31, 2021

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

17,046

 

 

$

14,406

 

Accounts receivable, net

 

834

 

 

 

5,471

 

Inventories

 

531

 

 

 

550

 

Prepaid expenses and other current assets

 

1,365

 

 

 

3,177

 

Total current assets

 

19,776

 

 

 

23,604

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

87

 

 

 

115

 

Intangible assets, net

 

3,108

 

 

 

3,621

 

Operating lease right-of-use assets, net

 

63

 

 

 

104

 

Other long-term assets, net

 

12

 

 

 

21

 

Total assets

$

23,046

 

 

$

27,465

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

1,299

 

 

$

1,774

 

Current portion of long-term debt

 

364

 

 

 

1,418

 

Accrued liabilities

 

2,149

 

 

 

1,366

 

Total current liabilities

 

3,812

 

 

 

4,558

 

 

 

 

 

 

 

 

 

Long-term debt, net of discount and including accrued fees

 

5,992

 

 

 

5,262

 

Operating lease liabilities, net of current portion

 

 

 

 

15

 

 

 

 

 

 

 

 

 

Total liabilities

 

9,804

 

 

 

9,835

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

Common stock, $0.001 par value; 50,000,000 shares authorized; 25,272,037 and 24,626,004 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

 

25

 

 

 

25

 

Additional paid-in capital

 

114,218

 

 

 

111,718

 

Accumulated deficit

 

(101,001

)

 

 

(94,113

)

Total stockholders’ equity

 

13,242

 

 

 

17,630

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

$

23,046

 

 

$

27,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eton Pharmaceuticals, Inc.
Condensed Statements of Cash Flows
(In thousands)
(Unaudited)

 

 

 

 

 

 

 

Six months ended June 30, 2022

 

 

Six months ended
June 30, 2021

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net (loss) income

$

(6,888

)

 

$

3,100

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

 

Stock-based compensation

 

2,383

 

 

 

1,509

 

Depreciation and amortization

 

1,352

 

 

 

240

 

Debt discount amortization

 

66

 

 

 

73

 

Gain on forgiveness of debt

 

 

 

 

(365

)

Gain on sale of equipment

 

 

 

 

(181

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

4,637

 

 

 

(255

)

Inventories

 

19

 

 

 

 

Prepaid expenses and other assets

 

1,827

 

 

 

419

 

Accounts payable

 

(475

)

 

 

(822

)

Accrued liabilities

 

763

 

 

 

(372

)

Net cash provided by operating activities

 

3,684

 

 

 

3,346

 

 

 

 

 

 

 

 

 

Cash (used in) provided by investing activities

 

 

 

 

 

 

 

Proceeds from sale of equipment

 

 

 

 

700

 

Purchase of product license rights

 

(750

)

 

 

 

Purchases of property and equipment

 

(26

)

 

 

(3

)

Net cash (used in) provided by investing activities

 

(776

)

 

 

697

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Repayment of long-term debt

 

(385

)

 

 

 

Proceeds from employee stock option exercises and ESPP

 

117

 

 

 

464

 

Net cash (used in) provided by financing activities

 

(268

 

 

464

 

 

 

 

 

 

 

 

 

Change in cash and cash equivalents

 

2,640

 

 

 

4,507

 

Cash and cash equivalents at beginning of period

 

14,406

 

 

 

21,295

 

Cash and cash equivalents at end of period

$

17,046

 

 

$

25,802

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

 

Cash paid for interest

$

378

 

 

$

424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Contact:
David Krempa
dkrempa@etonpharma.com
612-387-3740