ETON 10-K & 10-Q changes, risk factors and insider trading
Eton Pharmaceuticals, Inc. · Nasdaq · Pharmaceutical Preparations · CIK 1710340 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risks Relating to Pricing, Reimbursement and Market Access”
New heading “The Inflation Reduction Act and related Medicare reforms may adversely affect the prices we realize and the demand for our products.”
New heading “Our participation in U.S. government price reporting and discount programs imposes complex and evolving obligations that could adversely affect the net prices we realize and expose us to significant liabilities.”
New heading “Third-party coverage and reimbursement and healthcare cost containment initiatives, including formulary controls and utilization management, may constrain our future revenues.”
New heading “We may operate or support patient services and assistance programs, and government scrutiny of these activities could require us to curtail such programs, reducing patient access and adversely affecting demand for our products.”
New heading “If we obtain or seek marketing authorizations and commercialization outside the United States, we may be subject to pricing controls and health technology assessment processes that could delay commercialization and reduce net prices.”
New heading “We are subject to Drug Supply Chain Security Act requirements, and failure to comply could disrupt our distribution and result in enforcement action.”
Removed heading “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.”
Removed heading “We are currently unable to comply with the requirement to provide separate audited financial statements and unaudited pro forma financial information for the INCRELEX® product acquisition, specified by Item 9.01 of Form 8-K.”
Removed heading “Future capital raises may dilute our existing stockholders’ ownership, could depress the market price for our common stock and have other adverse effects on our operations.”
Removed heading “We may be at an increased risk of securities class action litigation.”
Largest changes
“We are subject to requirements under the Drug Supply Chain Security Act (“DSCSA”) and related state and federal laws governing the pharmaceutical distribution supply chain. These requirements include, among other things, product identification and serialization, interoperable product tracing, verification of certain products, and prompt investigation and disposition of suspect or illegitimate product. …”see in full comparison
“We have concentration risk within our supply chain, including reliance on single- or sole‑source suppliers and contract manufacturers, and certain raw materials, intermediates, components or finished products may be sourced from, processed in, or otherwise dependent on suppliers located in the People’s Republic of China or other higher‑risk geographies. …”see in full comparison
“We may be at an increased risk of securities class action litigation.”see in full comparison
“Our participation in U.S. government price reporting and discount programs materially affects the net prices we realize and requires us to comply with complex and evolving legal and reporting obligations. For example, under the Medicaid Drug Rebate Program, we must calculate and report Average Manufacturer Price (“AMP”) and, where applicable, Best Price, and pay rebates to states. Recalculations or restatements—whether due to errors, new interpretations, government audits or other factors—can be retroactive and may require us to pay additional rebates. …”see in full comparison
“We may also rely on single-source or limited-source suppliers and contract manufacturers for certain products, and certain raw materials, intermediates or finished products may be sourced from or manufactured in locations outside the United States. Supply-chain disruptions, capacity constraints, quality issues, natural disasters, cyber incidents, labor disruptions, geopolitical developments, export controls, sanctions, trade restrictions or other government actions (including actions that could restrict the ability of U.S. …”see in full comparison
“The Inflation Reduction Act of 2022 (the “IRA”), and related federal and state healthcare reforms, have introduced new and evolving mechanisms that may affect the prices we realize for our products and the demand for our products over time. …”see in full comparison
Full comparison: every changed paragraph (35)
Risks Relating to Pricing, Reimbursement and Market Access
The Inflation Reduction Act and related Medicare reforms may adversely affect the prices we realize and the demand for our products.
The Inflation Reduction Act of 2022 (the “IRA”), and related federal and state healthcare reforms, have introduced new and evolving mechanisms that may affect the prices we realize for our products and the demand for our products over time. These mechanisms include, among others, inflation-based rebates under Medicare Parts B and D that can require payments when certain reported prices increase faster than inflation; changes to the Medicare Part D benefit beginning in 2025 that redistribute financial liability among manufacturers, plans and the government while capping patient out-of-pocket costs; and a program under which certain drugs may become subject to price negotiation on a defined timetable. The applicability and impact of these mechanisms will evolve over time based on our portfolio mix and the characteristics of individual products. For example, whether and when a product becomes subject to the Medicare drug price negotiation program depends, among other factors, on the time elapsed since FDA approval and other selection criteria, and inflation‑based rebates in Medicare Parts B and D apply when prices increase faster than inflation. Changes in our portfolio, utilization and payer mix could therefore alter our exposure to negotiation, inflation‑based rebates, and the redesigned Medicare Part D benefit, including our financial responsibility under the new benefit structure. Implementation will occur through ongoing regulatory actions, the outcomes of which remain uncertain. Even where our current products are not immediately selected for negotiation or have limited Medicare utilization, these changes may alter channel economics, increase our obligations, reduce the net prices we realize, and adversely affect patient access and demand. Certain statutory exemptions may apply to particular products based on their indications, approval history or other factors; however, exemptions are narrow and can change with future legislation, guidance or changes in our product portfolio. The IRA, its implementing regulations and related guidance continue to evolve, and the scope and timing of their impact on our business remains uncertain.
Our participation in U.S. government price reporting and discount programs imposes complex and evolving obligations that could adversely affect the net prices we realize and expose us to significant liabilities.
Our participation in U.S. government price reporting and discount programs materially affects the net prices we realize and requires us to comply with complex and evolving legal and reporting obligations. For example, under the Medicaid Drug Rebate Program, we must calculate and report Average Manufacturer Price (“AMP”) and, where applicable, Best Price, and pay rebates to states. Recalculations or restatements—whether due to errors, new interpretations, government audits or other factors—can be retroactive and may require us to pay additional rebates. These obligations can also affect pricing and refund requirements under the 340B Drug Pricing Program, including through recalculation of ceiling prices and controls intended to prevent duplicate discounts. In addition, our products may be subject to pricing and discount requirements under the U.S. Department of Veterans Affairs and Federal Supply Schedule programs, including obligations tied to Non-Federal Average Manufacturer Price (“Non-FAMP”), Federal Ceiling Price (“FCP”) and related certifications, as well as TRICARE rebate requirements. Government authorities continue to increase scrutiny of these programs, and noncompliance (including inaccurate reporting, failure to timely report changes, or failure to implement required controls) may result in significant refunds, civil monetary penalties, contractual damages, suspension or termination from participation in government programs, reputational harm, and potential liability under the False Claims Act.
Third-party coverage and reimbursement and healthcare cost containment initiatives, including formulary controls and utilization management, may constrain our future revenues.
Our ability to successfully commercialize our products and product candidates depends in significant part on the extent to which governmental authorities, commercial insurers and other third-party payors provide coverage for, and establish adequate reimbursement levels for, our products. Even if a product is approved, payors may limit or exclude coverage, place the product at a disadvantageous formulary tier, require prior authorization, impose step-therapy or other utilization management restrictions, or require patients to pay higher out-of-pocket costs. Pharmacy benefit managers (“PBMs”) and payors may also increase their leverage through formulary exclusions, restrictive network arrangements, and demands for greater rebates, discounts or other price concessions, which can increase our gross-to-net reductions and reduce realized prices. In addition, treatment guidelines, clinical pathways, and health technology assessment frameworks may influence prescribing behavior and coverage determinations. If coverage and reimbursement are inadequate, delayed or more restrictive than we anticipate, or if our gross-to-net reductions increase, our sales, profitability and results of operations could be adversely affected.
We may operate or support patient services and assistance programs, and government scrutiny of these activities could require us to curtail such programs, reducing patient access and adversely affecting demand for our products.
We may operate or support patient services, including product access hubs, patient assistance programs, or programs that help patients address out-of-pocket costs. Government authorities have increased scrutiny of these activities, including our interactions with third-party service providers and independent charitable foundations, and the application of fraud and abuse laws to certain patient support arrangements. Evolving guidance, audits, investigations or enforcement actions could require us to modify, curtail or discontinue some of these programs or arrangements. If patient services or assistance programs are reduced or not available on terms that support patient access, patients may be unable to afford our products, prescription abandonment may increase, and demand and net sales could decline. Investigations or enforcement actions could also result in significant costs, penalties, settlements, or reputational harm.
If we obtain or seek marketing authorizations and commercialization outside the United States, we may be subject to pricing controls and health technology assessment processes that could delay commercialization and reduce net prices.
If we obtain or seek marketing authorizations and commercialization in jurisdictions outside the United States, we may be subject to national price controls, reimbursement reviews, reference pricing, and health technology assessment (“HTA”) processes that can delay launch timing, require additional comparative effectiveness or other evidence, and reduce the net prices we realize. For example, in the European Union, HTA reforms are being implemented on a phased basis and may include Joint Clinical Assessments for certain products, which could increase evidentiary requirements and affect timing and pricing negotiations. Any delay or reduction in reimbursement or pricing in non-U.S. markets could adversely affect our revenues and profitability.
Significant disruptions of IT systems or breaches of information security could adversely affect our business. Despite the implementation of security measures, our internal computer systems and those of third parties with which we contract are vulnerable to damage from cyber attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. We rely on technology developed, supplied, and/or maintained by third parties that may make us vulnerable to “supply chain” style cyber-attacks. System failures, accidents or security breaches could cause interruptions in our operations, and result in a material disruption of our product development and clinical activities and business operations, in addition to possibly requiring substantial expenditures of resources to remedy. Cybersecurity attacks in particular are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, misappropriation of our confidential or otherwise protected information and corruption of data. The loss, theft or sabotage of product development or clinical trial data could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and our development programs and the development of our product candidates could be delayed. Any technology service interruption or breach of our systems could adversely affect our business operations and/or result in the loss of personal data, confidential information or intellectual property. Such incidents require disclosure to government authorities and/or regulators and any incident could result in financial, legal, business and reputational harm to us. We are also subject to evolving cybersecurity disclosure and reporting requirements, included those adopted by the SEC, and any cybersecurity incident could require us to make public disclosures and could result in regulatory scrutiny or litigation, increase our costs, and harm our reputation. 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. For additional information regarding our cybersecurity risk management, third‑party oversight, incident response processes, and board and committee oversight, see Item 1C, “Cybersecurity—Risk Management and Strategy.”
We are subject to Drug Supply Chain Security Act requirements, and failure to comply could disrupt our distribution and result in enforcement action.
We are subject to requirements under the Drug Supply Chain Security Act (“DSCSA”) and related state and federal laws governing the pharmaceutical distribution supply chain. These requirements include, among other things, product identification and serialization, interoperable product tracing, verification of certain products, and prompt investigation and disposition of suspect or illegitimate product. Compliance with DSCSA requires coordination with our third-party manufacturers, wholesalers, distributors and other trading partners and may require changes to our systems, processes and contractual arrangements, as well as ongoing investment. If we or our trading partners fail to maintain DSCSA-compliant systems and processes, or if we do not identify and respond appropriately to suspect or illegitimate product, our distribution could be disrupted, we could face product holds, recalls or shortages, and we could be subject to enforcement action, fines, penalties or reputational harm, any of which could adversely affect our business and results of operations.
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.
In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the health care system that could prevent or delay marketing approval for our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell our product candidates. Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We do not know whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. For additional information on legislative and regulatory changes, see the Item 1. Business—Healthcare Reform section.
In the United States, the Medicare Modernization Act (“MMA”) changed the way Medicare covers and pays for pharmaceutical products. The legislation expanded Medicare coverage for drug purchases by the elderly and introduced a new reimbursement methodology based on average sales prices for drugs. In addition, this legislation authorized Medicare Part D prescription drug plans to use formularies where they can limit the number of drugs that will be covered in any therapeutic class. As a result of this legislation and the expansion of federal coverage of drug products, we expect that there will be additional pressure to contain and reduce costs. These cost reduction initiatives and other provisions of this legislation could decrease the coverage and price that we receive for our product candidates and could seriously harm our business. While the MMA applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates, and any reduction in reimbursement that results from the MMA may result in a similar reduction in payments from private payors.
In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively referred to as the Health Care Reform Law, was enacted, which substantially changes the way health care is financed by both governmental and private insurers, and significantly impacts the U.S. pharmaceutical industry. The 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.
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. Since January 2017, former President Trump had signed two executive orders and other directives designed to delay, circumvent or loosen certain requirements mandated by the Health Care Reform Law. Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the Health Care Reform Law. While Congress has not passed comprehensive repeal legislation, two bills affecting the implementation of certain taxes under the Health Care Reform Law have been signed into law. The Tax Act included a provision which repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the Health Care Reform Law on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On January 22, 2018, former President Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain Health Care Reform Law-mandated fees, including the so-called “Cadillac” tax on certain high-cost employer-sponsored insurance plans, the annual fee imposed on certain health insurance providers based on market share, and the medical device excise tax on non-exempt medical devices. The Bipartisan Budget Act of 2018, among other things, amended the Health Care Reform Law, effective January 1, 2019, to increase from 50% to 70% the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole”. On December 14, 2018, a Texas U.S. District Court Judge ruled that the Health Care Reform Law is unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of the Tax Act. In June 2021, the U.S. Supreme Court overturned the 2018 Texas U.S. District Court decision. It is unclear how subsequent appeals, and other efforts to repeal and replace the Health Care Reform will impact our business. We cannot predict the impact on our business of changes to current laws and regulations. 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. These changes include, among others, aggregate reductions of Medicare payments to providers of up to 2% per fiscal year. We expect that additional state and federal health care reform measures will be adopted in the future, which may alter or completely replace the existing health care financing structure. Any of these reform measures could limit the amounts that federal and state governments will pay for health care products and services, which could result in reduced demand for any such product candidate that we may have developed or additional pricing pressures on our business.
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 congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products. For example, the Trump administration released a “Blueprint” to lower drug prices and reduce out-of-pocket costs of drugs that contains additional proposals to increase drug manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out-of-pocket costs of drug products paid by consumers. On January 31, 2019, the U.S. Department of Health and Human Services, Office of Inspector General, proposed modifications to the federal Anti-Kickback Statute discount safe harbor for the purpose of reducing the cost of drug products to consumers which, among other things, if finalized, will affect discounts paid by manufacturers to Medicare Part D plans, Medicaid managed care organizations and pharmacy benefit managers working with these organizations. 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.
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. For example, in December 2016, the 21st Century Cures Act was signed into law. The 21st 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. Furthermore, the Trump administration has taken several executive actions, including the issuance of a number of executive orders, that could impose significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory and oversight activities such as implementing statutes through rulemaking, issuance of guidance and review and approval of marketing applications. If these executive actions impose constraints on the FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, our product candidates may lose any regulatory approval that may have been obtained and we may not achieve or sustain profitability, which would adversely affect our business.
If we market our existing approved products or any of our new 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 also rely on single-source or limited-source suppliers and contract manufacturers for certain products, and certain raw materials, intermediates or finished products may be sourced from or manufactured in locations outside the United States. Supply-chain disruptions, capacity constraints, quality issues, natural disasters, cyber incidents, labor disruptions, geopolitical developments, export controls, sanctions, trade restrictions or other government actions (including actions that could restrict the ability of U.S. companies to use certain foreign contract manufacturers or suppliers) could limit our ability to obtain materials or manufacture and distribute our products and product candidates. Although we seek to identify and qualify alternative suppliers and manufacturing sites where feasible, qualifying and transferring manufacturing to a new supplier or site can be time-consuming and costly, may require regulatory submissions and approval, and may not be successful on our anticipated timelines or at all.
We have concentration risk within our supply chain, including reliance on single- or sole‑source suppliers and contract manufacturers, and certain raw materials, intermediates, components or finished products may be sourced from, processed in, or otherwise dependent on suppliers located in the People’s Republic of China or other higher‑risk geographies. Legislative or executive actions, export controls, sanctions, or other government measures, including measures that could be adopted in the United States restricting the use of certain foreign contract manufacturers or suppliers, could materially impair our ability to qualify, audit, access or continue to use affected suppliers, increase our costs and timelines, or require us to identify and qualify second‑site manufacturing. Qualifying and transferring to an alternative supplier or site can be time‑consuming and costly, may require regulatory submissions and approvals, entail technology transfer and validation activities, and may not be successful on our anticipated timelines or at all. If we are required to identify and qualify an alternative supplier or manufacturing site, or to implement redundant supply, we could experience delays, increased cost of goods, supply interruptions or shortages, and adverse impacts on our development and commercialization plans.
We are currently unable to comply with the requirement to provide separate audited financial statements and unaudited pro forma financial information for the INCRELEX® product acquisition, specified by Item 9.01 of Form 8-K.
As previously reported in our Form 8-K/A filed on March 7, 2025, we are currently unable to file an amendment to our Form 8-K reporting the completion of our acquisition of the INCRELEX® product containing the separate audited financial statements and unaudited pro forma financial information required by Item 9.01 of Form 8-K by the required due date. As such, we are no longer in compliance with our reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Our inability to obtain such information by the deadline has resulted in noncompliance with our reporting obligations under the Exchange Act. Such noncompliance, in turn:
Until the earlier of the date on which we receive the requested waiver or the audited financial statements and unaudited pro forma financial information specified by Item 9.01 of Form 8-K are filed with the SEC, no new registration statement that we file with the SEC seeking to register our securities for issuance, sale or resale, including for capital raising transactions, additional acquisitions or for our employee benefit programs, will be declared effective by the SEC and thus our capital raising activities and ability to provide new equity incentives to our employees will be substantially curtailed during that period.
Future capital raises may dilute our existing stockholders’ ownership, could depress the market price for our common stock and have other adverse effects on our operations.
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. The issuance of additional shares of our common stock pursuant to the Shelf Registration, or issuances of securities convertible into or exercisable for our common stock or other equity-linked securities, including preferred stock, warrants, debt securities or units, would dilute the ownership interest of our common shareholders and could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities. If we raise additional funds by issuing debt securities, these debt securities would have rights senior to those of our common stock and the terms of the debt securities issued could impose significant restrictions on our operations, including liens on our assets. 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.
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. As of December 31, 2024,2025, our remaining federal NOLs were generated after the 2017 tax year. Our significant state NOLs as of December 31, 20242025, were generated in IL and TN, which begin to expire in 2037 and 2034,2035, respectively. Neither IL nor TN conform to the federal 80% utilization limitation, but IL has suspended annual NOL utilization above $0.5 million of IL taxable income until the 2027 tax year. IL NOLs that would have been utilized if not for this suspension are granted an additional carryforward year. In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards, or NOLs, and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. We aredo performingnot acurrently studyexpect IRC Sections 382 and 383 to determinesignificantly ifimpact our ability to utilize our tax attributes based on ownership changes through December 31, 2025. However, we have triggered any “ownership change” limitations. We may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership some of which may be outside of our control. As a result, if we earn net taxable income, our ability to use our pre-ownership change NOL carryforwards to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
We may be at an increased risk of securities class action litigation.
Historically, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology and pharmaceutical companies have experienced significant stock price volatility in recent years. 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.
OurAs of December 31, 2025, our directors and executive officers beneficially own approximately 16.9%18.8% of our common stock. Accordingly, these parties, together, can significantly influence, though not independently determine, the outcome of matters required to be submitted to our stockholders for approval, including decisions relating to the election of our board of directors and the outcome of any proposed merger or consolidation of our company. These interests may not be consistent with those of our other stockholders. 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.
Management's Discussion & Analysis (MD&A)
New heading “Year Ended December 31, 2025 Compared to Year Ended December 31, 2024”
New heading “Non-GAAP Financial Measures”
Removed heading “General and Administrative Expenses”
Removed heading “Research and Development Expenses”
Removed heading “Year Ended December 31, 2023 Compared to Year Ended December 31, 2022”
Largest changes
“EBITDA, which is derived from GAAP income or loss from operations, then excluding interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as net income or before interest expense, income taxes, depreciation and intangible amortization, stock-based compensation expense, restructuring charges, acquisition and divestiture-related costs, and other non-recurring items, non-GAAP net income and non-GAAP earnings per share are used and provided by us as non-GAAP financial measures. …”see in full comparison
“Year Ended December 31, 2025 Compared to Year Ended December 31, 2024”see in full comparison
“Year Ended December 31, 2023 Compared to Year Ended December 31, 2022”see in full comparison
Full comparison: every changed paragraph (43)
WeEton areis an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases. We currently have seveneight commercial rare disease products: INCRELEX®, ALKINDI SPRINKLE®, KHINDIVITM, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous,Anhydrous and Nitisinone. TheWe Companyhave has sixfive additional product candidates in late-stage development: ET-400, ET-600, Amglidia®, ET-700, ET-800 and ZENEO® hydrocortisone autoinjector.
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
During the twelve months ended December 31, 2025, we had $80.0 million in total revenues that generated a gross profit of $42.7 million, compared to total revenues of $39.0 million during the twelve-months ended December 31, 2024 that generated a gross profit of $23.4 million during the period. During the twelve-months ended December 31, 2025, we had product sales and royalties, net of $76.7 million, compared to product sales and royalties, net of $38.5 million during the twelve-months ended December 31, 2024, an increase of $38.2 million. The increase in product sales and royalties, net was the result of increased sales volume of our INCRELEX®, ALKINDI SPRINKLE® and GALZIN® products in the current year.
Licensing revenue during the twelve-months ended December 31, 2025 was $3.3 million, compared to $0.5 million in licensing revenue during the twelve-months ended December 31, 2024. The increase in licensing revenue during the twelve-months December 31, 2025 was due to $1.8 million from our out-licensing of INCRELEX® rights outside of the U.S. and $1.5 million from the recognition of a development milestone event associated with our divestiture of DS-200. During the twelve-months ended December 31, 2024, we recognized $0.5 million in licensing revenue associated with the sale of our DS-200 product candidate in September 2024.
Cost of Sales
During the twelve-months ended December 31, 2025, total costs of sales was $37.2 million, compared to $15.6 million in total costs of sales during the twelve-months ended December 31, 2024. The increase in total costs of sales during the twelve-months December 31, 2025, was due to increases in INCRELEX® and ALKINDI SPRINKLE® product sales and higher commissions with respect to our out-licensing of INCRELEX® rights outside of the U.S. Gross profit during the twelve-months ended December 31, 2025 was $42.7 million or 53.5% as a percentage of total net revenues, compared to gross profit of $23.4 million or 60.0% as a percentage of total net revenues during the twelve-months ended December 31, 2024. The decrease in gross profit during the twelve-months ended December 31, 2025 was primarily attributable to higher commission with respect to our out-licensing of INCRELEX® rights outside of the U.S.
We currently have twelve employees that support our overall product development function. The majority of our spend in research and development (“R&D”) expenses is to third parties we contract with to develop, test our products and the development of partner milestone payments. During the twelve-months ended December 31, 2025, we incurred $7.8 million of R&D expenses, compared to $3.3 million during the twelve-months ended December 31, 2024. The increase in R&D expenses was primarily due to a $2.2 million NDA filing fee for ET-600 and increased expenses associated with our ET-700 and ET-800 project development activities.
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. During the twelve-months ended December 31, 2025 and 2024, we incurred $35.8 million and $22.8 million, respectively, of G&A expenses. The increase in G&A expenses during the twelve-months ended December 31, 2025 was primarily attributable to an increase in product advertising and promotional expenses, higher stock-based compensation expense and an increase in compensation and benefit expenses due to an increase in general and administrative headcount during the current year.
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. 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.
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. 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.
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.
Research and Development Expenses
We currently have eight 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.
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. 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. 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.
Our 2023 gross profit of $21.1 million was up from $14.3 million in 2022 primarily as a result of growth in ALKINDI SPRINKLE® and Carglumic Acid, as well as the sale of our neurology product royalty streams to Azurity.
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 $0.3 million increase in G&A expenses was primarily due to personnel additions to support our growing business. We incurred a net loss of $0.9 million and $9.0 million for the years ended December 31, 2023 and 2022, respectively.
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.
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.
As of December 31, 2024,2025, we had total assets of $76.1$92.1 million, cash and cash equivalents of $14.9$25.9 million and working capital of $21.1$22.1 million. We believe that our existing fundingrevenues and revenuescash flows from our approvedproduct productsportfolio will be sufficient for at least the next twelve months of our operations. However, our projected estimates for our product development spending, administrative expenses and our working capital requirements could bechange inaccurate,significantly, or we may experience growth more quickly or on a larger scale than we expect, any of which could result in the depletion of capital resources more rapidly than anticipated and could require us to seek additional financing earlier than we would expect to support our operations.
During the twelve-months ended December 31, 2025, 2024 and 2023, net cash from operating activities was $10.5 million, $1.0 million and $6.8 million, respectively. The increase in cash from operating activities during the twelve-months ended December 31, 2025 was primarily due to higher cash collections from product sales, a filing fee refund from the FDA related to ET-400 and the collection of a licensing milestone payment. The decrease in cash from operating activities during December 31, 2024 as compared to December 31, 2023, was primarily associated with an increase in prepaid expenses associated with FDA filing fees in addition to higher inventory purchases in the current year.
During the twelve-months ended December 31, 2025, 2024 and 2023, net cash used in investing activities was $0.3 million, $40.0 million and $0.8 million, respectively. The decrease in net cash used in investing activities during the twelve-months ended December 31, 2025 was primarily attributable to one-time cash outflows for the business combination of INCRELEX® and the purchase of product licensing rights associated with GALZIN® and PKU GOLIKE®, which were cash outflows during the twelve-months ended December 31, 2024. During the twelve-months ended December 31, 2023, we purchased the product licensing rights for Nitisinone.
During the twelve-months ended December 31, 2025 and 2024, net cash from financing activities was $0.8 million and $32.6 million, respectively, compared to net cash used in financing activities during the twelve months ended December 31, 2023 of $1.0 million. The decrease in cash from financing activities during the twelve-months ended December 31, 2025 was primarily associated with net proceeds received from expanding our credit agreement with SWK Holdings Corporation ("SWK") and proceeds from common stock issued in a private placement offering in 2024. During the twelve-months ended December 31, 2023, net cash used in financing activities primarily represented $1.2 million in debt repayments to SWK, partially offset by proceeds received from stock option exercises and employee stock purchase plan proceeds.
Non-GAAP Financial Measures
EBITDA, which is derived from GAAP income or loss from operations, then excluding interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as net income or before interest expense, income taxes, depreciation and intangible amortization, stock-based compensation expense, restructuring charges, acquisition and divestiture-related costs, and other non-recurring items, non-GAAP net income and non-GAAP earnings per share are used and provided by us as non-GAAP financial measures. These non-GAAP financial measures are intended to provide additional information on our performance, operations and profitability. Adjustments to our GAAP figures as well as EBITDA includes non-recurring acquisition or divestiture-related costs, fees related to refinancing activities, as well as non-cash items such as share-based compensation, inventory step-up expense, depreciation and amortization, non-cash interest expense, and other non-cash adjustments. Certain other special items or substantive events may also be included in the non-GAAP adjustments periodically when their magnitude is significant within the periods incurred. We maintain an established non-GAAP policy that guides the determination of what costs or gains will be included in non-GAAP adjustments.
We believe that these non-GAAP financial measures, when considered together with the GAAP figures, can enhance an overall understanding of our financial and operating performance. The non-GAAP financial measures are included with the intent of providing investors with a more complete understanding of our historical financial results and trends and to facilitate comparisons between periods. In addition, these non-GAAP financial measures are among the indicators our management uses for planning and forecasting purposes and measuring our performance. These non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The non-GAAP financial measures used by us may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies.
EBITDA, adjusted EBITDA and non-GAAP net income, and the related per share amounts, were as follows (in thousands, except share and per share amounts):
(1) During the twelve months ended December 31, 2025, we recognized in cost of sales $5,094 for inventory step-up expense primarily attributable to INCRELEX® inventory revalued in connection with this business combination.
(2) Represents share-based compensation expense associated with our stock option and restricted stock unit stock unit grants to our employees and non-employee directors and our employee share purchase plan.
(3) Represents severance and benefit expenses associated with role redundancy within commercial operations during the first quarter of 2025.
(4) Represents legal expense and other divestiture-related costs associated with the out-licensing of the INCRELEX® commercial rights in territories outside of the U.S.
(5) Represents depreciation expense related to our property and equipment.
(6) Intangible amortization expenses are associated with our intellectual property rights related to INCRELEX®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous and Nitisinone.
(7) Income tax adjustments on pre-tax non-GAAP adjustments represent the estimated income tax impact of each pre-tax non-GAAP adjustment based on the effective income tax rate for the period. As discussed further in Note 14, we are in a full income tax valuation allowance position and the income tax effect on pre-tax non-GAAP adjustments is commensurate with the performance measure.
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. 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. 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. See Note 6 — Debt for additional information on the SWK loan in Notes to our Financial Statements.
We account for contracts with our customers in accordance with Accounting Standards Codification (“ASC”) 606 — Revenue from Contracts with Customers. ASC 606 applies to all contracts with customers, except for contracts that are within the scope of other standards. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services,goods, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.goods. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
At contract inception, once we determine the contract falls within the scope of ASC 606, we assess the goods or services promised within each contract and determinesdetermine those that are performance obligations and assesses whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. We assess whether these options provide a material right to the customer and, if so, they are considered performance obligations. The exercise of a material right is accounted for as a contract modification for accounting purposes.
The Company sells its INCRELEX®, ALKINDI SPRINKLE®, KHINDIVITM, GALZIN®, 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. Sales to wholesalers are made pursuant to purchase orders subject to the terms of a master agreement, and delivery of individual shipments represent performance obligations under each purchase order. The Company uses a third-party logistics (“3PL”) vendor to process and fulfill orders and has concluded it is the principal in the sales to wholesalers because it controls access to the 3PL vendor services rendered and directs the 3PL vendor activities. The Company has no significant obligations to wholesalers to generate pull-through sales.
For its INCRELEX®, ALKINDI SPRINKLE®, KHINDIVITM, GALZIN®, 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. 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 Company estimates the transaction price when it receives each purchase order taking into account the expected reductions of the selling price initially billed to the wholesaler/distributor arising from all of the above factors. The Company has developed estimates for future returns and chargebacks and the impact of other discounts and fees it pays, although INCRELEX®, ALKINDI SPRINKLE®, KHINDIVITM, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone sales are not subject to returns.
The Company stores its INCRELEX®, ALKINDI SPRINKLE®, KHINDIVITM, GALZIN®, 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. At that time, the wholesalers take control of the product as they take title, bear the risk of loss of ownership and have an enforceable obligation to pay the Company. They also have the ability to direct sales of product to their customers on terms and at prices they negotiate. Although wholesalers have product return rights, the Company does not believe they have a significant incentive to return the product.
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. 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, theThe fair value of these awards is remeasured using the then-current fair value of our common stock and updated assumptionassumptions inputs inare measured using the Black-Scholes option-pricing model (“BSM”).
What changed in the latest 10-Q
Risk Factors
We operate in a dynamic and rapidly changing environment that involves numerous risks and uncertainties. Certain factors may have a material adverse effect on our business, financial condition, and results of operations, and you should carefully consider them. Other events that we do not currently anticipate or that we currently deem immaterial may also affect our results of operations and financial condition.
You should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our 2025 10-K, which could materially affect our business, financial condition, cash flows or future results. The risk factors described in our 2025 10-K, are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, or future results.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Largest changes
During thesee in full comparisonthreesix months endedMarchJune31,30, 2026, net cash from operating activities was$7,405$14,660 compared to$2,090$10,049 during thethreesix months endedMarchJune31,30, 2025. The increase in cash from operating activities during thethreesix months endedMarchJune31,30, 2026 was primarily due to higher cash collections from product sales and lower cash outlay for inventory purchases. During thethreesix months endedMarchJune31,30, 2026, net cash used in investing activities was$15,075$15,070 and was primarily attributable to a $14,000 payment associated with the acquisition of the U.S. commercial rights to HEMANGEOL® in February 2026 and the $1,000 upfront payment for the licensing of U.S. marketing rights to an ultra-rare disease productcandidatecandidate,(which also occurred in February2026).2026. During thethreesix months endedMarchJune31,30, 2026, net cash from financing activities was$1,389$1,313 compared to $394 during thethreesix months endedMarchJune31,30, 2025. The increase in net cash from financing activities related to increased proceeds of $3,649 from stock optionexercises.exercises, proceeds of $270 from the employee stock purchase program, partially offset by a $3,000 principal debt payment.
“During the six months ended June 30, 2026, we had $61,855 in total revenues that generated a gross profit of $40,148 compared to total revenues of $36,210 during the six-month period ended June 30, 2025 that generated a gross profit of $21,785 for the period. The increase in product sales, net was primarily the result of increased sales of INCRELEX®, GALZIN®, ALKINDI SPRINKLE®, Carglumic Acid and the addition of HEMANGEOL® product sales in the current period.”see in full comparison
“During the three months ended June 30, 2026, we incurred $993 of research and development (“R&D”) expenses as compared to $3,712 for the same period in 2025. During the six months ended June 30, 2026, we incurred $2,868 of research and development (“R&D”) expenses as compared to $4,873 for the same period in 2025. In 2025, the Company paid a $2,155 NDA filing fee for DESMODA™, which was approved by the FDA in February of 2026.”see in full comparison
“During the three months ended March 31, 2026, we incurred $1,875 of research and development (“R&D”) expenses as compared to $1,161 for the same period in 2025. The increase was primarily due to higher clinical study expenses primarily associated with our KHINDIVI™ label expansion and increased expenses associated with our ET-700 project development activities.”see in full comparison
see in full comparisonForWe bill for ourINCRELEX®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone products, we billproducts at the initial product list price which are subject to offsets for patient co-pay assistance and potential state Medicaid reimbursements and other government programs which are recorded as a reduction of net revenues at the date of sale/shipment.INCRELEX®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and NitisinoneOur product sales are not subject to returns. Upon recognition of revenue from product sales, the estimated amounts of chargebacks, prompt pay discounts and state Medicaid and other government program rebates are in sales reserves, accrued liabilities and net accounts receivable.
G&A expenses consist primarily of employee compensation expenses, legal and professional fees, product marketing expenses, FDA fees, distribution expenses, business insurance, travel expenses, and general office expenses. During the three-month periods endedsee in full comparisonMarchJune31,30, 2026 and 2025, we incurred$10,446$11,626 and$9,170,$9,687, respectively, of G&A expenses. During the six-month periods ended June 30, 2026 and 2025, we incurred $22,072 and $18,857, respectively, of G&A expenses. The increase in G&A expenses during thethreesix months endedMarchJune31,30, 2026 was primarily attributable to higher FDA fees as the Company no longer qualifies for the orphan fee exemption and higher employee-related costs due to increased headcount to support the business.
Full comparison: every changed paragraph (16)
Eton is an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases. We currently have teneleven commercial rare disease products: INCRELEX®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, GALZIN®, PKU GOLIKE®, IMPAVIDO®, Carglumic Acid, Betaine Anhydrous and Nitisinone.Nitisinone, with IMPAVIDO® scheduled for commercialization in September 2026. We have four additional product candidates in late-stage development: Amglidia®, ET-700, ET-800 and ZENEO® hydrocortisone autoinjector.
During the three months ended MarchJune 31,30, 2026, we had $24,266$37,589 in total revenues that generated a gross profit of $14,735$25,413 compared to total revenues of $17,282$18,928 during the three-month period ended MarchJune 31,30, 2025 that generated a gross profit of $9,861$11,924 for the period. The increase in product sales and royalties,sales, net was primarily the result of increased sales of INCRELEX®, GALZIN®, ALKINDI SPRINKLE®, and Carglumic Acid,Acid and the addition of KHINDIVI™HEMANGEOL® product sales in the current period.
During the six months ended June 30, 2026, we had $61,855 in total revenues that generated a gross profit of $40,148 compared to total revenues of $36,210 during the six-month period ended June 30, 2025 that generated a gross profit of $21,785 for the period. The increase in product sales, net was primarily the result of increased sales of INCRELEX®, GALZIN®, ALKINDI SPRINKLE®, Carglumic Acid and the addition of HEMANGEOL® product sales in the current period.
Licensing revenue during the threesix months ended MarchJune 31,30, 2026 was zero$0 compared to $3,286 in licensing revenue during the threesix months ended MarchJune 31,30, 2025. Licensing revenue during the threesix months ended MarchJune 31,30, 2025 was due to $1,786 from our out-licensing of INCRELEX® rights outside of the U.S. and $1,500 from the recognition of a development milestone event associated with our divestiture of DS-200.
During the three months ended June 30, 2026, we incurred $993 of research and development (“R&D”) expenses as compared to $3,712 for the same period in 2025. During the six months ended June 30, 2026, we incurred $2,868 of research and development (“R&D”) expenses as compared to $4,873 for the same period in 2025. In 2025, the Company paid a $2,155 NDA filing fee for DESMODA™, which was approved by the FDA in February of 2026.
During the three months ended March 31, 2026, we incurred $1,875 of research and development (“R&D”) expenses as compared to $1,161 for the same period in 2025. The increase was primarily due to higher clinical study expenses primarily associated with our KHINDIVI™ label expansion and increased expenses associated with our ET-700 project development activities.
G&A expenses consist primarily of employee compensation expenses, legal and professional fees, product marketing expenses, FDA fees, distribution expenses, business insurance, travel expenses, and general office expenses. During the three-month periods ended MarchJune 31,30, 2026 and 2025, we incurred $10,446$11,626 and $9,170,$9,687, respectively, of G&A expenses. During the six-month periods ended June 30, 2026 and 2025, we incurred $22,072 and $18,857, respectively, of G&A expenses. The increase in G&A expenses during the threesix months ended MarchJune 31,30, 2026 was primarily attributable to higher FDA fees as the Company no longer qualifies for the orphan fee exemption and higher employee-related costs due to increased headcount to support the business.
As of MarchJune 31,30, 2026, we had total assets of $97.7$115.8 million, cash and cash equivalents of $19.7$26.8 million and working capital of $9.1$23.5 million.
The following table sets forth a summary of our cash flows for the three-monthsix-month periods ended MarchJune 31,30, 2026 and 2025 (dollars in thousands):
During the threesix months ended MarchJune 31,30, 2026, net cash from operating activities was $7,405$14,660 compared to $2,090$10,049 during the threesix months ended MarchJune 31,30, 2025. The increase in cash from operating activities during the threesix months ended MarchJune 31,30, 2026 was primarily due to higher cash collections from product sales and lower cash outlay for inventory purchases. During the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $15,075$15,070 and was primarily attributable to a $14,000 payment associated with the acquisition of the U.S. commercial rights to HEMANGEOL® in February 2026 and the $1,000 upfront payment for the licensing of U.S. marketing rights to an ultra-rare disease product candidatecandidate, (which also occurred in February 2026).2026. During the threesix months ended MarchJune 31,30, 2026, net cash from financing activities was $1,389$1,313 compared to $394 during the threesix months ended MarchJune 31,30, 2025. The increase in net cash from financing activities related to increased proceeds of $3,649 from stock option exercises.exercises, proceeds of $270 from the employee stock purchase program, partially offset by a $3,000 principal debt payment.
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 three and six months ended MarchJune 31,30, 2026 and 2025, all revenues recognized in the Condensed Statements of Operations were point in time sales to our customers.
ForWe bill for our INCRELEX®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone products, we billproducts at the initial product list price which are subject to offsets for patient co-pay assistance and potential state Medicaid reimbursements and other government programs which are recorded as a reduction of net revenues at the date of sale/shipment. INCRELEX®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and NitisinoneOur product sales are not subject to returns. Upon recognition of revenue from product sales, the estimated amounts of chargebacks, prompt pay discounts and state Medicaid and other government program rebates are in sales reserves, accrued liabilities and net accounts receivable.
We store our INCRELEX®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous and Nitisinone
products inventory at our specialty pharmacy distributor customer locations, and sales are recorded when stock is pulled and shipped to fulfill specific patient orders.
The state Medicaid rebateand other government program rebates and related liabilityliabilities are estimated based on monthly sales, historical experience of claims submitted by the various states and jurisdictions, historical rebate rates and estimated lag time of the rebate invoices.
We account for acquisitions that do not meet the definition of a business as an asset acquisition. The determination of whether a transaction represents a business combination or an asset acquisition requires significant judgment, including an evaluation of whether the acquired set includes a substantive process and whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar assets. For transactions accounted for as an asset acquisition, we allocate the purchase price, including transaction costs, to the individual assets acquired and liabilities assumed on a relative fair value basis. This allocation requires management to make significant estimates and assumptions, including the selection of valuation methodologies, discount rates, projected cash flows, and useful lives of acquired assets. Changes in these assumptions could result in materially different allocations of the purchase price, which may impact future depreciation and amortization expense. In addition, because goodwill is not recognized in asset acquisitions, the assignment of value to identifiable intangible assets may be greater than in a business combination.
We estimate 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 risk-free interest rate was determined from the implied yields for zero-coupon U.S. government issues with a remaining term approximating the expected life of the options or warrants.options. Dividends on common stock are assumed to be zero for the BSM valuation of the stock options. The expected term of stock options granted is based on vesting periods and the contractual life of the options. Expected volatilities are based on our historical volatility subsequent to our IPO, which we believe represents the most accurate basis for estimating expected future volatility. We account for forfeitures as they occur.
ETON insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 11 filings (5 insiders, 14 trade dates, 682,481 shares, about $29.4M). Net open-market shares: -682,481 (purchases minus sales); net value about -$29.4M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-10-06 | Krempa David |
Open-market sale | 4,166 | $55.07 | $229.4K |
| 2026-10-02 | Krempa David |
Option exercise | 10,522 | — | — |
| 2026-08-28 | Maier Paul V |
Option exercise | 12,500 | $7.31 | $91.4K |
| 2026-08-28 | Maier Paul V |
Open-market sale | 13,485 | $60.21 | $811.9K |
| 2026-08-28 | Maier Paul V |
Open-market sale | 128 | $61.77 | $7.9K |
| 2026-08-28 | Maier Paul V |
Option exercise | 50,000 | $3.78 | $189.0K |
| 2026-08-28 | Maier Paul V |
Open-market sale | 36,387 | $58.64 | $2.1M |
| 2026-08-28 | Maier Paul V |
Option exercise | 50,000 | $3.78 | $189.0K |
| 2026-08-28 | Maier Paul V |
Open-market sale | 128 | $61.77 | $7.9K |
| 2026-08-28 | Maier Paul V |
Open-market sale | 13,485 | $60.21 | $811.9K |
| 2026-08-28 | Maier Paul V |
Open-market sale | 36,387 | $58.64 | $2.1M |
| 2026-08-24 | Krempa David |
Option exercise | 25,000 | $7.31 | $182.8K |
| 2026-08-24 | Krempa David |
Open-market sale | 25,000 | $65.07 | $1.6M |
| 2026-08-20 | Brynjelsen Sean |
Open-market sale | 7,342 | $62.12 | $456.1K |
| 2026-08-20 | Brynjelsen Sean |
Open-market sale | 36,373 | $61.11 | $2.2M |
| 2026-08-20 | Brynjelsen Sean |
Open-market sale | 47,307 | $60.17 | $2.8M |
| 2026-08-19 | Brynjelsen Sean |
Open-market sale | 8,978 | $62.65 | $562.5K |
| 2026-07-14 | Opaleye Management Inc. |
Open-market sale | 13,315 | $37.54 | $499.8K |
| 2026-07-14 | Opaleye Management Inc. |
Open-market sale | 15,000 | $37.54 | $563.1K |
| 2026-07-14 | Opaleye Management Inc. |
Open-market sale | 15,000 | $37.54 | $563.1K |
| 2026-07-14 | Opaleye Management Inc. |
Open-market sale | 13,315 | $37.54 | $499.8K |
| 2026-07-14 | Brynjelsen Sean |
Option exercise | 200,000 | $1.37 | $274.0K |
| 2026-07-12 | Brynjelsen Sean |
Option exercise | 27,500 | — | — |
| 2026-07-12 | Krempa David |
Option exercise | 10,000 | — | — |
| 2026-07-07 | Opaleye Management Inc. |
Open-market sale | 20,000 | $38.37 | $767.4K |
| 2026-07-07 | Opaleye Management Inc. |
Open-market sale | 6,685 | $38.37 | $256.5K |
| 2026-07-06 | Opaleye Management Inc. |
Open-market sale | 10,000 | $38.00 | $380.0K |
| 2026-07-02 | Opaleye Management Inc. |
Open-market sale | 25,000 | $37.39 | $934.8K |
| 2026-07-02 | Opaleye Management Inc. |
Open-market sale | 65,000 | $37.39 | $2.4M |
| 2026-06-17 | Adams Jennifer Mckie |
Option exercise | 50,000 | $3.78 | $189.0K |
| 2026-06-17 | Adams Jennifer Mckie |
Open-market sale | 50,000 | $32.48 | $1.6M |
| 2026-05-28 | Brynjelsen Sean |
Open-market sale | 148 | $32.67 | $4.8K |
| 2026-05-28 | Brynjelsen Sean |
Open-market sale | 119,852 | $31.88 | $3.8M |
| 2026-05-27 | Krempa David |
Option exercise | 12,476 | $1.37 | $17.1K |
| 2026-05-27 | Krempa David |
Option exercise | 7,203 | $3.58 | $25.8K |
| 2026-05-27 | Krempa David |
Open-market sale | 19,679 | $31.47 | $619.3K |
| 2026-05-26 | Krempa David |
Option exercise | 25,000 | $1.38 | $34.5K |
| 2026-05-26 | Krempa David |
Option exercise | 12,524 | $1.37 | $17.2K |
| 2026-05-26 | Krempa David |
Open-market sale | 37,524 | $31.49 | $1.2M |
| 2026-05-22 | Krempa David |
Open-market sale | 9,315 | $33.88 | $315.6K |
| 2026-05-22 | Krempa David |
Open-market sale | 519 | $35.00 | $18.2K |
| 2026-05-22 | Krempa David |
Open-market sale | 32,963 | $33.22 | $1.1M |
| 2026-05-22 | Krempa David |
Option exercise | 30,591 | $3.58 | $109.5K |
| 2026-04-21 | Riedel Norbert G |
Option exercise | 19,655 | $8.61 | $169.2K |
| 2026-04-21 | Riedel Norbert G |
Option exercise | 12,500 | $7.31 | $91.4K |
Well-known investors holding ETON (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| D. E. Shaw & Co. | 2026-06-30 | 188,452 | $6.8M | 0.0% | New position |
| Two Sigma Investments | 2026-06-30 | 116,291 | $4.2M | 0.0% | Added 9% |
| Renaissance Technologies | 2026-06-30 | 52,300 | $1.9M | 0.0% | Reduced 68% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 48,969 | $1.8M | 0.0% | Reduced 55% |
| Polen Capital Management | 2026-06-30 | 45,379 | $1.6M | 0.01% | Added 51% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 44,918 | $1.6M | 0.0% | New position |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 15,982 | $578.5K | 0.0% | New position |
| Millennium Management (Israel Englander) | 2026-06-30 | 14,939 | $368.7K | — | Sold out |