Earnings call transcript: Eton Pharmaceuticals Q1 2025 beats revenue estimates

Eton Pharmaceuticals reported a robust first quarter for 2025, with revenue far surpassing expectations. The company achieved a revenue of $17.3 million, marking a 117% increase from the same period last year, driven by strong product sales and licensing revenue. According to InvestingPro data, the company has maintained impressive momentum with a 380.85% return over the past year and holds a "GOOD" Financial Health score of 2.81. Despite a net loss of $1.6 million, the market reacted positively, with the stock price rising 7.91% in after-hours trading.

Key Takeaways

• Eton Pharmaceuticals’ revenue reached $17.3 million, a 117% increase year-over-year.
• Product sales contributed significantly, with $14 million in revenue.
• The stock surged 7.91% in after-market trading following the earnings release.
• The company maintained a strong cash position with $17.4 million on hand.
• Eton is targeting a $100 million revenue run rate in the near term.

Company Performance

Eton Pharmaceuticals demonstrated significant growth in the first quarter of 2025, with a notable 117% increase in revenue compared to Q1 2024. The company’s focus on the ultra-rare disease market and its expanding product portfolio contributed to this performance. With a market capitalization of $463.3 million and a solid current ratio of 2.06, InvestingPro analysis reveals the company operates with moderate debt levels and maintains strong liquidity. Eton’s product sales increased by 76% to $14 million, while licensing revenue added $3.3 million.

Financial Highlights

• Revenue: $17.3 million, up 117% year-over-year
• Product Sales: $14 million, up 76%
• Licensing Revenue: $3.3 million
• Adjusted Gross Profit: $12 million (69.5% of total revenue)
• Adjusted EBITDA: $3.7 million
• Net Loss: $1.6 million
• Cash on Hand: $17.4 million

Earnings vs. Forecast

Eton Pharmaceuticals exceeded revenue expectations, reporting $17.3 million against a forecast of $14.34 million. This represents a revenue surprise of approximately 20.6%, showcasing the company’s strong performance in the first quarter.

Market Reaction

Following the earnings announcement, Eton Pharmaceuticals’ stock reacted positively, climbing 7.91% in after-hours trading to $18.42. Trading near its 52-week high of $18.41, InvestingPro analysis indicates the stock is currently undervalued based on its Fair Value estimate. This movement reflects strong investor confidence, with analyst price targets ranging from $24 to $33, suggesting significant upside potential. Get access to 12 additional ProTips and comprehensive valuation metrics with an InvestingPro subscription.

Outlook & Guidance

Looking forward, Eton Pharmaceuticals aims to achieve a $100 million revenue run rate in the near term, with expectations of a 70% gross margin in 2025. InvestingPro analysts anticipate strong sales growth and project the company will turn profitable this year, with an EPS forecast of $0.42 for 2025. The company plans multiple product launches between 2025 and 2027, reinforcing its position in the ultra-rare disease market. Dive deeper into Eton’s growth prospects with the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Sean Brynjelsen expressed optimism, stating, "There’s never been a more exciting time for the organization." CFO James Gruber highlighted the company’s growth trajectory, noting, "We continue to expect to exit 2025 at an approximately $80,000,000 annual revenue run rate."

Risks and Challenges

• Regulatory hurdles: Ongoing FDA approvals are crucial for new product launches.
• Market competition: Increased competition in the ultra-rare disease space could impact market share.
• Economic conditions: Macroeconomic pressures could affect healthcare spending and pricing policies.
• Supply chain: Although currently minimal, any disruption could impact product availability.

Q&A

During the earnings call, analysts inquired about the progress of product launches, particularly ET400, which is expected to generate initial revenue in Q3/Q4 2025. The relaunch of Galzin was also discussed, with management reporting positive progress. Concerns about potential impacts from White House pricing policies were addressed, with management indicating minimal expected effects.

Full transcript - Eton Pharmaceuticals Inc (ETON) Q1 2025:

Conference Operator: Good afternoon, and welcome to the InPharmaceuticals First Quarter twenty twenty five Financial Results Conference Call. At this time, all participants are in a 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 Kempa, Chief Business Officer at Eaton Pharmaceuticals.

Please proceed.

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: Thank you, operator. Good afternoon, everyone, and welcome to Eaton’s first quarter twenty twenty five 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, eatonpharma.com. Joining me on our call today, we have Sean Brynjelsen, our CEO James Gruber, our CFO and Deepak Trinkas, 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 investorrelationseatonpharma dot 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. 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, and thank you for joining us today. If you were aware or with us for our Investor Day in March, you heard about Eaton’s transformational 2024. And I’m proud to say the momentum has continued into 2025. Our existing products are generating strong growth.

We recently added two high value commercial assets to our portfolio with the acquisition and relaunch of Inkalex and Dalzan. And we’ve advanced our pipeline candidates setting the stage for two potential approvals in the next nine months. We’ve seen now sequential growth product revenue for seventeen straight quarters since the launch of alkindi sprinkle. Though we are very proud of this track record of commercial execution we’re just getting started. With attractive growth prospects for existing products and a strong late stage pipeline, we expect this streak to continue well into the future and we’re very excited about what lies ahead.

I’d like to begin with one of our important new products, Incralyx. Incralyx is a complex biologic product used in treating patients two years of age and older who suffer from severe primary insulin like growth factor one deficiency. SPIG FD affects an estimated two hundred children in The United States. When we signed the transaction in the fourth quarter, we were very excited about the deal given the strong strategic fit within pediatric endocrinology and what we saw is a very attractive growth opportunity. We are now nearly five months into the transaction and I am pleased to say that it is exceeding our expectations.

Eton saw a tremendous opportunity to leverage our existing pediatric endocrinology sales force and commercial infrastructure, as well as make new investments into community initiatives to raise awareness of this ultra rare condition, which unfortunately has seen an increased number of children going undiagnosed in recent years. At its peak, more than a year or a decade ago, AnchorLex had one hundred and eighty five patients in The United States. But that number has been declining for years and was at only sixty seven patients when we completed our acquisition late December. With the significant investments we have made, plus the hard work of our commercial team over the last five months, I am pleased to say that the trend appears to have reversed. We’ve now reached over 90 active patients and remain confident that we can reach our goal of 100 patients by the end of this year and even higher levels in the years to come.

Missed diagnosis has been a long standing problem with this condition. When physicians are presented with short of stature patients and IGF-one deficiency is not necessarily top of mind. And there’s an ingrained habit of automatically prescribing growth hormones. SPIGFD patients generally have normal growth hormone levels, so this treatment is ineffective and delayed in proper diagnosis, causing SPIGFD patients to miss the Incolyx treatment window. We feel that it’s important for all shorter stature patients to be screened for severe primary IGF-one deficiency and are using our deep relationships in the pediatric endocrinology community to drive greater awareness of SP IGFD and push for the screening.

EATIN is also working to expand access for U. S. Patients by seeking to harmonize The U. S. And EU labels.

The definition of what constitutes severe primary IGF-one deficiency differs between the regions. While the height criteria is consistent, the IGF level is not. In The United States, a patient’s IGF level must be at least three standard deviations below the median. While in The EU, patients must be in the bottom 2.5 percentile for their age and gender, which translates to approximately two standard deviations. We have completed statistical analysis of the patient registry that has tracked hundreds of NCLEX patients over the last decade, and we believe it shows that the product is safe and effective in the slightly broader EU label population.

We expect to submit a supplemental filing to the FDA in the second half of twenty twenty five. By harmonizing the two definitions, we estimate that up to 1,000 U. S. Patients could clinically benefit, significantly expanding treatment opportunities beyond the current 200 patients. We are proud of the team’s hard work to close, integrate, and relaunch Inkrolix.

The growth achieved in such a short period of time is impressive, and it is clear that a long term growth opportunity remains with or without the label harmonization. During the quarter, we announced the out licensing of Incrolex’s international alliance to a study of pharmaceuticals for an upfront payment of 4,300,000.0. Incrolex’s international opportunity is relatively small, highly fragmented across more than 30 different countries and has slim margins. In addition, the out licensing eliminated the need for EASON to make a multi million dollar G and A investment to support global infrastructure, maintain foreign regulatory approvals, and facilitate commercial and distribution activities. We believe the transaction will be far more additive to Eaton’s profitability than if we had commercialized the product internationally ourselves.

The transaction also provided us with a $4,300,000 upfront payment, recouping a meaningful portion of our initial purchase price and providing excess capital that can be reinvested into our attractive pipeline opportunities. And finally, it eliminated the distraction and resource burden that would have come with managing more than 30 territories, and instead allows our team members to fully dedicate their time and attention to our three high value U. S. Product launches in 2025. A study shows a similar philosophy of putting patients first, so we are confident that they will be a good partner for the product and ensure that the international patients have access to this meaningful therapy.

Turning now to Alkindi. This has been a strong growth driver for us for seventeen straight quarters with no signs of slowing down. In fact, the pace of referrals has actually increased in 2025. As you may remember, beginning in January, we made our existing sales force one hundred percent focused on pediatric endocrinology. We believe this has driven increased efficiency, which is apparent not only in the strong launch of Incolex, but also in an increased rate of new alkindi sprinkle prescriptions.

Through April, the number of new patient referrals received this year exceeds the first four months of any other year since launch. Despite the relatively high discontinuation rate, we have still added a significant number of new patients this year and are quickly closing in on our 500 active patients. Each of them has been encouraged by our kind of strong start to the year and are expecting the rate of new patient adds for adrenal insufficiency franchise to accelerate even further in the second half of twenty twenty five with the anticipated launch of ET-four hundred. As we have discussed at length, we continue to see a large portion of the market using unapproved compounded hydrocortisone due to the preference for a liquid dosage form. We believe approximately fifty percent of young children are using a non FDA liquid hydrocortisone today.

With an estimated five thousand adrenal insufficiency patients under nine years of age, we continue to see a very compelling market opportunity for ET400. ET400’s PDUFA date is just two weeks away, and we are prepared to launch quickly upon potential approval. We’ve manufactured our launch inventory and our specialty sales force and promotional campaigns are ready to go live. We have been engaged in communications with the agency throughout the review, being optimistic that they will meet their Purdue for a goal date of May 28. It’s a very exciting time at Eaton.

After many years of hard work, our team is very excited to be on the cusp of making this important medication available to the patients in need. Transitioning now to another significant opportunity, The treatment of Wilson’s disease or Wilson disease more correctly, a rare genetic disorder that causes excessive copper accumulation in the body. Patients suffering from this condition do not metabolize copper normally with their bodies absorbing the copper instead. Prevents it from leaking the body and Galzin is an FDA approved treatment for patients with Wilson disease who have been initially treated with a chelating agent. It is the only FDA approved zinc therapy for Wilson disease today.

As with Inkilex, we were driving Galvan as an acquisition because we saw significant opportunities for each entity to add value, grow the product and improve outcomes for patients. And similar to severe primary IGF-one deficiency Wilson disease is a severely under diagnosed condition with a lack of product investment leading to inadequate awareness and education. Wilson disease is estimated to impact approximately ten thousand people in The United States, but we estimate that only two thousand of those patients are diagnosed and actively on a therapy today. Unfortunately, most patients are not diagnosed until they are in their 20s or 30s when symptoms begin to present after years of excessive copper buildup. This delayed diagnosis leads to worse outcomes, including neurological damage and liver failure.

The increased frequency of genetic testing in recent years has led to earlier diagnosis allowing patients to proactively start zinc therapy before liver or other damage occurs. But an unmet need still remains. Of the roughly two thousand patients that have been diagnosed and are on treatment, we estimate approximately eight hundred use zinc therapy. While the remainder are on chelating agents. However, due to historical challenges with access affordability and awareness, most patients on zinc therapy appear to be using over the counter supplements rather than the FDA approved prescription product.

The nutritional supplements are a different form of zinc, which have been shown to be less effective than Galzin. We acquired Galzin because we feel that we are the right company to address this dynamic. We relaunched the product in March with robust patient services, including a $0 copay. For the first time ever, every Wilson disease patient who wants Galzin can access it regardless of insurance status. We believe Eaton Cares is one of the most generous high touch patient assistance programs in the industry.

And one of the many things that sets us apart from other rare disease companies. Our relaunch has received a warm reception from the community, including patient advocates and leading Wilson disease physician. We are currently migrating patients to Eaton’s commercial infrastructure and Eaton Cares program. This migration kicked off in March and will be a multi month process as the previous pharmacies work through inventory that remained in the channel. We expect the conversion to be largely complete by the end of the quarter or the third quarter, at which time Gallatin should begin producing meaningful revenue.

I’m pleased to be able to solve the access and affordability issues that have impacted Gallatin users for more than a decade. However, we believe that there is more that can be done to improve the lives and outcomes of Wilson disease patients. After access and affordability, the two most common complaints about zinc therapy are the burdensome dosing requirements and unpleasant GI side effects. We set out to tackle these challenges with the development of ET700, which we disclosed for the first time in March. ET700 is an extended release version of Galton, which we believe will eliminate the need for three times per day dosing as well as potentially reduce the GI side effects that are reported by some patients on zinc therapy today.

We initiated ET seven hundred development last year prior to the acquisition of Galsin, and have now filed a patent on our proprietary formulation. We’re now advancing this program at full speed and working with the top Wilson disease thought leaders to prepare a clinical study protocol. We are preparing for the manufacturing registration batches later this year and have a meeting with the FDA in the second quarter to discuss our proposed clinical program. If everything goes as planned, we expect to file an NDA in 2027. We believe this product candidate has the potential to generate more than $100,000,000 in peak revenue.

Our metabolic portfolio which includes carbonic acid, methane, antisidone, and goblite continues to provide steady revenue and cash flow. The group of products produced solid year over year growth in the first quarter but will have reduced significance to each of them going forward due to the rapidly increasing revenue contributions from our high margin pediatric endocrinology products. Turning now to our development pipeline. During the quarter, we were pleased to report that ET600 passed its pivotal bioequivalency study, which allowed us to submit an NDA for the product in late April. ET600 is Eaton’s proprietary patent or patented oral solution of desmopressin under development for the treatment of central diabetes insipidus.

Leading pediatric endocrinologists have long expressed the need for this product because it allows for the small precise and titratable doses required to treat pediatric patients. ET600 is the same pediatric endocrinology prescriber base as LKD sprinkle ET400 and Incolex. This should provide an important start once commercialization activities begin. We expect our application to be assigned a ten month review which will allow for an approval and launch potentially as early as the first quarter of twenty twenty six. Pre launch commercial activities are already underway and we are excited about the prospects for this important product.

Ethan is also continuing to advance Inclidia which we acquired late last year. Inclidia is designed for the treatment of the ultra rare condition of neonatal diabetes mellitus, which impacts an estimated three hundred children in The United States and is within our pediatric endocrinology call point. Although the product has been approved in the EU since 2018, there are currently no FDA approved oral treatments for the condition and therefore it is not possible for infants in The US to receive the correct dose in an FDA approved manner. Today caregivers must either obtain a suspension from a compounding pharmacy or crush adult tablets to create a suspension at home. Similar to ET400 and ET600, Embladida gives us an opportunity to bring a liquid formulation to the market to provide precise and accurate pediatric dosing.

Our acquisition terms allow us in an FDA meeting to receive confirmation of the clinical pathway before any payment occurred. This meeting occurred in April and we were pleased with how it went. The FDA was receptive to what we believe is a feasible clinical pathway to bring this critical treatment to patients in The U. S. In the first quarter, we also unveiled another new internal development program ET800.

Our French development partner, Crosscheck, will continue to work on advancing the Xenio hydrocortisone auto injector and separately E10 will manage the development of this injectable vial product, which we are calling ET800. In addition to the large opportunity hydrocortisone injection, which we have discussed extensively, there was an even greater use of the hospital setting. A total of more than 5,000,000 vials per year and approximately 100,000,000 sales per day. Today hospitals use a lyophilized for freeze dried powder vial, which must be manually reconstituted prior to administration. We have developed and filed a patent on a proprietary ready to use liquid formulation that we believe take time, reduce risk of medical errors, and is an important factor as hydrocortisone is often used in the emergency room and operating rooms.

If development activities progress as planned, we expect to make registration batches in the coming months and submit an NDA in early twenty twenty seven. On the business development front, we expect acquisition and licensing transactions to remain a central part of our long term story and we continue to evaluate new opportunities. We’ve demonstrated that we can successfully execute value creating transactions, and we expect to continue to do so. However, our strong position allows us the luxury to remain disciplined and focus solely on products that are aligned with our ultra rare disease strategy, and can be our high threshold for financial returns and value creation opportunities. As you have heard today since a very busy time at Eden, we have made great strides in our mission to bring as many new rare disease treatments to patients as possible.

With two major product launches, relaunches already underway this year, and the largest launch in our history, potentially a matter of days away, there’s never been a more exciting time for the organization. Following the expected launch of ET-four hundred, we see a clear path to reaching $100,000,000 of revenue in the near term and much higher levels as our pipeline products come to market. Through years of hard work, our team has built an extraordinary organization and we continue to make progress every day toward our goal of becoming one of the leading ultra rare disease companies in the world. With that I’ll turn it over to James our Chief Financial Officer to discuss the financials and to discuss the tariff questions. James?

Thank you, Sean.

James Gruber, CFO, Eaton Pharmaceuticals: I’ll start by addressing the tariff situation in The US since that seems to be at the top of everyone’s list of questions right. We believe Eaton would see minimal impact from any of the tariff proposals discussed to date. The majority of our products are produced in The US. Eaton does not hold any IP in any foreign countries, and we do not have any intercompany transfer pricing arrangements. Our primary exposure would be with Incralex and Alkindi, which are both manufactured in Europe.

However, the anticipated cost of products purchased from Europe represents less than 5% of our forecasted revenue. So a 20% tariff on European purchases would impact total company gross margin by less than 100 basis points. And the potential impact would likely be even smaller in future years since our late stage pipeline products ET400 and ET600 will also be manufactured within The US. In short, we are not concerned about the impact of tariffs, but we will continue to monitor the situation closely.

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: Turning to our financial results.

James Gruber, CFO, Eaton Pharmaceuticals: Our first quarter revenue was $17,300,000 compared to $8,000,000 in the first quarter of twenty twenty four, an increase of 117%. Net sales during the quarter included $3,300,000 of licensing, of which $1,800,000 was from the licensing of Incralex rights outside of The US. Although Eaton is receiving $4,300,000 upfront, accounting guidance results in recording $1,800,000 immediately, with the remaining $2,500,000 recognized over the licensing term. We also recorded $1,500,000 of licensing revenue from a regulatory milestone event associated with our previous divestiture of DS-two hundred. There was no licensing revenue recognized in the prior year quarter.

Product sales were $14,000,000 for the first quarter of twenty twenty five, compared with $8,000,000 in the first quarter of twenty twenty four, an increase of 76%. This growth was driven primarily by increased sales of Alkindi Sprinkle and the addition of Inkrolix, which was acquired in late December. We expect product sales to continue growing quarter over quarter throughout the rest of 2025 and beyond. And we continue to expect to exit 2025 at an approximately 80,000,000 annual revenue run rate.

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: Gross profit for the quarter

James Gruber, CFO, Eaton Pharmaceuticals: was 9,900,000.0 compared with 5,000,000 in the prior year period, primarily due to increased product sales. Adjusted gross profit, which excludes the impact of acquired inventory step up adjustments and intangible amortization, was $12,000,000 or 69.5% of total revenue versus $5,200,000 of adjusted gross profit or 65.6% of total revenue in the prior year period. This increase was driven by continued growth of higher margin Alkindi Sprinkle, and the recognition of higher margin licensing revenue in the first quarter of twenty twenty five. We expect to report full year 2025 adjusted gross margin of approximately 70%, and long term adjusted gross margin to exceed 75% by 2028. R and D expenses for the quarter were $1,200,000 compared with $700,000 in the prior year period, primarily due to increased expenses associated with our ET 700 and ET 800 project development activities.

It’s worth noting that in April, we paid a $2,200,000 NDA application fee related to our ET 600 submission. That cost will be fully recorded as R and D expense in the second quarter, and we also expect to record a $500,000 expense for an Amlidia licensing payment in the second quarter of twenty twenty five. Besides these two one time items, we expect R and D spending to remain largely in line with historical levels for the remainder of 2025. General and administrative expenses for the quarter were 9,200,000.0 compared with 5,200,000.0 in the prior year period. As mentioned in our fourth quarter call, increased SG and A expenses in 2025 were planned and necessary to build infrastructure needed to support the significant growth in our product portfolio and revenue base.

These incremental investments include our new dedicated five person metabolic sales team, which launched on January 2, commercial investments made in the product relaunches of Incralex and Galsin, investment

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: in our

James Gruber, CFO, Eaton Pharmaceuticals: ET 400 launch readiness activities, and additional corporate staff to support their growing portfolio in the areas of quality, regulatory, and finance. On an adjusted basis, which removes the impact of share based compensation, transaction related costs, and other one time expenses, G and A expense was $7,300,000 compared to $4,400,000 in the prior year period. In addition to the planned increases in our infrastructure, SG and A expenses during the quarter were also affected by relaunch and prelaunch commercial activities in the period. We are not planning to make further significant investments in SG and A this year, and anticipate that adjusted G and A spending will remain flat or slightly declined for the remainder of 2025. We believe that the investments we’ve made in G and A during the quarter will support revenue levels much higher than where we are today, and as a result, we expect to return to minimal G and A growth in 2026 and beyond.

Adjusted EBITDA for the first quarter of twenty twenty five was 3,700,000.0 compared to $500,000 in the first quarter of twenty twenty four. Total company net loss was $1,600,000 for the quarter, compared to a net loss of $800,000 in the prior year period. Net loss per basic and diluted share was

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: $06 during the quarter, compared

James Gruber, CFO, Eaton Pharmaceuticals: to net loss per basic and diluted share of $03 in the prior year period. On a non GAAP basis, we reported net income of $2,400,000 for the first quarter of twenty twenty five, compared to $200,000 in the prior year period, and diluted earnings per share of $07 for the first quarter of twenty twenty five, compared to $00 in the prior year period. Eaton finished the first quarter with $17,400,000 of cash on hand, and we generated $2,100,000 of operating cash flow during the quarter. This concludes our remarks on first quarter results. And with that, we’ll turn it over to the operator for Q and A.

Conference Operator: Thank you. Now first question coming from the line of Your line is now open.

Trace, Analyst: Good afternoon. Congrats on the results here and thanks for taking the questions. Just first on Incrolix. Sean, have you had your meeting with FDA to discuss that label expansion at this point?

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: The meeting request has gone in, so we’ll be looking forward to having that, I would say, in the coming weeks, possibly most likely July in my opinion, and then it would follow-up ideally with the submission in the third quarter of the actual update. We believe the data we have is compelling. It’s based on patient registry data out of Europe and should support that label change.

Trace, Analyst: Great. And maybe staying on the FDA front. Appreciate the commentary on ET-four hundred. Any additional color on any recent interaction with FDA that you can give us? I mean, things progressing as you would expect with the review at this later stage as in things like manufacturing inspections and final label discussions, etcetera?

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: Yeah. Typically, the last step in a review process of an NDA, your drug application, would be the labeling discussions. And so the FDA provides commentary on your label. And what I mean by that is the package insert. We’ve received that commentary.

We have already had the submission sent back to the agency. And so we believe that should be the final step. I mean, we could hear of something else, but it seems to me that we are on track for approval here in two weeks or less.

Trace, Analyst: Great. And on the AMgladia front, sounds like you liked what you heard there. Does that mean you expect to just need a fairly simple PK study to support an NDA filing there? Or just any additional color?

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: Yeah. So we like the feedback from the agency because you can tell during the tone, they would like to see us develop and get this product on market. They provided a pathway. It didn’t seem like there were it seemed fairly clear to us and what we need to do. We did have a few clarifying questions.

So we are planning a follow-up meeting with the agency to ensure that we’re doing what they want and what their expectations are. But I was very encouraged by that, by the comments that we received back. And I do expect that it would just be a fairly straightforward PK study, as you indicated.

Trace, Analyst: Got it. Pretty impressive continued progress on Incrolix. I think you said ninety patients. If I parse through the commentary on Incrolix, on SPRINKLE, I mean, it doesn’t take much for that $80,000,000 run rate in Q4 to start looking pretty derisked. Is there anything I’m missing there?

Or maybe any comments that you would have on that Q4 run rate?

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: No, I think at the appropriate time, feel very comfortable with the number. First, address your question there. The question is, will we be revising that number at some point? I think we’re going to leave it where it is right now, and we’ll see where the sales go in the second quarter. But we’re feeling pretty good about our sales.

They’ve been strong across the board, And we couldn’t be happier with the Incolex launch and the quick addition of patients. We think the coming weeks here will help us to maybe provide some update on the next conference call.

Trace, Analyst: I’ll leave it there. Thanks, guys.

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: Great. Thanks, Trace.

Conference Operator: Thank you. And our next question coming from the line of Madison Alsadi from B. Riley. Your line is now open.

Madison Alsadi, Analyst, B. Riley: Hey, guys. Thanks for taking our question, and congrats. Really firing on all cylinders here. Yeah. So could you maybe provide an update on the recent weekly Incrylex prescription trends?

I mean, really looks like March was a tremendous month. Is that kind of the proxy barometer going forward? Yeah. Sure.

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: On that point, would say that we’re significantly increased the number of patients. Now as we increase, we expect that rate would go down. You’re getting closer to that whatever, that one hundred eighty five potential patients, let’s say, that are in The US. So we would expect that. But as it stands today, we’re firing at all cylinders in terms of the launch on that product.

We expect to hit our goals, our revenue goals, or exceed them this year. I think we’ll exceed those goals. I’d like to get a few more months under our belt and then we’ll provide an update. I think we probably we did indicate that we’re now in the 90s on the patient front. We’ll give further updates on that rate and better answer your question in terms of the trajectory of it.

Madison Alsadi, Analyst, B. Riley: Got it. Understood. And then on ET-four hundred, if we assume approval is on time, what’s the expected timing to the first commercial revenue that you would book? Do you think this could be an end of 2Q story or maybe early 3Q?

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: I’m thinking more of a Q3. We will be launching it essentially right around the approval date. So we would expect a June, let’s say June launch on the product. It takes a little bit of time for the patients to get the prescription because patients have to come back to the office and the doctors have to prescribe it. So I would say there’s a bit of a lag between the initial launch and then the actual revenue coming in.

So from a revenue standpoint, I would really think more about that instead of Q3, Q4. It will, we believe, have a rapid uptake. We know that it’s something that there’s a lot of pent up demand for an oral solution. So maybe I’ll leave it there and give you an idea. It won’t have massive impact in terms of revenue this year, but we think it will have a much more significant impact in the quarters after that.

Madison Alsadi, Analyst, B. Riley: Got it, Sean. Thanks for that. And then lastly, I really appreciate the color on the tariff risk exposure, which looks to be really a non story. Any commentary to theoretical exposure to the White House executive order to favor nation policy?

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: Thanks. Yeah, thanks for the question. Was probably the same question on others’ minds. When I first heard about that, really didn’t know what to make of it. There weren’t enough details that were released around that.

But Now that we’ve had a chance to look at and digest that, and I’ve also been able to do a little bit more background research on it, I do not believe it will have a meaningful impact to us. We only sell in The US, so we’re not selling products overseas to foreign customers at lower prices than we sell in The US. We believe that alone is pretty strong in the sense that we don’t have dual pricing as big pharma does. So my opinion, this is something that would potentially impact big pharma. But we’re also less reliant on Medicare, Medicaid than most pharma companies.

Really, have no Medicare business to speak of. It’s only Medicaid. And the Medicaid, we lose money on the Incrolexis. Think we’ve people involved. But we make money on Medicaid through products like the current Gloomix.

There are no plans for us to sell our products overseas, so that reciprocal or most favored nation pricing would not apply. We believe for our company. We are a rare disease company, an ultra rare disease company. So I think that it’s a unique situation compared to more of your standard pharmaceuticals.

Madison Alsadi, Analyst, B. Riley: Got it. Thanks for that. Makes sense. Congrats again on the quarter.

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: Yeah. Our pleasure.

Conference Operator: Thank you. And our next question coming from the line of Swayampakula Ramakanth from H. C. Wainwright. Your line is now open.

Swayampakula Ramakanth, Analyst, H.C. Wainwright: Thank you. This is RK from H. C. Wainwright. Good afternoon, Sean, John, Jim, and David.

So I know you have had more experience with the relaunch of Incrolux compared to Galvan, in general, what’s the feedback from the sales force on Galvan, anything anecdotal you can tell us about how the relaunch is going and what the expectations are internally for adoption during 2025?

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: So Galzin is an important product for the company. It’s placing us squarely in the Wilson disease space, and we aspire to become a key player in Wilson disease. Beyond just Galzin, obviously we have our ET 700 product, which is an extended release version of Galzin. That product we think will have clinical trial results in January. That’s a small study we’re running, which will show the same efficacy we believe as the three times a day dosing, hopefully less side effects.

So that is really the big opportunity is the extended release version. The Galvan itself has been great for patients because they had in the past supply issues, they no longer have that. There’s a zero copay, they never had that in the past, they have that today. There’s overnight shipping so we get the product to them very quickly. So we believe that product will add appreciable revenue in the quarters to come.

The uptake and the conversion has gone well and we add patients weekly on Gelzin. So we see a steady stream of patients coming off of, let’s say, over the counter stuff or compounded medicines. And they were forced to go there, frankly, in the past because of the inaccessibility of the medicine and the high co pays that were charged by the prior company. We have taken away all those blockades. So I think and then the last thing I want to say is we’re adding a really strong relationship with the Wilson Disease Foundation and with really some of the leading prescribers in The United States that treat Wilson disease.

We have been able to get there and hear what their thoughts are, how we can help patients, how we can do the best job to make sure that these patients are served properly.

Swayampakula Ramakanth, Analyst, H.C. Wainwright: Thanks for that. Do you by any chance, are you able to give us patient numbers that are on Galzyn at this point, or we have to wait for the next update?

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: I think for the next update, we’ll provide patient numbers because it’s still in the transition period. But I can tell you that it is going better than according to plan. And I’m very pleased with the launch and the job that our Chief Commercial Officer, EPIC, has done with the organization. We have a dedicated sales team in that space, just like we have a dedicated sales team on our other endocrinology products.

Swayampakula Ramakanth, Analyst, H.C. Wainwright: Perfect. A quick question for Jim. Looking through the cash flow statement, I see an increase in the Medicaid rebates and also on receivables. So is this Just trying to understand what’s behind those numbers and how sticky are those?

James Gruber, CFO, Eaton Pharmaceuticals: Sure, let’s start with the receivables. So significant increase there. Part of that was called normal operating activity with the addition of Incrolex. We talked about significant impact with Medicaid there. So with that product relaunch, decent amount of addition yes sorry with Incrolux receivables.

With the licensing revenue even though we only recognized 1,800,000.0 of the Astebbe licensing deal revenue in the first quarter there’s a receivable payment of 4,300,000.0. So we have not received that yet. So a big chunk of the $5,800,000 increase receivables was licensing revenue and then the remainder was just Incralux sales. On the Medicaid side the increased liability was almost entirely due to Incrolex, the product relaunch. So nothing out of the ordinary with the increased liability other than the fact that and we have a traditional patient mix in Incrolex and dollars are just higher with that product.

Swayampakula Ramakanth, Analyst, H.C. Wainwright: Okay. Thanks. Thanks for that clarification. I appreciate you taking my questions folks.

David Kempa, Chief Business Officer, Eaton Pharmaceuticals: Our pleasure. Thanks RK.

Conference Operator: Thank you. And there are no further questions in the queue at this time. Ladies and gentlemen, this concludes today’s conference call. Thank you all for your participation, and you may now disconnect.

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