Good afternoon and welcome to the Eton Pharmaceuticals’ Third 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 Eton Pharmaceuticals. Please proceed.

Thank you, operator. Good afternoon, everyone and welcome to Eton’s third quarter 2021 conference call. This afternoon, we issued a press release that outlines the topics that we plan to discuss on today’s call. The release is available on our website, etonpharma.com. Joining me on the call today, we have Sean Brynjelsen, our CEO; Wilson Troutman, our CFO. In addition to taking live questions on today’s we will also be answering questions that are emailed to us. Investors can send their questions to investorrelations@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. Now, I will turn the call over to our CEO, Sean Brynjelsen.

Thank you, David. Thank you everyone for joining us this afternoon. As we're preparing for three new product launches and the initiation of a major co-promotion partnership in the coming weeks, I don't think there's ever been a more exciting time for me to talk to investors. We couldn't be happier with the way we are exiting 2021, the new acquisition of an approved, rare disease product, a major co-promotion arrangement launching in December and the upcoming launches of EPRONTIA and Rezipres. These major catalysts, combined with the expectation for at least three additional product approval and launches next year, set us up for what should be a fantastic 2022. I will start with an Alkindi update and the exciting partnership with Tolmar that we announced this morning. Alkindi sales continue to grow month-over-month, quarter-over-quarter, and we believe they can grow even faster. So, we're implementing some major commercial changes. We are now about six months into holding in-person meetings with doctors. The feedback to us has been clear. Alkindi Sprinkle is critical to giving patients and doctors the ability to precisely treat adrenal insufficiency. However, changing doctors prescribing habits has been a higher touch activity than we originally expected. For decades Pediatric endocrinologists have been using hydrocortisone tablets and are used to the status quo. We found that in-person demonstrations and multiple face-to-face interactions has been the key to making doctors comfortable changing their prescribing habits. Ultimately, it would have taken us a significant amount of time to convert the market to Alkindi. Given the capacity constraints in our current internal sales force, we had only reached approximately 10% of the physicians face-to-face. So, the very exciting announcement regarding our co-promotion with Tolmar increases our presence more than ten-fold. We believe this co-promotion partnership is a very attractive opportunity…

Thank you, Sean. Eton reported revenue of $0.8 million for the third quarter of 2021. There was no material revenue in the third quarter of 2020. Eton's gross profit for the third quarter of 2021 was $0.2 million and reflected the impact of the $0.4 million write-down for excess inventory of by orphan ampule stock. The gross profit for the prior year quarter was not material. R&D expenses for third quarter of 2021, were $2.7 million compared to the $2.8 million for the prior year period. R&D expenses in the third quarter of 2021 were elevated due to expenses related to the development of Biorphen and Rezipres vial container conversions. R&D expenses in the third quarter of 2020 included a one-time $1.5 million NDA filing fee. General and administrative expenses for the third quarter of 2021, where $3.3 million compared to $3.4 million in the prior year period. This decrease, which largely due to elevated spending in the prior year period related to launch preparation activities for Alkindi Sprinkle. The third quarter of 2021 included $0.9 million of non-cash expenses. As a result of these factors, Eton reported a net loss of $6.1 million for the third quarter of 2021, compared to a net loss of $6.5 million in the prior year period. Eton reported diluted earnings per share of a negative $0.24 cents per share in the third quarter of 2021, compared to a negative $0.31 per share in the prior year period. Cash and cash equivalents were $22.7 million as of September 30, 2021. Eton expects to receive a $5.0 million milestone cash payment in December from the recent approval of EPRONTIA, which is a topiramate oral solution product. Operator, we are now open for questions.

[Operator Instructions] Our first question is from Ram Selvaraju with H.C. Wainwright. Your line is open.

Hi, this is Boobalan dialing for Ram Selvaraju. Can you hear me okay?

We can, yes.

Okay, awesome. Great. So firstly, would you be able to provide any color in terms of Rezipres injection pricing?

The best way for me to answer that is that we believe the pricing will be in excess of where Biorphen is price currently. We know that the hospitals pay around $15 to $20 for compounded ephedrine. Sometimes it can be lower, but from our surveys, from our data, that seems to be about where they've been. We know that there's another ready to use ephedrine on the market and we believe they charge a little over $20. So, we would imagine we're going to be somewhere a little less than that because it's in an ampule format, but it certainly will not be commodity pricing. We believe the value offered and the convenience as long as the longer shelf life are all positive, in terms of patient experience.

Great, thanks for the color. So, the co-promotion agreement with Tolmar Pharma, is actually pretty exciting. I'm just curious whether synergy been promoting can be [indiscernible] rate, but Tolmar is already promoting to the pediatric community.

Yes. So, I'll just repeat the question for anybody that couldn't hear. The question had to do with the synergies and the, I guess, the fit of Tolmar being able to promote Alkindi and Fensolvi. It really is primarily, mostly, let's just say the same call point. Certainly, these are pediatric endocrinologists. One of the reasons we did this deal frankly, was that it was just a good strategic fit. Best kind of deal you can do as a deal that works for both sides. So, we know that Eton will benefit, but we also know Tolmar will benefit. And that's the kind of deal I like doing. I don't know that it would make sense for other companies, but for Tolmar, it certainly was a great – I think, it's going to be a great deal for them. And for us, at least at this point in our history it allows us opportunity to save some expenses on that side and we believe they will be very successful. So, I have no doubt about it.

Great. So, one final question from me. So how should we think about the growth trajectory of the company for the year 2022 and beyond, given couple of approvals coming up in the next few quarters?

Well, I think, our press release and some of my words earlier touched on that. You work any, let's say, startup company, we're going into our fifth year soon, we've been up and running for over four years. It really takes at least three years to build your pipeline, to do the deals, to file, navigate the FDA. We're at a point now it really is an inflection point where you are going to see multiple products approved, multiple sources of revenue our ability they maybe do larger transactions. I couldn't be happier where we we're in a nice cash position, we have no needs for going and raising additional cash. So, I'm very excited about the company. And we're attracting top talent within the organization. And we would expect to expand our team in the coming months as the need arises.

Great. Thanks for taking my questions.

Yes, our pleasure.

[Operator Instructions] I am showing no further questions in the queue. I will now turn a conference back to Mr. Krempa to go over the email questions.

Thank you, operator. We do have a couple questions. I'll start. First one, how do you feel about your cash position? Is it enough to launch all these products you're planning to launch?

We feel great about our cash position. As I indicated earlier, we do have more than enough cash to launch all the products. We'll receive milestone payments for the oral solutions and we're really not even having to launch those. Those are done through Azurity. Those are Azurity products, but that cash inflow will also help us to launch other products that we've got in our pipeline. So, I think we've done a good job of balancing cost outlay with matching the revenue as it comes in. And we I believe carglumic acid launch, for example, should cost us very little, it's basically going to be contracted product. And we don't imagine there will be a lot of detailing necessary. It's really a product that has a need. And we think the insurance companies will want to lower cost product. I suppose I could also add that due to the fact that we've got additional revenue sources coming in, we really have reduced our cash burn and will reduce it over the coming quarters. I think our R&D expenses in the past quarter was a bit elevated because of some conversion products of by Biorphen and Rezipres, we're converting those to vials. And I would say that's like will be a bit lower than what you saw in the third quarter. So, I think hopefully that answers the question.

Another question we had is where do you expect to price carglumic acid relative to the brand product?

Okay, everybody wants to know the pricing question. Well, we're still in aged in pre-launch discussions with payers. I think that has a large influence. But I would expect the price of approximate 10% to 15% discount to the brand. I think that's generally what's done for our first generic. Our lower price should save the healthcare system, millions of dollars. So, the value proposition is there. Given the dynamics in the market, and all patient support programs, and so on, we're not really expecting a race to the bottom like you see in some traditional products, when generics enter the market, you may end up with three, four, five generics at a given point. And you certainly end up at a commodity pricing level. But this is a little bit different. We certainly want to add the value of the lower priced option. But we still think it will be a high value product. And yes, so…

We have one more they said, what is the sales commission being paid to Tolmar on the co-promote deal?

Well, I'm not going to disclose the exact rate for competitive reasons, but I would say that our margins remain attractive on the product, even after product costs of royalties, to Diurnal and the sales commission to Tolmar. We still expect to be netting more than 50% of the sales. Tolmar, as I said earlier is compensated on incremental sales above and beyond. At the same time, it'll be a meaningful product for them with meaningful revenue. I think that if you want to have a good partner you really have to go in that as a partnership. So, at the end of the day, probably the best way for me to answer that is to say that we'll make more revenue. We believe we'll make more revenue, more profit by partnering with Tolmar than not partnering with Tolmar. So, you do this make or buy decision on whether you want to do something like this. And with Tolmar, it certainly made sense because they're already in that space. And so, yes, we give up something, but we're not – also getting something. And what we're getting is what we believe will be higher revenue than a go at loan strategy. I think that hopefully covers that question as well. Anything else?

That's it for the question. So, I'll turn it back to the operator, if there's any other questions on the phone.

Yes, sir. We do have a question from Ram Reddy [ph] a private investor. Your line is now open.

Hi, Ram.

Yes, hi. When do you expect to report profit?

So, we would expect to be profitable next year. We had some profitability the first quarter this year, but profitability is number one for me. From my perspective that's what it's about. That's why we try to keep our expenses low. And since we'll be launching three products this quarter and we have another three products launching, hopefully in the first half of next year, we would expect to be profitable at least for the second half of the year. And perhaps even for the full year. That's about as precise as I can get. I hope that answers your question.

Good. Thank you.

You're welcome.

Thank you. As there are no questions at this time, presenters, do you have any final remarks?

No, I just, again, like to thank everyone for joining the call today. We always look forward to providing updates to the shareholders. And with that I believe we can adjourn the call. And I wish everyone happy holidays in the weeks and months to come.

Thank you. Ladies, and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.