Eton Pharmaceuticals, Inc. (ETON)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue was $17.3M (+117% y/y) with product sales of $14.0M (+76% y/y); adjusted EBITDA was $3.7M and non-GAAP diluted EPS was $0.07, while GAAP diluted EPS was -$0.06 .
• Revenue beat S&P Global consensus ($17.3M vs $15.1M, +14%), but GAAP EPS missed (+$0.053 consensus vs -$0.06 actual); non-GAAP EPS was positive at $0.07, supported by licensing revenue and mix shift to higher-margin products *.
• Management reiterated exit-2025 annualized revenue run-rate target of approximately $80M and FY25 adjusted gross margin of ~70% (Q1 adjusted gross margin 69.5%); long-term adjusted gross margin expected to exceed 75% by 2028 .
• Near-term catalysts: ET-400 (hydrocortisone oral solution) approval and launch timing confirmed, with commercial revenue expected to begin in Q3; relaunch momentum in INCRELEX and GALZIN, and ET-600 NDA submission (potential Q1 2026 launch) .

What Went Well and What Went Wrong

• What Went Well

  • “17th straight quarter of sequential growth in product sales” driven by ALKINDI SPRINKLE and the addition of INCRELEX; product sales $14.0M (+76% y/y) .
  • INCRELEX relaunch tracking ahead of expectations; active patients increased from 67 at acquisition to “over 90,” with label harmonization planned to expand the eligible U.S. patient population .
  • Adjusted gross margin improved to 69.5% (from 65.6% y/y), aided by licensing revenue; adjusted EBITDA rose to $3.7M .

• What Went Wrong

  • GAAP net loss widened to -$1.6M (EPS -$0.06) from -$0.8M (-$0.03) y/y, as reported G&A increased to $9.2M on launch and pre-launch activities; adjusted G&A was $7.3M .
  • Elevated cost of sales included $1.142M acquisition-related inventory step-up, pressuring GAAP gross margin in the quarter (adjusted margins addressed non-cash items) .
  • Medicaid rebates liability and receivables rose, in part due to INCRELEX relaunch and timing of the $4.3M Esteve licensing receivable; adds working capital friction near term .

Financial Results

Sequential trend (oldest → newest)

Year-over-year comparison

Segment breakdown

KPIs (Q1 2025)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We reported record financial results, launched two recently acquired commercial products, and achieved critical milestones with the advancement of our development pipeline… we remain prepared to launch quickly upon potential approval on its PDUFA date of May 28th” — CEO Sean Brynjelsen .
• “We expect to report full year 2025 adjusted gross margin of approximately 70% and long-term adjusted gross margin to exceed 75% by 2028.” — CFO James Gruber .
• “We’ve now reached over 90 active [INCRELEX] patients and remain confident that we can reach our goal of 100 patients by the end of this year.” — CEO .
• “A 20% tariff on European purchases would impact total company gross margin by less than 100 basis points.” — CFO .

Q&A Highlights

• ET-400 approval process: labeling discussions completed and submission returned; management believes they are “on track for approval” around May 28; launch planned first week of June; revenue impact expected to begin in Q3 due to patient visit cycle .
• Amglidia pathway: FDA feedback “fairly straightforward” PK study; follow-up meeting planned to confirm expectations .
• INCRELEX momentum: “over 90” active patients; management comfortable with exit-2025 ~$80M run-rate and may revisit after Q2 trends .
• Tariff and MFN pricing exposure: minimal tariff impact; MFN policy deemed more relevant to big pharma; Eton sells only in U.S., limited Medicare exposure .
• Working capital dynamics: receivables up due to $4.3M Esteve payment timing and INCRELEX; Medicaid rebate liability higher due to INCRELEX patient mix .

Estimates Context

• Q1 2025 S&P Global consensus: Revenue $15.13M*, GAAP Primary EPS $0.0533*; Actuals: Revenue $17.282M, GAAP EPS -$0.06 (beat on revenue, miss on GAAP EPS) *.
• Non-GAAP diluted EPS printed at $0.07 (supported by $3.3M licensing revenue, adjusted items), while consensus appears aligned to GAAP primary EPS; expect models to raise FY25 revenue and adjusted EBITDA on INCRELEX/GALZIN traction and ET-400 timing, but GAAP EPS may remain pressured by launch SG&A and Q2 R&D charges (ET-600 $2.2M NDA fee; $0.5M Amglidia payment) .
  Values retrieved from S&P Global.

Estimates vs actuals

Key Takeaways for Investors

• Revenue quality improved: mix shift to higher-margin products and licensing lifted adjusted gross margin to 69.5%; FY25 adjusted GM guide ~70% and LT target >75% by 2028 underpin margin trajectory .
• INCRELEX is a meaningful growth driver: patient count rose to “over 90” in ~5 months; ex-U.S. rights out-licensed to Esteve provides cash and focus; label harmonization could expand U.S. addressable market materially .
• ET-400 approval/launch is imminent: launch readiness complete; expect commercial revenue starting Q3, providing further synergy with ALKINDI in pediatric endocrinology .
• Wilson disease franchise building: GALZIN relaunched with $0 co-pay and specialty distribution; ET-700 extended-release program targets adherence/tolerability; revenue contribution expected to become material by Q3/Q4 as migration completes .
• Working capital and GAAP optics: licensing receivable timing and Medicaid rebates inflate receivables/liabilities; GAAP EPS negative despite strong adjusted results—focus on adjusted EBITDA/cash generation near term .
• Risk checks: tariff/MFN exposure appears de minimis; watch Q2 P&L for ET-600 NDA fee ($2.2M) and Amglidia payment ($0.5M) hitting R&D .
• Trading implications: Near-term catalysts (ET-400 approval/launch, continued INCRELEX adds, GALZIN migration) favor momentum; model revisions likely to raise revenue and adjusted EBITDA, while GAAP EPS may lag due to planned investments .