Good afternoon, and welcome to the Eton Pharmaceuticals Third Quarter 2024 Financial Results Conference Call. At this time, all participants are in listen-only mode. Following the formal remarks, we’ll 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 would like to turn it over to David Krempa, Chief Business Officer at Eton Pharmaceuticals. Please proceed.

Thank you, operator. Good afternoon, everyone, and welcome to Eton’s third quarter 2024 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, etonpharma.com. Joining me on our call today, we have Sean Brynjelsen, our CEO; and James Gruber, our CFO. In addition to taking live questions on today’s call, we will be answering questions that are e-mailed to us. Investors can send their questions to investorrelations@etonpharma.com. Before we begin, I would like to remind everyone that remarks made during today’s 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. Good afternoon, everyone, and thank you for joining us today. It’s been a busy and exciting few months for us, and I’m looking forward to talking with all of you today at such a critical moment in Eton’s history. Throughout the last year, we have been talking about our three-pillar strategy: one, organic growth of our existing portfolio; two, advancement of internal pipeline products; and three, value-creating business development transactions to accelerate growth. I’m pleased to report that we have delivered major progress in all three of these pillars. First, our commercial organization continues to deliver attractive organic growth from our existing products, producing our 15th straight quarter of sequential product revenue growth. Secondly, the third quarter brought a critical milestone for our important pipeline product, ET-400, which was accepted for review by the FDA and assigned a February 28 PDUFA date. And lastly, on the business development front, we announced the signing of an asset purchase agreement to acquire Increlex last month, which represented a transformational opportunity for the company. I cannot be more proud of our team’s hard work to achieve these results over the last few months, and I look forward to discussing each of these accomplishments in more detail. I’ll start with our Q3 results. As I mentioned, we delivered another record quarter of product sales. Product sales were up 40% year-over-year and the growth continues to be driven by strong increases in both ALKINDI SPRINKLE and Carglumic Acid. The strong sales allowed us to reach positive GAAP net income in the third quarter. We previously said our goal was to reach GAAP net income by the fourth quarter of this year, so I am pleased that we were able to achieve it one quarter ahead of schedule. Reaching GAAP profitability is a…

Thank you, Sean. Our third quarter revenue was $10.3 million compared to $7.0 million in the third quarter of 2023. Revenue for the third quarter of 2024 included $0.5 million of licensing revenue resulting from the sale of our DS-200 product candidate in September of 2024, and we reported zero licensing revenue in the third quarter of 2023. Net product sales for the third quarter of 2024 increased 40% to $9.8 million compared to $7.0 million in the prior year period, primarily driven by growth in ALKINDI SPRINKLE and Carglumic Acid. R&D expenses for the quarter were $0.5 million compared with $0.6 million in the prior year period as overall development activities were relatively flat year-over-year. General and administrative expenses for the quarter were $5.3 million compared with $4.3 million in the prior year period, due primarily to increased sales and marketing activities, legal expenses and employee-related expenses. Total company net income was $0.6 million for the quarter compared to a net loss of $0.6 million in the prior year period. Net income per basic and diluted share during the quarter was $0.02 compared to a net loss per basic and diluted share of $0.02 in the prior year period. It is worth noting that even without the profit associated with onetime licensing revenue this quarter, Eton still generated positive net income, which as Sean mentioned, is a very important milestone for the company. Eton finished the third quarter with $20.3 million of cash on hand and generated $2.9 million of operating cash flow during the quarter. This concludes our remarks on third quarter results. And with that, I’ll turn it back over to the operator for Q&A.

Thank you. We will now open the line for questions. [Operator Instructions] Your first question comes from the line of Chase Knickerbocker with Craig-Hallum. Please go ahead.

Good afternoon, guys. Congrats on all the progress here and thanks for taking the questions. Obviously, you guys are well familiar with many of the potential and current prescribers of Increlex. Can you kind of let us in on what you heard from them as you were kind of doing your work on the product that got you very interested to pursue the deal. Just kind of any color on kind of your due diligence there that got you really excited? Thanks.

Sure. Thanks, Chase. So we won’t be able to go too much into it before the deal closed. But obviously, we’re very excited talking about the opportunity. As you mentioned, we know a lot of the doctors. We’ve talked to them they’ve said it’s a very good product. It’s a needed product. There’s no other alternatives for these children. So it was a critical product. They wanted to make sure we kept it on the market and available to all these patients. I think they thought there was an opportunity for even more education and awareness within the community, and that’s what we intend to do. We think we’ve got a good presence, given relationships with the community, and we look forward to increasing the awareness education and we think the treatment within the population.

Great. And then to the extent that you can kind of before closing, first, kind of how we can think about Increlex on the top line under Eton ownership. It looks to be fairly – it have been fairly steady with some kind of recent fluctuations under Ipsen. Any thoughts on what you guys can do to potentially return the product to growth? And then on the expense side, how should investors think about kind of SG&A needing to increase as a result of this transaction?

Hi, Chase, this is Sean. So on the top line, we certainly don’t think it’ll be less than what it’s done historically. But the plan here is we have a dedicated sales team that is bringing that product really back to the forefront of these doctors’ minds as they have patients come in growth issues that Increlex is another tool within their bag, they can use to treat them. We know that at one point, there was just under 200 patients on product, and we think we can get back to that just by simple promotion and education and hopefully, the doctors will take the diagnose and administer it more broadly. So we’re looking at that as one lever. At some point, we’ll see Europe has far more patients than the U.S. and we’ll have to figure out what’s going on there and how that perhaps we can understand that perhaps to grow the market above the 200 patients. But those would be the initial steps. Our plan also include putting together an advisory board of medical doctors and leading health care providers that understand the disease state and will help us to make sure that patients are number one. Because the other company is patients first, then products and then services, patient support services in their order we want to help as much as we can. And then the second part of your question regarding the expenses, I guess, I’ll let either – maybe James, do you want to take that one?

Hey Chase, regarding SG&A, as Sean mentioned in his remarks, here in the U.S., we are going to increase by the – we’re expanded sales force. So there’ll be additional investment there. As David mentioned, there will be additional investment in market education to a decent amount of investment here in the United States. And then outside the U.S., a decent amount of investment in ex-U.S. infrastructure, logistics, decent amount of regulatory investment. So after the deal closes, we’ll provide a little more detail behind specific 2025, but decent amount of investment expect to next year.

Got it. And then on Carglumic, I mean, you noted sequential growth again. Did you add a couple more patients in the quarter? And kind of do you think that growth can kind of continue sequentially? And then Sean, any engagement with FDA on ET-400 in the quarter? Or kind of what informs kind of the confidence that you mentioned in prepared remarks?

Sure. On Carglumic, maybe James, do you want to speak to that in terms of the sales revenue.

Yes. We’ve had – it’s been a great contributor of revenue growth for us to date. We’ve overachieved what we expected to from a market share standpoint. So while additional growth is certainly possible. The reason we’ve built up our internal pipeline has been so active in every day, is to bolster the product portfolio with additional products because we’re never going to say the product is not going to continue to grow, but it’s got limited opportunity from a go forward standpoint.

Yes. I think that’s fair. And really as we go forward with these new opportunities, we’re looking at patent protect, and IP projected true branded products and really hitting unmet needs. Carglumic, as you know, is an AB-rated version of Carbaglu. And so that offers I guess, another option for patients, but it wasn’t really filling an unmet need as Carbaglu met that. With that need met, it’s really just offering a lower price. But our real connection here is to bring in products that can address unmet needs. Like I always say, there’s over 5,000 rare diseases, most of which are ultra-rare, that’s the work we like to do. And to that point, ET-400 review is going very well in my opinion. We don’t have any open items at this time. And we’re expecting labeling in the near future. So once the label income and start coming in, we’re – we feel pretty good about the February 20 PDUFA date.

Great. Thanks for taking the question guys. Appreciate it. Congrats again.

Yes, our pleasure.

[Operator Instructions] And that concludes our question-and-answer. Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.