Eton Pharmaceuticals, Inc.

Good day and thank you for standing by. Welcome to the Eaton Pharmaceuticals Investor Day and Fourth Quarter 2024 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. I would now like to hand the conference over to your speaker today, David Krempa, Chief Business Officer.

Hello, everyone, and welcome to Eaton's fourth quarter 2024 results and 2025 Investor Day conference call. Before we begin the presentation, please take a look at our safe harbor statement. Our comments today may contain forward-looking statements and involve risks and uncertainties that could cause actual results to differ materially from those presented. Please see the forward-looking statements disclaimer in our earnings release and the risk factors in the company's filings with the SEC. With that, I will now turn the call over to Shawn Fringelson, our CEO, to begin the presentation. Thank you, David, and thank you, everyone, for joining us today. It's an exciting time for us to be hosting this call, and we have a lot of important items to discuss. We'll begin by reviewing our transformational last six months, our corporate vision, and our three-pillar strategy for long-term growth. And James will discuss our fourth quarter and full-year 2024 financial results. After that, we will provide a deep dive into the significant potential we see with the recently closed Increlix acquisition. Next, we will cover the Outlook for Adrenal Insufficiency franchise, and I'll tell you about our latest acquisition, Gelson, and the untapped opportunity we see within Wilson Disease. We'll then discuss our recently announced ET600 clinical results and upcoming planned NDA submission, as well as the update on the rest of the pipeline, including two new products that we are disclosing for the very first time. We'll wrap up with James discussing our financial outlook for 2025 and beyond, and then we will open up for Q&A. Today, you will not only hear from me, but also the rest of our executive team. James Gruber, our Chief Financial Officer, David Krempa, our Chief Business Officer, and also Ipek Erdogan, our Chief Commercial Officer. Okay, let's get started. Our vision is clear. We want to build a large, leading, ultra-rare disease company that brings as many new treatments to patients as possible. We intend to do that by putting patients first. Eaton operates on the philosophy that every patient that wants and needs our products will get it, regardless of insurance status or access barriers. I believe we have one of the most generous, high-touch patient-assisted programs in the industry. This goes beyond just $0 copays. It includes free drug programs for under or uninsured patients and free bridge shipments while reimbursement paperwork is being worked through. Our laser-sharp focus is on the rarest of conditions, which is an area where we think we can have the greatest impact on patients. All conditions our products target currently have fewer than 10,000 patients in the United States, and some have even fewer than 1,000. Many of these patient populations have been overlooked by big pharma for years because of the smaller size of these opportunities. However, we are determined to fill these gaps. I take pride in being able to fulfill an unmet need and deliver new treatment options to these patients that have been overlooked for far too long. And we want to solidify that commitment as many times as possible. Eaton is not a single product company. We now have seven treatments on the market, and we intend to continue growing that number, bringing in as many new therapies to market as possible, which allows us to make the greatest impact to patients. There are more than 5,000 rare diseases out there without any current treatments, so there's a lot of workforce to do and many patients that can benefit from Eaton bringing in new therapies to market. Over the last few months, we've acquired two high-value commercial products, Increlix and Galzen, which will both have significant and immediate impacts on our 2025 revenue. We've also added three late-stage pipeline assets, which help us deliver even greater long-term growth. And Neaton continues to deliver with our existing business. Our commercial team continues to produce organic sales growth while also preparing for major product launches and integrating our new products. And our R&D and regulatory teams have made exceptional progress advancing our pipeline assets towards the market. Our strategy remains the same. The way we've grown the business to date is how we'll continue to grow it in the future. Since the launch of our product years ago, we've had a three-pillar growth strategy. Number one, organic growth of existing products. Two, development of internal pipeline programs. And three, external acquisitions and licensing transactions. Starting with organic growth of the products we've already launched. We've seen 16 straight quarters of product revenue growth. That's every quarter since we launched Elkindi Sprinkle. And we believe Alkindi, Galzen, and Incralax, which have great organic growth prospects, will keep that streak alive. All three products have captured a relatively small percentage of their target market opportunities and have long runways ahead. Eaton also has a strong track record of developing and progressing products internally, with ET400 the best example of our internal competencies. With ET400, our team fully developed the product from scratch to FDA filing in a fast-paced and cost-effective manner. If approved, and we have every reason to believe that it will be, ET400 will add a very promising and high-revenue product to a portfolio for a fraction of what it would have cost to acquire a product with the same characteristics. However, our internal pipeline includes much more than ET400. We also expect to see near-term value realized from our other pipeline products, including ET600, ET700, ET800, Mglidia, and Venial, all of which we will talk about today. Finally, we will continue to pursue strategically aligned business development opportunities to acquire or license new products. This has been a crucial part of our growth story so far. And we've demonstrated success in identifying and acquiring undervalued products, making these acquisitions pay off quickly. We begin with Alcandia Sprinkle and Kirk-Lumic Acid, both of which had a very short payback period and will generate lifetime profits at many multiples of their purchase prices. We anticipate similar or better returns on our recently closed Inculex and Gelson transactions. Our business strategy has proven repeatable and we expect to continue finding and acquiring attractive assets on a go-forward basis. In many ways, we are actually in a better position to execute on business development activities today than ever before. With our strong financial position, we have greater access to capital and our increased commercial infrastructure and recent track record of commercializing rare disease products has made us an even more attractive partner. We expect acquisition and licensing transactions to remain a central part of the Eaton growth story. Our commercial strategy is one of our core competitive advantages and makes us particularly well-suited to delivering life-saving treatments for patients suffering from the rarest of diseases. Concentrated prescriber bases means a limited number of specialists. We could cover all of them with a highly targeted, efficient Salesforce efforts. Eaton has also established long-standing relationships in the pediatric endocrinology and metabolic genetics communities, a significant advantage when trying to drive awareness and adoption. This also gives us a strong competitive edge when launching new therapies. It's also why the Incolex acquisition was such a no-brainer. More than 90% of doctors who treat this condition were already our existing targets. Another distinctive competence we bring is our meaningful partnerships with patient advocacy groups. Many of the conditions we pursue are so rare that there is limited available to parents of newly diagnosed patients. These parents turn to and rely heavily on patient advocacy groups for education and updates on their condition and new treatment options. Our strong partnership with these groups has helped drive increased awareness. We also work closely with key opinion leaders. They provide valuable insight into cutting-edge treatment practices. Our close work with these thought leaders also allows us to better understand the shortcoming of existing treatments. This allows us to identify areas of unmet need. For example, the idea for EP600 product candidate came out of discussions with leading pediatric endocrinologists. Our Eaton Cares program, patient support program, is a point of difference for Eaton, offering best-in-class personalized support for patients and offices and removes access and affordability barriers. Through Eaton Cares, we offer a $0 copay for commercial patients, quick start and bridge programs, a nurse hotline, monthly patient check-in, and exclusive distribution through a high-touch specialty pharmacy. We truly believe our commercial strategy sets us apart and would not be easy to replicate. We've intentionally curated one of the broadest ultra rare disease portfolios in the industry. In fact, I cannot think of another player in the ultra rare disease space that has 13 approved or late stage ultra rare products in their portfolio. Of the 13 products, seven are commercial, and that should increase to eight with the upcoming expected approval of ET400. Five of these 13 products have been added in just the last six months. There were three acquisitions, INCRELEX, MGLIDIA, and GALSIM, plus two new internal programs, ET700 and ET800, which we initiated last year and will discuss for the first time today. Here are the results that showcase the effectiveness of our strategy and the excellence of our execution. We've made tremendous progress over the past few years, growing from just $3 million in product sales revenue in 2021 to $39 million in 2024. We are very proud of this accomplishment, but really are just getting started. Those of you who have followed us for a while know that we have ambitions to reach levels much higher than we are today. With the additions of Acrolux skeleton and ET400 on top of our existing approved products, we believe there's a clear path for us to reach 100 million in revenue in the near term, and ultimately much higher levels than that as our product pipelines come to market in the coming years. We look forward to spending this morning explaining why we're so confident in the near-term growth opportunity and laying out additional details on how we plan to get there. We will be taking an in-depth look into the market opportunities for our new products and our commercial strategies to ensure we can quickly unlock the next wave of growth for Eaton. Before we dive into our portfolio in more detail, I'll turn it over to James to discuss our record fourth quarter results.

James? Thank you, Sean. I am pleased to share that the fourth quarter was another record quarter for Eaton, representing our 16th straight quarter of sequential product sales growth. Revenue was $11.6 million, all from product sales, representing a year-over-year increase of 59%. These strong results were driven primarily by the continued robust growth of both cargumic acid and Alkendi sprinkle. The Incurlex acquisition closed on December 19th and contributed less than $200,000 of revenue to the quarter, and the Galzen acquisition closed on December 31st so our new products did not have a material impact on Q4 revenue. Gross profit increased by 78% year-over-year, including the negative impact of stepped-up inventory values and increased IP amortization reported in cost of goods sold. SG&A expense increased to $6.7 million in the quarter, which included some one-time transaction costs related to the Incrulex product acquisition. In addition, investments in additional headcount and commercial infrastructure were made in the fourth quarter to support our three expected product launches in 2025. R&D expense for the quarter was a negative $900,000 as we were granted an orphan drug designation for ET400, which resulted in a refund of the NDA submission fee that we had paid in expense in the second quarter of 2024. Operating income was a positive $600,000 in the quarter. Our full fourth quarter results are available in our earnings press release that was issued this morning. And for detailed full year 2024 results and disclosures, please see the company's Form 10-K, which was filed with the SEC earlier today. I'll now hand it over to our Chief Commercial Officer, Ipek Trinkets, to discuss a recent acquisition of INCRALEX.