eton20240331

eton20240331_10q.htm

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 March 31, 2024

☐	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 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 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 May 2, 2024, Eton Pharmaceuticals, Inc. had outstanding 25,690,562 shares of common stock, $0.001 par value.

Part No	Item No	Description	Page No.

I		FINANCIAL INFORMATION	1

	1	Financial Statements	1

		Condensed Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023	1

		Unaudited Condensed Statements of Operations for the three months ended March 31, 2024 and 2023	2

		Unaudited Condensed Statements of Stockholders’ Equity for the three months ended March 31, 2024 and 2023	3

		Unaudited Condensed Statements of Cash Flows for the three months ended March 31, 2024 and 2023	4

		Notes to Condensed Financial Statements	5

	2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

	3	Quantitative and Qualitative Disclosures About Market Risk	25

	4	Controls and Procedures	26

II		OTHER INFORMATION	27

	1	Legal Proceedings	27

	1A	Risk Factors	27

	2	Unregistered Sales of Equity Securities and Use of Proceeds	27

	3	Defaults Upon Senior Securities	27

	4	Mine Safety Disclosures	27

	5	Other Information	27

	6	Exhibits	27

		Exhibit Index	28

		Signatures	29

	*March 31, 2024*			*December 31, 2023*
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	16,655		$	21,388
Accounts receivable, net		4,240			3,411
Inventories		2,318			911
Prepaid expenses and other current assets		1,050			1,129
Total current assets		24,263			26,839

Property and equipment, net		57			58
Intangible assets, net		6,388			4,739
Operating lease right-of-use assets, net		74			92
Other long-term assets, net		12			12
Total assets	$	30,794		$	31,740

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,263		$	1,848
Debt, net of unamortized discount		5,020			5,380
Accrued liabilities		8,017			9,013
Total current liabilities		15,300			16,241

Operating lease liabilities, net of current portion		—			22

Total liabilities		15,300			16,263

Commitments and contingencies (Note 11)

Stockholders’ equity
Common stock, $0.001 par value; 50,000,000 shares authorized; 25,690,562 and 25,688,062 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively		26			26
Additional paid-in capital		120,349			119,521
Accumulated deficit		(104,881	)		(104,070	)
Total stockholders’ equity		15,494			15,477

Total liabilities and stockholders’ equity	$	30,794		$	31,740

	*For the three months ended*
	*March 31,*			*March 31,*
	*2024*			*2023*
Revenues:
Licensing revenue	$	—		$	—
Product sales and royalties		7,966			5,304
Total net revenues		7,966			5,304

Cost of sales:
Licensing revenue		—			—
Product sales and royalties		2,959			1,958
Total cost of sales		2,959			1,958

Gross profit		5,007			3,346

Operating expenses:
Research and development		651			535
General and administrative		5,156			5,345
Total operating expenses		5,807			5,880

Loss from operations		(800	)		(2,534	)

Other income (expense):
Other income		—			—
Interest expense, net		(11	)		(126	)
Total other income (expense)		(11	)		(126	)

Loss before income tax expense		(811	)		(2,660	)

Income tax expense		—			—

Net loss	$	(811	)	$	(2,660	)
Net loss per share, basic	$	(0.03	)	$	(0.10	)
Weighted average number of common shares outstanding, basic		25,763			25,525
Net loss per share, diluted	$	(0.03	)	$	(0.10	)
Weighted average number of common shares outstanding, diluted		25,763			25,525

	*Common Stock*				*Additional Paid-in*		*Accumulated*			*Total Stockholders’*
	*Shares*		*Amount*		*Capital*		*Deficit*			*Equity*
Balances at December 31, 2023		25,688,062	$	26	$	119,521	$	(104,070	)	$	15,477

Stock-based compensation		—		—		821		—			821

Stock option exercises		2,500		—		7		—			7

Net loss		—		—		—		(811	)		(811	)

Balances at March 31, 2024		25,690,562	$	26	$	120,349	$	(104,881	)	$	15,494

	*Three months ended*			*Three months ended*
	*March 31, 2024*			*March 31, 2023*
Cash flows from operating activities
Net loss	$	(811	)	$	(2,660	)

Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		821			872
Depreciation and amortization		252			213
Debt discount amortization		25			29
Changes in operating assets and liabilities:
Accounts receivable		(829	)		(1,022	)
Inventories		(1,407	)		120
Prepaid expenses and other assets		79			191
Accounts payable		414			(530	)
Accrued liabilities		(1,017	)		1,239
Net cash used in operating activities		(2,473	)		(1,548	)

Cash flows from investing activities
Purchases of product license rights		(1,868	)		—
Purchases of property and equipment		(14	)		—
Net cash used in investing activities		(1,882	)		—

Cash flows from financing activities
Repayment of long-term debt		(385	)		—
Proceeds from stock option exercises		7			132
Payment of tax withholding related to net share settlement of stock option exercises		—			(181	)
Net cash used in financing activities		(378	)		(49	)

Change in cash and cash equivalents		(4,733	)		(1,597	)
Cash and cash equivalents at beginning of period		21,388			16,305
Cash and cash equivalents at end of period	$	16,655		$	14,708

Supplemental disclosures of cash flow information
Cash paid for interest	$	190		$	216
Cash paid for income taxes	$	—		$	—

	*Amortization*
Year	*Expense*
Remainder of 2024	$	800
2025		1,067
2026		1,067
2027		943
2028		609
Thereafter		1,902
Total estimated amortization expense	$	6,388

	*March 31,*			*December 31,*
	*2024*			*2023*
Computer hardware and software	$	187		$	187
Furniture and fixtures		125			111
Equipment		52			52
Leasehold improvements		103			103
Construction in Progress		—			—
		467			453
Less: accumulated depreciation		(410	)		(395	)
Property and equipment, net	$	57		$	58

	*Amount*
Remainder of 2024		5,905
Less: amount representing interest		(830	)
Loan payable, gross		5,075
Less: unamortized discount		(55	)
Debt, net of unamortized discount	$	5,020

Description of Warrants	*No. of Shares*		*Exercise Price*
SWK Warrants – Debt – Tranche #1		51,239	$	5.86
SWK Warrants – Debt – Tranche #2		18,141	$	6.62
Total (Avg)		69,380	$	6.05

						*Weighted*
				*Weighted*		*Average*
				*Average*		*Remaining*		*Aggregate*
				*Exercise*		*Contractual*		*Intrinsic*
	*Shares*			*Price*		*Term (Yrs)*		*Value*
Outstanding as of December 31, 2023		4,839,226		$	4.57
Issued		1,441,118		$	4.42
Exercised		(2,500	)	$	2.97
Forfeited/Cancelled		—		$	—
Outstanding as of March 31, 2024		6,277,844		$	4.54		7.7	$	1,287
Exercisable as of March 31, 2024		3,619,469		$	4.74		6.6	$	1,031
Vested and expected to vest at March 31, 2024		6,277,844		$	4.54		7.7	$	1,287

	*Number of Units*		*Weighted Average Grant-Date Fair Value Per Unit*
Outstanding and unvested as of December 31, 2023		274,204	$	2.63
Granted		—	$	—
Vested		—	$	—
Forfeited		—	$	—
Outstanding and unvested as of March 31, 2024		274,204	$	2.63

	*Operating Lease Liabilities*
2024 (remainder of 2024)		68
2025		23
Undiscounted lease payments		91
Less: Imputed interest		(4	)
Total operating lease liabilities	$	87

Exhibit No.		Description
31.1		Certification of President and Chief Executive Officer (Principal Executive Officer), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer (Principal Financial Officer), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certifications of President and Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2024 formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Condensed Balance Sheets, (ii) the Condensed Statements of Operations, (iii) the Condensed Statements of Stockholders’ Equity, (iv) the Condensed Statements of Cash Flows and (v) Notes to Condensed Financial Statements.

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

	ETON PHARMACEUTICALS, INC.

May 9, 2024	By:	/s/ Sean E. Brynjelsen
		Sean E. Brynjelsen
		President and Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ James R. Gruber
		James R. Gruber
		Chief Financial Officer
		(Principal Financial Officer)

Assets	*Classification*
Operating lease right-of-use assets	Operating lease right-of-use assets, net	$	74
Total leased assets		$	74
Liabilities
Operating lease liabilities, current	Accrued liabilities	$	87
Total operating lease liabilities		$	87

	Three months ended			Three months ended
	March 31, 2024			March 31, 2023
Net cash used in operating activities	$	(2,473	)	$	(1,548	)
Cash used in investing activities		(1,882	)		—
Cash used in financing activities		(378	)		(49	)
Change in cash and cash equivalents	$	(4,733	)	$	(1,597	)

SEC Form 10-Q filed by Eton Pharmaceuticals Inc.