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Eton Pharmaceuticals Announces Third Quarter 2020 Financial Results

Eton Pharmaceuticals
·11 min read

DEER PARK, Ill., Nov. 12, 2020 (GLOBE NEWSWIRE) -- Eton Pharmaceuticals, Inc (Nasdaq: ETON), a specialty pharmaceutical company focused on developing and commercializing innovative treatments for rare pediatric diseases, today reported financial results for the third quarter ended September 30, 2020 and provided an update on business progress.


“In recent weeks we submitted the last of our nine product candidates to the FDA. This is a tremendous accomplishment by our team after years of hard work. We are now turning our focus to building out a leading orphan drug commercial organization,” said Sean Brynjelsen, CEO of Eton Pharmaceuticals. “Early interest in ALKINDI SPRINKLE from physicians and caregivers has been very strong and has reiterated the significant need for the product.”

Recent Business Milestones

  • FDA approval of orphan product ALKINDI® SPRINKLE. In September, ALKINDI SPRINKLE was approved by the FDA as a replacement therapy for Adrenocortical Insufficiency in patients under 17 years of age. Eton expects to have the product commercially available by the end of November.

  • FDA approval of Alaway Preservative Free®. During the quarter, Alaway Preservative Free was approved by the FDA. Bausch Health plans to launch the product by the Spring of 2021 and Eton will receive a royalty on sales of the product.

  • Four additional NDAs submitted to the FDA. Eton, or its partners, have submitted four NDAs in the second half of 2020. Dehydrated alcohol injection, zonisamide oral suspension, and ephedrine injection have all been accepted for filing and assigned PDUFA dates of May 27, 2021; May 29, 2021; and June 18, 2021, respectively.

  • Successful completion of equity financing. In October, Eton closed an oversubscribed common stock offering which resulted in gross proceeds of approximately $22.5 million. The proceeds are expected to be sufficient to allow Eton to launch its current pipeline products and reach profitability.


ALKINDI SPRINKLE

Eton anticipates having commercial availability of ALKINDI SPRINKLE by the end of November. The company’s ALKINDI SPRINKLE sales representatives have been hired, fully trained, and have begun engaging with pediatric endocrinologists. Initial interest from physicians, caregivers, and patients has been very strong and Eton expects the product to exceed the company’s original sales forecast for 2021.


Biorphen

The company remains on schedule to file a Prior Approval Supplement for Biorphen vials in the fourth quarter of 2020, which should allow for a launch of the vial product in the first half of 2021. Customer feedback continues to show aversion to the ampule format but strong interest in the product in vial form.


Pipeline Update

Product

Regulatory Status

Biorphen®

Commercial

ALKINDI® SPRINKLE

Approved

Alaway Preservative Free®

Approved

Dehydrated Alcohol Inj. (DS-100)

Filed

Lamotrigine Oral Susp. (ET-105)

Filed

Zonisamide Oral Susp. (ET-104)

Filed

Cysteine Inj. (DS-300)

Filed

Ephedrine Injection (ET-203)

Filed

Topiramate Oral Soln (ET-101)

Submitted


Dehydrated Alcohol Injection (DS-100).
During the quarter, Eton submitted an NDA for the product and the application was accepted for filing. The application has been assigned a PDUFA date of May 27, 2021.

Lamotrigine Oral Suspension (ET-105). The product’s human factors study is ongoing. One of the three requested arms has been completed, and the two remaining arms are ongoing. Eton expects the study to be completed and submitted to the FDA in the coming months, allowing for potential FDA approval as early as the first half of 2021.

Zonisamide Oral Suspension (ET-104). During the quarter, Eton submitted an NDA for the product and the application was accepted for filing. The application has been assigned a PDUFA date of May 29, 2021.

Cysteine Injection (DS-300). In October, Eton’s Abbreviate New Drug Application received a complete response letter from the FDA with only minor deficiencies. Eton expects to respond to the request in December, which should allow the application to receive tentative approval as early as the first quarter of 2021. The company’s paragraph IV litigation and post grant review (PGR) challenges are ongoing. Eton remains confident the innovator’s patents will be invalidated, and the company believes its product could launch as early as November 2021 if the PGR process is successful or August 2022 when the 30-month stay expires.

Ephedrine Injection (ET-203). Eton’s partner submitted the product’s NDA during the quarter and the application has been accepted for filing by the FDA. The NDA has been assigned a PDUFA date of June 18, 2021.

Topiramate Oral Solution (ET-101). Eton submitted an NDA for the product in October 2020. If the application is accepted for filing, Eton would expect it to be assigned a PDUFA date of Q3 2021.


Financial Results

Revenue: Eton reported revenue of ($0.2) million for the third quarter of 2020. During the quarter, Eton lowered the list price of Biorphen, which resulted in a $0.2 million reduction to revenue due to a shelf stock adjustment charge tied to inventory on hand with wholesale customers. Eton reported no revenue in the third quarter of 2019.

Selling, General, & Administrative (SG&A): SG&A expenses in the third quarter of 2020 were $3.4 million compared with $1.6 million in the prior year period. The increase was driven by higher sales and marketing spending in advance of the ALKINDI SPRINKLE launch, paragraph IV litigation expenses related to the company’s cysteine injection patent challenge, and higher non-cash stock-based compensation in the period.

Research & Development (R&D): R&D expenses in the third quarter of 2020 were $2.8 million compared with $3.4 million in the prior year period. The third quarter of 2020 included a $1.5 million NDA filing fee paid to the FDA. The third quarter of 2019 included a $2.0 million licensing payment related to the lamotrigine product.

Net Loss: Eton reported a net loss of $6.5 million in the third quarter of 2020 compared to a net loss of $5.0 million for the same period in 2019.

Cash Position: As of September 30, 2020, Eton reported cash and cash equivalents of $7.3 million. Subsequent to the quarter end, Eton closed an equity financing which resulted in gross proceeds of approximately $22.5 million.


Conference Call and Webcast Information:
Eton Pharmaceuticals will host a conference call and webcast today at 4:30 p.m. ET (3:30 p.m. CT). To access the conference call, please dial 1-866-795-8473 (domestic) or 1-470-495-9161 (international) and refer to conference ID 5092872. 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.

About Eton Pharmaceuticals
Eton Pharmaceuticals, Inc. is a specialty pharmaceutical company focused on developing and commercializing innovative treatments for rare pediatric diseases. The company currently owns or receives royalties from three FDA-approved products, including ALKINDI® SPRINKLE, Biorphen®, and Alaway Preservative Free®, and has six additional products that have been submitted to the FDA.

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.


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

For the three months ended

For the nine months ended


September 30,


September 30,

September 30,

September 30,

2020

2019

2020

2019

Revenues:

Product sales, net

$

(161

)

$

$

(42

)

$

Licensing revenue

500

Total revenues

(161

)

(42

)

500

Cost of product sales

(144

)

(14

)

Gross (loss) profit

(17

)

(28

)

500

Operating expenses:

Research and development

2,826

3,418

10,703

11,322

General and administrative

3,429

1,624

8,960

5,123

Total operating expenses

6,255

5,042

19,663

16,445

Loss from operations

(6,272

)

(5,042

)

(19,691

)

(15,945

)

Other (expense) income:

Interest and other (expense) income, net

(232

)

77

(592

)

321

Loss before income tax expense

(6,504

)

(4,965

)

(20,283

)

(15,624

)

Income tax expense

Net loss

$

(6,504

)

$

(4,965

)

$

(20,283

)

$

(15,624

)

Net loss per share, basic and diluted

$

(0.31

)

$

(0.28

)

$

(1.01

)

$

(0.88

)

Weighted average number of common shares outstanding, basic and diluted

21,052

17,878

20,070

17,706


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

September 30, 2020

December 31, 2019

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$

7,332

$

12,066

Accounts receivable, net

473

Inventory

1,699

380

Prepaid expenses and other current assets

754

2,090

Total current assets

9,785

15,009

Property and equipment, net

854

1,117

Intangible assets, net

612

725

Operating lease right-of-use assets, net

63

160

Other long-term assets, net

81

61

Total assets

$

11,395

$

17,072

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

2,208

$

575

PPP loan, current portion

219

Accrued liabilities

792

1,388

Total current liabilities

3,219

1,963

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

6,496

4,540

Long-term portion of PPP and EIDL loans

292

Operating lease liabilities, net of current portion

19

Total liabilities

10,007

6,522

Commitments and contingencies (Note 11)

Stockholders’ equity

Common stock, $0.001 par value; 50,000,000 shares authorized as of September 30, 2020 and December 31, 2019; 20,988,533 and 17,877,486 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

21

18

Additional paid-in capital

85,838

74,720

Accumulated deficit

(84,471

)

(64,188

)

Total stockholders’ equity

1,388

10,550

Total liabilities and stockholders’ equity

$

11,395

$

17,072


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

Nine months ended
September 30, 2020

Nine months ended
September 30, 2019

Cash flows from operating activities

Net loss

$

(20,283

)

$

(15,624

)

Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation

1,803

1,387

Common stock issued for product candidate licensing rights

1,264

Depreciation and amortization

490

299

Debt discount amortization

85

Changes in operating assets and liabilities:

Accounts receivable

473

Inventory

(1,319

)

Prepaid expenses and other assets

1,305

426

Accounts payable

1,633

(403

)

Accrued liabilities

(615

)

(263

)

Net cash used in operating activities

(15,164

)

(14,178

)

Cash used in investing activities

Purchases of property and equipment

(6

)

(1,062

)

Cash flows from financing activities

Proceeds from issuance of long-term debt, net of issuance costs

1,965

Proceeds from sales of common stock, net of offering costs

7,756

Proceeds from PPP and EIDL loans

511

Proceeds from employee stock purchase plan and stock option exercises

204

282

Net cash provided by financing activities

10,436

282

Change in cash and cash equivalents

(4,734

)

(14,958

)

Cash and cash equivalents at beginning of period

12,066

26,735

Cash and cash equivalents at end of period

$

7,332

$

11,177

Supplemental disclosures of cash flow information

Cash paid for interest

$

545

$

Cash paid for income taxes

$

$

Supplemental disclosure of non-cash financing activity

Relative fair value of common stock warrants issued in connection with debt

$

94

$


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