Eton Pharmaceuticals(ETON) - 2023 Q3 - Quarterly Report

Financial Performance - Total net revenues for the three months ended September 30, 2023, were $7,028,000, a 118% increase from $3,219,000 in the same period of 2022[11] - Gross profit for the nine months ended September 30, 2023, was $17,431,000, compared to $7,958,000 for the same period in 2022, reflecting a 119% increase[11] - Net income for the nine months ended September 30, 2023, was $1,320,000, a significant improvement from a net loss of $9,933,000 in the same period of 2022[19] - For the three-month period ended September 30, 2023, total revenue was $7,028, generating a gross profit of $4,403, compared to $3,219 in revenue and $2,018 in gross profit for the same period in 2022, reflecting a significant increase in sales volume of ALKINDI SPRINKLE® and Carglumic Acid products[149] - For the nine months ended September 30, 2023, total revenue reached $24,329 with a gross profit of $17,431, up from $12,753 in revenue and $7,958 in gross profit for the same period in 2022, driven by increased sales volume and a $500 increase in licensing revenue[150] Cash and Assets - Cash and cash equivalents increased to $22,070,000 as of September 30, 2023, up from $16,305,000 at the end of 2022, representing a 35% increase[9] - Total current assets rose to $27,157,000 as of September 30, 2023, compared to $20,004,000 at the end of 2022, marking a 36% increase[9] - As of September 30, 2023, total assets were $31.5 million, including cash and cash equivalents of $22.1 million and working capital of $16.8 million, indicating a solid liquidity position[157] Liabilities and Equity - Total liabilities increased to $14,634,000 as of September 30, 2023, from $11,952,000 at the end of 2022, reflecting a 23% increase[9] - The accumulated deficit decreased to $(101,814,000) as of September 30, 2023, from $(103,134,000) at the end of 2022, indicating a reduction in losses[9] - The company had 25,658,396 shares outstanding as of September 30, 2023, an increase from 25,353,119 shares at the end of 2022[9] Operating Activities - The company reported a net cash provided by operating activities of $6,428,000 for the nine months ended September 30, 2023, compared to $1,981,000 in the same period of 2022[19] - The company recorded $800 of other income for the nine months ended September 30, 2023, from a break-up fee related to an asset acquisition auction process[156] Research and Development - Research and development (R&D) expenses for the three months ended September 30, 2023, were $615, down from $744 in the same period in 2022, primarily due to decreased expenses related to products sold to Dr. Reddy's[151] - R&D expenses for the nine months ended September 30, 2023, totaled $2,275, a decrease from $3,052 in the same period in 2022, again due to reduced expenses associated with products sold to Dr. Reddy's[152] General and Administrative Expenses - General and administrative (G&A) expenses for the three months ended September 30, 2023, were $4,336, slightly up from $4,169 in 2022, mainly due to increased employee-related expenses for sales force expansion[154] - G&A expenses for the nine months ended September 30, 2023, were $14,355, compared to $14,228 in 2022, reflecting incremental employee-related expenses offset by decreased sales and marketing expenses[155] Product Development and Licensing - The Company currently has three commercial rare disease products: ALKINDI SPRINKLE®, Carglumic Acid, and Betaine Anhydrous, with three additional product candidates in late-stage development[23] - The Company acquired an FDA-approved ANDA for Nitisinone Capsules from Oakrum Pharma LLC effective October 11, 2023[24] - The Company acquired exclusive rights to sell the EM-100 product in the U.S. for $250, with additional payments of $250 upon FDA approval and $500 upon the first commercial sale, plus a 10% royalty on net sales[115] - The Company received $5,000 for the sale of rights in Cysteine Hydrochloride, Biorphen®, and Rezipres®, with potential additional payments of up to $42,500 based on milestones[138] Debt and Interest - The company has a long-term debt obligation under the SWK Credit Agreement, with a total borrowing capacity of $10,000, of which $10,000 has been drawn[81] - Interest expense for the nine months ended September 30, 2023, was $805, including $90 of debt discount amortization, compared to $699 for the same period in 2022[87] - As of September 30, 2023, the company has long-term debt net of unamortized discount totaling $4,197, with a gross loan payable of $5,844[89] Internal Controls and Compliance - The company's Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures are effective as of September 30, 2023[185] - There have been no changes in the internal control over financial reporting that materially affected the company during the period ended September 30, 2023[187] - The company has irrevocably elected not to take advantage of the extended transition period under the JOBS Act, meaning it will adopt new or revised accounting standards as required for public companies[179] Market and Risk Factors - The company operates in a dynamic environment with numerous risks and uncertainties that may materially affect its business and financial condition[190] - The company remains an emerging growth company until December 31, 2023, and is evaluating the benefits of relying on exemptions under the JOBS Act[180]