Eton Pharmaceuticals, Inc.

Good afternoon and welcome to the Eaton Pharmaceuticals Second Quarter 2021 Financial and Operating 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 Krempa, Senior Vice President of Business Development and Investor Relations at Eaton Pharmaceuticals. Please proceed.

Thank you, operator. Good afternoon, everyone, and welcome to Eaton's second quarter 2021 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 the call today, we have Sean Brunch-Elson, our CEO, Wilson Troutman, our CFO, and Paul Stickler, our Senior Vice President of Sales and Marketing. Before we begin, I would like to remind everyone that statements 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 Brinjelson.

Thank you, David. Thank you, everyone, for joining us today as we discuss our second quarter earnings results. During the second quarter, we had a number of important accomplishments, including the approval of ResiPRESS, a ready-to-use formulation of ephedrine injection. For years, hospitals have had to manually dilute or compound concentrated ephedrine in emergency care situations. Now, with the approval of ResiPRESS, Eaton is offering yet another value-enhancing option for physicians and caregivers. This is now our fourth FDA approval, and I'm very proud of our team and the hard work they have put in to achieve so many approvals in such a short period of time. Of the nine products in our pipeline, nearly 50% are now approved, with the others under FDA review and approval expected over the next couple of weeks and months. Currently, there are over 6 million vials of the concentrated ephedrine injections sold annually in the U.S. market. As you can imagine, this would translate into a significantly higher number of ready-to-use doses once they have been diluted for administration. We would expect to launch ResiPress at a slight premium to the ephedrine concentrate in the coming months. Eaton also expanded our orphan drug pipeline in the quarter. with the acquisition of the U.S. and Canadian rights to Xenio hydrocortisone. Xenio is a proprietary needle-free autoinjector that is designed to quickly and safely deliver a rescue dose of hydrocortisone during an adrenal crisis. Since launching Alkindi Sprinkle, we had constantly heard patients describing an autoinjector as the number one unmet need for the adrenal insufficiency community. So we are very excited to be able to work with CrossCheck to try to bring this treatment to the community as quickly as possible. This product is a perfect strategic fit with Elkindi Sprinkle. Elkindi Sprinkle is the daily maintenance treatment for pediatric AI patients, and Xenio Hydrocortisone is the rescue treatment that AI patients are likely to carry with them, similar to how someone would carry an EpiPen for, obviously, a different indication. The announcement of our deal has also helped further deepen our relationship with the AI community. Numerous physicians and patient advocacy groups reached out to express their excitement for the project, including some leading pediatric endocrinologists that had previously been hard to reach. Now more on our Alkindi Sprinkle commercial launch. We were pleased to be able to initiate in-person meetings during the second quarter. Now we are prioritizing in-person meetings, and their frequency has surpassed our Zoom and telephone calls in recent months. We are finding in-person meetings to be significantly more effective than Zoom calls. Physicians are much more engaged when meeting person-to-person, and they enjoy being able to see Alkindi samples so they can feel comfortable knowing exactly what they are prescribing to their patients. As a result of this ability to now host more in-person meetings and the positive feedback we have received, we are now planning to expand our field sales force. The ongoing feedback is clear. Physicians and patients like Alkindi So we believe increasing the reach and frequency of our in-person meetings with doctors will accelerate adoption of the product. To illustrate this point, to date we've only reached approximately 10% of prescribing physicians in person. What that means is that we have a long runway of growth ahead of us. The company is also seeing favorable support from payers that understand the critical need to dose precisely in pediatric patients. We are not aware of any patients that have had LKINDI coverage rejected by their insurer, and many patients are starting with a quick start program where we immediately fill the prescription so the child can begin treatment and handle the paperwork and the administrative aspects on the back end. This process has worked seamlessly with patients, converting to their insurance coverage by the second monthly script. Currently, more than 90% of patients on treatment are being reimbursed for the product, and the remainder are newly added patients on the quick start that are expected to convert to commercial coverage by next month. While the initial launch faced some COVID-related headwinds that limited our ability to get in front of doctors, the physicians' reactions to in-person meetings and the strong payer's support has confirmed our assumptions about the product and given us greater confidence in our long-term expectations, which remain unchanged. While we had some delays in our pipeline during the quarter, in large part due to COVID-19 delaying the FDA's international inspections, Our team has proven that we are resilient, and I am confident we will be able to achieve approval on these products in short order. The company is looking forward to the new Topiramate PDUFA date of November 6th. The product is manufactured at an already FDA-approved U.S. manufacturing site that was successfully inspected in late 2020, so we do not expect any inspection issues during the review. We also continue to believe that the zonisamide application is fully ready for approval whenever the FDA can complete the foreign manufacturing site inspection. Unfortunately, we have not been given any indication of timing from the agency, but the manufacturing site has many other pending product applications, similar situation to ours, and we're hopeful the agency will prioritize the site with a near-term inspection and allow these important products to get to patients. Regarding our dehydrated alcohol and lamotrigine products, we expect both product applications will have amendments filed shortly with the FDA. And after responding to these FDA questions, we believe approval of the product could occur early next year. Eaton is excited for all four of these products to be approved and launched in the near future, which sets the company up for a very strong growth in 2022 and beyond. Before discussing financial results, I would like to just summarize and to thank also our long-term shareholders for their continued support and their belief in the vision of the company. I sincerely believe that Eaton's outlook has never been stronger than it is today for a number of reasons, One, the Alkendi launch is taking stride, growing sales every week. Two, we're on the cusp of launching our fourth commercial product. Three, we have four more potential product approvals lined up in the coming quarters. And lastly, we are fully funded with more than $25 million of cash today, plus more milestone payments expected to come in soon. Therefore, no need for external financing in the foreseeable future. With that, I would like to turn the call over to Wilson, who will briefly walk through some of the financials before we open up the call for Q&A. Wilson?