[Management View]
Eton Pharmaceuticals reported record quarterly revenue of $22.5 million in Q3 2025, marking a 129% year-over-year increase and a 19% sequential growth. Key drivers included Alkindi Sprinkle, kerglumic acid, and newly acquired products Incralex and Galzin. The company generated $12 million in operating cash flow, reduced adjusted SG&A expenses sequentially, and achieved an adjusted EBITDA of $2.9 million despite nonrecurring costs related to Incralex's ex-US transition. Management emphasized their commitment to profitability, margin expansion, and strategic acquisitions to drive future growth.

[Outlook]
Eton expects continued revenue growth from its core products, including Alkindi Sprinkle, Incralex, Galzin, and Kindivy, alongside the anticipated launch of ET600 in 2026. The company plans to submit a revised formulation of Kindivy for FDA approval in 2026, aiming for expanded pediatric adoption by 2027. Additionally, Eton is preparing for the ET700 pilot study and the initiation of an Incralex label harmonization clinical trial in 2026. Management is optimistic about closing two acquisitions of ultra-rare disease products by year-end or early 2026, which could lead to additional product launches.

[Financial Performance]
- Q3 2025 revenue: $22.5 million (+129% YoY, +19% QoQ).
- Adjusted gross margin: 45% (down from 64% YoY due to Incralex ex-US transition costs).
- Adjusted EBITDA: $2.9 million (up from $2 million YoY).
- GAAP net loss: $1.9 million (compared to $600,000 net income YoY).
- Non-GAAP net income: $1.5 million (down from $1.9 million YoY).
- Cash position: $37.1 million at quarter-end, with $12 million in operating cash flow.

[Q&A Highlights]
Question 1: Can you provide pro forma gross margins for the core US business, excluding ex-US Incralex activity?
Answer: Adjusted gross margin for Q3 2025 was 45%, but excluding ex-US Incralex activity, it was just over 70%.

Question 2: What factors contributed to the reacceleration of Alkindi's revenue growth in 2025?
Answer: The primary driver was the refocusing of the Salesforce solely on pediatric endocrinology. Additionally, physicians have become more comfortable with the product, leading to increased adoption. Alkindi continues to grow steadily, complemented by Kindivy, which has not caused significant cannibalization.

Question 3: Can you provide details on Incralex's gross patient additions since August and the clinical trial design submitted to the FDA?
Answer: Incralex's net active patient count remained flat due to new patient additions being offset by age-outs. Management aims to reach 110 patients by next month. Regarding the clinical trial, feedback from the FDA is expected in the coming weeks, with patient enrollment anticipated in the first half of 2026.

Question 4: What are your initial thoughts on top-line growth for 2026?
Answer: Management expects significant growth from Incralex, Galzin, Alkindi, and Kindivy but will provide detailed guidance during the Q4 earnings report.

Question 5: Will the Incralex US registry trial take place at the same sites as the global registry trial?
Answer: The US registry trial will likely involve different sites, although sites with a meaningful number of eligible patients may be considered.

Question 6: How are you prioritizing business development opportunities?
Answer: Eton is in late-stage discussions for two acquisitions of ultra-rare disease products, aiming to close transactions by year-end or early 2026. These acquisitions are expected to add significant revenue and align strategically with the company's portfolio.

Question 7: What are the reasons for Incralex patient discontinuation, and how is Eton addressing them?
Answer: Discontinuations are primarily due to patients aging out upon reaching adulthood. Eton is focusing on earlier diagnosis and treatment initiation to extend therapy duration and improve patient outcomes.

Question 8: What is the long-term gross margin outlook?
Answer: Eton expects gross margins to exceed 75% by 2028, driven by a product mix shift toward high-margin products like Kindivy, Alkindi, and Incralex.

Question 9: Are you experiencing pricing pressures from government or private payers?
Answer: Eton has not faced significant pricing pressures, as its orphan drug products are priced appropriately for their small patient populations.

[Sentiment Analysis]
The management's tone was optimistic, emphasizing strong revenue growth, strategic acquisitions, and long-term profitability. Analysts expressed positive sentiment, acknowledging the company's progress and potential for future growth, while seeking clarity on specific metrics and plans.

[Quarterly Comparison]
| Metric | Q3 2025 | Q3 2024 | QoQ Change | YoY Change |
|----------------------------|-----------------|-----------------|------------|------------|
| Revenue ($M) | 22.5 | 10.3 | +19% | +129% |
| Adjusted Gross Margin (%) | 45 | 64 | -19 pts | -19 pts |
| Adjusted EBITDA ($M) | 2.9 | 2.0 | +45% | +45% |
| GAAP Net Income ($M) | -1.9 | 0.6 | N/A | N/A |
| Non-GAAP Net Income ($M) | 1.5 | 1.9 | -21% | -21% |
| Cash Position ($M) | 37.1 | N/A | N/A | N/A |

[Risks and Concerns]
1. Nonrecurring ex-US Incralex revenue of $900,000 and $2.4 million from inventory sales to Astevi may negatively impact reported product sales in Q4.
2. Lower revenue per Incralex patient due to a less favorable payer mix in Q3.
3. Adjusted gross margin fell to 45% from 64% YoY, primarily due to ex-US Incralex transition costs.
4. Net loss of $1.9 million on a GAAP basis, compared to net income of $600,000 in Q3 2024.
5. Regulatory risks associated with FDA approval of ET600 and Kindivy label expansion.

[Final Takeaway]
Eton Pharmaceuticals delivered record revenue growth in Q3 2025, driven by strong performance from its rare disease therapies and strategic acquisitions. Despite challenges such as nonrecurring revenue and lower gross margins, the company demonstrated robust operating cash flow and maintained a strong cash position. Management's focus on expanding product adoption, achieving regulatory milestones, and pursuing acquisitions positions Eton for sustained growth in 2026 and beyond. Investors should monitor the company's progress on FDA approvals, clinical trials, and business development activities, which are expected to drive future revenue and profitability.