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What changed in Eton Pharmaceuticals, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Eton Pharmaceuticals, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+196 added−173 removedSource: 10-K (2025-03-18) vs 10-K (2024-03-14)

Top changes in Eton Pharmaceuticals, Inc.'s 2024 10-K

196 paragraphs added · 173 removed · 145 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

32 edited+19 added−6 removed95 unchanged
Biggest changeEton Pharmaceuticals Products Summary Product Eton Category Indication FDA Status Carglumic Acid Tablets Metabolic NAGS deficiency Commercial ALKINDI SPRINKLE® Endocrinology Adrenal Insufficiency Commercial Betaine Anhydrous Metabolic Homocystinuria Commercial Nitisinone Metabolic Tyrosinemia Type 1 Commercial ET-400 Pending Pending Submission Expected in 2024 ET-600 Endocrinology Diabetes Insipidus Submission Expected in 2025 ZENEO® Hydrocortisone Endocrinology Adrenal Crisis Submission Expected in 2025 3 Table of Contents Goals and Strengths Our goal is to become a leading profitable pharmaceutical company focused on developing and commercializing treatments for rare diseases.
Biggest changeZENEO ® Hydrocortisone Autoinjector – Our ZENEO® hydrocortisone autoinjector product candidate is a proprietary needle-free autoinjector under development for the treatment of adrenal crisis. 2 Eton Pharmaceuticals Products Summary Product Eton Category Indication FDA Status INCRELEX® Endocrinology Severe Primary IGF-1 Deficiency Commercial ALKINDI SPRINKLE® Endocrinology Adrenal Insufficiency Commercial GALZIN® Metabolic Wilson Disease Commercial PKU GOLIKE® Metabolic Phenylketonuria Commercial Carglumic Acid Tablets Metabolic NAGS deficiency Commercial Betaine Anhydrous Metabolic Homocystinuria Commercial Nitisinone Metabolic Tyrosinemia Type 1 Commercial ET-400 Endocrinology Adrenal Insufficiency NDA Submitted (PDUFA Goal Date of May 28, 2025) ET-600 Endocrinology Diabetes Insipidus Under Development Amglidia® Endocrinology Neonatal diabetes mellitus Under Development ET-700 Metabolic Wilson Disease Under Development ET-800 Endocrinology Adrenal Insufficiency Under Development ZENEO® Hydrocortisone Endocrinology Adrenal Crisis Under Development Goals and Strengths Our goal is to become a leading pharmaceutical company focused on developing and commercializing treatments for rare diseases.
After a safe dose has been established, in Phase 2 clinical trials the drug is administered to a limited patient population with the target disease or condition to identify possible adverse events and safety risks, to conduct a preliminary evaluation of the efficacy of the product candidate in treating the targeted disease or condition.
After a safe dose has been established, in Phase 2 clinical trials the drug is administered to a limited patient population with the target disease or condition to identify possible adverse events and safety risks, and to conduct a preliminary evaluation of the efficacy of the product candidate in treating the targeted disease or condition.
Healthcare Reform In the United States and some foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the health-care system that could prevent or delay marketing approval pharmaceutical products, restrict or regulate post-approval activities and affect our ability to profitably sell our product candidates.
Healthcare Reform In the United States and some foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the health-care system that could prevent or delay marketing approval of pharmaceutical products, restrict or regulate post-approval activities and affect our ability to profitably sell our product candidates.
In July 2021, President Biden signed an Executive Order affirming the administration’s policy to (i) support legislative reforms that would lower the prices of prescription drug and biologics, including by allowing Medicare to negotiate drug prices, by imposing inflation caps, and, by supporting the development and market entry of lower-cost generic drugs and biosimilars; and (ii) support the enactment of a public health insurance option.
In July 2021, President Biden signed an Executive Order affirming the administration’s policy to (i) support legislative reforms that would lower the prices of prescription drugs and biologics, including by allowing Medicare to negotiate drug prices, by imposing inflation caps, and, by supporting the development and market entry of lower-cost generic drugs and biosimilars; and (ii) support the enactment of a public health insurance option.
In the event we have to perform under these indemnification provisions, it could have an adverse effect on our business, financial condition and results of operations. ● Any termination or suspension of, or delays in the commencement or completion of, any necessary studies of any of our product candidates for any indications could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects. ● Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results. ● Third-party coverage and reimbursement and health care cost containment initiatives and treatment guidelines may constrain our future revenues. ● We are subject to extensive laws and regulations related to data privacy, and our failure to comply with these laws and regulations could harm our business. ● We will depend on rights to certain pharmaceutical compounds that have been acquired by us.
In the event we have to perform under these indemnification provisions, it could have an adverse effect on our business, financial condition and results of operations. 9 ● Any termination or suspension of, or delays in the commencement or completion of, any necessary studies of any of our product candidates for any indications could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects. ● Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results. ● Third-party coverage and reimbursement and health care cost containment initiatives and treatment guidelines may constrain our future revenues. ● We are subject to extensive laws and regulations related to data privacy, and our failure to comply with these laws and regulations could harm our business. ● We will depend on rights to certain pharmaceutical compounds that have been acquired by us.
Implementation of the IRA is expected to be carried out through upcoming actions by regulatory authorities, the outcome of which is uncertain. In August 2023, the Biden Administration published the first ten medicines subject to the Medicare Drug Price Negotiation Program.
Implementation of the IRA is expected to be carried out through actions by regulatory authorities, the outcome of which is uncertain. In August 2023, the Biden Administration published the first ten medicines subject to the Medicare Drug Price Negotiation program.
We do not have complete control over these pharmaceutical compounds and any loss of our rights to them could prevent us from selling our products. ● It is difficult and costly to protect our intellectual property rights, and we cannot ensure the protection of these rights. ● Changes in either U.S. or foreign patent law or interpretation of such laws could diminish the value of patents in general, thereby impairing our ability to protect our products. ● Our product candidates may infringe the intellectual property rights of others, which could increase our costs and delay or prevent our development and commercialization efforts. ● Others may claim an ownership interest in our intellectual property, which could expose us to litigation and have an adverse effect on our prospects. ● We may be subject to claims that we have wrongfully hired an employee from a competitor or that we or our employees have wrongfully used or disclosed alleged confidential information or trade secrets of their former employers. 13 Table of Contents
We do not have complete control over these pharmaceutical compounds and any loss of our rights to them could prevent us from selling our products. ● It is difficult and costly to protect our intellectual property rights, and we cannot ensure the protection of these rights. ● Changes in either U.S. or foreign patent law or interpretation of such laws could diminish the value of patents in general, thereby impairing our ability to protect our products. ● Our product candidates may infringe the intellectual property rights of others, which could increase our costs and delay or prevent our development and commercialization efforts. ● Others may claim an ownership interest in our intellectual property, which could expose us to litigation and have an adverse effect on our prospects. ● We may be subject to claims that we have wrongfully hired an employee from a competitor or that we or our employees have wrongfully used or disclosed alleged confidential information or trade secrets of their former employers. 10
These products are distributed to patients via specialty pharmacies, which support customer service and reimbursement activities. Research and Development We currently have nine employees that support our product research and development (“R&D”) priorities and strategy.
These products are distributed to patients via specialty pharmacies, which support customer service and reimbursement activities. Research and Development We currently have eight employees that support our product research and development (“R&D”) priorities and strategy.
If the Orange Book certifications outlined above are not accomplished, the Section 505(b)(2) applicant may invest a significant amount of time and expense in the development of its products only to be subject to significant delay and patent litigation before its products may be commercialized. 7 Table of Contents Section 505(j) Abbreviated New Drug Applications The 505(j) pathway is used for product candidates that are therapeutically equivalent to an approved product.
If the Orange Book certifications outlined above are not accomplished, the Section 505(b)(2) applicant may invest a significant amount of time and expense in the development of its products only to be subject to significant delay and patent litigation before its products may be commercialized. 5 Section 505(j) Abbreviated New Drug Applications The 505(j) pathway is used for product candidates that are therapeutically equivalent to an approved product.
Such data will take time and are costly to generate, and the delay associated with generating these data may cause interruptions in our ability to meet commercial demand, if any.
Such data will take time and are costly to generate, and the delay associated with generating this data may cause interruptions in our ability to meet commercial demand, if any.
Phase 3 clinical trials are usually multi-center, double-blind controlled trials in larger numbers of subjects to assess as fully as possible both the safety and effectiveness of the drug, establish the overall risk-benefit of the product candidate, and provide adequate information for the labeling of the product. 5 Table of Contents Clinical trials must be conducted in accordance with the FDA’s current Good Clinical Practices (“GCP”) requirements.
Phase 3 clinical trials are usually multi-center, double-blind controlled trials in larger numbers of subjects to assess as fully as possible both the safety and effectiveness of the drug, establish the overall risk-benefit of the product candidate, and provide adequate information for the labeling of the product. 4 Clinical trials must be conducted in accordance with the FDA’s current Good Clinical Practices (“GCP”) requirements.
These reductions went into effect in April 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2030 unless additional action is taken by Congress. ● On April 13, 2017, CMS published a final rule that gives states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the Health Care Reform Law for plans sold through such marketplaces. ● On May 30, 2018, the Right to Try Act, was signed into law.
These reductions went into effect in April 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2030 unless additional action is taken by Congress. ● On April 13, 2017, the Centers for Medicare and Medicaid Services (“CMS”) published a final rule that gives states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the Health Care Reform Law for plans sold through such marketplaces. ● On May 30, 2018, the Right to Try Act, was signed into law.
Any reduction in payment that results from the MMA may result in a similar reduction in payments from non-governmental payors. 9 Table of Contents Decreases in third-party reimbursement for our products or a decision by a third-party payor to not cover our products could reduce physician usage of the products and have a material adverse effect on our sales, results of operations and financial condition.
Any reduction in payment that results from the MMA may result in a similar reduction in payments from non-governmental payors. 6 Decreases in third-party reimbursement for our products or a decision by a third-party payor to not cover our products could reduce physician usage of the products and have a material adverse effect on our sales, results of operations and financial condition.
We vigorously defend our intellectual property to preserve our rights and gain the benefit of our technological investments. Our business is not dependent, however, upon any single patent, trademark, or contract. 4 Table of Contents ALKINDI SPRINKLE® is protected by three issued patents that extend to 2034.
We vigorously defend our intellectual property to preserve our rights and gain the benefit of our technological investments. Our business is not dependent, however, upon any single patent, trademark, or contract. 3 ALKINDI SPRINKLE® is protected by three issued patents that extend to 2034.
False Claims Act, can be enforced by individuals, on behalf of the government, through civil whistleblower or qui tam actions, and the civil monetary penalties law, prohibits individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government claims for payment that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government; ● The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which prohibits, among other things, executing a scheme to defraud any healthcare benefit program, including private third-party payors, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious, or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items, or services; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; and ● Analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; state and local laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; state laws that require the reporting of information related to drug pricing; state and local laws requiring the registration of pharmaceutical sales and medical representatives; and state and foreign laws, such as the General Data Protection Regulation (EU) 2016/679, governing the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. 8 Table of Contents Because of the breadth of these laws and the narrowness of available statutory exceptions and regulatory safe harbors, it is possible that some of our business activities could be subject to challenge under one or more of such laws.
False Claims Act, can be enforced by individuals, on behalf of the government, through civil whistleblower or qui tam actions, and the civil monetary penalties law, prohibits individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government claims for payment that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government; ● The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which prohibits, among other things, executing a scheme to defraud any healthcare benefit program, including private third-party payors, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious, or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items, or services; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; and ● Analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; state and local laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; state laws that require the reporting of information related to drug pricing; state and local laws requiring the registration of pharmaceutical sales and medical representatives; and state and foreign laws, such as the General Data Protection Regulation (EU) 2016/679, governing the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Risk Factors Summary You should carefully consider the risks set forth in the section of this Annual Report of Form 10-K entitled “Risk Factors” beginning on page 14 of this Annual Report, including, but not limited to, the following: ● We may have significant research, regulatory and development expenses as we advance our product candidates. ● We may need to grow the size of our organization, and we may experience difficulties in managing this growth. ● If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates. ● We may acquire businesses or products, or form strategic alliances, in the future, and we may not realize the benefits of such acquisitions. ● We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents, could harm our ability to operate our business effectively. ● Sales of counterfeits of any of our product candidates, as well as unauthorized sales of any of our product candidates, may have adverse effects on our revenues, business and results of operations and damage our brand and reputation. ● We have entered into several arrangements with related parties for the development and marketing of certain product candidates and these arrangements present potential conflicts of interest. ● We face competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively. ● Our competitors may obtain FDA or other regulatory approval for comparable products more rapidly than we may obtain approval for ours, and the risk of our competitors doing so may lead us to develop drug candidates without disclosing certain information with regard to such candidates. ● If we are not able to obtain regulatory approvals for our product candidates, we will not be able to commercialize our product candidate and our ability to generate revenue will be limited. 12 Table of Contents ● If the FDA concludes that our product candidates do not satisfy the requirements for the 505(b)(2) regulatory approval pathway, or if the requirements for approval of any of our product candidates under Section 505(b)(2) are not as we expect, the approval pathway for our product candidates will likely take significantly longer, cost significantly more and encounter significantly greater complications and risks than anticipated, and in any case may not be successful. ● An NDA submitted under Section 505(b)(2) subjects us to the risk that we may be subject to a patent infringement lawsuit that would delay or prevent the review or approval of our product candidate. ● Even if we receive regulatory approval for any of our product candidates, we may not be able to successfully commercialize the product, and the revenue that we generate from its sales, if any, may be limited. ● We are subject to ongoing obligations and continued regulatory review, which may result in significant additional expense.
Accordingly, the Company has filed a request with the SEC that the SEC waive the aforementioned financial statement filing requirement. 8 Risk Factors Summary You should carefully consider the risks set forth in the section of this Annual Report of Form 10-K entitled “Risk Factors” beginning on page 11 of this Annual Report, including, but not limited to, the following: ● We may have significant research, regulatory and development expenses as we advance our product candidates. ● We may need to grow the size of our organization, and we may experience difficulties in managing this growth. ● If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates. ● We may acquire businesses or products, or form strategic alliances, in the future, and we may not realize the benefits of such acquisitions. ● We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents, could harm our ability to operate our business effectively. ● Use of artificial intelligence-based software by us or third parties with which we contract, may lead to the release of confidential information which may impact our ability to realize the benefits of our intellectual property. ● Sales of counterfeits of any of our product candidates, as well as unauthorized sales of any of our product candidates, may have adverse effects on our revenues, business and results of operations and damage our brand and reputation. ● We have entered into several arrangements with related parties for the development and marketing of certain product candidates and these arrangements present potential conflicts of interest. ● We face competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively. ● Our competitors may obtain FDA or other regulatory approval for comparable products more rapidly than we may obtain approval for ours, and the risk of our competitors doing so may lead us to develop drug candidates without disclosing certain information with regard to such candidates. ● If we are not able to obtain regulatory approvals for our product candidates, we will not be able to commercialize our product candidate and our ability to generate revenue will be limited. ● If the FDA concludes that our product candidates do not satisfy the requirements for the 505(b)(2) regulatory approval pathway, or if the requirements for approval of any of our product candidates under Section 505(b)(2) are not as we expect, the approval pathway for our product candidates will likely take significantly longer, cost significantly more and encounter significantly greater complications and risks than anticipated, and in any case may not be successful. ● An NDA submitted under Section 505(b)(2) subjects us to the risk that we may be subject to a patent infringement lawsuit that would delay or prevent the review or approval of our product candidate. ● Even if we receive regulatory approval for any of our product candidates, we may not be able to successfully commercialize the product, and the revenue that we generate from its sales, if any, may be limited. ● We are subject to ongoing obligations and continued regulatory review, which may result in significant additional expense.
Additionally, our product candidates could be subject to labeling and other restrictions and withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our product candidates. ● Significant additional labeling or warning requirements or limitations on the availability of our products may inhibit sales of affected products. ● Current and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and affect the prices we may obtain. ● If we market any of our products or product candidates in a manner that violates health care fraud and abuse laws, or if we violate government price reporting laws, we may be subject to civil or criminal penalties. ● We may not be able to establish agreements with third parties with whom we wish to collaborate and, if we are able to establish them, we may not be able to establish them on commercially reasonable terms, which could result in alterations or delays of our development and commercialization plans. ● We expect to rely on third parties to conduct clinical trials for our product candidates.
Additionally, our product candidates could be subject to labeling and other restrictions and withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our product candidates. ● Significant additional labeling or warning requirements or limitations on the availability of our products may inhibit sales of affected products. ● Current and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and affect the prices we may obtain. ● Changes in U.S. trade policy, threats of international tariffs, and changes to the U.S. political landscape may adversely affect our business, results of operations, financial condition, and prospects. ● If we market any of our products or product candidates in a manner that violates health care fraud and abuse laws, or if we violate government price reporting laws, we may be subject to civil or criminal penalties. ● We may not be able to establish agreements with third parties with whom we wish to collaborate and, if we are able to establish them, we may not be able to establish them on commercially reasonable terms, which could result in alterations or delays of our development and commercialization plans. ● We expect to rely on third parties to conduct clinical trials for our product candidates.
These relationships allow us to commercialize new products quickly and effectively. Sales and Marketing We currently commercialize four orphan products under our own label with our internal infrastructure and sales force. We market and sell our ALKINDI SPRINKLE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone in the United States consistent with applicable laws.
These relationships allow us to commercialize new products quickly and effectively. Sales and Marketing We currently commercialize seven products under our own label with our internal infrastructure and sales force. We market and sell INCRELEX®, ALKINDI SPRINKLE®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone in the United States consistent with applicable laws.
Under the Prescription Drug User Fee Act (“PDUFA”) the FDA’s goal is to complete its initial review and respond to the applicant within ten months of submission, unless the application relates to an unmet medical need, or is for a serious or life-threatening indication, in which case the goal may be within six months of NDA submission.
Under a PDUFA, the FDA’s goal is to complete its initial review and respond to the applicant within ten months of submission, unless the application relates to an unmet medical need, or is for a serious or life-threatening indication, in which case the goal may be within six months of NDA submission.
Such scrutiny has resulted in several recent U.S. Congressional Inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer and patient programs, and reform government program reimbursement methodologies for products.
Congressional Inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer and patient programs, and reform government program reimbursement methodologies for products.
In August 2022, President Biden signed the Inflation Reduction Act (“IRA”) which provides for (i) the government to set or negotiate prices for select high-cost Medicare Part D (beginning in 2026) and Medicare Part B drugs (beginning in 2028) that are more than nine years (for small-molecule drugs) or 13 years (for biological products) from their FDA approval, (ii) manufacturers to pay a rebate for Medicare Part B and Part D drugs when prices increase faster than inflation beginning in 2022 for Medicare Part D and 2023 for Medicare Part B drugs, and (iii) Medicare Part D redesign which replaces the current coverage gap provisions and establishes a $2,000 cap for out-of-pocket limits costs for Medicare beneficiaries beginning in 2025, with manufacturers being responsible for 10% of costs up to the $2,000 cap and 20% after that cap is reached.
Although a number of these and other proposed measures may require authorization through additional legislation to become effective, and the Trump administration may reverse or otherwise change these measures. 7 In August 2022, President Biden signed the Inflation Reduction Act (“IRA”) which provides for (i) the government to set or negotiate prices for select high-cost Medicare Part D (beginning in 2026) and Medicare Part B drugs (beginning in 2028) that are more than nine years (for small-molecule drugs) or 13 years (for biological products) from their FDA approval, (ii) manufacturers to pay a rebate for Medicare Part B and Part D drugs when prices increase faster than inflation beginning in 2022 for Medicare Part D and 2023 for Medicare Part B drugs, and (iii) Medicare Part D redesign which replaces the current coverage gap provisions and establishes a $2,000 cap for out-of-pocket limits costs for Medicare beneficiaries beginning in 2025, with manufacturers being responsible for 10% of costs up to the $2,000 cap and 20% after that cap is reached.
We periodically utilize outside consultants on an as-needed basis, including medical consultants. Corporate and Other Information We were incorporated under the laws of the state of Delaware in April 2017. Our principal executive offices are located at 21925 W. Field Parkway, Suite 235, Deer Park, Illinois, 60010, and our telephone number is (847) 787-7361.
Corporate and Other Information We were incorporated under the laws of the state of Delaware in April 2017. Our principal executive offices are located at 21925 W. Field Parkway, Suite 235, Deer Park, Illinois, 60010, and our telephone number is (847) 787-7361.
There is no obligation for a pharmaceutical manufacturer to make its drug products available to eligible patients as a result of the Right to Try Act. ● On May 23, 2019, CMS published a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020. 10 Table of Contents Further, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics.
There is no obligation for a pharmaceutical manufacturer to make its drug products available to eligible patients as a result of the Right to Try Act. ● On May 23, 2019, CMS published a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020.
The FDA also may condition approval on, among other things, changes to proposed labeling, development of adequate controls and specifications, or a commitment to conduct post-marketing testing.
The FDA also may condition approval on, among other things, changes to proposed labeling, development of adequate controls and specifications, or a commitment to conduct post-marketing testing. Such post-marketing testing may include Phase 4 clinical trials and surveillance to further assess and monitor the product’s safety and efficacy after approval.
Such post-marketing testing may include Phase 4 clinical trials and surveillance to further assess and monitor the product’s safety and efficacy after approval. 6 Table of Contents If the FDA approves one of our product candidates, we will be required to comply with post-approval regulatory requirements, including record-keeping requirements and reporting of adverse reactions and production problems, and updated safety and efficacy information.
If the FDA approves one of our product candidates, we will be required to comply with post-approval regulatory requirements, including record-keeping requirements and reporting of adverse reactions and production problems, and updated safety and efficacy information.
ET-400 is protected by an issued patent that extends to 2043, and there are additional patent applications related to this product and ET-600 under review with the U.S. Patent and Trademark Office (“USPTO”). In June 2021, we acquired U.S. marketing rights from Crossject to the ZENEO® hydrocortisone autoinjector.
ET-400 is protected by two issued patents that extend to 2043 and there are additional patent applications related to this product under review with the U.S. Patent and Trademark Office (“USPTO”). ET-600 is protected by an issued patent that extends to 2044 and there are additional patent applications related to this product under review with the USPTO.
We acquired marketing rights to the product in October 2021 and launched the product in December 2021. We promote the product with our internal sales force.
Our product is approved for the treatment of acute and chronic hyperammonemia due to N-acetylglutamate synthase (“NAGS”) deficiency . We acquired the marketing rights to the product in October 2021 and launched the product in December 2021. We promote the product with our internal sales force.
Such reforms could have an adverse effect on anticipated revenue from product candidates that we may successfully develop and for which we may obtain regulatory approval and may affect our overall financial condition and ability to develop product candidates. 11 Table of Contents Employees We currently have 30 full-time employees, 9 of whom are engaged in research and development activities, 16 are engaged in sales and marketing operations and 5 of whom are engaged in general corporate and strategy roles.
Such reforms could have an adverse effect on anticipated revenue from product candidates that we may successfully develop and for which we may obtain regulatory approval and may affect our overall financial condition and ability to develop product candidates.
The Company has three additional product candidates in late-stage development: ET-400, ET-600, and ZENEO® hydrocortisone autoinjector. ALKINDI SPRINKLE ® (hydrocortisone granules) – This product was approved by the FDA in September 2020 as a replacement therapy for Adrenocortical Insufficiency (“AI”) in children under 17 years of age.
ALKINDI SPRINKLE® – This product was approved by the FDA in September 2020 as a replacement therapy for Adrenocortical Insufficiency (“AI”) in children under 17 years of age. The product is the first and only FDA-approved granule hydrocortisone formulation designed to help provide accurate dosing for newborns and children with AI.
We believe there are approximately 10,000 children currently suffering from AI in the United States. ALKINDI SPRINKLE® is protected by three issued patents that extend to 2034. Carglumic Acid tablets – Our Carglumic Acid product is an FDA-approved generic version of Carbaglu®. Our product is approved for the treatment of acute and chronic hyperammonemia due to NAGS deficiency.
We acquired U.S. marketing rights to the product in March 2020 and launched ALKINDI SPRINKLE® in December 2020 with a sales force targeting pediatric endocrinologists. We believe there are approximately 10,000 children currently suffering from AI in the United States. ALKINDI SPRINKLE® is protected by three issued patents that extend to 2032, 2033, and 2034.
ET-400 – Eton expects to submit a new drug application for the product during 2024, which could allow for an approval and launch of the product in 2025. ET-600 – Eton expects to submit a new drug application for the diabetes insipidus product during 2025, which could allow for an approval and launch of the product in early 2026.
We expect to submit an NDA for the product in 2025, which could allow for an approval and launch of the product in 2026. Amglidia ® - In November 2024, we entered into a licensing agreement with AMMTeK., pursuant to which we have agreed to acquire the U.S. rights to Amglidia® (glyburide oral suspension).
Item 1. Business About Eton Eton is an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases.
Item 1. Business About Eton Eton is an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases. We currently have seven commercial rare disease products: INCRELEX®, ALKINDI SPRINKLE®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone. We have six additional product candidates in late-stage development: ET-400, ET-600, Amglidia®, ET-700, ET-800 and ZENEO® hydrocortisone autoinjector.
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The Company currently has four commercial rare disease products, ALKINDI SPRINKLE® for the treatment of adrenocortical insufficiency; Carglumic Acid for the treatment of hyperammonemia due to N-acetylglutamate synthas e (“NAGS”) deficiency ; Betaine Anhydrous for the treatment of homocystinuria; and Nitisinone for the treatment of hereditary tyrosinemia type 1 (HT-1).
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INCRELEX® – This biologic product was approved by the FDA in August 2005 as a treatment for children who suffer from severe primary insulin-like growth factor 1 deficiency (SPIGFD). The product is approved in 40 territories, including the United States and the European Union. We acquired and launched the product in December 2024.
Removed
The product is the first and only FDA-approved granule hydrocortisone formulation designed to help provide accurate dosing for newborns and children with adrenal insufficiency. We acquired U.S. marketing rights to the product in March 2020 and launched ALKINDI SPRINKLE® in December 2020 with a sales force targeting pediatric endocrinologists.
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GALZIN® is FDA-approved as a maintenance treatment for patients with Wilson Disease who have been initially treated with a chelating agent. It is estimated that less than 5,000 patients in the U.S. are currently being treated for Wilson Disease. We acquired the product in December 2024 and assumed the commercialization of the product in the U.S. in March 2025.
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ZENEO ® Hydrocortisone Autoinjector – Our ZENEO® hydrocortisone autoinjector product candidate is a proprietary needle-free autoinjector under development for the treatment of adrenal crisis. We expect to submit a New Drug Application (“NDA”) for the product in 2025, which could allow for FDA approval in 2026.
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We offer the product through our Eton Cares patient support program that provides high-touch, personalized service tailored for rare disease patients and their providers.
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Although a number of these and other proposed measures may require authorization through additional legislation to become effective, and the Biden administration may reverse or otherwise change these measures, both the Biden administration and Congress have indicated that they will continue to seek new legislative measures to control drug costs.
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PKU GOLIKE ® - In March 2024, w e acquired the U.S. rights to PKU GOLIKE, which is a next generation medical formula product engineered with the patent protected, pharmaceutical grade Physiomimic™ technology for the dietary management of phenylketonuria (“PKU”) under medical supervision.
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In addition, there will be a new Medicare manufacturer discount program agreement expected to be signed in March 2024 that will change our discounting obligations for all medicines in Medicare, with few exceptions, beginning in 2025. The Medicare Drug Price Negotiation Program is currently subject to legal challenges and therefore, the outcome of the Program remains uncertain.
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PKU GOLIKE’s® taste-masked, odor-free coating technology is designed to provide a better taste and a superior experience compared to alternative PKU medical formulas. In addition, PKU GOLIKE’s delayed amino acid release formulation is designed to keep patients full for a longer period of time. Carglumic Acid Tablets – Our Carglumic Acid product is an FDA-approved generic version of Carbaglu®.
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We continue to evaluate the impact of the IRA on our business, operations and financial condition and results as the full effect of the IRA on our business and the pharmaceutical industry remains uncertain.
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ET-400 - We submitted to the FDA a New Drug Application (“NDA”) for the product in 2024, which was originally scheduled with a Prescription Drug User Fee Amendments (“PDUFA”) goal date of February 28, 2025.
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On February 6, 2025, we were notified by the FDA that it had applied a three-month extension to the original PDUFA goal date of February 28, 2025. The new PDUFA goal date is now May 28, 2025. ET-600 – ET-600 is under development for the treatment of central diabetes insipidus.
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Amglidia® is being developed for the treatment of neonatal diabetes mellitus, a rare condition estimated to impact approximately 300 patients in the U.S. The product was approved by the European Medicines Agency in 2018 and has been granted Orphan Drug Designation by the FDA.
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AMMTeK has conducted a post-approval study tracking five years of real-world safety and efficacy in European patients, which will be used to support Eton’s NDA submission. ET-700 – We are developing this zinc extended release product for the treatment of Wilson disease. We plan to hold a meeting with the FDA in 2025 to discuss the product’s clinical pathway.
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ET-800 – We are developing this ready-to-use, injectable liquid hydrocortisone in a vial for the hospital market.
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Because of the breadth of these laws and the narrowness of available statutory exceptions and regulatory safe harbors, it is possible that some of our business activities could be subject to challenge under one or more of such laws.
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Further, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics. Such scrutiny has resulted in several recent U.S.
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Eton signed a program agreement in February 2024 with an effective date of January 1, 2025 that could change our discounting obligations for all medicines in Medicare, however the impact to our business is minimal since Eton products are prescribed to very few Medicare patients.
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Should the program change such that it significantly increases our discounting obligations, or should the number of our products prescribed to Medicare patients increase substantially, it could have a material adverse effect on our net revenues, financial condition, results of operations or prospects.
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Employees At December 31, 2024, we had 31 full-time employees, eight of whom are engaged in research and development activities, 18 are engaged in sales and marketing operations and five of whom are engaged in general corporate and strategy roles. We periodically utilize outside consultants on an as-needed basis, including medical consultants.
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Recent Development As previously reported in our Form 8-K/A filed on March 7, 2025, following the closing of our acquisition of the INCRELEX® product on December 19, 2024, the Company’s advisors determined that, under relevant accounting rules and interpretations, the acquisition must be accounted for by the Company as a business combination rather than an asset purchase.
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As a result of this determination, the Company is required to file an amendment to the Original Report to provide separate audited financial statements and unaudited pro forma financial information for INCRELEX®, specified by Item 9.01 of Form 8-K, no later than 71 calendar days after the date that the Original Report on Form 8-K was required to be filed with the SEC, which was March 7, 2025.
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While the Company is required to file audited financial statements of INCRELEX® for the years ended December 31, 2023 and 2022 and the nine months ended September 30, 2024 and 2023, as well as unaudited proforma financial information for the years ended December 31, 2024 and 2023, INCRELEX® was accounted for as a single product within Ipsen's consolidated financial statements and not as a separate business.
Added
Historical financial statements for the Increlex product do not exist, and as a result, the Company believes that it will be unable to create the required financial statements.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

75 edited+21 added−8 removed343 unchanged
Biggest changeThe Health Care Reform Law, among other things, imposed reporting requirements on manufacturers related to drug samples and financial relationships with physicians and teaching hospitals, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, established annual fees on manufacturers of certain branded prescription drugs, and established a Medicare Part D coverage gap discount program. 25 Table of Contents Some of the provisions of the Health Care Reform Law have yet to be implemented, and there have been judicial and Congressional challenges to certain aspects of the Health Care Reform Law, as well as recent efforts by the Trump administration to repeal or replace certain aspects of the Health Care Reform Law.
Biggest changeThe Health Care Reform Law, among other things, imposed reporting requirements on manufacturers related to drug samples and financial relationships with physicians and teaching hospitals, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, established annual fees on manufacturers of certain branded prescription drugs, and established a Medicare Part D coverage gap discount program.
The market price of our shares on the Nasdaq Global Market may fluctuate as a result of a number of factors, some of which are beyond our control, including, but not limited to: ● actual or anticipated variations in our and our competitors’ results of operations and financial condition; ● market acceptance of our products; ● the mix of products that we sell and related services that we provide; ● changes in earnings estimates or recommendations by securities analysts, if our shares are covered by analysts; ● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”); ● changes in earnings estimates or recommendations by securities analysts, if our shares are covered by analysts; ● development of technological innovations or new competitive products by others; ● announcements of technological innovations or new products by us; ● publication of the results of preclinical or clinical trials for our other product candidates; ● failure by us to achieve a publicly announced milestone; ● delays between our expenditures to develop and market new or enhanced products and the generation of sales from those products; ● developments concerning intellectual property rights, including our involvement in litigation brought by or against us; ● regulatory developments and the decisions of regulatory authorities as to the approval or rejection of new or modified products; ● changes in the structure of healthcare payment systems; ● changes in the amounts that we spend to develop, acquire or license new products, technologies or businesses; ● changes in our expenditures to promote our products; ● our sale or proposed sale, or the sale by our significant stockholders, of our shares or other securities in the future; ● changes in key personnel; ● success or failure of our research and development projects or those of our competitors; ● the trading volume of our shares; and ● general economic and market conditions and other factors, including factors unrelated to our operating performance.
The market price of our shares on the Nasdaq Global Market may fluctuate as a result of a number of factors, some of which are beyond our control, including, but not limited to: ● actual or anticipated variations in our and our competitors’ results of operations and financial condition; 27 ● market acceptance of our products; ● the mix of products that we sell and related services that we provide; ● changes in earnings estimates or recommendations by securities analysts, if our shares are covered by analysts; ● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”); ● changes in earnings estimates or recommendations by securities analysts, if our shares are covered by analysts; ● development of technological innovations or new competitive products by others; ● announcements of technological innovations or new products by us; ● publication of the results of preclinical or clinical trials for our other product candidates; ● failure by us to achieve a publicly announced milestone; ● delays between our expenditures to develop and market new or enhanced products and the generation of sales from those products; ● developments concerning intellectual property rights, including our involvement in litigation brought by or against us; ● regulatory developments and the decisions of regulatory authorities as to the approval or rejection of new or modified products; ● changes in the structure of healthcare payment systems; ● changes in the amounts that we spend to develop, acquire or license new products, technologies or businesses; ● changes in our expenditures to promote our products; ● our sale or proposed sale, or the sale by our significant stockholders, of our shares or other securities in the future; ● changes in key personnel; ● success or failure of our research and development projects or those of our competitors; ● the trading volume of our shares; and ● general economic and market conditions and other factors, including factors unrelated to our operating performance.
If we or a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, problems with the facility where the product is manufactured, or we or our manufacturers fail to comply with applicable regulatory requirements, we may be subject to the following administrative or judicial sanctions: ● restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls; ● issuance of warning letters or untitled letters; ● clinical holds; ● injunctions or the imposition of civil or criminal penalties or monetary fines; ● suspension or withdrawal of regulatory approval; ● suspension of any ongoing clinical trials; ● refusal to approve pending applications or supplements to approved applications filed by us, or suspension or revocation of product license approvals; ● suspension or imposition of restrictions on operations, including costly new manufacturing requirements; or ● product seizure or detention or refusal to permit the import or export of product.
If we or a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, problems with the facility where the product is manufactured, or we or our manufacturers fail to comply with applicable regulatory requirements, we may be subject to the following administrative or judicial sanctions: ● restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls; ● issuance of warning letters or untitled letters; ● clinical holds; ● injunctions or the imposition of civil or criminal penalties or monetary fines; ● suspension or withdrawal of regulatory approval; ● suspension of any ongoing clinical trials; 17 ● refusal to approve pending applications or supplements to approved applications filed by us, or suspension or revocation of product license approvals; ● suspension or imposition of restrictions on operations, including costly new manufacturing requirements; or ● product seizure or detention or refusal to permit the import or export of product.
Regardless of the merits or eventual outcome, liability claims may result in: ● decreased demand for our current products or any of our product candidates or any future products that we may develop; ● injury to our reputation; ● withdrawal of clinical trial participants; ● costs to defend the related litigation; ● a diversion of management’s time and our resources; ● substantial monetary awards to trial participants or patients; ● product recalls, withdrawals or labeling, marketing or promotional restrictions; ● the inability to commercialize some or all of our product candidates; and ● a decline in the value of our stock.
Regardless of the merits or eventual outcome, liability claims may result in: ● decreased demand for our current products or any of our product candidates or any future products that we may develop; ● injury to our reputation; ● withdrawal of clinical trial participants; ● costs to defend the related litigation; ● a diversion of management’s time and our resources; 11 ● substantial monetary awards to trial participants or patients; ● product recalls, withdrawals or labeling, marketing or promotional restrictions; ● the inability to commercialize some or all of our product candidates; and ● a decline in the value of our stock.
In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act, or the subsequent testing by our independent registered public accounting firm when required, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retrospective changes to our consolidated financial statements or identify other areas for further attention or improvement.
In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act, or the subsequent testing by our independent registered public accounting firm when required, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retrospective changes to our financial statements or identify other areas for further attention or improvement.
However, any changes that lower reimbursements for products for which we may obtain regulatory approval, or that impose administrative and financial burdens on us, could adversely affect our business. In addition, other legislative changes have been proposed and adopted in the United States since the Health Care Reform Law was enacted.
However, any changes that lower reimbursements for products for which we may obtain regulatory approval, or that impose administrative and financial burdens on us, could adversely affect our business. 18 In addition, other legislative changes have been proposed and adopted in the United States since the Health Care Reform Law was enacted.
However, based on a pre-IND meeting with the FDA in March 2018 to discuss the clinical and regulatory pathway for the product, we have decided to suspend all further development activities for this candidate indefinitely due to extraordinarily high costs of the clinical trials that would be required by the FDA.
However, based on a pre-IND meeting with the FDA in March 2018 to discuss the clinical and regulatory pathway for the product, we decided to suspend all further development activities for this candidate indefinitely due to extraordinarily high costs of the clinical trials that would be required by the FDA.
Further, we cannot provide assurance that competitors will not infringe the trademarks we use, or that we will have adequate resources to enforce these trademarks. Changes in either U.S. patent law or interpretation of such laws could diminish the value of patents in general, thereby impairing our ability to protect our products .
Further, we cannot provide assurance that competitors will not infringe the trademarks we use, or that we will have adequate resources to enforce these trademarks. 25 Changes in either U.S. patent law or interpretation of such laws could diminish the value of patents in general, thereby impairing our ability to protect our products .
We note that most product candidates never reach the clinical development stage and even those that do commence clinical development have only a small chance of successfully completing clinical development and gaining regulatory approval. Therefore, our business substantially depends entirely on the successful development, regulatory approval and commercialization of our product candidates, which may never occur.
We note that most product candidates never reach the clinical development stage and even those that do commence clinical development have only a small chance of successfully completing clinical development and gaining regulatory approval. Therefore, our business depends entirely on the successful development, regulatory approval and commercialization of our product candidates, which may never occur.
There is also a risk that neither we nor our independent registered public accounting firm (when applicable in the future) will be able to conclude within the prescribed timeframe that internal controls over financial reporting is effective as required by Section 404.
There is also a risk that neither we nor our independent registered public accounting firm (when applicable in the future) will be able to conclude within the prescribed timeframe that internal controls over financial reporting are effective as required by Section 404.
Our success depends on the receipt of regulatory approval and the issuance of such regulatory approvals is uncertain and subject to a number of risks, including the following: ● the results of any required toxicology studies may not support the submission of an IND for our product candidates; ● the FDA or comparable foreign regulatory authorities or Institutional Review Boards (“IRB”), may disagree with the design or implementation of our clinical trials; ● we may not be able to provide acceptable evidence of our product candidates’ safety and efficacy; 18 Table of Contents ● the results of our clinical trials may not be satisfactory or may not meet the level of statistical or clinical significance required by the FDA or other regulatory agencies for marketing approval; ● the dosing of our product candidates in any required clinical trial may not be at an optimal level; ● the results of our clinical trials may not be satisfactory or may not meet the level of statistical or clinical significance required by the FDA or other regulatory agencies for marketing approval; ● the dosing of our product candidates in any required clinical trial may not be at an optimal level; ● patients in our clinical trials may suffer adverse effects for reasons that may or may not be related to our product candidates; ● the data collected from clinical trials may not be sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere; ● the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and ● the approval policies or regulations of the FDA may significantly change in a manner rendering our clinical data insufficient for approval.
Our success depends on the receipt of regulatory approval and the issuance of such regulatory approvals is uncertain and subject to a number of risks, including the following: ● the results of any required toxicology studies may not support the submission of an IND for our product candidates; ● the FDA or comparable foreign regulatory authorities or Institutional Review Boards (“IRB”), may disagree with the design or implementation of our clinical trials; ● we may not be able to provide acceptable evidence of our product candidates’ safety and efficacy; ● the results of our clinical trials may not be satisfactory or may not meet the level of statistical or clinical significance required by the FDA or other regulatory agencies for marketing approval; ● the dosing of our product candidates in any required clinical trial may not be at an optimal level; ● the results of our clinical trials may not be satisfactory or may not meet the level of statistical or clinical significance required by the FDA or other regulatory agencies for marketing approval; ● the dosing of our product candidates in any required clinical trial may not be at an optimal level; ● patients in our clinical trials may suffer adverse effects for reasons that may or may not be related to our product candidates; ● the data collected from clinical trials may not be sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere; ● the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and ● the approval policies or regulations of the FDA may significantly change in a manner rendering our clinical data insufficient for approval.
Our business model is to focus on product candidates that we consider to have a shorter timeline to, and lower cost of, regulatory approval. These attributes can also be taken advantage of by our competitors to develop and obtain marketing approval of a competing product.
Our business model is to focus on product candidates that we consider to have a shorter timeline to, and lower cost of, regulatory approval. These attributes can also be taken advantage of by our competitors to develop and obtain marketing approval for a competing product.
If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our product candidates. Even successful defense would require significant financial and management resources.
If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our product candidates. Even a successful defense would require significant financial and management resources.
Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, or causing to be made, a false statement to get a false claim paid. 27 Table of Contents Over the past few years, several pharmaceutical and other health care companies have been prosecuted under these laws for a variety of alleged promotional and marketing activities, such as: allegedly providing free trips, free goods, sham consulting fees and grants and other monetary benefits to prescribers; reporting to pricing services inflated average wholesale prices that were then used by federal programs to set reimbursement rates; engaging in off-label promotion that caused claims to be submitted to Medicare or Medicaid for non-covered, off-label uses; and submitting inflated best price information to the Medicaid Rebate Program to reduce liability for Medicaid rebates.
Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, or causing to be made, a false statement to get a false claim paid. 19 Over the past few years, several pharmaceutical and other health care companies have been prosecuted under these laws for a variety of alleged promotional and marketing activities, such as: allegedly providing free trips, free goods, sham consulting fees and grants and other monetary benefits to prescribers; reporting to pricing services inflated average wholesale prices that were then used by federal programs to set reimbursement rates; engaging in off-label promotion that caused claims to be submitted to Medicare or Medicaid for non-covered, off-label uses; and submitting inflated best price information to the Medicaid Rebate Program to reduce liability for Medicaid rebates.
Provisions in our amended and restated certificate of incorporation provide that the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for: ● any derivative action or proceeding brought on our behalf; ● any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by any of our directors, officers or other employees; ● any action asserting a claim against us or any of our directors, officers or other employees arising pursuant to any provision of Delaware law or our charter documents; or ● any action asserting a claim against us or any of our directors, officers or other employees governed by the internal affairs doctrine, but excluding actions to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. 42 Table of Contents In addition, unless we consent in writing to the selection of an alternative forum, the Federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Provisions in our amended and restated certificate of incorporation provide that the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for: ● any derivative action or proceeding brought on our behalf; ● any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by any of our directors, officers or other employees; ● any action asserting a claim against us or any of our directors, officers or other employees arising pursuant to any provision of Delaware law or our charter documents; or ● any action asserting a claim against us or any of our directors, officers or other employees governed by the internal affairs doctrine, but excluding actions to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. 30 In addition, unless we consent in writing to the selection of an alternative forum, the Federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
In addition, we expect that our competitors will file citizens’ petitions with the FDA in an attempt to persuade the FDA that our product candidate, or the clinical studies that support their approval, contain deficiencies. Such actions by our competitors could delay or even prevent the FDA from approving any NDA that we submit under Section 505(b)(2).
In addition, we expect that our competitors will file citizens’ petitions with the FDA in an attempt to persuade the FDA that our product candidates, or the clinical studies that support their approval, contain deficiencies. Such actions by our competitors could delay or even prevent the FDA from approving any NDA that we submit under Section 505(b)(2).
For example, we may be sued if our approved products or any product we develop, including any of our product candidates, or any materials that we use in our products allegedly causes injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale.
For example, we may be sued if our approved products or any product we develop, including any of our product candidates, or any materials that we use in our products allegedly cause injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale.
The commencement and completion of clinical studies can be delayed for a number of reasons, including delays related to: ● the FDA or a comparable foreign regulatory authority failing to grant permission to proceed and placing the clinical study on hold; ● subjects for clinical testing failing to enroll or remain in our trials at the rate we expect; ● a facility manufacturing any of our product candidates being ordered by the FDA or other government or regulatory authorities to temporarily or permanently shut down due to violations of GMP requirements or other applicable requirements, or cross-contaminations of product candidates in the manufacturing process; ● any changes to our manufacturing process that may be necessary or desired; ● subjects choosing an alternative treatment for the indications for which we are developing our product candidates, or participating in competing clinical studies; ● subjects experiencing severe or unexpected drug-related adverse effects; ● reports from clinical testing on similar technologies and products raising safety and/or efficacy concerns; ● third-party clinical investigators losing their license or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or employing methods consistent with the clinical trial protocol, GMP requirements, or other third parties not performing data collection and analysis in a timely or accurate manner; 31 Table of Contents ● inspections of clinical study sites by the FDA, comparable foreign regulatory authorities, or IRBs finding regulatory violations that require us to undertake corrective action, result in suspension or termination of one or more sites or the imposition of a clinical hold on the entire study, or that prohibit us from using some or all of the data in support of our marketing applications; ● third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or any of the data produced by such contractors in support of our marketing applications; ● one or more IRBs refusing to approve, suspending or terminating the study at an investigational site, precluding enrollment of additional subjects, or withdrawing its approval of the trial; reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● deviations of the clinical sites from trial protocols or dropping out of a trial; ● adding new clinical trial sites; ● the inability of the CRO to execute any clinical trials for any reason; and ● government or regulatory delays or “clinical holds” requiring suspension or termination of a trial.
The commencement and completion of clinical studies can be delayed for a number of reasons, including delays related to: ● the FDA or a comparable foreign regulatory authority failing to grant permission to proceed and placing the clinical study on hold; ● subjects for clinical testing failing to enroll or remain in our trials at the rate we expect; ● a facility manufacturing any of our product candidates being ordered by the FDA or other government or regulatory authorities to temporarily or permanently shut down due to violations of GMP requirements or other applicable requirements, or cross-contaminations of product candidates in the manufacturing process; ● any changes to our manufacturing process that may be necessary or desired; ● subjects choosing an alternative treatment for the indications for which we are developing our product candidates, or participating in competing clinical studies; ● subjects experiencing severe or unexpected drug-related adverse effects; ● reports from clinical testing on similar technologies and products raising safety and/or efficacy concerns; ● third-party clinical investigators losing their license or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or employing methods consistent with the clinical trial protocol, GMP requirements, or other third parties not performing data collection and analysis in a timely or accurate manner; ● inspections of clinical study sites by the FDA, comparable foreign regulatory authorities, or IRBs finding regulatory violations that require us to undertake corrective action, result in suspension or termination of one or more sites or the imposition of a clinical hold on the entire study, or that prohibit us from using some or all of the data in support of our marketing applications; ● third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or any of the data produced by such contractors in support of our marketing applications; ● one or more IRBs refusing to approve, suspending or terminating the study at an investigational site, precluding enrollment of additional subjects, or withdrawing its approval of the trial; reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● deviations of the clinical sites from trial protocols or dropping out of a trial; ● adding new clinical trial sites; ● the inability of the CRO to execute any clinical trials for any reason; and ● government or regulatory delays or “clinical holds” requiring suspension or termination of a trial. 22 Product development costs for any of our product candidates will increase if we have delays in testing or approval or if we need to perform more or larger clinical studies than planned.
Similar requirements exist in many of these areas in other countries. 23 Table of Contents In addition, if any of our product candidates are approved for a particular indication, our product labeling, advertising and promotion would be subject to regulatory requirements and continuing regulatory review. The FDA strictly regulates the promotional claims that may be made about prescription products.
Similar requirements exist in many of these areas in other countries. In addition, if any of our product candidates are approved for a particular indication, our product labeling, advertising and promotion would be subject to regulatory requirements and continuing regulatory review. The FDA strictly regulates the promotional claims that may be made about prescription products.
If we fail to comply with the regulatory requirements in international markets and/or to receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed. 24 Table of Contents Significant additional labeling or warning requirements or limitations on the availability of our products may inhibit sales of affected products.
If we fail to comply with the regulatory requirements in international markets and/or to receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed. Significant additional labeling or warning requirements or limitations on the availability of our products may inhibit sales of affected products.
The existence and any increase in production or sales of counterfeit products or unauthorized sales could negatively impact our revenues, brand reputation, business and results of operations. 16 Table of Contents Risks Related to Product Development, Regulatory Approval, Manufacturing and Commercialization We depend entirely on the success of current approved products and our new product candidates.
The existence and any increase in production or sales of counterfeit products or unauthorized sales could negatively impact our revenues, brand reputation, business and results of operations. Risks Related to Product Development, Regulatory Approval, Manufacturing and Commercialization We depend entirely on the success of current approved products and our new product candidates.
In particular, the Virginia Consumer Data Protection Act (“VCDPA”) became effective on January 1, 2023; the Colorado Privacy Act (“CPA”) and the Connecticut Data Privacy Act (“CTDPA”) will become effective on July 1, 2023; and the Utah Consumer Privacy Act (“UCPA”) will become effective on December 31, 2023.
In particular, the Virginia Consumer Data Protection Act (“VCDPA”) became effective on January 1, 2023; the Colorado Privacy Act (“CPA”) and the Connecticut Data Privacy Act (“CTDPA”) became effective on July 1, 2023; and the Utah Consumer Privacy Act (“UCPA”) became effective on December 31, 2023.
If we are unable to rely on clinical data collected by our CROs, we could be required to repeat, extend the duration of, or increase the size of our clinical trials, which could significantly delay commercialization and require significantly greater expenditures. 30 Table of Contents If any of our relationships with these third-party CROs or clinical sites terminate, we may not be able to enter into arrangements with alternative CROs or clinical sites.
If we are unable to rely on clinical data collected by our CROs, we could be required to repeat, extend the duration of, or increase the size of our clinical trials, which could significantly delay commercialization and require significantly greater expenditures. 21 If any of our relationships with these third-party CROs or clinical sites terminate, we may not be able to enter into arrangements with alternative CROs or clinical sites.
The existence of comprehensive privacy laws in different states in the country makes our compliance obligations more complex and costly and may increase the likelihood that we may be subject to enforcement actions or otherwise incur liability for noncompliance. 33 Table of Contents Further, regulations promulgated pursuant to HIPAA imposes privacy, security and breach notification obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services that involve creating, receiving, maintaining or transmitting individually identifiable health information for or on behalf of such covered entities, and their covered subcontractors.
The existence of comprehensive privacy laws in different states in the country makes our compliance obligations more complex and costly and may increase the likelihood that we may be subject to enforcement actions or otherwise incur liability for noncompliance. 23 Further, regulations promulgated pursuant to HIPAA impose privacy, security and breach notification obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services that involve creating, receiving, maintaining or transmitting individually identifiable health information for or on behalf of such covered entities, and their covered subcontractors.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile. 40 Table of Contents If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile. 28 If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
Any product candidates that we successfully develop and commercialize will compete with existing products and new products that may become available in the future. 17 Table of Contents There are products already approved for all of the indications we are targeting. Many of these approved products are well established therapies and are widely accepted by physicians, patients and third-party payors.
Any product candidates that we successfully develop and commercialize will compete with existing products and new products that may become available in the future. 13 There are products already approved for all of the indications we are targeting. Many of these approved products are well established therapies and are widely accepted by physicians, patients and third-party payors.
Our efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may never be successful. 22 Table of Contents In addition, even if we obtain regulatory approvals for our product candidates, the timing or scope of any approvals may prohibit or reduce our ability to commercialize our product candidates successfully.
Our efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may never be successful. 16 In addition, even if we obtain regulatory approvals for our product candidates, the timing or scope of any approvals may prohibit or reduce our ability to commercialize our product candidates successfully.
Drugs approved in this way are commonly referred to as “generic equivalents” to the listed drug and can often be substituted by pharmacists under prescriptions written for the original listed drug. 20 Table of Contents The ANDA applicant is required to certify to the FDA concerning any patents listed for the approved product in the FDA’s Orange Book.
Drugs approved in this way are commonly referred to as “generic equivalents” to the listed drug and can often be substituted by pharmacists under prescriptions written for the original listed drug. The ANDA applicant is required to certify to the FDA concerning any patents listed for the approved product in the FDA’s Orange Book.
There is no assurance that a jury and/or court would find in our favor on questions of infringement, validity or enforceability. 38 Table of Contents Others may claim an ownership interest in our intellectual property, which could expose us to litigation and have an adverse effect on our prospects .
There is no assurance that a jury and/or court would find in our favor on questions of infringement, validity or enforceability. 26 Others may claim an ownership interest in our intellectual property, which could expose us to litigation and have an adverse effect on our prospects .
Any future clinical trial results for our product candidates may not be successful. 32 Table of Contents In addition, a number of factors could contribute to a lack of favorable safety and efficacy results for any of our product candidates.
Any future clinical trial results for our product candidates may not be successful. In addition, a number of factors could contribute to a lack of favorable safety and efficacy results for any of our product candidates.
In addition, the significant interest held by these parties, and particularly by Harrow, may discourage third parties from seeking to acquire control of us, which may adversely affect the market price of our shares.
In addition, the significant interest held by these parties may discourage third parties from seeking to acquire control of us, which may adversely affect the market price of our shares.
If we were to be sued, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business. 41 Table of Contents Our charter documents and Delaware law may inhibit a takeover that stockholders consider favorable .
If we were to be sued, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business. 29 Our charter documents and Delaware law may inhibit a takeover that stockholders consider favorable .
We have an effective Form S-3 registration statement (“Shelf Registration”) on file with the SEC which allows us to sell any combination of common stock, preferred stock, debt securities, warrants to purchase any of these securities, subscription rights to purchase any of these securities, and/or units consisting of one or more of the foregoing in one or more offerings up to a total dollar amount of $100 million (including the $22.5 million raised in our October 2020 offering of common stock).
We have an effective Form S-3 registration statement (“Shelf Registration”) on file with the SEC which allows us to sell any combination of common stock, preferred stock, debt securities, warrants to purchase any of these securities, subscription rights to purchase any of these securities, and/or units consisting of one or more of the foregoing in one or more offerings up to a total dollar amount of $100 million.
Litigation or similar proceedings could result in substantial costs to and diversion of effort by us and could have a material adverse effect on our business, financial condition and results of operations.
Litigation or similar proceedings could result in substantial costs to and diversion of effort by us and could have a material adverse effect on our business, financial condition and results of operations. These efforts by us may not be successful.
Potential third parties may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate.
Potential third parties may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate. The terms of any arrangements that we may establish may also not be favorable to us.
Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries. 36 Table of Contents Moreover, proceedings to enforce our patent rights, or those of our licensors or partners, in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our in-licensed patents, or any patents that we may own in the future, at risk of being invalidated or interpreted narrowly, could put our owned or in-licensed patent applications at risk of not issuing and could provoke third parties to assert claims against us.
Moreover, proceedings to enforce our patent rights, or those of our licensors or partners, in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our in-licensed patents, or any patents that we may own in the future, at risk of being invalidated or interpreted narrowly, could put our owned or in-licensed patent applications at risk of not issuing and could provoke third parties to assert claims against us.
As of March 5, 2024, we had 25,688,062 shares of common stock outstanding, all of which, other than shares held by our directors and certain officers, are eligible for sale in the public market, subject in some cases to compliance with the requirements of Rule 144, including volume limitations and manner of sale requirements.
As of March 10, 2025, we had 26,817,535 shares of common stock outstanding, all of which, other than shares held by our directors and certain officers, are eligible for sale in the public market, subject in some cases to compliance with the requirements of Rule 144, including volume limitations and manner of sale requirements.
We cannot be sure that we will receive these necessary approvals or that these approvals will be granted in a timely fashion. We also cannot guarantee that we will be able to enhance and optimize output in our commercial manufacturing process. If we cannot enhance and optimize output, we may not be able to reduce our costs over time.
We cannot be sure that we will receive these necessary approvals or that these approvals will be granted in a timely fashion. We also cannot guarantee that we will be able to enhance and optimize output in our commercial manufacturing process.
We may not be able to establish agreements with third parties with whom we wish to collaborate and, if we are able to establish them, we may not be able to establish them on commercially reasonable terms, which could result in alterations or delays of our development and commercialization plans .
If we cannot enhance and optimize output, we may not be able to reduce our costs over time. 20 We may not be able to establish agreements with third parties with whom we wish to collaborate and, if we are able to establish them, we may not be able to establish them on commercially reasonable terms, which could result in alterations or delays of our development and commercialization plans .
The price of our stock may change in response to variations in our operating results and also may change in response to other factors, including factors specific to companies in our industry many of which are beyond our control.
The market price of our common stock could be subject to significant fluctuations. The price of our stock may change in response to variations in our operating results and also may change in response to other factors, including factors specific to companies in our industry many of which are beyond our control.
For example, in December 2016, the 21 st Century Cures Act was signed into law. The 21 st Century Cures Act, among other things, is intended to modernize the regulation of drugs and biologics and spur innovation, but it has not yet been fully implemented and its ultimate implementation is unclear.
The 21 st Century Cures Act, among other things, is intended to modernize the regulation of drugs and biologics and spur innovation, but it has not yet been fully implemented and its ultimate implementation is unclear.
However, a court may determine that this provision is unenforceable. Ownership portions held by our executives and directors, as well as by our former parent company, Harrow Health, Inc., may limit our stockholders ’ ability to influence corporate matters . Our directors and executive officers beneficially own approximately 14.9% of our common stock. Additionally, Harrow Health, Inc.
However, a court may determine that this provision is unenforceable. Ownership portions held by our executives and directors may limit our stockholders ’ ability to influence corporate matters . Our directors and executive officers beneficially own approximately 16.9% of our common stock.
Because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before any of our products can be commercialized, any related patent may expire or remain in existence for only a short period following commercialization, thus reducing any advantage of the patent, which could adversely affect our ability to protect future product development and, consequently, our operating results and financial position.
Because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before any of our products can be commercialized, any related patent may expire or remain in existence for only a short period following commercialization, thus reducing any advantage of the patent, which could adversely affect our ability to protect future product development and, consequently, our operating results and financial position. 24 If we cannot maintain the confidentiality of our proprietary technology and other confidential information, our ability to receive patent protection and our ability to protect valuable information owned by us may be imperiled.
If any of these outcomes occur, we may not receive approval for our product candidate. We are subject to extensive laws and regulations related to data privacy, and our failure to comply with these laws and regulations could harm our business.
If any of these outcomes occur, we may not receive approval for our product candidates, which could negatively impact our business, financial condition, or results of operations. We are subject to extensive laws and regulations related to data privacy, and our failure to comply with these laws and regulations could harm our business.
The trading price of our common stock has fluctuated significantly in the past and is likely to be volatile. The stock market in general, and early stage public companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies.
The stock market in general, and early stage public companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies.
Failure to obtain regulatory marketing approval for our product candidates will prevent us from commercializing the product candidate, and our ability to generate sufficient revenue will be materially impaired. 19 Table of Contents If the FDA does not conclude that our product candidates satisfy the requirements for the 505(b)(2) regulatory approval pathway, or if the requirements for approval of any of our product candidates under Section 505(b)(2) are not as we expect, the approval pathway for our product candidates will likely take significantly longer, cost significantly more and encounter significantly greater complications and risks than anticipated, and in any case may not be successful .
If the FDA does not conclude that our product candidates satisfy the requirements for the 505(b)(2) regulatory approval pathway, or if the requirements for approval of any of our product candidates under Section 505(b)(2) are not as we expect, the approval pathway for our product candidates will likely take significantly longer, cost significantly more and encounter significantly greater complications and risks than anticipated, and in any case may not be successful .
The process of obtaining regulatory approvals is expensive, often takes many years, if approval is obtained at all, and can vary substantially based upon, among other things, the type, complexity and novelty of the product candidates involved, the jurisdiction in which regulatory approval is sought and the substantial discretion of the regulatory authorities.
In addition, varying interpretations of the data obtained from pre-clinical and clinical testing could delay, limit or prevent regulatory approval of our product candidates. 14 The process of obtaining regulatory approvals is expensive, often takes many years, if approval is obtained at all, and can vary substantially based upon, among other things, the type, complexity and novelty of the product candidates involved, the jurisdiction in which regulatory approval is sought and the substantial discretion of the regulatory authorities.
Our common stock is listed on the Nasdaq Global Market. However, trading volume has been limited and a more active public market for our common stock may not develop or be sustained over time. The market price of our common stock could be subject to significant fluctuations.
An active, liquid and orderly trading market for our shares may not continue to be developed or sustained . Our common stock is listed on the Nasdaq Global Market. However, trading volume has been limited and a more active public market for our common stock may not develop or be sustained over time.
Amendments may require us to resubmit our study protocols to the FDA, comparable foreign regulatory authorities, and IRBs for reexamination, which may impact the costs, timing or successful completion of that study.
Additionally, changes in regulatory requirements and policies may occur and we may need to amend study protocols to reflect these changes. Amendments may require us to resubmit our study protocols to the FDA, comparable foreign regulatory authorities, and IRBs for reexamination, which may impact the costs, timing or successful completion of that study.
Such mechanisms include re-examination, post grant review and equivalent proceedings in foreign jurisdictions, e.g., opposition proceedings. Such proceedings could result in revocation or amendment of our patents or our licensors’ patents in such a way that they no longer cover product candidates or competitive products. The outcome following legal assertions of invalidity and unenforceability is unpredictable.
Such proceedings could result in revocation or amendment of our patents or our licensors’ patents in such a way that they no longer cover product candidates or competitive products. The outcome following legal assertions of invalidity and unenforceability is unpredictable.
We may acquire additional businesses or products, form strategic alliances or create joint ventures with third parties that we believe will complement or augment our existing business.
We may acquire businesses or products, or form strategic alliances, in the future, and we may not realize the benefits of such acquisitions . We may acquire additional businesses or products, form strategic alliances or create joint ventures with third parties that we believe will complement or augment our existing business.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. Under the Tax Act, federal NOLs incurred in taxable years ending after December 31, 2017, may be carried forward indefinitely, but the deductibility of federal NOLs generated in tax years beginning before December 31, 2017, is limited.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. Under the Tax Act, federal Net Operating Losses (“NOLs”) incurred in taxable years ending after December 31, 2017, may be carried forward indefinitely, but can only be applied to 80% of taxable income for the year.
We may have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. 15 Table of Contents We may acquire businesses or products, or form strategic alliances, in the future, and we may not realize the benefits of such acquisitions .
We may have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.
Further, even if we obtain significant market share for our products and product candidates, because the potential target populations are small, we may struggle to remain profitable or generate sufficient revenue growth to sustain our business. 14 Table of Contents If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates .
Further, even if we obtain significant market share for our products and product candidates, because the potential target populations are small, we may struggle to remain profitable or generate sufficient revenue growth to sustain our business.
Failure by our contract manufacturers to comply with or maintain any of these standards could adversely affect our ability to develop, obtain regulatory approval for or market any of our product candidates. 28 Table of Contents If, for any reason, these third parties are unable or unwilling to perform, we may not be able to terminate our agreements with them, and we may not be able to locate alternative manufacturers or formulators or enter into favorable agreements with them and we cannot be certain that any such third parties will have the manufacturing capacity to meet future requirements.
If, for any reason, these third parties are unable or unwilling to perform, we may not be able to terminate our agreements with them, and we may not be able to locate alternative manufacturers or formulators or enter into favorable agreements with them and we cannot be certain that any such third parties will have the manufacturing capacity to meet future requirements.
Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our reputation and our business, financial condition, results of operations or prospects. 34 Table of Contents Risks Relating to Our Intellectual Property Rights We will depend on rights to certain pharmaceutical compounds that have been acquired by us.
Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our reputation and our business, financial condition, results of operations or prospects.
Our success depends in part on avoiding infringement of the proprietary technologies of others. The pharmaceutical industry has been characterized by frequent litigation regarding patent and other intellectual property rights.
Our product candidates may infringe the intellectual property rights of others, which could increase our costs and delay or prevent our development and commercialization efforts . Our success depends in part on avoiding infringement of the proprietary technologies of others. The pharmaceutical industry has been characterized by frequent litigation regarding patent and other intellectual property rights.
Our rights to develop and commercialize the product candidates are subject to the validity of the intellectual property rights. Enforcement of any assigned or licensed patents or defense or any claims asserting the invalidity of these patents is often subject to the control or cooperation of the assignor or licensor.
Enforcement of any assigned or licensed patents or defense or any claims asserting the invalidity of these patents is often subject to the control or cooperation of the assignor or licensor.
If we raise additional funds through collaborations and licensing arrangements, we may be required to relinquish some rights to our technologies or candidate products, or to grant licenses on terms that are not favorable to us. 39 Table of Contents The trading price of the shares of our common stock may continue to be volatile, and purchasers of our common stock could incur substantial losses.
If we raise additional funds through collaborations and licensing arrangements, we may be required to relinquish some rights to our technologies or candidate products, or to grant licenses on terms that are not favorable to us.
Congress, the federal courts, the USPTO, or similar authorities in foreign jurisdictions, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing in-licensed patents and patents that we might obtain in the future. 37 Table of Contents Our product candidates may infringe the intellectual property rights of others, which could increase our costs and delay or prevent our development and commercialization efforts .
Congress, the federal courts, the USPTO, or similar authorities in foreign jurisdictions, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing in-licensed patents and patents that we might obtain in the future.
If the analyses that artificial intelligence-based applications assist in producing are deficient or inaccurate, we could be subjected to competitive harm, potential legal liability and brand or reputational harm. Furthermore, use of artificial intelligence-based software may lead to the release of confidential information which may impact our ability to realize the benefits of our intellectual property.
If the analyses that artificial intelligence-based applications assist in producing are deficient or inaccurate, we could be subjected to competitive harm, potential legal liability and brand or reputational harm.
While some of these and other proposed measures may require additional authorization to become effective, Congress and government administration officials have each indicated that they will continue to seek new legislative and/or administrative measures to control drug costs. 26 Table of Contents The policies of the FDA or similar regulatory authorities may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates.
While some of these and other proposed measures may require additional authorization to become effective, Congress and government administration officials have each indicated that they will continue to seek new legislative and/or administrative measures to control drug costs.
These efforts by us may not be successful. 35 Table of Contents Additionally, if we or one of our licensing partners initiated legal proceedings against a third party to enforce a patent covering any product candidate, the defendant could counterclaim that the patent covering any other product candidate is invalid and/or unenforceable.
Additionally, if we or one of our licensing partners initiated legal proceedings against a third party to enforce a patent covering any product candidate, the defendant could counterclaim that the patent covering any other product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace.
In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future third parties to assist us in our business operations. We may not be able to negotiate agreements on a timely basis, on acceptable terms or at all.
Agreements with third parties are complex and time-consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future third parties to assist us in our business operations.
We maintain cyber liability insurance; however, this insurance may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems. Artificial intelligence-based software is increasingly being used in the biopharmaceutical and healthcare industries. As with many developing technologies, artificial intelligence-based software presents risks and challenges.
We maintain cyber liability insurance; however, this insurance may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems.
Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes.
Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.
In addition, a 505(b)(2) application will not be approved until any non-patent exclusivity, such as exclusivity for obtaining approval of a new chemical entity listed in the Orange Book for the referenced product has expired.
Accordingly, we may invest a significant amount of time and expense in the development of one or more product candidates only to be subject to significant delay and patent litigation before such product candidates may be commercialized, if at all. 15 In addition, a 505(b)(2) application will not be approved until any non-patent exclusivity, such as exclusivity for obtaining approval of a new chemical entity listed in the Orange Book for the referenced product has expired.
Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. Risks Related to Owning Our Common Stock An active, liquid and orderly trading market for our shares may not continue to be developed or sustained .
Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.
We do not have complete control over these pharmaceutical compounds and any loss of our rights to them could prevent us from selling our products . We are dependent on the assignment and licensing from third parties for certain of our pharmaceutical compounds and potential product candidates.
Risks Relating to Our Intellectual Property Rights We will depend on rights to certain pharmaceutical compounds that have been acquired by us. We do not have complete control over these pharmaceutical compounds and any loss of our rights to them could prevent us from selling our products .
In addition, we will not have control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel.
In addition, we will not have control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. Failure by our contract manufacturers to comply with or maintain any of these standards could adversely affect our ability to develop, obtain regulatory approval for or market any of our product candidates.
An adverse decision in patent litigation could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline. 21 Table of Contents Even if we receive regulatory approval for our additional product candidates, we may not be able to successfully commercialize these products, and the revenue that we generate from those sales, if any, may be limited .
Even if we receive regulatory approval for our additional product candidates, we may not be able to successfully commercialize these products, and the revenue that we generate from those sales, if any, may be limited .
Our rights to use the pharmaceutical compounds we were assigned are subject to the negotiation of, continuation of and compliance with the terms of those assignments and licenses. Moreover, under these agreements, any related patents may remain under the control of the assignor or licensor.
Moreover, under these agreements, any related patents may remain under the control of the assignor or licensor. Our rights to develop and commercialize the product candidates are subject to the validity of the intellectual property rights.
In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge include alleged failures to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement.
Grounds for a validity challenge include alleged failures to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for unenforceability assertions include allegations that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution.
Sales of counterfeits of any of our product candidates, as well as unauthorized sales of any of our product candidates, may have adverse effects on our revenues, business and results of operations and damage our brand and reputation .
Furthermore, use of artificial intelligence-based software by us or third parties with which we contract, may lead to the release of confidential information which may impact our ability to realize the benefits of our intellectual property and could negatively impact our competitive position, financial condition, results of operations and prospects. 12 Sales of counterfeits of any of our product candidates, as well as unauthorized sales of any of our product candidates, may have adverse effects on our revenues, business and results of operations and damage our brand and reputation .
Grounds for unenforceability assertions include allegations that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation.
Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post grant review and equivalent proceedings in foreign jurisdictions, e.g., opposition proceedings.
Removed
In addition, varying interpretations of the data obtained from pre-clinical and clinical testing could delay, limit or prevent regulatory approval of our product candidates.
Added
If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates .
Removed
Accordingly, we may invest a significant amount of time and expense in the development of one or more product candidates only to be subject to significant delay and patent litigation before such product candidates may be commercialized, if at all.
Added
Use of artificial intelligence-based software by us or third parties with which we contract, may lead to the release of confidential information which may impact our ability to realize the benefits of our intellectual property. Artificial intelligence-based software is increasingly being used in the biopharmaceutical and healthcare industries. As with many developing technologies, artificial intelligence-based software presents risks and challenges.
Removed
The terms of any arrangements that we may establish may also not be favorable to us. 29 Table of Contents Agreements with third parties are complex and time-consuming to negotiate and document.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition to consulting on best practices, we leverage a third-party expert security firm for independent evaluations of our security controls through penetration testing. These evaluations test both the design and the operational effectives of security controls.
Biggest changeAs part of the above process, we engage third -party services to provide 24 -hour, 365 -day monitoring, escalation, and response to cyber events. In addition to consulting on best practices, we leverage a third -party expert security firm for independent evaluations of our security controls through penetration testing.
Third-party risks are included within our broader overall risk assessment process, and cybersecurity considerations are considered during the selection and oversight of our third-party service providers. Governance Our board of directors, in coordination with the Audit Committee, oversees our risk management program, including the management of risks associated with cybersecurity threats.
Third-party risks are included within our broader overall risk assessment process, and cybersecurity considerations are considered during the selection and oversight of our third -party service providers. 31 Governance Our board of directors, in coordination with the Audit Committee, oversees our risk management program, including the management of risks associated with cybersecurity threats.
We have a cybersecurity risk assessment process that involves the activities listed below, among others: ● Compare our processes to benchmark standards, such as those set by the National Institute of Standards and Technology (“NIST”). ● Closely monitor emerging data protection laws and implement changes to our processes as needed. ● Conduct annual cybersecurity management and incident training for employees involved in our systems that contain sensitive data. ● Run tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our processes and technologies as needed. ● Carry cybersecurity risk insurance that provides protection against potential losses arising from a cybersecurity incident. 43 Table of Contents As part of the above process, we engage third-party services to provide 24-hour, 365-day monitoring, escalation, and response to cyber events.
We have a cybersecurity risk assessment process that involves the activities listed below, among others: ● Compare our processes to benchmark standards, such as those set by the National Institute of Standards and Technology (“NIST”). ● Closely monitor emerging data protection laws and implement changes to our processes as needed. ● Conduct annual cybersecurity management and incident training for employees involved in our systems that contain sensitive data. ● Run tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our processes and technologies as needed. ● Carry cybersecurity risk insurance that provides protection against potential losses arising from a cybersecurity incident.
Our process also addresses material risks from cybersecurity threats associated with our use of third-party service providers, including those in our supply chain, our product development partners, or those who have access to sensitive data or our systems.
These evaluations test both the design and the operational effectives of security controls. Our process also addresses material risks from cybersecurity threats associated with our use of third -party service providers, including those in our supply chain, our product development partners, or those who have access to sensitive data or our systems.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLegal Proceedings None. Item 4. Mine Safety Disclosures Not applicable. 44 Table of Contents PART II
Biggest changeLegal Proceedings None. Item 4. Mine Safety Disclosures Not applicable. 32 PART II
Item 2. Properties We conduct all of our administrative activities for Eton Pharmaceuticals, Inc. at our 5,507 square foot leased office space located at 21925 W. Field Parkway, Suite 235, Deer Park, Illinois 60010. The lease for this facility expires in March 2025. We consider our current facilities suitable and adequate to meet our current needs. Item 3.
Item 2. Properties We conduct all of our administrative activities for Eton Pharmaceuticals, Inc. at our 5,507 square foot leased office space located at 21925 W. Field Parkway, Suite 235, Deer Park, Illinois 60010. The lease for this facility expires in March 2027. We consider our current facilities suitable and adequate to meet our current needs. Item 3.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Global Market under the symbol “ETON.” The closing price of our common stock on the Nasdaq Global Market on December 29, 2023, the last trading date in 2023, was $4.38 per share.
Biggest changeItem 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Global Market under the symbol “ETON.” The closing price of our common stock on the Nasdaq Global Market on December 31, 2024, the last trading date in 2024, was $13.32 per share.
Any future determinations to pay cash dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual restrictions, general business conditions, and any other factors that our board of directors may deem relevant.
Any future determinations to pay cash dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual restrictions, general business conditions, and any other factors that our board of directors may deem relevant. Item 6. [Reserved]
Record Holders As of March 5, 2024, we had six holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
Record Holders As of March 10, 2025, we had four holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. The closing price per share of our common stock on March 5, 2024 was $4.38. Dividends We have never declared or paid a cash dividend on our common stock.
This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. The closing price per share of our common stock on March 10, 2025 was $13.69. Dividends We have never declared or paid a cash dividend on our common stock.
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Purchases of Equity Securities None. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

26 edited+11 added−13 removed24 unchanged
Biggest changeCash Flows The following table sets forth a summary of our cash flows for the years ended December 31, 2023, 2022 and 2021 (in thousands): Year ended Year ended Year ended December 31, 2023 December 31, 2022 December 31, 2021 Net cash provided by (used in) operating activities $ 6,815 $ 4,821 $ (4,721 ) Net cash used in investing activities (775 ) (2,788 ) (2,559 ) Net cash flows (used in) provided by financing activities (957 ) (134 ) 391 Net change in cash and cash equivalents $ 5,083 $ 1,899 $ (6,889 ) The increase in cash provided by operating activities is primarily a result of increased revenue.
Biggest changeCash Flows The following table sets forth a summary of our cash flows for the years ended December 31, 2024, 2023 and 2022 (in thousands): Year ended Year ended Year ended December 31, 2024 December 31, 2023 December 31, 2022 Net cash from operating activities $ 969 $ 6,815 $ 4,821 Net cash from investing activities (40,014 ) (775 ) (2,788 ) Net cash flows from financing activities 32,593 (957 ) (134 ) Net change in cash and cash equivalents $ (6,452 ) $ 5,083 $ 1,899 The decrease in cash from operating activities was primarily the result of an increase in prepaid expenses associated with FDA filing fees in addition to higher inventory purchases in the current year.
The Company has developed estimates for future returns and chargebacks and the impact of other discounts and fees it pays, although ALKINDI SPRINKLE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone sales are not subject to returns.
The Company has developed estimates for future returns and chargebacks and the impact of other discounts and fees it pays, although INCRELEX®, ALKINDI SPRINKLE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone sales are not subject to returns.
Net revenue of $21.3 million in 2022 included $10.0 million of licensing revenue, consisting of $5.0 million from Azurity on the launch of Zonisamide and $5.0 million from the hospital products sale to Dr. Reddy’s.
Net revenues of $21.3 million in 2022 included $10.0 million of licensing revenue, consisting of $5.0 million from Azurity on the launch of Zonisamide and $5.0 million from the hospital products sale to Dr. Reddy's.
General and Administrative Expenses G&A expenses consist primarily of employee compensation expenses, selling and adverting/promotional expenses, legal and professional fees, business insurance and FDA fees associated with approved products. We anticipate that our G&A expenses will increase to support our business growth, particularly with respect to sales and marketing activities and additional personnel.
General and Administrative Expenses G&A expenses consist primarily of employee compensation expenses, selling and advertising/promotional expenses, legal and professional fees, business insurance and FDA fees associated with approved products. We anticipate that our G&A expenses will increase to support our business growth, particularly with respect to sales and marketing activities and additional personnel.
The Company stores its ALKINDI SPRINKLE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone inventory at its pharmacy distributor customer locations, and sales are recorded when stock is pulled and shipped to fulfill specific patient orders. The Company recognizes revenue and cost of sales from products sold to wholesalers upon delivery to the wholesaler location.
The Company stores its INCRELEX®, ALKINDI SPRINKLE®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone inventory at its pharmacy distributor customer locations, and sales are recorded when stock is pulled and shipped to fulfill specific patient orders. The Company recognizes revenue and cost of sales from products sold to wholesalers upon delivery to the wholesaler location.
The Company sells its ALKINDI SPRINKLE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone products to pharmacy distributor customers which provide order fulfilment and inventory storage/distribution services. The Company may sell products in the U.S. to wholesale pharmaceutical distributors, who then sell the product to hospitals and other end-user customers.
The Company sells its INCRELEX®, ALKINDI SPRINKLE®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone products to pharmacy distributor customers which provide order fulfilment and inventory storage/distribution services. The Company may sell products in the U.S. to wholesale pharmaceutical distributors, who then sell the product to hospitals and other end-user customers.
While our significant accounting policies are described in more detail in Note 3 to our financial statements included herein, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements. 47 Table of Contents Revenue Recognition for Contracts with Customers We account for contracts with our customers in accordance with Accounting Standards Codification (“ASC”) 606 — Revenue from Contracts with Customers.
While our significant accounting policies are described in more detail in Note 3 to our Financial Statements included herein, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements. 34 Revenue Recognition for Contracts with Customers We account for contracts with our customers in accordance with Accounting Standards Codification (“ASC”) 606 — Revenue from Contracts with Customers.
Selling prices initially billed to wholesalers are subject to discounts for prompt payment and subsequent chargebacks when the wholesalers sell products at negotiated discounted prices to members of certain group purchasing organizations (“GPOs”) and government programs.
Selling prices initially billed to wholesalers may be subject to discounts for prompt payment and subsequent chargebacks when the wholesalers sell products at negotiated discounted prices to members of certain group purchasing organizations (“GPOs”) and government programs.
The expected term of stock options granted is based on vesting periods and the contractual life of the options. Expected volatilities are based on the Company's historical volatility subsequent to our IPO, which we believe represents the most accurate basis for estimating expected future volatility under the current conditions.
The expected term of stock options granted is based on vesting periods and the contractual life of the options. Expected volatilities are based on the Company's historical volatility subsequent to our IPO, which we believe represents the most accurate basis for estimating expected future volatility under the current conditions. We account for forfeitures as they occur.
The Company has no significant obligations to wholesalers to generate pull-through sales. 48 Table of Contents For its ALKINDI SPRINKLE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone products, the Company bills at the initial product list price which are subject to offsets for patient co-pay assistance and potential state Medicaid reimbursements which are recorded as a reduction of net revenues at the date of sale/shipment.
The Company has no significant obligations to wholesalers to generate pull-through sales. 35 For its INCRELEX®, ALKINDI SPRINKLE®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone products, the Company bills at the initial product list price which are subject to offsets for patient co-pay assistance and potential state Medicaid reimbursements which are recorded as a reduction of net revenues at the date of sale/shipment.
Net product revenue of $26.1 million in 2023 increased by $14.9 million from $11.3 million in 2022 primarily as a result of growth in ALKINDI SPRINKLE® and Carglumic Acid.
Net product revenue of $26.1 million in 2023 increased by $14.8 million from $11.3 million in 2022 primarily as a result of product sales growth for ALKINDI SPRINKLE® and Carglumic Acid.
For the years ended December 31, 2023 and 2022, we incurred $3.3 million and $4.0 million of R&D expenses, respectively, and $18.9 million and $18.6 million of general and administrative (“G&A”) expenses, respectively. The $0.7 million decrease in R&D was driven by hospital products development in 2022 that were sold and therefore did not recur in 2023.
For the years ended December 31, 2023 and 2022, we incurred $3.3 million and $4.0 million of R&D expenses, respectively, and $18.9 million and $18.6 million of G&A expenses, respectively. The $0.7 million decrease in R&D was driven by hospital products development in 2022 that were sold and, therefore, did not recur in 2023.
The Company monitors actual product returns, chargebacks, discounts and fees subsequent to the sale. If these amounts end up differing from its estimates, it will make adjustments to these allowances, which are applied to increase or reduce product sales revenue and earnings in the period of adjustment.
The Company monitors actual product returns, chargebacks, discounts and fees subsequent to the sale. If these amounts end up differing from its estimates, it will make adjustments to these allowances, which are applied to increase or reduce product sales revenue and earnings in the period of adjustment. Acquisitions The Company accounts for business acquisitions using the acquisition method of accounting.
The Company estimates the fair value of stock-based option awards using the BSM. The BSM requires the input of subjective assumptions, including the expected stock price volatility, the calculation of expected term, forfeitures and the fair value of the underlying common stock on the date of grant, among other inputs.
The BSM requires the input of subjective assumptions, including the expected stock price volatility, the calculation of expected term, forfeitures and the fair value of the underlying common stock on the date of grant, among other inputs.
See Note 5 — Debt for additional notes to Financial Statement. Critical Accounting Policies Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
See Note 6 — Debt for additional information on the SWK loan in Notes to our Financial Statements. Critical Accounting Policies Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Stock-Based Compensation The Company accounts for stock-based compensation under the provisions of ASC 718 Compensation – Stock Compensation. The guidance under ASC 718 requires companies to estimate the fair value of the stock-based compensation awards on the date of grant and record expense over the related service periods, which are generally the vesting period of the equity awards.
The guidance under ASC 718 requires companies to estimate the fair value of the stock-based compensation awards on the date of grant and record expense over the related service periods, which are generally the vesting period of the equity awards. Compensation expense is recognized over the period during which services are rendered by consultants and non-employees until completed.
Compensation expense is recognized over the period during which services are rendered by consultants and non-employees until completed. At the end of each financial reporting period prior to completion of the service, the fair value of these awards is remeasured using the then-current fair value of our common stock and updated assumption inputs in the Black-Scholes option-pricing model (“BSM”).
At the end of each financial reporting period prior to completion of the service, the fair value of these awards is remeasured using the then-current fair value of our common stock and updated assumption inputs in the Black-Scholes option-pricing model (“BSM”). The Company estimates the fair value of stock-based option awards using the BSM.
We anticipate successfully growing sales of our commercialized products and commercializing additional product candidates in 2024 and beyond. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net revenues of $31.6 million in 2023 included $5.5 million of licensing revenue from the sale of our neurology product royalty streams to Azurity in June 2023.
The majority of our spend in R&D is to third parties we contract with to develop and test our products and development of partner milestone payments. 33 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net revenues of $31.6 million in 2023 included $5.5 million of licensing revenue from the sale of our neurology product royalty streams to Azurity in June 2023.
We also realized revenue from the sale of our hospital products portfolio to Dr. Reddy’s Laboratories S.A. (“Dr. Reddy's”) in 2022, the launch of our Betaine Anhydrous and product in May 2023, the sale of our neurology product royalty streams to Azurity in June 2023, and the launch of our Nitisinone product in February 2024.
Results of Operations We have realized revenues from the sale of our ALKINDI SPRINKLE®, Carglumic Acid, and Biorphen products in 2022, as well as the launch of Betaine in 2023, and the launch of Nitisinone and PKU GOLIKE® products in 2024. We also realized revenue from the sale of our hospital products portfolio to Dr. Reddy’s Laboratories S.A. (“Dr.
We recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied at a point in time or over time, and if over time this is based on the use of an output or input method.
We recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied at a point in time. For the years ended December 31, 2022, 2023 and 2024, all revenues recognized in the Statements of Operations were point in time sales to our customers.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Net revenues of $21.3 million in 2022 included $10.0 million of licensing revenue, consisting of $5.0 million from Azurity on the launch of Zonisamide and $5.0 million from the sale of our hospital products to Dr. Reddy’s.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Net revenues of $39.0 million in 2024 included $0.5 million of licensing revenue from the sale of our DS-200 product candidate in September 2024.
The $4.3 million increase in G&A expenses was primarily due to personnel additions and increased sales and marketing initiatives to support our growing business.
The $3.8 million increase in G&A expenses was primarily due to personnel additions to support our growing business as well as marketing spend on new products. We incurred a net loss of $3.8 million and $0.9 million for the years ended December 31, 2024 and 2023, respectively.
We anticipate that our G&A expenses will increase to support our business growth. Research and Development Expenses We had eight employees that supported our overall product development function. The majority of our spend in R&D was to third parties we contracted with to develop and test our products in addition to development partner milestone payments.
General and Administrative Expenses G&A expenses consisted primarily of employee compensation expenses, selling and advertising/promotional expenses, legal and professional fees, business insurance and FDA fees. We anticipate that our G&A expenses will increase to support our business growth. Research and Development Expenses We had eight employees that supported our overall product development function.
Research and Development Expenses We currently have nine employees that support our overall product development function. The majority of our spend in R&D is to third parties we contract with to develop and test our products and development of partner milestone payments.
Research and Development Expenses We currently have eight employees that support our overall product development function.
We closed our internal R&D facility in May 2021. Liquidity and Capital Resources As of December 31, 2023, we had total assets of $31.7 million, cash and cash equivalents of $21.4 million and working capital of $10.6 million.
The majority of our spend in R&D was to third parties we contracted with to develop and test our products in addition to development partner milestone payments. Liquidity and Capital Resources As of December 31, 2024, we had total assets of $76.1 million, cash and cash equivalents of $14.9 million and working capital of $21.1 million.
For the years ended December 31, 2022 and 2021, we incurred $4.0 million and $6.2 million of R&D expenses, respectively, and $18.6 million and $14.3 million of G&A expenses, respectively. The $2.2 million decrease in R&D was driven by milestone payments on a number of our products in development in 2021 that did not recur in 2022.
For the years ended December 31, 2024 and 2023, we incurred $3.3 million and $3.3 million in research and development ("R&D") expenses, respectively, and $22.8 million and $18.9 million of general and administrative (“G&A”) expenses, respectively.
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Risk Factors. ” Overview We are an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases.
Added
Risk Factors. ” Overview We are an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases. We currently have seven commercial rare disease products: INCRELEX®, ALKINDI SPRINKLE®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone. The Company has six additional product candidates in late-stage development: ET-400, ET-600, Amglidia®, ET-700, ET-800 and ZENEO® hydrocortisone autoinjector.
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Since the formation of our company in 2017, we have used our expertise in business development, regulatory, and product development to assemble a diversified portfolio of rare disease products. 45 Table of Contents Results of Operations To date, we have realized revenues from the sale of our neurology products portfolio in 2021, a licensing arrangement on our EM-100 product that was sold to Bausch Health, and the launch of our Biorphen®, ALKINDI SPRINKLE®, and Carglumic Acid products in December 2019, December 2020, and December 2021, respectively.
Added
Reddy's”) in 2022, and the sale of our neurology product royalty streams to Azurity in 2023. We anticipate continued growth of our commercialized products as well as commercializing additional product candidates in 2025 and beyond.
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Net revenues of $21.8 million in 2021 included $19.0 million of licensing revenue, including $17.0 million from our neurology products sold to Azurity. Our 2022 gross profit of $14.3 million was down from $19.0 million in 2021, primarily as a result of decreased licensing revenue.
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Net revenue of $31.6 million in 2023 included $5.5 million of licensing revenue from the sale of our neurology product royalty streams to Azurity in June 2023. Net product revenue of $38.5 million in 2024 increased by $12.4 million from $26.1 million in 2023 primarily as a result of higher product sales for ALKINDI SPRINKLE® and Carglumic Acid.
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We incurred a net loss of $9.0 million and $2.0 million for the years ended December 31, 2022 and 2021, respectively. 46 Table of Contents General and Administrative Expenses G&A expenses consisted primarily of employee compensation expenses, selling and adverting/promotional expenses, legal and professional fees, business insurance and FDA fees.
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Our 2024 gross profit of $23.4 million was up from $21.1 million in 2023 primarily as a result of higher product sales for ALKINDI SPRINKLE® and Carglumic Acid.
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Investing activities in 2023 consist of licensing fees for Nitisinone, while investing activities in 2022 and 2021 consist primarily of licensing fees for Betaine and Carglumic Acid, respectively. The increase in cash used in financing activities is primarily the result of scheduled payments on our outstanding loan to SWK Holdings.
Added
Investing activities in 2024 consisted of the purchase of product licensing rights associated with INCRELEX®, GALZIN® and PKU GOLIKE®, while investing activities in 2023 and 2022 consist primarily of the purchase of product licensing rights for Nitisinone and Betaine, respectively.
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Any amounts received prior to revenue recognition will be recorded as deferred revenue. Amounts expected to be recognized as revenue within the twelve months following the balance sheet date will be classified as current portion of deferred revenue in our balance sheets.
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The increase in cash from financing activities was primarily the result of net proceeds received from expanding our credit agreement with SWK Holdings Corporation (“SWK”) in 2024 and proceeds received from the issuance of common stock in a private placement offering compared to repayment of long-term debt in 2023 and 2022.
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Amounts not expected to be recognized as revenue within the twelve months following the balance sheet date are classified as long-term deferred revenue, net of current portion.
Added
Under this method of accounting, assets acquired and liabilities assumed are recorded at their respective fair values at the date of the acquisition. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions.
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Because of the shelf life of the product and the Company’s lengthy return period, there may be a significant period of time between when the product is shipped and when it issues credits on returned product.
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The Company’s estimates of fair value are based upon assumptions believed to be reasonable but that are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Any excess of the purchase price over the fair value of the net assets acquired is recognized as goodwill.
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When estimating these adjustments to the transaction price, the Company reduces it sufficiently to be able to assert that it is probable that there will be no significant reversal of revenue when the ultimate adjustment amounts are known.
Added
The Company also uses best estimates and assumptions to determine the useful lives of those acquired intangible assets that have a finite life.
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We account for forfeitures as they occur. 49 Table of Contents Research and Development Expenses R&D expenses include both internal R&D activities and external contracted services. Internal R&D activity expenses include salaries, benefits and stock-based compensation and other costs to support our R&D operations.
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Critical estimates in valuing certain of the intangible assets acquired include: * future expected cash flows from customer contracts and license agreements; * historical and expected customer attrition rates and anticipated growth in revenues from acquired customers; and * discount rates. Stock-Based Compensation The Company accounts for stock-based compensation under the provisions of ASC 718 Compensation – Stock Compensation.
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External contracted services include product development efforts including certain product licensor milestone payments, clinical trial activities, manufacturing and control-related activities and regulatory costs. R&D expenses are charged to operations as incurred. We review and accrue R&D expenses based on services performed and rely upon estimates of those costs applicable to the stage of completion of each project.
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Off-Balance Sheet Transactions We do not have any off-balance sheet transactions.
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Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from our estimates. Upfront payments and milestone payments made for the licensing of technology for products that are not yet approved by the FDA are expensed as R&D in the period in which they are incurred.
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Nonrefundable advance payments for goods or services to be received in the future for use in R&D activities are recorded as prepaid expenses and are expensed as the related goods are delivered or the services are performed. Off-Balance Sheet Transactions We do not have any off-balance sheet transactions.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed3 unchanged
Biggest changeAs of December 31, 2023, our cash equivalents only included cash deposits at our bank. From time to time, we do have cash investments in short-term money market or U.S. treasury bills.
Biggest changeAs of December 31, 2024, our cash equivalents only included cash deposits at our bank. From time to time, we do have cash investments in short-term money market or U.S. treasury bills.
We do not currently have exposure to foreign currency risk.
We do not currently have exposure to foreign currency risk. 36

Other ETON 10-K year-over-year comparisons