Good afternoon, and welcome to the Eton Pharmaceuticals First Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please be advised that this call is being recorded at the company's request. At this time, I would like to turn it over to David Krempa, Chief Business Officer at Eton Pharmaceuticals. Please proceed.

Thank you, operator. Good afternoon, everyone, and welcome to Eton's First Quarter 2024 Conference Call. This afternoon, we issued a press release that outlines the topics we plan to discuss on today's call. The release is available on our website, etonpharma.com. Joining me on our call today, we have Sean Brynjelsen, our CEO; and James Gruber, our CFO. In addition to taking live questions on today's call, we will be answering questions that are e-mailed to us. Investors can send their questions to investorrelations@etonpharma.com. Before we begin, I would like to remind everyone that remarks made during this call may contain forward-looking statements and involve risks and uncertainties that could cause actual results to differ materially from those contained in these forward-looking statements. Please see the forward-looking statements disclaimer in our earnings release and the risk factors in the company's filings with the SEC. Now I will turn the call over to our CEO, Sean Brynjelsen.

Thank you, David. Good afternoon, everyone, and thank you for joining us today. After a strong finish to 2023, I am pleased to say we carry this momentum into 2024, delivering our 13th straight quarter of sequential product revenue growth. It has been a very productive start to 2024 for the company, and we have a number of exciting items to discuss today. In addition to posting record revenue sales in Q1, we also acquired a new commercial growth asset in PKU GOLIKE. We launched Nitisinone capsules and more importantly, Eton submitted our new drug application for ET-400. We were pleased to deliver another quarter of strong revenue growth and to do so while maintaining our disciplined cost structure. Revenues from product sales grew by more than 50% year-over-year to $8.0 million, while our SG&A spending actually declined by 4% year-over-year. As you can see, now that we have our infrastructure in place, there is significant operating leverage in our business. We believe we could support a revenue level many multiples over our current run rate, with only a modest increase in our SG&A spending. This should allow us to deliver substantial earnings as we scale our revenue towards our goal of being a $100 million plus revenue company in the coming years. Our record product sales in the quarter were driven primarily by strong growth in both Carglumic Acid and ALKINDI SPRINKLE. I remain very encouraged by the trajectory of our Carglumic Acid product as it continues to exceed our expectations. We believe we have now captured more than 50% of the patient population, but the product continues to grow, and we have added additional patients in Q1 and also additional ones in Q2. Carglumic is a part of our metabolic portfolio that expanded from 2 products to 4…

Thank you, Sean. Our first quarter revenue was $8.0 million compared to $5.3 million in the first quarter of 2023, an increase of 50%. In both periods, revenue was comprised entirely of product sales and royalties and the increase was primarily due to increased sales volume of our ALKINDI SPRINKLE and Carglumic Acid products. We expect product sales to continue to grow quarter-over-quarter throughout the rest of this year and beyond. Gross profit for the quarter was $5.0 million compared with $3.3 million in the prior year period. R&D expenses for the quarter were $0.7 million compared with $0.5 million in the prior year period, and the increase was primarily due to development activities related to ET-400. While we expect an increase in second quarter R&D expenses with a $2 million filing fee for ET-400, we expect total R&D spend for 2024 to remain at approximately $4 million, excluding the one-time filing fees. General and Administrative expenses for the quarter were $5.2 million compared with $5.3 million in the prior year period, with the decrease due to a slight reduction in employee-related expenses and logistics costs. We expect General and Administrative expenses to remain relatively constant throughout the remainder of 2024, even with the recent PKU GOLIKE acquisition and Nitisinone launch. Total company net loss was $0.8 million for the quarter compared to a net loss of $2.7 million in the prior year period. Net loss per basic and diluted share was $0.03 during the quarter compared to a net loss per basic and diluted share of $0.10 in the prior year period. Given our current expectations surrounding the timing of R&D activities, we expect to report positive quarterly net income by the end of this year. Eton finished the first quarter with $16.7 million of cash on hand and our operating cash burn during the quarter was $2.5 million. While we achieved positive operating cash flow in the second half of 2023, the first quarter of 2024 was impacted by a one-time milestone payment of $1.0 million related to 2023 ALKINDI SPRINKLE sales achievement. A payment of $0.5 million for inventory associated with the PKU GOLIKE product acquisition and by the calendarization of marketing and promotion spend that is heavily weighted in the first half of the year. We remain confident that our continued sales growth and disciplined cost structure will result in positive operating cash flow throughout the remainder of 2024 and allow us to actively pursue new product opportunities. This concludes our remarks on first quarter results. And with that, I'll turn it over to the operator for Q&A.

[Operator Instructions] First question comes from the line of Chase Knickerbocker of Craig-Hallum.

I'm just going to kind of go product line by product line here. Maybe just to start on Carglumic, Sean. Where are we at in that product's life cycle? Do you think we can add a couple of handfuls of patients this year still? Or should we think about it as you kind of maintaining the patient volumes that you have, say, in 1Q kind of through this year?

Well, Chase. There's still some runway apparently. We continue to add patients. We just added 3 more patients in the past week. And I -- our estimate is there's up to 100 patients. We have about a little more than half of that, and it continues to grow. We get a lot of new patients on, which actually tend to use that same product over an extended period of time. In terms of the product life, it's been a robust product for us, primarily due to the detailing the patient services and we think all the wraparound services that we provide for patients.

Got it. And then maybe on the new one on GOLIKE, you're expecting quite a bit of growth there. You already know all of those physicians. How quickly do you think you can kind of get to that 10% penetration level from here? Is it 3-years? Is it 1 or 2-years? I mean, just kind of help us benchmark kind of how quickly you would expect that growth, considering you already know the 100 or so odd positions.

Yes. I -- that's a little more difficult to predict, but we have approximately 50% of that -- let's say, we want to hit $10 million in peak sales, which would be about 10% of the current market. We actually could exceed that depending on how fast the uptick is. There are very few companies out there that are positioned as well as us in terms of being able to promote a PKU product. So with that said, for us to hit $5 million next year in GOLIKE sales is very achievable. It may be significantly higher than that, but I believe that's in the cards.

Got it. That's helpful. And if we kind of think about ALKINDI and hydrocortisone portfolio before the ET-400 launch. Obviously, you're seeing nice growth there still. Do you think there's kind of runway to add another kind of 100 patients from here before ET-400 launch? Or just kind of help bench us on -- kind of growth in ALKINDI as we're waiting for ET-400.

The challenge with the ALKINDI is that we -- it's not a challenge of getting new scripts. So we get a lot of scripts. What happens is some of the patients do not stay on product due to the texture issue that we've mentioned before. So we have a fairly higher rate of discontinuation than I've seen in other pharmaceutical products. It can be mitigated by education. It could be mitigated by working with the doctors and the caregivers, which we are doing all of those things. And we are planning some additional educational materials to go out to all of the physicians' offices. So when patients are prescribed product, they understand it can be a challenge of texture with the child initially. And I think that for us to have -- we have growth for the product quarter-over-quarter. Can we add another 100 patients? It's not -- it's certainly an achievable goal, but it's going to hinge largely on reducing the discontinuation rate, which is really the main driver of why we did ET-400 in the first place. We look at the reasons why ALKINDI patients go off drug and ET-400 handles really most of those issues right out of the gate. So I think that is -- that's why we're really excited about the product. Now that it's been filed. We're already looking to produce and have product even ahead of a 10-month PDUFA date. So ALKINDI numbers will continue to get scripts week after week. If we can reduce the discontinuations, we can add another 100 patients, if discontinuations are at the same level it's going to be a little bit more challenging. But it's a robust product, and we're going to keep going.

Got it. Maybe shifting gears to ET-400, and I just have a couple more guys. Maybe speak to us on -- obviously, you've established the PK bridge. Maybe just talk to us on kind of your confidence around the CMC kind of side of that submission. I mean, are you kind of -- are you working with a manufacturer who has recently kind of successfully gotten through some FDA audits along the lines of some recent approvals that they are manufacturing? Just kind of talk to us about the confidence of your manufacturing partner there.

Sure. So the files are very similar to what we did with topiramate and zonisamide oral solutions. One of the manufacturers are the same as the -- one of the products, I won't say which one. And so we're confident in their FDA readiness, they have already gone through that process and passed our quality inspections. So I don't feel the facility has really any risk around it. We feel good about the way the NDA submission has been put together. It's actually been put together at a higher level than what we did for topiramate and zonisamide, both of which are approved in commercial products today. So the process and the deliverables that we had in those files are exactly the same as what we have with ET-400. So I really don't see significant barriers to launching the product on time. And we'll obviously be very timely in any inquiries we'll get from the FDA and make sure that, that process is going smoothly as possible.

And then just last from me, Sean. This is really kind of a line extension with ET-400. You know all these physicians already. You'll obviously be kind of targeting some of those discontinued patients that ET-400 is a great fit with, how quickly should investors be thinking that you can kind of drive scripts with ET-400 post launch? Just kind of speak to your confidence on how quick that launch can be?

Yes, absolutely. Our pleasure. So in terms of the ramp-up to what we stated, I think, in our press release and in our comments earlier today, it was -- our goal is to get $50 million plus in revenue between these 2 products. I feel that within a 12-month timeframe, we'll be well on our way. And I think that getting to that $50 million with the 24-months of launch is achievable. So that gives you some idea of what -- how we're thinking on things. Of course, once you get out there, we just did, for example, a panel of doctors of -- I believe it was 8, maybe it was 10 doctors who specialize in treating adrenocortical insufficiency, and they could not be more excited about this product. They are some of the top prescribers in the nation. And so for us to have conversations and just sort of like marketing studies in advance to understand their needs is really important. We want to serve the patients, and we believe we've designed a product that will meet patient needs and be well received and prescribed by doctors.

All right. I'm showing no further questions at this time. This does conclude the question-and-answer session and the program. Thank you for your participation in today's conference. You may now disconnect.