Eton Pharmaceuticals Reports Second Quarter 2022 Financial Results
12 August 2022 - 6:01AM
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 |
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|
Time |
4:30 p.m. ET (3:30 p.m. CT) |
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|
Toll Free (U.S).) |
1-800-715-9871 |
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|
International |
1-646-307-1963 |
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Conference ID |
9229889 |
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|
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
StatementsStatements 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 PharmaceuticalsEton
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)
|
|
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|
|
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For the three months ended |
|
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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 endedJune 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 |
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Investor Contact:David
Krempadkrempa@etonpharma.com612-387-3740
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