Eton Pharmaceuticals, Inc.

Previous wording

Eton is an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases. We currently have seven commercial rare disease products: INCRELEX®, ALKINDI SPRINKLE®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone. We have six additional product candidates in late-stage development: ET-400, ET-600, Amglidia®, ET-700, ET-800 and ZENEO® hydrocortisone autoinjector.

Current wording

Eton is an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases. We currently have eight commercial rare disease products: INCRELEX®, ALKINDI SPRINKLE®, KHINDIVITM, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone. We have five additional product candidates in late-stage development: ET-600, Amglidia®, ET-700, ET-800 and ZENEO® hydrocortisone autoinjector.

Previous wording

During the three months ended March 31, 2025, we had $17,282 in total revenues that generated a gross profit of $9,861 compared to total revenues of $7,966 during the three-month period ended March 31, 2024 that generated a gross profit of $5,007 for the period. During the three months ended March 31, 2025, we had product sales and royalties, net of $13,996, compared to product sales and royalties, net of $7,966 during the three months ended March 31, 2024, an increase of $6,030. The increase in product sales and royalties, net was the result of increased sales of our INCRELEX®, ALKINDI SPRINKLE® and Carglumic Acid products in the current period, along with sales volume from Nitisinone and PKU GOLIKE® products launched in 2024.

Current wording

During the six months ended June 30, 2025, we had $36,210 in total revenues that generated a gross profit of $21,785 compared to total revenues of $17,040 during the six-month period ended June 30, 2024 that generated a gross profit of $10,633 for the period. During the six months ended June 30, 2025, we had product sales and royalties, net of $32,924, compared to product sales and royalties, net of $17,040 during the six months ended June 30, 2024, an increase of $15,884. The increase in product sales and royalties, net was the result of increased sales of our INCRELEX®, ALKINDI SPRINKLE® and GALZIN® products in the current period.

Previous wording

Licensing revenue during the three months ended March 31, 2025 was $3,286, compared to zero licensing revenue during the three months ended March 31, 2024. The increase in licensing revenue during the three months ended March 31, 2025 was due to $1,786 from our out-licensing of INCRELEX® rights outside of the U.S. and $1,500 from the recognition of a development milestone event associated with our divestiture of DS-200.

Current wording

Licensing revenue during the six months ended June 30, 2025 was $3,286, compared to $0 licensing revenue during the six months ended June 30, 2024. The increase in licensing revenue during the six months ended June 30, 2025 was due to $1,786 from our out-licensing of INCRELEX® rights outside of the U.S. and $1,500 from the recognition of a development milestone event associated with our divestiture of DS-200.

Previous wording

During the three months ended March 31, 2025, we incurred $1,161 of research and development (“R&D”) expenses as compared to $651 for the same period in 2024. The increase was primarily due to increased expenses associated with our ET-700 and ET-800 project development activities.

Current wording

During the three months ended June 30, 2025, we incurred $3,712 of research and development (“R&D”) expenses as compared to $2,970 for the same period in 2024. During the six months ended June 30, 2025, we incurred $4,873 of R&D expenses as compared to $3,621 for the same period in 2024. The increase was primarily due to a $2,155 NDA filing fee for ET-600 and increased expenses associated with our ET-700 and ET-800 project development activities.

Previous wording

G&A expenses consist primarily of employee compensation expenses, legal and professional fees, product marketing expenses, distribution expenses, business insurance, travel expenses, and general office expenses. During the three-month periods ended March 31, 2025 and 2024, we incurred $9,170 and $5,156, respectively, of G&A expenses. The increase in G&A expenses during the three months ended March 31, 2025 was primarily attributable to an increase in product advertising and promotional expenses, an increase in product development expenses and an increase in compensation and benefit expenses due to an increase in general and administrative headcount.

Current wording

G&A expenses consist primarily of employee compensation expenses, legal and professional fees, product marketing expenses, distribution expenses, business insurance, travel expenses, and general office expenses. During the three-month periods ended June 30, 2025 and 2024, we incurred $9,687 and $5,591, respectively, of G&A expenses. During the six-month periods ended June 30, 2025 and 2024, we incurred $18,857 and $10,747, respectively, of G&A expenses. The increase in G&A expenses during the six months ended June 30, 2025 was primarily attributable to an increase in product advertising and promotional expenses, an increase in stock-based compensation expense and an increase in compensation and benefit expenses due to an increase in general and administrative headcount.

Previous wording

As of March 31, 2025, we had total assets of $84.0 million, cash and cash equivalents of $17.4 million and working capital of $24.6 million. We believe that our cash and cash equivalents on hand, along with continued product revenues, will be sufficient for at least the next twelve months of our operations. However, our projected estimates for our product development spending, administrative expenses, and our working capital requirements could be inaccurate, or we may experience growth more quickly or on a larger scale than we expect, any of which could result in the depletion of capital resources more rapidly than anticipated and could require us to seek additional financing earlier than we expect to support our operations.

Current wording

As of June 30, 2025, we had total assets of $101.7 million, cash and cash equivalents of $25.4 million and working capital of $29.8 million. We believe that our cash and cash equivalents on hand, along with continued product revenues, will be sufficient for at least the next twelve months of our operations. However, our projected estimates for our product development spending, administrative expenses, and our working capital requirements could be inaccurate, or we may experience growth more quickly or on a larger scale than we expect, any of which could result in the depletion of capital resources more rapidly than anticipated and could require us to seek additional financing earlier than we expect to support our operations.

Previous wording

The following table sets forth a summary of our cash flows for the three-month periods ended March 31, 2025 and 2024 (dollars in thousands):

Current wording

The following table sets forth a summary of our cash flows for the six-month periods ended June 30, 2025 and 2024 (dollars in thousands):

Previous wording

The increase in cash from operating activities during the three months ended March 31, 2025 was primarily due to higher cash collections from product sales and a filing fee refund from the FDA related to ET-400. During the three months ended March 31, 2024, net cash from investing activities was $1,882, which reflected $1,868 payment associated with the acquisition of the PKU GOLIKE® product license in March 2024. During the three months ended March 31, 2025, net cash provided by financing activities was $394 and was associated with proceeds from stock option exercises, compared to net cash used by financing activities of $378, which reflected $385 repayment of debt and proceeds of $7 from stock option exercises during the three months ended March 31, 2024.

Current wording

The increase in cash from operating activities during the six months ended June 30, 2025 was primarily due to higher cash collections from product sales, a filing fee refund from the FDA related to ET-400 and the collection of a licensing milestone payment. During the six months ended June 30, 2024, net cash from investing activities was $1,882, which reflected $1,868 payment associated with the acquisition of the PKU GOLIKE® product license in March 2024. During the six months ended June 30, 2025, net cash provided by financing activities was $394 and was associated with proceeds from stock option exercises, compared to net cash used by financing activities during the six months ended June 30, 2024 of $594, which reflected $770 repayment of debt and proceeds of $176 from stock option exercises during the six months ended June 30, 2024.

Previous wording

We recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied at a point in time. For the three months ended March 31, 2025 and 2024, all revenues recognized in the Condensed Statements of Operations were point in time sales to our customers.

Current wording

We recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied at a point in time. For the six months ended June 30, 2025 and 2024, all revenues recognized in the Condensed Statements of Operations were point in time sales to our customers.

Previous wording

For its INCRELEX®, ALKINDI SPRINKLE®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone products, the Company bills at the initial product list price which are subject to offsets for patient co-pay assistance and potential state Medicaid reimbursements which are recorded as a reduction of net revenues at the date of sale/shipment. Selling prices initially billed to wholesalers may be subject to discounts for prompt payment and subsequent chargebacks when the wholesalers sell products at negotiated discounted prices to members of certain group purchasing organizations (“GPOs”) and government programs.

Current wording

For its INCRELEX®, ALKINDI SPRINKLE®, KHINDIVITM, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone products, the Company bills at the initial product list price which are subject to offsets for patient co-pay assistance and potential state Medicaid reimbursements which are recorded as a reduction of net revenues at the date of sale/shipment. INCRELEX®, ALKINDI SPRINKLE®, KHINDIVITM, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone sales are not subject to returns. Upon recognition of revenue from product sales, the estimated amounts of chargebacks, prompt payment discounts and state Medicaid are included in sales reserves, accrued liabilities and net accounts receivable.

Previous wording

The Company stores its INCRELEX®, ALKINDI SPRINKLE®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone inventory at its pharmacy distributor customer locations, and sales are recorded when stock is pulled and shipped to fulfill specific patient orders. The Company recognizes revenue and cost of sales from products sold to wholesalers upon delivery to the wholesaler location. At that time, the wholesalers take control of the product as they take title, bear the risk of loss of ownership and have an enforceable obligation to pay the Company. They also have the ability to direct sales of product to their customers on terms and at prices they negotiate. Although wholesalers have product return rights, the Company does not believe they have a significant incentive to return the product.

Current wording

The Company stores its INCRELEX®, ALKINDI SPRINKLE®, KHINDIVITM, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone inventory at its pharmacy distributor customer locations, and sales are recorded when stock is pulled and shipped to fulfill specific patient orders.

Previous wording

The Company estimates the fair value of stock-based option awards using the BSM. The BSM requires the input of subjective assumptions, including the expected stock price volatility, the calculation of expected term, forfeitures and the fair value of the underlying common stock on the date of grant, among other inputs. The risk-free interest rate was determined from the implied yields for zero-coupon U.S. government issues with a remaining term approximating the expected life of the options or warrants. Dividends on common stock are assumed to be zero for the BSM valuation of the stock options. The expected term of stock options granted is based on vesting periods and the contractual life of the options. Expected volatilities are based on the Company's historical volatility subsequent to our IPO, which we believe represents the most accurate basis for estimating expected future volatility under the current conditions. We account for forfeitures as they occur.

Current wording

The Company estimates the fair value of stock-based option awards using the BSM. The BSM requires the input of subjective assumptions, including the expected stock price volatility, the calculation of expected term, forfeitures and the fair value of the underlying common stock on the date of grant, among other inputs. The risk-free interest rate was determined from the implied yields for zero-coupon U.S. government issues with a remaining term approximating the expected life of the options or warrants. Dividends on common stock are assumed to be zero for the BSM valuation of the stock options. The expected term of stock options granted is based on vesting periods and the contractual life of the options. Expected volatilities are based on the Company's historical volatility subsequent to our IPO, which we believe represents the most accurate basis for estimating expected future volatility. We account for forfeitures as they occur.