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EP

Eton Pharmaceuticals, Inc. (ETON)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $22.5M, up 118% year over year and up 19% sequentially; led by INCRELEX and GALZIN relaunches; adjusted EBITDA was $2.9M, while non-GAAP diluted EPS was $0.04 .
  • Revenue beat Wall Street consensus ($20.5M) but EPS missed ($0.04 vs $0.09); EBITDA was far below consensus ($0.97M vs $6.1M); management cited non-recurring INCRELEX ex-U.S. transition costs that depressed margins and EBITDA in Q3 .
  • Guidance: adjusted gross margin guide for Q4 ~70% (vs 45% in Q3); adjusted G&A expected flat-to-down in Q4; U.S. product sales expected to grow sequentially in Q4, but total product sales may be flat to slightly down given non-recurring ex-U.S. INCRELEX revenue in Q3 .
  • Pipeline/regulatory catalysts: ET-600 NDA accepted (PDUFA 2/25/2026); KHINDIVI revised formulation for younger patients with plan to submit supplement in Q2 2026; ET-700 pilot PET study to initiate Q1 2026 .

What Went Well and What Went Wrong

What Went Well

  • “Another stellar period…product sales growing 129% year over year” with strong contributions across ALKINDI SPRINKLE, Carglumic Acid, INCRELEX, and GALZIN; “both products [INCRELEX and GALZIN] continue to track ahead of our original expectations” .
  • GALZIN ahead of plan: exceeded the previous year-end target of 200 active patients; strong community reception due to enhanced patient support and education .
  • Cash generation inflected: $12.0M from operations in Q3; cash balance reached $37.1M .

What Went Wrong

  • Gross margin compressed materially in Q3 due to INCRELEX ex-U.S. transition costs (commissions to Ipsen, finished product sales to Ipsen/Esteve, and semi-finished loading to Esteve); adjusted gross margin fell to 45% vs 75% in Q2 .
  • EPS miss versus consensus and YoY decline: GAAP diluted EPS -$0.07 (vs $0.02 prior year), non-GAAP diluted EPS $0.04 (vs $0.07 prior year) .
  • INCRELEX net active patient count remained roughly flat around ~100 as higher age-outs offset new starts; payer mix was less favorable, lowering revenue per patient QoQ .

Financial Results

Quarterly Trend (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD)$17.282M $18.928M $22.459M
GAAP diluted EPS ($)-$0.06 -$0.10 -$0.07
Non-GAAP diluted EPS ($)$0.07 $0.03 $0.04
Gross Profit ($USD)$9.861M $11.924M $7.855M
Adjusted Gross Margin (%)69.5% 75% 45%
GAAP EBITDA ($USD)$0.678M -$0.316M $0.266M
Adjusted EBITDA ($USD)$3.675M $3.051M $2.872M
Cash from Operations ($USD)$2.090M $8.0M $12.0M

Q3 2025 vs Prior Year and vs Estimates

MetricQ3 2024Q3 2025 ActualConsensusBeat/Miss
Revenue ($USD)$10.324M $22.459M $20.474M*Beat
Non-GAAP diluted EPS ($)$0.07 $0.04 $0.09*Miss
GAAP EBITDA ($USD)$0.991M $0.266M $6.100M*Miss

Values marked with * retrieved from S&P Global.

Segment Mix

SegmentQ1 2025Q2 2025Q3 2025
Licensing Revenue ($USD)$3.286M $0 $0
Product Sales & Royalties ($USD)$13.996M $18.928M $22.459M
NotesINCRELEX ex-U.S. license upfront recognized partly in Q1 —$0.9M finished product to Ipsen/Esteve (non-recurring) and $2.4M semi-finished loading to Esteve (periodic)

KPIs

KPIQ1 2025Q2 2025Q3 2025
INCRELEX active patients~90 100 at end of July ~100; aiming for 110 by next month
GALZIN active patientsTransition phase (relaunch in March) Targeted 200 by YE Exceeded 200 patients

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Gross Margin (%)Q4 2025FY 2025 ~70% (Q1 & Q2 commentary) Q4 ~70% Maintained for Q4; operational reconfirmation
Adjusted G&A ($)Q4 20252H to be flat/decline vs 1H Q4 flat or decline vs Q3 Maintained
U.S. Product SalesQ4 2025Sequential growth expectedSequential growth expected Maintained
Total Product SalesQ4 2025n/aCould be flat/slightly down vs Q3 due to non-recurring INCRELEX ex-U.S. revenue New caution
KHINDIVI label expansion2026–2027Pre-submission meeting (Sept) Bioequivalence study starts by Jan 2026; PAS submission Q2 2026; ~10-month review (potential early 2027 approval) Formalized timeline
ET-600 NDA1Q 2026NDA submitted (Apr) NDA accepted; PDUFA 2/25/2026; inventory production in Q4 2025 Advanced to accepted
ET-700 pilot2026Plan to initiate late 2025 Pilot PET study to initiate Q1 2026; top-line mid-2026 Slight timing update

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1/Q2)Current Period (Q3)Trend
INCRELEX relaunch & label harmonizationGrew to ~90 (Q1); 100 patients by end of July; pursuing US/EU harmonization; registry data supports broadened label Net patients ~flat ~100 due to age-outs; FDA meeting request submitted; aiming for IND study in 2026; payer mix less favorable QoQ Growth + regulatory pathway progressing; near-term lumpiness
Adrenal insufficiency franchise (ALKINDI + KHINDIVI)Strong new scripts; KHINDIVI approved May; plan revised formulation for <5 yrs; pre-submission in Sept Bioequivalence study Jan 2026; PAS in Q2 2026; potential early 2027 approval; minimal cannibalization; franchise additive Expansion path clarified; steady adoption
GALZIN relaunchAddressing access (zero co-pay, patient support); targeting 200 patients by YE Exceeded 200; strong reception; Wilson community engagement; ET-700 development timeline set Ahead of plan; pipeline support
Margins & OpEx disciplineFY adj. GM ~70%; R&D one-time fees in Q2; SG&A to flatten in 2H Q3 adj. GM 45% with ex-U.S. drag; Q4 adj. GM guide ~70%; adjusted G&A expected flat/down Near-term compression; recovery expected Q4
Cash generationCFO detailed cash build and receivables/Medicaid dynamics $12.0M operating cash flow in Q3; cash $37.1M Strengthening
Tariffs/MacroMinimal impact expected from tariff proposals No new macro constraints notedStable
Business developmentOpportunistic BD central to strategy Late-stage discussions with two parties; aiming to close ~year-end; potentially two launches in 2026 Potential additive catalysts

Management Commentary

  • CEO: “The third quarter was another stellar period… ALKINDI SPRINKLE and Carglumic Acid produced strong year over year growth, and INCRELEX and GALZIN delivered major revenue contributions… both products continue to track ahead of our original expectations” .
  • CFO on margins: “GAAP gross margins… 35%. Adjusted was 45%. And if we remove… Increlex ex-U.S. activity, it’s… just over 70% for the quarter” .
  • CEO on KHINDIVI: “FDA indicated they would be receptive to a label expansion… bioequivalency study… start by January 2026… submit… in the second quarter of 2026… approval by the first quarter of 2027” .
  • CEO on ET-600: “NDA… accepted… PDUFA date… February 25, 2026… production of inventory at risk… pre-launch marketing activities are underway” .

Q&A Highlights

  • Margin quality: Analysts probed pro-forma gross margin excluding ex-U.S. INCRELEX; CFO indicated adjusted margin would be “just over 70%,” implying Q3 compression was transient and tied to transition costs .
  • INCRELEX trajectory: Discussion on gross adds since August and trial design; management expects FDA feedback by December and aims to start the harmonization study in 2026; targeting ~110 patients near term despite age-outs .
  • 2026 outlook: Street modeling mid-to-high 20% topline growth; management withheld specific guidance until Q4 report but reiterated healthy growth drivers and multiple launches/label expansions .
  • Long-term margins: Path to >75% adjusted gross margin by 2028 driven by mix to higher-margin products (ALKINDI, KHINDIVI, INCRELEX) .
  • Pricing power: Management emphasized appropriate pricing and limited exposure to government pricing pressures in ultra-rare categories .

Estimates Context

  • Q3 2025 consensus vs actual: Revenue $20.5M* vs $22.5M (Beat) ; Primary EPS $0.09* vs $0.04 (Miss); EBITDA $6.1M* vs $0.27M GAAP ($2.87M adjusted) (Miss) .

  • of estimates: 3 for EPS and revenue*; non-GAAP adjustments, ex-U.S. transition costs, and payer mix dynamics likely drove EPS/EBITDA variance despite strong topline.

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Topline momentum remains robust and diversified, but Q3 margin compression was largely driven by non-recurring ex-U.S. INCRELEX transition costs; management guides adjusted gross margin recovery to ~70% in Q4 .
  • Revenue beat paired with EPS/EBITDA miss suggests near-term estimate recalibration focused on margin trajectory and ex-U.S. contribution cadence; expect improved EBITDA as transition costs fade .
  • Pediatric endocrinology franchise is scaling with minimal cannibalization, and KHINDIVI label expansion could unlock a larger pediatric cohort by early 2027, accelerating adoption .
  • GALZIN exceeded patient targets; ET-700 extended-release path offers a sizable Wilson disease opportunity (compliance-driven) with pilot data mid-2026 .
  • ET-600 PDUFA on 2/25/2026 provides a near-term launch catalyst in the same call point, leveraging Eton’s established footprint .
  • Business development remains active; potential acquisitions could add 2026 launches, enhancing the medium-term growth profile .
  • Trading implications: Near-term focus on Q4 margin recovery and ex-U.S. revenue normalization; medium-term thesis anchored on label expansions and pipeline launches that structurally lift margins and earnings power .