Eton Pharmaceuticals, Inc.

Good evening and welcome to the Eaton Pharmaceutical 4th 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 to 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 Crimpa, Senior Vice President of Business Development and Investor Relations at Eaton Pharmaceutical. Please proceed.

Thank you, operator. Good evening, everyone, and welcome to Eaton's fourth 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 Shawn Brunjielsen, our CEO, Wilson Troutman, our CFO, and Kevin Guthrie, our Executive Vice President of Commercial Activities. In addition to taking live questions on today's call, we will be answering questions that have been emailed to us by investors. Investors can send their questions to investorrelations at EatonPharma.com. Before we begin, I would like to remind everyone that statements made during today's call may contain forward looking statements that 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 Bridgeson.

Thank you, David. Thank you, everyone, for joining us this evening. We have a number of exciting product launches and new initiatives in motion right now, so I'm excited to provide all of you an update today. With the launch of ResiPress this week, we now have six commercial products in launch phase and an additional four products that have been submitted to the FDA and expected to be approved and launched in the coming quarters. I'll touch on each of them today, but I'd like to start first with our recent launch of carglymic acid, which occurred in December. We were very excited when we acquired this product late last year. It was clearly a great fit with our orphan drug business, and we knew it would be an important product for our company. Although we are only three months into launch, I am pleased to report that we are trending well ahead of our initial projections for the launch. Our product is the first and only generic of Carboglu, which is used to treat elevated levels of ammonia in the body and is one of the most expensive treatments in the world. The cost of treatment for many adult patients can exceed $1 million per year. So our lower-cost alternative has received a welcome reception from patients, payers, and healthcare professionals. Although we are a fully substitutable and bioequivalent generic, our product actually has advantages over the branded product. including the fact our product does not require refrigeration while the brand product does. Additionally, our product has a 90-day shelf life after opening versus 30 days for the branded product, and we expect our labeling to be updated shortly to reflect that. We've already heard from patients that they find this to be a very valuable benefit. Our strategy has been to actively detail the product directly to physicians and patient advocacy groups, at medical conferences with our orphan drug sales force rather than trying to drive adoption through aggressive discounting with payers. Payers often try to instigate a pricing war by requesting massive price discounts in exchange for sending volumes to your product, especially on generic products. Given our ability to use a sales force to directly talk to physicians and patient advocacy groups about the advantages of our product, we do not believe we need to engage in these aggressive pricing games. We believe this will be an attractive market for us long-term and are not interested in pursuing short-term revenue wins at the cost of destroying the long-term market economics. We believe the carbon blue market in the U.S. is more than $50 million annually, and our goal is to capture 25 to 35 percent of the market. We are very encouraged by the adoption we have seen in the first couple of months, and we believe we can reach our goal by the end of the year. We launched the product on December 20th, so it did not have an impact on the fourth quarter results we are reporting today. But now that we have already added patients throughout the first quarter, we would expect to see significant revenue from the product starting in the second quarter of this year. Now turning to other drivers for 2022. One of the primary drivers will be our orphan drug, Alkindi Sprekel, which is indicated for the treatment of adrenal insufficiency in pediatric patients. Alkindi sales continue to grow in Q4 compared to Q3. However, we believe They can grow at a much faster pace, which is why we initiated a co-promotion agreement with Tolmar late last year. We are pleased to announce this co-promotion partnership appears to be working, as we have already seen significantly higher rates of new prescriptions in recent weeks. Tolmar's 62-person sales force was fully trained in out-promoting LKD Sprinkle in the field starting in the second half of January. They have now been promoting the product for almost 60 days, and we are seeing the benefits of this expanded reach. As expected, they have been able to conduct a significantly greater number of in-person meetings with doctors than we were able to do on our own. In fact, last week we saw record new patient scripts breaking the old record that was set just two weeks ago, and March is on track to be by far our highest month ever for new patient scripts. We believe the full benefit of the Tolmar partnership will be even more apparent in quarters to come as Tolmar is able to achieve a steady cadence of repeat doctor's visits that are often required to change physicians' prescribing habits. In addition to the extra push from Tolmar sales reps, we are in the process of implementing an expanded digital marketing campaign. We will have new branding and messaging with an enhanced focus on directly educating patients and caregivers about the benefits of precision dosing. Next, I will turn to our two commercial hospital products, including our newest product launch, ResiPress. ResiPress is our own ready-to-use formulation of ephedrine. The market for ephedrine injection in the U.S. was over 85 million last year and grew more than 20%. The vast majority of the market is still sold in a concentrated form that must be manually diluted prior to administration. We expect the launch of ResiPress to help accelerate the adoption of ready-to-use products And ultimately, we believe the majority of the market will convert to ready-to-use. We have partnered with Xgen Pharmaceuticals, a leading injectable drug company, to commercialize our ResiPress ampule. Xgen has indicated to us that they've already seen strong initial interest from customers, and we are optimistic about the opportunity. Our other commercial hospital product, BioOrphan Ampules, continues to see increased adoption every quarter. However, it is still at levels well below what we believe the opportunity is once we convert to the vial presentation, which is why we are working aggressively to convert both ResiPress and BioOrphan into vial formats. I'm pleased to say that the manufacturing of registration batches of both products and vials occurred late last year, and the initial data looks good. We are just waiting on the final stability data time points in order to submit the prior approval supplements, but I expect them to be submitted in the second quarter, which could allow for a launch of both vials before the end of this year. Turning now to our royalty products. In our royalty product segment, our partner, Azurity Pharmaceuticals, launched a Prontia, our Topiramate oral solution, in December. We had found Topiramate to be the most requested oral liquid from pharmacists, so we believe there's significant demand and a large market opportunity for the product. The launch triggered a $5 million payment to us, and we will receive a single-digit royalty on sales of the product. The $5 million payment was recognized as revenue in our Q4 results when it was achieved, but the actual cash payment was received in early January, so it was not included in our year-end cash balance. In addition to all of this progress we've made on the commercial front, we have continued to advance our pipeline products in bringing them closer to approval. Zonisamide oral suspension. This is the product approval that had been held up last summer because the FDA was unable to inspect the UK-based manufacturing site due to COVID-related travel restrictions. However, the inspection has been completed. It took place at the end of January, and we believe it was a successful inspection that should allow the FDA to approve the product application. Unfortunately, we have not received a new target action date to share with you at this time, but we hope to receive a decision from the FDA in the coming weeks or months. The approval and launch of zonisamide would trigger another $5 million payment to us from Missouri. Secondly, lamotrigine. Our partner completed the human factor study and submitted the results to the FDA in the fourth quarter. We believe the response fully addressed all of the FDA's questions from the complete response letter. The application has been assigned a new target action date of May 2022. The approval and launch of lamotrigine would also trigger a $5 million payment for us. And CISTEEN. CISTEEN is our paragraph four trial ongoing this week. I am actually in Delaware now attending the trial, so I appreciate everyone's flexibility to hold this call later than normal. We continue to feel strongly that the Innovators Patent should never have been issued as our partner has been manufacturing the same CISTEEN product in the same format for more than 20 years now, well before Accela ever began working on the project. While we do not have a timeline for the judge's decision, our lawyers expect to receive it in the second half of this year. We believe we responded to the final minor request from the FDA in our application, which should allow our application to receive tentative approval as early as next month. As the first to file ANDA against the innovator, we should be entitled to 180 days of generic exclusivity if we successfully overturn their patents. The innovator's market is more than 50 million annually, so this would be a significant opportunity if we were able to prevail and launch the product. Finally, dehydrated alcohol. We are actively working on the resubmission to address the FDA's comments on the CRL. We held a meeting with the FDA in the fourth quarter and received feedback regarding exactly what the agency wanted to see in our response. It is taking us a little longer than originally anticipated to address those requests, but the dialogue with the FDA gave us increased confidence that we are fully addressing their points and providing them with an application that warrants approval and expect to have this wrapped up in the coming weeks. I think it is undeniable that we are in the most exciting time in our history and an important inflection point as we launch all of these products that we worked so hard to develop. Our goal remains to achieve sustained profitability by the end of this year, and we believe we are on a strong path to do so given the recent sales trends of carglymic acid and Alkindi. We believe we can achieve at least $25 million worth of revenue this year, including $10 million of launch milestones from Missouri D. plus potentially significant upside in the second half of the year from a number of items that could materialize for us, including the launch of biorphine, resipress vials, successful outcome in the litigation, and launch of our cysteine product, or receiving approval and launching dehydrated alcohol injection. So with that, I will now turn it over to Wilson to discuss our financial results. Wilson?