Eton Pharmaceuticals, Inc.

Note 9— Basic and Diluted Net Income (Loss) per Common Share

Basicnet income (loss) per common share is computed by dividingnet income (loss) attributable to common stockholders for the period by the weighted average number of common shares outstanding during the period. Dilutednet income (loss) per share is computed by dividing thenet income (loss) attributable to common stockholders for the period by the weighted average number of common and common equivalent shares, such as unvested restricted stock, stock options and warrants that are outstanding during the period. Common stock equivalents are excluded from the computation when their inclusion would be anti-dilutive. During the three and nine months ended September 30, 2026 and 2025, included in the basic and diluted net income (loss) per share calculation were RSUs awarded to directors that had vested, but the issuance and delivery of the shares are deferred until the director retires from service as a director.

The following table shows the computation of basic and diluted net income (loss) per common share:

Note 10— Income Taxes

The following table summarizes the Company's income tax (benefit) expense and effective tax rates for the three and nine months ended September 30, 2026 and 2025:

For the three and nine months ended September 30, 2026, the Company recorded an income tax benefit of $12,892 and $12,732, respectively. For the three and nine months ended September 30, 2025, the Company recorded an income tax benefit of $28 and an expense of $112, respectively.

For the three and nine months ended September 30, 2026, the difference between the income tax benefit and the tax at the federal statutory rate of 21% was primarily due to the release of previously recorded valuation allowances against the Company's federal net operating losses. The release of the valuation allowance against a portion of the Company's state net operating losses and other discrete tax benefits also contributed to the difference. For the three and nine months ended September 30, 2025, the difference between the income tax benefit or expense and the tax at the federal statutory rate of 21% was due to the impact of the valuation allowance, partially offset by state income taxes.

The valuation allowance is determined in accordance with the provisions of ASC 740, which requires an assessment of both negative and positive evidence when measuring the need for a valuation allowance. In the third quarter of 2026, the Company primarily relied upon its projected availability of future taxable income from its forecasts for pre-tax income. The Company obtained additional, secondary support from reviewing its reversing taxable differences. As a result, the Company determined that it was more-likely-than-not that its federal, and a portion of its state, deferred tax assets would be realized. Accordingly, the associated valuation allowance was released during the three months ended September 30, 2026. The Company continues to maintain a valuation allowance against deferred tax assets that are not expected to be realized, principally relating to a portion of its Illinois net operating loss carryforwards.

The Company's quarterly income tax provision for the three and nine months ended September 30, 2026 captures the income tax effects of the One Big Beautiful Bill Act (the “Act”), which was enacted on July 4, 2025. The Company’s estimated annual effective tax rate reflects the benefit of the Act provision restoring the ability to immediately deduct domestic research and experimental expenditures under Internal Revenue Code Section 174. Accordingly, the Company recognized the deferred tax effects of the Act and other temporary differences to the extent the related deferred tax assets were determined to be more likely than not realizable.

Taxes paid, net, during thenine months ended September 30, 2026 and 2025 were $106 and $117, respectively. Tax refunds received during the nine months ended September 30, 2026 and 2025 were $110 andzero, respectively.

Note 11— Related-Party Transactions

Chief Executive Officer

The Company acquired DS-200 and all related intellectual property pursuant to an asset purchase agreement (the “Selenix Agreement”) dated June 23, 2017 between the Company and Selenix LLC (“Selenix”), an entity affiliated with the CEO. On August 30, 2024, the Company amended the Selenix Agreement in tandem with an agreement to sell DS-200 in August 2024(see Note 13). Pursuant to the terms of the amended Selenix Agreement, Selenix waived its rights to future milestone payments and 50% of DS-200 profit in exchange for 45% of proceeds received by the Company from the DS-200 sale agreement. Selenix is 50% owned by Messa Holdings LLC (“Messa”), which is 100% owned by the CEO. In March 2025, the Company recognized licensing revenue of $1,500 and $825 in cost of sales from a development milestone.

Note 12—Leases

The Company recognizes a right-of-use (“ROU”) asset and a lease liability on the balance sheets for substantially all leases, including operating leases, and separates lease components from non-lease components related to its office space lease.

In May 2025, the Company entered into an amendment to its office lease agreement to expand its office space, from 5,507 square feet to 8,079 square feet, and to renew its lease term. The amendment to the lease agreement was effective September 1, 2025 and the renewal period for the office lease is for asixty-five month period through January 2031 and included tenant improvement allowances. The Company removed its existing ROU asset and liability and recorded $333 in ROU assets, $189 in tenant improvement allowances and $522 in operating lease liabilities in association with the lease extension.

In May 2026, the Company entered into an additional office lease agreement for 4,634 square feet. The lease agreement was effective May 15, 2026 for afifty-one month period through July 2030. The Company capitalized $849 in ROU assets and recorded $849 in operating lease liabilities in association with the lease agreement.

The Company’s operating lease cost was $175 and $36 for thenine months ended September 30, 2026 and 2025, respectively. For thenine months ended September 30, 2026 and 2025, cash paid for operating leases was $189 and $68, respectively. The ROU asset non-cash lease expense was $96 and $35 for thenine months ended September 30, 2026 and 2025, respectively, and is reflected within non-cash lease expense on the Company’s Condensed Statements of Cash Flows. As of September 30, 2026 and December 31, 2025, the average remaining lease term was 4.1 and 5.2 years, respectively, and the weighted average discount rate for the Company's leases was 11.0% and 11.8%, respectively, for each period.

The table below presents the lease-related assets and liabilities recorded on the balance sheets as of September 30, 2026 and December 31, 2025:

The Company’s future lease commitments as of September 30, 2026, are as indicated below:

Note 13—Commitments and Contingencies

Legal

The Company is subject to legal proceedings and claims that may arise in the ordinary course of business. The Company is not aware of any pending or threatened litigation matters at this time that would have a material impact on the operations of the Company.

License and product development agreements

The Company has entered into various agreements that include commitments and contingencies, which are described below.

In March 2020, the Company entered into an Exclusive License and Supply Agreement with Diurnal for marketing ALKINDI SPRINKLE® in the United States (the “Alkindi License Agreement”). In December 2024, the Company and Diurnal entered into an amendment to the Alkindi License Agreement to extend the agreement terms to incorporate both ALKINDI SPRINKLE® and KHINDIVITM in the existing agreement terms. The Company could pay up to $44,000 in future sales milestones. The Company pays tiered royalties of 11.0% to 17.0% on net sales.

In June 2021, the Company acquired U.S. and Canadian rights to Crossject’s ZENEO® hydrocortisone needleless autoinjector, which is under development as a rescue treatment for adrenal crisis. The Company could pay up to $3,500 in future development milestones and up to $6,000 in commercial milestones, as well as a 10% royalty on net sales.

In September 2022, the Company entered into a licensing agreement with Lukare Medical LLC (“Lukare”) to which the Company acquired the U.S. rights to Betaine Anhydrous (betaine anhydrous oral solution). Under the terms of the agreement, Lukare is entitled to a $250 commercial milestone payment upon Betaine Anhydrous achievement of a certain net sales and a $500 payment if no generic competitors have launched within 48 months after the effective date of the license agreement. The $500 payment was made in September 2026.

In March 2023, the Company acquired rare disease endocrinology product candidate, ET-600, from Tulex. In February 2026, the FDA approved the New Drug Application (“NDA”) for ET-600 (“DESMODA™”) and the Company launched DESMODA™ in March 2026 and was obligated to make a milestone payment of $250, which was paid in April 2026. The Company pays tiered royalties to Tulex of 12.5% to 17.0% on net sales of DESMODA™.

In March 2024, the Company entered into a licensing agreement with APR Applied Pharma Research SA (“APR”) pursuant to which the Company agreed to acquire the U.S. rights to various products under the PKU GOLIKE brand. The Company could pay up to $2,000 in one-time sales milestones, and the Company pays a royalty of 30% of net sales less product costs to APR.

In August 2024, the Company entered into an agreement to sell its DS-200 product candidate. In March 2025, the Company recognized licensing revenue of $1,500 from a development milestone payment. In addition, the Company could receive additional milestone payments of up to $5,000 based on the achievement of certain future development and commercial milestones related to DS-200, of which the Company would recognize 45% of the proceeds from the future milestones, with the balance being distributed to other partners.

In November 2024, the Company entered into a licensing agreement with AMMTeK pursuant to which the Company agreed to acquire the U.S. rights to glyburide oral suspension. Glyburide oral suspension was approved by the European Medicines Agency in 2018 and has been granted Orphan Drug Designation by the FDA. AMMTeK has conducted a post-approval study tracking five years of real-world safety and efficacy in European patients, which will be used to support the Company's NDA submission. In July 2025, the Company paid $500 to AMMTeK upon the receipt of FDA meeting minutes. Under the terms of the licensing agreement, the Company could pay up to $1,850 as follows: $550 upon NDA acceptance for review by the FDA and $1,300 upon NDA approval by the FDA and first commercial sale. The Company would also be required to pay a royalty of 14% of net sales to AMMTek.

In December 2024, the Company acquired GALZIN® (zinc acetate) from Teva Pharmaceuticals USA, Inc and assumed the commercialization of the product in the U.S. during March of 2025. The Company is required to pay the seller a royalty of 10% of U.S. net sales through the tenth anniversary of the Company's first commercial sales of the product in the U.S.

In December 2024, the Company acquired INCRELEX® (mecasermin injection) from Ipsen S.A. The Company is obligated to pay the seller $2,500 on each of the first and second anniversaries of closing, of which $2,500 was paid to Ipsen S.A. in December 2025. As of September 30, 2026 and December 31, 2025, the present value of the deferred consideration of $2,443 and $2,259, respectively, was classified as accrued liabilities in the Condensed Balance Sheets, with $57 and $241 as of September 30, 2026 and December 31, 2025, respectively, to be accreted to interest expense over the remainder of the deferred consideration term using the effective interest rate method.

In connection with the INCRELEX® product acquisition, the Company assumed the commercial manufacturing and supply agreement between Simtra BioPharma Solutions and Ipsen Pharma SAS. The commercial manufacturing and supply agreement was executed in November 2020. The initial term of the supply agreement expires in November 2027 and renews fortwo additionaltwo year terms thereafter. The commercial manufacturing and supply agreement is associated with the production of INCRELEX® for commercial usage and contains an annual production obligation and a maximum annual obligation.

Additionally, in connection with the INCRELEX® product acquisition, the Company assumed a manufacturing services agreement between Lonza Ltd and Ipsen Pharma SAS, as amended. The manufacturing services agreement was executed in December 2022 and expires in December 2032. The manufacturing services agreement is associated with the production of INCRELEX® bulk drug substance and contains a minimum and a maximum obligation every twenty-four months.

In March 2025, the Company out-licensed the commercial rights to INCRELEX® in territories outside of the U.S. to Esteve Pharmaceuticals, S.A. (“Esteve”). Under the terms of the licensing agreement, Esteve paid the Company €4,000 in July 2025 to license the rights to INCRELEX® for up toten years, and Esteve also received an option to acquire the international rights in the future for a purchase price of up to €6,000. In accordance with ASC 606 with respect to the license and supply agreements between the Company and Esteve, the Company recognized in March 2025, $4,327 in accounts receivable, licensing revenues of $1,786 and deferred revenues of $2,541. With respect to deferred revenues, $497 and $457, respectively, are reflected in accrued liabilities and $1,416 and $1,762, respectively, in other long-term liabilities in the Company's Condensed Balance Sheets as of September 30, 2026 and December 31, 2025. Deferred revenues will be amortized to revenues over the course of the agreements based on quarterly INCRELEX® product sales, and at the end of the initial term of the license agreement a deferred revenue residual will be recognized. During the three andnine months ended September 30, 2026, the Company recognized revenue of $65 and $495, respectively, from deferred revenues associated with the supply agreement. During the three andnine months ended September 30, 2025, the Company recognized revenue of $322 from deferred revenues associated with the supply agreement.

In June 2025, in connection with the asset purchase agreement with Ipsen S.A, the Company purchased $11,540 in inventory. Under the terms of the inventory purchase agreement, the Company is required to make eight equal quarterly installment payments to Ipsen S.A, beginning in the third quarter of 2025. Accordingly, the Company has classified $5,036 and $6,926, respectively, in accounts payable andzero and $3,463, respectively, in other long-term liabilities in the accompanying Condensed Balance Sheets as of September 30, 2026 and December 31, 2025.

In February 2026, the Company entered into a licensing agreement to acquire the U.S. rights to HEMANGEOL® (propranolol) oral solution from Pierre Fabre. Under the terms of the licensing agreement, the Company will pay an 8% royalty on net sales for the duration of the product’s patent protected life, which expires in October 2028. The Company accounted for this transaction as an asset acquisition.

In May 2026, the Company entered into a licensing agreement for the U.S. rights to IMPAVIDO® (miltefosine) oral capsules with an affiliate of Knight Therapeutics, Inc. (“Knight Therapeutics”). Under the terms of the licensing agreement, the Company will pay Knight Therapeutics $4,250 in fixed fees during the initial term ending March 31, 2032 as follows: $125 on July 1, 2026, $1,250 on April 1, 2027, $1,000 on June 30, 2028, $1,000 on June 30, 2029 and $875 on June 30, 2030. The Company made the first payment of $125 in the third quarter of 2026. The Company's exclusive right to commercialize IMPAVIDO® in the U.S. began in September 2026. As of September 30, 2026, the Company has classified $922 and $2,372 in accrued liabilities and other long-term liabilities, respectively, in the accompanying Condensed Balance Sheets associated with the associated future fixed fees described above, with $831 to be accreted to interest expense through June 30, 2030 using the effective interest rate method. After the initial term, the Company will have the option to make up toten additional annual renewals subject to certain conditions and an annual fee. The Company will also pay (i) up to an additional $4,000 based on tiered revenue milestones ranging from $50,000 to $200,000, (ii) royalties of 55% of net sales up to $7,000 per calendar year, and (iii) royalties of 50% of net sales above $7,000 per calendar year. Knight Therapeutics will be responsible for all product costs and regulatory expenses associated with IMPAVIDO®, and the Company will be responsible for sales and marketing expenses related to commercialization.

In July 2026, the Company entered into a licensing agreement for a late-stage rare disease product candidate ASN-001 (timolol topical gel) from Auson Pharmaceuticals (“Auson”). Under the terms of the licensing agreement, the Company paid Auson an upfront license fee of $3,000 in August 2026. Upon the successful approval by the FDA of an NDA for ASN-001, the Company will be responsible for (i) a payment of $5,000 to Auson upon the first commercial sale of product after FDA approval, (ii) payments of up to $28,500 to Auson based on tiered revenue milestones ranging from $20,000 to $280,000 in net product sales and (iii) tiered royalty payments to Auson of 10% to 15% of sales of the ASN-001 product.

Indemnification

As permitted under Delaware law and in accordance with the Company’s Amended and Restated Bylaws, the Company is required to indemnify its officers and directors for certain events or occurrences while the officer or director is or was serving in such capacity. The Company is also party to indemnification agreements with its directors and officers. The Company believes the fair value of the indemnification rights and agreements is minimal. Accordingly, the Company hasnot recorded any liabilities for these indemnification rights and agreements as of September 30, 2026 and December 31, 2025.

Note 14— Subsequent Events

LIBERVANT®

On October 13, 2026, the Company entered into a license agreement (the “License Agreement”) with Aquestive Therapeutics, Inc. (“Aquestive”) pursuant to which the Company acquired exclusive U.S. rights to commercialize LIBERVANT® (diazepam) buccal film (the “Product”) for the acute treatment of seizure clusters in patients with epilepsy, subject to applicable regulatory approvals. Under the terms of the agreement, the Company paid Aquestive an upfront license fee of $10,000 in October 2026. In addition, the Company is responsible for regulatory and commercial milestone payments to Aquestive of up to an aggregate of $47,500 as follows: $10,000 upon first commercial sale in the United States, reduced to $5,000 if full FDA approval permitting commercial sale for ages 2–5 has not been received; $2,500 upon approval by the FDA of the Product for patients ages 6–11; and up to $35,000 of commercial milestones tied to Product’s achievement of certain annual net sales levels in the United States. The Company will pay Aquestive a mid-teens royalty on annual net sales of the Product. In connection with the License Agreement, the Company also entered into a supply agreement with Aquestive (the “Supply Agreement”) under which Aquestive will serve as the exclusive manufacturer and supplier of the Product, subject to specified exceptions. The Supply Agreement provides for an initial term of 20 years. At the conclusion of such initial term, the Supply Agreement will be subject to an automatic extension for succeeding three-year periods unless either party terminates with at leasttwo years notice prior to the end of the initial or any succeeding term.

ET-900

On November 2, 2026, the Company announced ET-900, a new development program evaluating mecasermin injection for the treatment of infantile and epileptic spasms. Mecasermin is a recombinant form of IGF-1 and the active ingredient in INCRELEX. The Company has entered into a license agreement with Baylor College of Medicine covering patent rights related to the use of IGF-1 for the treatment of spasms. Under the license agreement, upon FDA approval for infantile and epileptic spasms, the Company will pay $1,000 upon first commercial sale and up to $8,000 of milestones based on annual net sales within the indication ranging from $50,000 to $500,000. Additionally, the Company will pay a low single-digit royalty on annual net sales of ET-900 for infantile and epileptic spasms.