Eton Pharmaceuticals, Inc.

Good afternoon and welcome to the Eaton Pharmaceuticals first quarter 2022 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 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 first quarter 2022 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 Brinjelson, our CEO, James Gruber, our CFO, and Kevin Guthrie, our Executive Vice President of Commercial. 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 investorrelations at etonpharma.com. 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. I will turn the call over to our CEO, Sean Brinjelson.

David, thank you. Good afternoon, everyone, and thank you for joining us. On today's call, I will discuss our strong first quarter commercial performance as well as some product-related development updates. Starting with the commercial results, very pleased with our revenue that we posted in the first quarter. It was our fifth straight quarter of sequential growth in product sales and royalty revenue. And we expect that streak of sequential growth to continue throughout the rest of this year and into the foreseeable future. In the first quarter, we reported product sales revenue of $2.2 million, which was double what we had reported in the fourth quarter of 2021. Our revenue continues to build month over month. Alkindi, cargumic acid, biorphine all saw record revenue levels in April and are also expected to exceed those levels in May. These products are starting to gain significant traction and yet are still in the early stages of their launches. So I hope it's becoming more evident to investors that they hold significant revenue potential for the company. I believe it will be even more apparent as we report the coming quarters throughout the rest of this year. I continue to expect us to report more than $25 million in revenue this year, composed of $10 million of milestone payments and at least $15 million of product sales and royalty revenue. By the way, on a side note, I wouldn't say we're going to hit $25 million. If I didn't think we could at least hit that, I think we could probably hit more. To be clear, the $15 million of product sales is only from products on the market today, and any of our potential new approvals and launches in the back half of the year would be additional upside. Turning to product-specific updates, I will start with curglimic acid, which we launched in late December. We are very happy with the performance of curglimic acid, and it is tracking ahead of our original expectations. I'm also pleased to report that we had numerous patients initiate treatment during the quarter, and more have initiated since quarter end. Product earned a meaningful revenue in the first quarter. Many patients joined mid-quarter to start on what we call a quick start, so the full revenue contribution from the product will be more pronounced in the second quarter and also in the rest of the year. The product's reception from patients and physicians continues to be overwhelmingly positive. They are excited to have another treatment option and are particularly pleased about our product's room temperature storage compared with the refrigeration requirement associated with the competing product. Our team exhibited at three of the most important conferences in the field over the last eight weeks, which provided us with valuable interactions that we believe are likely to translate into additional patient conversions in the coming months. We continue to make strong progress towards our goal of taking 25 to 35 percent market share of this more than $50 million market before the end of the year. Turning to Alkindi Sprinkle, Alkindi Sprinkle also had a very strong quarter, first quarter. We added more patients on treatment in the first quarter than we had in any quarter since launch. Alkindi sales continue to grow month over month, with April well exceeding March levels and May expected to grow from April. While the product posted solid growth in April, the number of new patient ads was not as high as the record number we saw in March. We believe the slower growth rate in April could be due to some organizational changes implemented by our co-promotion partner, Tolmar. However, there's large sales force, which was previously selling into two call points, both pediatric endocrinology and oncology, is now in the process of shifting that into two separate sales forces. So there will be a new sales force, 100% dedicated to just pediatric endocrinology. And we also believe this change is a positive, may cause some short-term disruption, but ultimately will be a long-term benefit as these dedicated sales reps will build deeper relationships and more frequent interactions with the prescribing doctors. Our partner expects to have these changes fully implemented by July, and so the disruption will be short-lived. We also saw good results from our hospital products in the quarter. Biorphin ampules continue to see increased adoption and record sales month over month. While the current sales are not yet reaching their full potential due to the ampule container, I am pleased to share that we finally have submitted our prior approval supplement for the vial format and have been assigned a target action date of August. Based on the feedback from customers, the conversion rates of these ready-to-use products are going to be significant. We continue to believe that the long-term opportunity for the Bryorcan franchise is in the millions of units annually and tens of millions of dollars annually. Our partner, XGen, also launched ResiPress ampules in the first quarter. We expect to submit the prior approval supplement for the ResiPRESS vials later this month, which would allow it to be approved before the end of the year. Unfortunately, since the launch of the ResiPRESS product, we have seen increased competition from other ready-to-use ephedrons in the market. However, given that market is estimated to be more than 10 million doses annually, we still believe there's ample opportunity for this product to provide a meaningful profit contribution. On the R&D side, we have had a very productive couple of months since our last call. Most notably, we received final FDA approval of our cysteine injection product, bringing us up to a new total of seven FDA-approved products in our portfolio. The team continues to execute. We were the first to file an ANDA on cysteine injection. We've also been awarded 180 days of generic exclusivity if we successfully overturn the patent. The trial took place in March, and we expect to receive a judge's opinion by August. We are taking steps to prepare for launch so that we can be ready to commercialize the product shortly after the judge's opinion is positive. We estimate the current Cysteine market well in excess of 50 million annually. As you may remember, our partner has been manufacturing Cysteine in its current formulation for more than a decade, well before Accela began working on its product or filing its patent So we believe we have a very strong position in this case. In addition, we believe the fact that our product has now received final approval by the FDA further strengthens our case. We also announced today our development project for a biorphine premixed bag, which I am very excited about. We believe this would be a critical product and address a significant unmet need in the marketplace. Currently, hospitals must manually mix up their own bags or purchase premixed bags that are not FDA approved, have not been shown to be safe or efficacious from compounding pharmacies. We expect to submit the NDA for the product by the third quarter of this year, which could allow for approval as early as the first half of next year. And this is one of the most in-demand, premixed products that we've encountered. In recent weeks, we also received good news on our zonisamide suspension product. Our partner received notice from the FDA that the manufacturing site inspection has been officially resolved and the facility was deemed ready for commercial manufacturing. As you may recall, the only previous deficiency in the application was the lack of the manufacturing site inspection, which had been delayed by COVID. Now that the inspection is behind us, we expect to see the application approved on or before the newly assigned target action date of July 18th. Eaton would receive a $5 million milestone payment from Missouri upon the launch of this product. We are also waiting on the upcoming PDUFA date of May 30th for our Lamotrigine product candidate. Our partners submitted the product's human factor study data in the fourth quarter of 2021, which we believe addressed all of the FDA's requests and allows for the product approval later this month. We have no reason to believe that the product would not be approved by the end of this month. The launch of the Lamotrigine product would also trigger a $5 million payment to Eaton. While I've been excited about Eaton's prospects, I hope it's clear to investors that we are positioned for a great 2022. With our commercial products ramping up quickly, we are poised to deliver significant revenue growth to shareholders throughout the rest of the year. But on top of the existing products, we have potential launches in lamotrigine, zonisamide, biorphin vials, resipress vials, cysteine injection, and even business development opportunities that I won't go into detail today. Despite the stacked pipeline of potential 2022 product launches, we are not satisfied and are not coasting. We continue to aggressively hunt for new high-return product opportunities. Obviously, there's no guarantee that any transactions will close, but we are actively engaged in discussions on a number of opportunities, not just development but even commercial, that could further expand our rare disease footprint. We believe we are sufficiently capitalized to deliver on product launches and continue investment in new products for long-term growth. We finished the quarter with more than $15 million in cash. Our burn is shrinking by the month with a rapid growth. And in addition, we are set to receive a toll of $10 million of milestone payments in the coming months if Zonisamide and Lamotrigine are launched as we expect. Absent of any large new product acquisition opportunities, we do not see any need for a capital raise. Now I will turn it over to our new CFO, James Gruber, who is on the call for the first time today. James was previously the U.S. controller at Horizon Therapeutics, one of the most successful rare disease companies in the industry. During his tenure at Horizon, the company grew revenue more than tenfold, so he has shown he can successfully manage accounting and finance departments at a rapidly growing pharmaceutical company. We are happy to have him joining the team, and we believe he will see similar growth during his tenure here at Eaton. We are, of course, sad to see Wilson retire as CFO. He's been an instrumental part of the company for our entire five-year existence and has certainly earned his retirement. He was one of the founding members of our team. Wilson will be around until the end of the month to ensure a seamless transition, and he will also be consulting over the subsequent months. So with that, I will now turn it over to James to discuss our financial results. James? Thank you, Sean. Thank you, Sean.