UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended June 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from _________________ to _______________________

Commission file number: 001-38738

ETON PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware		37-1858472
(State of incorporation)		(I.R.S. Employer Identification Number)

21925 W. Field Parkway, Suite 235

Deer Park, Illinois 60010-7278

(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code: (847) 787-7361

Securities registered pursuant to Section 12(b) of the Act		Trading Symbol		Name of each exchange on which registered
Common stock, $0.001 par value per share		ETON		Nasdaq Global Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter time that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 9, 2021, Eton Pharmaceuticals, Inc. had outstanding 24,600,175 shares of common stock, $0.001 par value.

Eton Pharmaceuticals, Inc.

TABLE OF CONTENTS

Part No	Item No	Description	Page No.

I		FINANCIAL INFORMATION	1

	1	Financial Statements	1

		Condensed Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020	1

		Unaudited Condensed Statements of Operations for the three and six months ended June 30, 2021 and 2020	2

		Unaudited Condensed Statements of Stockholders’ Equity for the three months ended June 30, 2021 and 2020	3

		Unaudited Condensed Statements of Stockholders’ Equity for the six months ended June 30, 2021 and 2020	4

		Unaudited Condensed Statements of Cash Flows for the six months ended June 30, 2021 and 2020	5

		Notes to Condensed Financial Statements	6

	2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

	3	Quantitative and Qualitative Disclosures About Market Risk	30

	4	Controls and Procedures	31

II		OTHER INFORMATION	32

	1	Legal Proceedings	32

	1A	Risk Factors	32

	2	Unregistered Sales of Equity Securities and Use of Proceeds	32

	3	Defaults Upon Senior Securities	32

	4	Mine Safety Disclosures	32

	5	Other Information	32

	6	Exhibits	32

		Index to Exhibits	33

		Signatures	34

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Eton Pharmaceuticals, Inc.

Condensed Balance Sheets

(in thousands, except share and per share amounts)

	June 30, 2021			December 31, 2020
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	25,802		$	21,295
Accounts receivable, net		303			48
Inventories		1,242			1,242
Prepaid expenses and other current assets		1,728			2,116
Total current assets		29,075			24,701

Property and equipment, net		156			811
Intangible assets, net		500			575
Operating lease right-of-use assets, net		143			192
Other long-term assets, net		32			40
Total assets	$	29,906		$	26,319

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,522		$	2,344
Current portion of long-term debt		749			—
PPP loan, current portion		—			280
Accrued liabilities		835			1,170
Total current liabilities		3,106			3,794

Long-term debt, net of discount and including accrued fees		5,856			6,532
Long-term portion of PPP and EIDL loans		150			231
Operating lease liabilities, net of current portion		58			99

Total liabilities		9,170			10,656

Commitments and contingencies (Note 12)		-

Stockholders’ equity
Common stock, $0.001 par value; 50,000,000 shares authorized as of June 30, 2021 and December 31, 2020; 24,600,175 and 24,312,808 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		25			24
Additional paid-in capital		109,769			107,797
Accumulated deficit		(89,058	)		(92,158	)
Total stockholders’ equity		20,736			15,663

Total liabilities and stockholders’ equity	$	29,906		$	26,319

The accompanying notes are an integral part of these condensed financial statements.

Eton Pharmaceuticals, Inc.

Condensed Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

	2021			2020			2021			2020
	For the three months ended						For the six months ended
	June 30,			June 30,			June 30,			June 30,
	2021			2020			2021			2020
Revenues:
Licensing revenue	$	2,500		$	—		$	14,000		$	—
Product sales and royalties		567			20			964			119
Total net revenues		3,067			20			14,964			119

Cost of sales:
Licensing revenue		—			—			1,500			—
Product sales and royalties		136			28			226			130
Total cost of sales		136			28			1,726			130

Gross profit (loss)		2,931			(8	)		13,238			(11	)

Operating expenses:
Research and development		1,990			1,609			2,876			7,877
General and administrative		3,266			2,921			7,324			5,531
Total operating expenses		5,256			4,530			10,200			13,408

(Loss) income from operations		(2,325	)		(4,538	)		3,038			(13,419	)

Other (expense) income:
Interest and other (expense) income, net		(237	)		(192	)		(484	)		(360	)
Gain on PPP loan forgiven		365			—			365			—
Gain on equipment sale		181			—			181			—

(Loss) income before income tax expense		(2,016	)		(4,730	)		3,100			(13,779	)

Income tax expense		—			—			—			—

Net (loss) income	$	(2,016	)	$	(4,730	)	$	3,100		$	(13,779	)
Net loss (income) per share, basic	$	(0.08	)	$	(0.23	)	$	0.12		$	(0.70	)
Net loss (income) per share, diluted	$	(0.08	)	$	(0.23	)	$	0.12		$	(0.70	)
Weighted average number of common shares outstanding, basic		25,211			21,005			25,133			19,574
Weighted average number of common shares outstanding, diluted		25,211			21,005			26,486			19,574

The accompanying notes are an integral part of these condensed financial statements.

Eton Pharmaceuticals, Inc.

Condensed Statements of Stockholders’ Equity

For the three months ended June 30, 2021 and 2020

(in thousands, except share amounts)

(Unaudited)

	Shares		Amount		Capital		Deficit			Equity
	Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Capital		Deficit			Equity
Balances at March 31, 2021		24,482,616	$	24	$	108,573	$	(87,042	)	$	21,555

Stock-based compensation		—		—		836		—			836

Stock option exercises		63,233				226		—			226

Employee stock purchase plan		29,326		—		134		—			134

Common stock issued related to restricted stock units		25,000		—		—		—			—
Proceeds from sales of common stock, net of offering costs
Proceeds from sales of common stock, net of offering costs, shares
Warrant exercises
Warrant exercises, shares
Issuance of common stock for product candidate licensing rights
Issuance of common stock for product candidate licensing rights, shares

Net loss		—		—		—		(2,016	)		(2,016	)

Balances at June 30, 2021		24,600,175	$	25	$	109,769	$	(89,058	)	$	20,736

Common Stock

SEC Form 10-Q filed by Eton Pharmaceuticals, Inc.