What changed in this filing

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Item 1. Financial Statements

2025-08-07 compared with 2025-05-13 · 234 added, 261 removed, 626 unchanged (44% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

March 31, 2025

June 30, 2025

December 31, 2024

18 unchanged sentences

$ 12,142 $ 4,167

Short-term debt, net of discount

Accrued Medicaid rebates

5 unchanged sentences

Operating lease liabilities, net of current portion

Long-term inventory payable

Other long-term liabilities

5 unchanged sentences

50,000,000 shares authorized;

26,817,535 and 26,709,084 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

26,817,535 and 26,709,084 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

Additional paid-in capital

11 unchanged sentences

For the three months ended

For the six months ended

Licensing revenue

10 unchanged sentences

Loss from operations

( 470 ) ( 800 )

Other expense:

Interest and other expense, net

( 1,028 ) ( 11 )

Loss before income tax expense

( 1,498 ) ( 811 )

Income tax expense

$ ( 1,572 ) $ ( 811 )

Net loss per share, basic and diluted

$ ( 0.06 ) $ ( 0.03 )

Weighted average number of common shares outstanding, basic and diluted

26,886 25,763

The accompanying notes are an integral part of these condensed financial statements.

1 unchanged sentence

Condensed Statements of Stockholders ’ Equity

For the three months ended March 31, 2025 and 2024

For the three months ended June 30, 2025 and 2024

(in thousands, except share amounts)

1 unchanged sentence

Total Stockholders’

Balances at December 31, 2024

26,709,084 $ 27 $ 132,294 $ ( 107,893 ) $ 24,428

Balances at March 31, 2025

Stock-based compensation

— — 1,200 — 1,200

Stock option exercises

108,451 — 394 — 394

— — — ( 1,572 ) ( 1,572 )

Balances at June 30, 2025

Additional Paid-in

Total Stockholders’

Balances at March 31, 2024

26,817,535 $ 27 $ 133,888 $ ( 109,465 ) $ 24,450

Stock-based compensation

Employee stock purchase plan

Balances at June 30, 2024

The accompanying notes are an integral part of these condensed financial statements.

Eton Pharmaceuticals, Inc.

Condensed Statements of Stockholders ’ Equity

For the six months ended June 30, 2025 and 2024

(in thousands, except share amounts)

Additional Paid-in

1 unchanged sentence

Balances at December 31, 2024

25,688,062 $ 26 $ 119,521 $ ( 104,070 ) $ 15,477

Stock-based compensation

— — 821 — 821

Employee stock purchase plan

Stock option exercises and vesting of restricted stock units

Balances at June 30, 2025

Additional Paid-in

Total Stockholders’

Balances at December 31, 2023

Stock-based compensation

Employee stock purchase plan

Stock option exercises

2,500 — 7 — 7

— — — ( 811 ) ( 811 )

Balances at March 31, 2024

25,690,562 $ 26 $ 120,349 $ ( 104,881 ) $ 15,494

Balances at June 30, 2024

The accompanying notes are an integral part of these condensed financial statements.

2 unchanged sentences

(In thousands)

Three months ended

March 31, 2025

March 31, 2024

Cash flows from operating activities

$ ( 1,572 ) $ ( 811 )

Six months ended

June 30, 2025

June 30, 2024

Cash flows from (used in) operating activities

Adjustments to reconcile net loss to net cash from operating activities:

6 unchanged sentences

Accounts receivable

( 11,039 ) ( 829 )

468 ( 1,407 )

Prepaid expenses and other assets

2 unchanged sentences

Accrued liabilities

( 1,373 ) ( 1,639 )

Other non-current assets and liabilities

Net cash from operating activities

2,090 ( 2,473 )

Cash flows from investing activities

Net cash from (used in) operating activities

Cash flows from (used in) investing activities

Purchases of product license rights

Purchases of property and equipment

Net cash from investing activities

Cash flows from financing activities

Net cash from (used in) investing activities

Cash flows from (used in) financing activities

Repayment of long-term debt

Proceeds from stock option exercises

Net cash from financing activities

Proceeds from employee stock purchase plan and stock option exercises

Net cash from (used in) financing activities

Change in cash and cash equivalents

2,484 ( 4,733 )

Cash and cash equivalents at beginning of period

14,936 21,388

Cash and cash equivalents at end of period

$ 17,420 $ 16,655

Supplemental disclosures of cash flow information

8 unchanged sentences

is an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases.

The Company currently has seven commercial rare disease products:

INCRELEX®, ALKINDI SPRINKLE®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone.

The Company has six additional product candidates in late-stage development:

ET- 400, ET- 600, Amglidia®, ET- 700, ET- 800 and ZENEO® hydrocortisone autoinjector.

The Company currently has eight commercial rare disease products:

INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM , GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone.

The Company has five additional product candidates in late-stage development:

ET- 600, Amglidia®, ET- 700, ET- 800 and ZENEO® hydrocortisone autoinjector.

Note 2 — Liquidity Considerations

The Company believes its existing cash and cash equivalents of $ 17,420 as of March 31, 2025 in addition to revenues from products will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next twelve months from the date of filing of this quarterly report.

The Company believes its existing cash and cash equivalents of $ 25,379 as of June 30, 2025 in addition to revenues from products will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next twelve months from the date of filing of this quarterly report.

This estimate is based on the Company’s current assumptions, including assumptions relating to estimated sales and its ability to manage spending.

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The Company has prepared the accompanying condensed financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).

Certain prior period amounts, have been reclassified to conform to current year presentation in the condensed financial statements and notes to financial statements and these reclassifications had no impact to prior period condensed financial statements.

Certain prior period amounts, have been reclassified to conform to current year presentation in the condensed financial statements and notes to financial statements.

Unaudited Interim Financial Information

The accompanying interim condensed financial statements are unaudited and have been prepared on the same basis as the audited financial statements and, in the opinion of management, reflect all adjustments necessary for the fair presentation of the Company’s financial position as of March 31, 2025, and the results of its operations and its cash flows for the periods ended March 31, 2025 and 2024.

The financial data and other information disclosed in these notes related to the three -month periods ended March 31, 2025 and 2024 are also unaudited.

The accompanying interim condensed financial statements are unaudited and have been prepared on the same basis as the audited financial statements and, in the opinion of management, reflect all adjustments necessary for the fair presentation of the Company’s financial position as of June 30, 2025, and the results of its operations and its cash flows for the periods ended June 30, 2025 and 2024.

The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2025 and 2024 are also unaudited.

The interim financial statements are condensed and generally do not repeat the disclosures in the annual financial statements.

As such, the interim financial statements herein should be read in conjunction with the Company’s latest annual financial statements filed on Form 10 -K on March 18, 2025.

The results for the three -month periods ended March 31, 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2025, any other interim periods, or any future year or period.

The results for the three -month and six -month periods ended June 30, 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2025, any other interim periods, or any future year or period.

Use of Estimates

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Segment Information

The Company operates the business on the basis of a single reportable segment, which includes seven commercial rare disease products:

INCRELEX®, ALKINDI SPRINKLE®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone.

The Company operates the business on the basis of a single reportable segment, which includes eight commercial rare disease products:

INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM , GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone.

The Company derives revenues from product sales to specialty pharmacy customers, who then provide order fulfillment, inventory storage and distribution services.

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Additionally, the measure of segment assets is reported on the Company’s balance sheet as total assets.

The Company's revenues and its accounts receivable balances are highly concentrated and consist of sales to and amounts due from AnovoRx and Optime Care for the Company's INCRELEX®, ALKINDI SPRINKLE®, Carglumic Acid, GALZIN® and Betaine Anhydrous products, as well as from Pentec Heath for sales of the Company’s PKU GOLIKE® product.

For the three months ended March 31, 2025 and 2024, AnovoRx product sales represented 90.8 % and 97.7 % of net product revenues, respectively.

As of March 31, 2025 and December 31, 2024 , AnovoRx product sales represented 59.2 % and 92.2 % of net accounts receivable.

As of March 31, 2025 and December 31, 2024 , all long-lived assets were domiciled within the U.S.

The Company's revenues and its accounts receivable balances are highly concentrated and consist of sales to and amounts due from AnovoRx and Optime Care for the Company's INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM, Carglumic Acid, GALZIN® and Betaine Anhydrous products, as well as from Pentec Heath for sales of the Company’s PKU GOLIKE® product.

For the six months ended June 30, 2025 and 2024, AnovoRx product sales represented 92.0 % and 95.9 % of net product revenues, respectively.

As of June 30, 2025 and December 31, 2024 , AnovoRx product sales represented 59.7 % and 96.2 % of net accounts receivable.

As of June 30, 2025 and December 31, 2024 , all long-lived assets were domiciled within the U.S.

Cash and Cash Equivalents

2 unchanged sentences

financial institutions or invested in high-grade money market funds.

As of March 31, 2025 and December 31, 2024, the Company’s cash is in a non-interest-bearing account and a high-grade money market fund.

As of June 30, 2025 and December 31, 2024, the Company’s cash is in a non-interest-bearing account and a high-grade money market fund.

From time to time, amounts deposited with its bank exceed federally insured limits.

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Accounts receivable are recorded at the invoiced amount and are non-interest bearing.

Accounts receivable are recorded net of allowances for credit losses, cash discounts for prompt payment, distribution fees, chargebacks and returns and allowances.

Accounts receivable are recorded net of allowances for cash discounts for prompt payment, distribution fees and chargebacks.

The Company considers historical collection rates and the current financial status of its customers, as well as macroeconomic and industry-specific factors when evaluating potential credit losses.

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Given the size and creditworthiness of these customers, we have not experienced and do not expect to experience material credit losses.

The total for all accounts receivable reserves was $ 262 and $ 238 as of March 31, 2025 and December 31, 2024 , respectively.

The total for all accounts receivable reserves was $ 249 and $ 238 as of June 30, 2025 and December 31, 2024 , respectively.

The Company values its inventories at the lower of cost or net realizable value using the first -in, first -out method of valuation.

The Company reviews its inventories for potential excess or obsolete issues on an ongoing basis and records a write-down if an impairment is identified.

As of March 31, 2025 and December 31, 2024 , inventories consisted of purchased finished goods, semi-finished goods and raw materials.

At March 31, 2025 , inventories are shown net of a reserve for Nitisinone, Betaine Anhydrous, GALZIN®, ALKINDI SPRINKLE® and PKU GOLIKE® inventory.

As of March 31, 2025 and December 31, 2024, inventories included $ 5,000 in prepaid raw materials acquired in the INCRELEX® business acquisition as the Company will take title and possession to the raw materials on June 19, 2025.

At December 31, 2024 inventories are shown net of a reserve for Nitisinone, Betaine Anhydrous, ALKINDI SPRINKLE® and PKU GOLIKE® inventory.

There was an inventory reserve of $ 695 and $ 605 at March 31, 2025 and December 31, 2024 , respectively.

As of June 30, 2025 and December 31, 2024 , inventories consisted of purchased finished goods, semi-finished goods and raw materials.

At June 30, 2025 , inventories are shown net of a reserve for Nitisinone, Betaine Anhydrous, GALZIN®, ALKINDI SPRINKLE®, and PKU GOLIKE® inventory.

As of December 31, 2024, inventories included $ 5,000 in prepaid raw materials acquired in the INCRELEX® business acquisition as the Company did not take title and possession to the raw materials until June 19, 2025.

At June 30 and December 31, 2024 inventories are shown net of a reserve for Nitisinone, Betaine Anhydrous, ALKINDI SPRINKLE®, and PKU GOLIKE® inventory.

There was an inventory reserve of $ 811 and $ 605 at June 30, 2025 and December 31, 2024 , respectively.

Property and Equipment

6 unchanged sentences

Maintenance and repairs are charged to expense as incurred, while renewals and improvements are capitalized.

Depreciation expense for the three -month periods ended March 31, 2025 and 2024 was $ 12 and $ 14 , respectively.

Depreciation expense for the six -month periods ended June 30, 2025 and 2024 was $ 16 and $ 23 , respectively.

Intangible Assets

11 unchanged sentences

Note 3 — Summary of Significant Accounting Policies (continued)

The intangible assets, net on the Company’s Condensed Balance Sheet, reflected $ 3,382 and $ 2,381 of accumulated amortization as of March 31, 2025 and December 31, 2024 .The Company recorded $ 1,001 and $ 220 , respectively, of amortization expense for the three months ended March 31, 2025 and 2024 , respectively.

The intangible assets, net on the Company’s Condensed Balance Sheet, reflected $ 4,383 and $ 2,381 of accumulated amortization as of June 30, 2025 and December 31, 2024 .The Company recorded $ 2,002 and $ 487 , respectively, of amortization expense for the six months ended June 30, 2025 and 2024 , respectively.

The table below shows the estimated remaining amortization for these products for each of the five years from 2025 to 2029 and thereafter.

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If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the Company’s Condensed Statements of Operations for the amount by which the carrying amount of the asset exceeds the fair value of the asset.

No impairment was recognized during the three -month periods ended March 31, 2025 or 2024 .

No impairment was recognized during the six -month periods ended June 30, 2025 or 2024 .

Deferred Financing Costs, Debt Discount and Detachable Debt-Related Warrants

11 unchanged sentences

Operating leases are reflected on the Condensed Balance Sheet as operating lease right-of-use assets, current accrued liabilities and long-term operating lease liabilities.

The Company does not have any finance leases as of March 31, 2025 and December 31, 2024 .

The Company does not have any finance leases as of June 30, 2025 and December 31, 2024 .

The Company commences recognizing operating lease expense when the lessor makes the underlying asset available for use by the Company and the operating lease expense is recognized on a straight-line basis over the term of the lease.

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Additionally, Management monitors its exposure to accounts receivable by periodically evaluating the collectability of the account receivable based on a variety of factors including the length of time the receivables are past due, the financial health of the customer and any prior customer credit loss experience.

Based upon the review of these factors, the Company recorded no allowance for credit losses at March 31, 2025 or December 31, 2024 .

Based upon the review of these factors, the Company recorded no allowance for credit losses at June 30, 2025 or December 31, 2024 .

Revenue Recognition for Contracts with Customers

23 unchanged sentences

Significant Financing Component – In determining the transaction price, the Company will adjust consideration for the effects of the time value of money if the expected period between payment by the licensees and the transfer of the promised goods or services to the licensees will be more than one year.

The Company sells its INCRELEX®, ALKINDI SPRINKLE®, 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 sells its INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM , 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.

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Note 3 — Summary of Significant Accounting Policies (continued)

For its INCRELEX®, ALKINDI SPRINKLE®, 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®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone sales are not subject to returns.

The Company stores its INCRELEX®, ALKINDI SPRINKLE®, 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 may recognize 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.

Upon recognition of revenue from product sales, the estimated amounts of credit for product returns, chargebacks, distribution fees, prompt payment discounts, state Medicaid and GPO fees are included in sales reserves, accrued liabilities and net accounts receivable.

The Company monitors actual product returns, chargebacks, discounts and fees subsequent to the sale.

If these amounts end up differing from its estimates, it will make adjustments to these allowances, which are applied to increase or reduce product sales revenue and earnings in the period of adjustment.

For its INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM , 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.

INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM , GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone sales are not subject to returns.

Upon recognition of revenue from product sales, the estimated amounts of chargebacks, prompt payment discounts and state Medicaid are included in sales reserves, accrued liabilities and net accounts receivable.

The Company stores its INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM , 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 state Medicaid rebate and related liability 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.

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The costs of sales for profit-sharing agreements are recognized upon the achievement of certain development and commercial milestones.

For the three months ended March 31, 2025, the Company recognized $ 825 in license cost of sales associated with the recognition of a development milestone related to the August 2024 sale of its DS- 200 product candidate.

Research and Development Expenses

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Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders for the period by the weighted average number of common and common equivalent shares, such as unvested restricted stock, stock options and warrants that are outstanding during the period.

Common stock equivalents are excluded from the computation when their inclusion would be anti-dilutive.

No such adjustments were made for 2025 or 2024 as the Company reported a net loss for the three months ended March 31, 2025 and 2024 and including the effects of common stock equivalents in the diluted earnings per share calculation would have been anti-dilutive (see Note 8 ).

C ommon stock equivalents are excluded from the computation when their inclusion would be anti-dilutive.

No such adjustments were made for 2025 or 2024 as the Company reported a net loss for the three months and six months ended June 30, 2025 and 2024 and including the effects of common stock equivalents in the diluted earnings per share calculation would have been anti-dilutive (see Note 8 ).

Eton Pharmaceuticals, Inc.

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To the extent the Company establishes a valuation allowance or increase or decrease to this allowance in a period, the impact will be included in income tax expense in the Condensed Statements of Operations.

As of March 31, 2025 and December 31, 2024 , the Company has established a 100 % valuation reserve against its deferred tax assets.

As of June 30, 2025 and December 31, 2024 , the Company has established a 100 % valuation reserve against its deferred tax assets.

See Note 9 for further information.

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The amendments are effective for the Company's annual periods beginning January 1, 2025, with early adoption permitted, and may be applied either prospectively or retrospectively.

The Company is assessing the guidance, noting the adoption impacts disclosure only.

The Company is currently evaluating the effect of this new guidance on its condensed financial statements.

In November 2024, the FASB issued ASU 2024 - 03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220 - 40 ).

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This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted.

The Company is assessing the guidance, noting the adoption impacts disclosure only.

The Company is currently evaluating the effect of this new guidance on its condensed financial statements.

Eton Pharmaceuticals, Inc.

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In November 2019, the Company entered into a credit agreement (the “SWK Credit Agreement”) with SWK, which provided $ 10,000 in debt financing.

In March 2020 and April 2022, the Company and SWK entered into amendments to the SWK Credit Agreement.

In November 2019, the Company issued warrants to SWK to purchase 51,239 shares of the Company’s common stock with an exercise price of $ 5.86 per share.

The relative fair value of these 51,239 warrants was $ 226 and was estimated using the Black-Scholes-Merton option pricing model with the following assumptions:

In connection with entering into the SWK Credit Agreement, the Company issued warrants to SWK to purchase 51,239 shares of the Company’s common stock with an exercise price of $ 5.86 per share.

The fair value of these 51,239 warrants was $ 226 and was estimated using the Black-Scholes-Merton option pricing model with the following assumptions:

fair value of the Company’s common stock at issuance of $ 5.75 per share;

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In August 2020, the Company issued additional warrants for 18,141 shares of its common stock at an exercise price of $ 6.62 per share.

The relative fair value of the 18,141 warrants was $ 94 and was estimated using the Black-Scholes-Merton option pricing model with the following assumptions:

The fair value of the 18,141 warrants was $ 94 and was estimated using the Black-Scholes-Merton option pricing model with the following assumptions:

fair value of the Company’s common stock at issuance of $ 6.85 per share;

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The amended SWK Credit Agreement includes a 5.0 % exit fee payable at maturity and this exit fee payable will be accreted to interest expense in the Company's Condensed Statement of Operations using the effective interest expense method.

The amended SWK Credit Agreement contains a mandatory prepayment clause that can compel the Company to partially prepay the loan upon certain triggering events, which the Company has deemed to be remote.

The amended SWK Credit Agreement contains a mandatory prepayment clause that can compel the Company to partially prepay the loan upon the occurrence of certain triggering events, which the Company has deemed to be remote.

Borrowing under the amended SWK Credit Agreement is secured by the Company's assets, contains customary default provisions, which include limits on additional indebtedness.

As of March 31, 2025 and December 31, 2024 , the Company was in compliance with all financial covenants.

The Company recorded interest expense of $ 1,163 and $ 238 for the three months ended March 31, 2025 and 2024, respectively, which included $ 294 and $ 25 , respectively of debt discount and non-cash interest expense.

During the three months ended March 31, 2025, debt discount amortization and accrued exit fees was $ 56 and $ 126 , respectively, associated with the SWK Credit Agreement and $ 112 was associated with interest expense accretion on the $ 5,000 deferred consideration due to Ipsen S.A (See Note 12 for further discussion).

As of March 31, 2025 and December 2024, the Company had accrued interest of $ 409 and $ 182 , respectively, which is included in accrued liabilities in the accompanying Condensed Balance Sheet.

The table below reflects the future payments for the SWK loan principal and interest as of March 31, 2025 .

As of June 30, 2025 and December 31, 2024 , the Company was in compliance with all financial covenants.

The Company recorded interest expense of $ 2,361 and $ 460 for the six months ended June 30, 2025 and 2024, respectively, which included $ 342 and $ 48 , respectively of debt discount and non-cash interest expense.

During the six months ended June 30, 2025 and 2024, debt discount amortization and accrued exit fees was $ 112 and $ 48 , respectively, associated with the SWK Credit Agreement and $ 229 was associated with interest expense accretion during the six months ended June 30, 2025 on the $ 5,000 deferred consideration due to Ipsen S.A (See Note 12 for further discussion).

As of June 30, 2025 and December 2024, the Company had accrued interest of $ 454 and $ 182 , respectively, which is included in accrued liabilities in the accompanying Condensed Balance Sheet.

The table below reflects the future payments for the SWK loan principal and interest as of June 30, 2025 .

Total payments

unamortized discount

accrued exit fees at March 31, 2025

accrued exit fees at June 30, 2025

Debt, net of unamortized discount and accrued exit fees

1 unchanged sentence

The Company has 50,000,000 authorized shares of $ 0.001 par value common stock under its Amended and Restated Certificate of Incorporation.

During the three months ended March 31, 2025 , the Company issued 108,451 shares of its common stock resulting from stock option exercises under its 2018 Equity Incentive Plan as amended in December 2020.

In March 31, 2024 the Company issued 2,500 shares of its common stock resulting from stock option exercises under its 2018 Equity Incentive Plan.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

During the six months ended June 30, 2025 , the Company issued 108,451 shares of its common stock resulting from stock option exercises under its 2018 Equity Incentive Plan as amended in December 2020.

In June 30, 2024 the Company issued 2,500 shares of its common stock resulting from stock option exercises under its 2018 Equity Incentive Plan.

Eton Pharmaceuticals, Inc.

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Note 6 — Common Stock Warrants

The Company’s outstanding warrants to purchase shares of its common stock at March 31, 2025 are summarized in the table below.

The Company’s outstanding warrants to purchase shares of its common stock at June 30, 2025 are summarized in the table below.

Description of Warrants

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SWK Warrants – Debt – Tranche #1

51,239 $ 5.86

SWK Warrants – Debt – Tranche #2

18,141 $ 6.62

SWK Warrants – Debt – Tranche #3

289,736 $ 5.32

Total shares and weighted average exercise price

359,116 $ 5.46

The holders of these warrants or their permitted transferees, are entitled to rights with respect to the registration under the Securities Act of their shares that are converted to common stock, including demand registration rights and piggyback registration rights.

These rights are provided under the terms of a registration rights agreement between the Company and the investors.

The issuance of these warrants was accounted for as equity and the fair value of the warrants issued were classified to additional paid-in capital in the Company's Condensed Balance Sheet.

Note 7 — Share-Based Payment Awards

The Company’s board of directors and stockholders approved the Eton Pharmaceuticals, Inc.

2017 Equity Incentive Plan in May 2017 ( the “2017 Plan”), which authorized the issuance of up to 5,000,000 shares of the Company’s common stock.

In conjunction with the Company’s IPO in November 2018 , the Company’s stockholders and board of directors approved the 2018 Equity Incentive Plan, as amended (the “2018 Plan”) which succeeded the 2017 Plan.

In November 2018 , the Company’s stockholders and board of directors approved the 2018 Equity Incentive Plan, as amended (the “2018 Plan”) which succeeded the 2017 Plan.

The Company has granted RSAs, stock options and RSUs for its common stock under the 2017 Plan and 2018 Plan as detailed in the tables below.

There were 990,162 shares available for future issuance under the 2018 Plan as of March 31, 2025.

Shares that are expired, terminated, surrendered or canceled without having been fully exercised will be available for future awards under the 2018 Plan.

There were 982,556 shares available for future issuance under the 2018 Plan as of June 30, 2025.

All stock options issued have been non-qualified stock options and the exercise price is the closing stock price of the Company's common stock on the date of grant.

Non-qualified stock options typically have a ten -year life and non-qualified stock options that are expired, terminated, surrendered or canceled without having been fully exercised will be available for future awards under the 2018 Plan.

In addition, the 2018 Plan provides that commencing January 1, 2019 and through January 1, 2028, the share reserve will be increased by 4 % of the total number of shares outstanding as of the preceding December 31, subject to a reduction at the discretion of the Company’s board of directors.

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On January 1, 2025, the share reserve was increased by 1,068,323 shares based on the 26,709,084 shares of common stock outstanding at December 31, 2024.

The exercise price for stock options granted is not less than the fair value of common stock as determined by the board of directors as of the date of grant.

The exercise price for stock options granted is not less than the fair value of common stock as of the date of grant.

The Company uses the closing stock price on the date of grant as the exercise price.

To date, all stock options issued have been non-qualified stock options, and the exercise prices were set at the fair value for the shares at the dates of grant.

Options typically have a ten -year life, except for options to purchase 50,000 shares of the Company’s common stock granted to product consultants in July 2017 that expired, unexercised, in July 2022 as the Company was not able to file certain product submissions to the FDA prior to the five -year expiration date.

Furthermore, these option awards to the Company’s product consultants would not vest unless certain product submissions are made to the FDA, and accordingly, the Company has not recorded any expense for these contingently vesting option awards to its product consultants.

For the three months ended March 31, 2025 and 2024 , the Company’s total stock-based compensation expense was $ 1,200 and $ 821 , respectively.

Of these amounts, $ 1,161 and $ 742 were recorded in general and administrative (“G&A”) expenses during the three months ended March 31, 2025 and 2024, respectively, and $ 39 and $ 79 were recorded in research and development expenses for the three months ended March 31, 2025 and 2024, respectively.

For the six -month periods ended June 30, 2025 and 2024 , the Company’s total stock-based compensation expense was $ 3,296 and $ 1,661 , respectively.

Of these amounts, $ 3,214 and $ 1,459 were recorded in general and administrative (“G&A”) expenses during the six months ended June 30, 2025 and 2024, respectively, and $ 82 and $ 202 were recorded in research and development expenses for the six months ended June 30, 2025 and 2024, respectively.

Stock Options

The following table summarizes stock option activity during the three months ended March 31, 2025 :

The following table summarizes stock option activity during the six months ended June 30, 2025 :

Outstanding as of December 31, 2024

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( 227,114 ) $ 4.99

Outstanding as of March 31, 2025

Outstanding as of June 30, 2025

6,045,610 $ 5.32 6.5 $ 54,036

Options exercisable as of March 31, 2025

Options exercisable as of June 30, 2025

4,373,586 $ 4.83 5.7 $ 41,182

Options vested and expected to vest at March 31, 2025

Options vested and expected to vest at June 30, 2025

6,045,610 $ 5.32 6.5 $ 54,036

The following table summarizes stock option activity during the six months ended June 30, 2024:

Outstanding as of December 31, 2023

4,839,226 $ 4.57

1,471,118 $ 4.41

( 2,500 ) $ 2.97

Forfeited/Cancelled

( 25,771 ) $ 4.38

Outstanding as of June 30, 2024

6,282,073 $ 4.54 7.4 $ 634

Options exercisable as of June 30, 2024

3,866,990 $ 4.72 6.5 $ 604

Options vested and expected to vest at June 30, 2024

6,282,073 $ 4.54 7.4 $ 634

Eton Pharmaceuticals, Inc.

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Note 7 — Share-Based Payment Awards (continued)

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock at March 31, 2025 for those stock options that had strike prices lower than the fair value of the Company’s common stock.

Stock based compensation related to stock options was $ 929 and $ 705 for the three -month periods ended March 31, 2025 and 2024 , respectively.

As of March 31, 2025 , there was a total of $ 7,546 of unrecognized compensation costs related to non-vested stock option awards.

The weighted average grant date fair value of stock option awards for the three months ended March 31, 2025 was $ 8.35 per share.

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock at June 30, 2025 for those stock options that had strike prices lower than the fair value of the Company’s common stock.

Stock based compensation related to stock options was $ 1,756 and $ 1,432 for the six -month periods ended June 30, 2025 and 2024 , respectively.

As of June 30, 2025 , there was a total of $ 8,508 of unrecognized compensation costs related to non-vested stock option awards, which will be recognized over a weighted average period of approximately 2.6 years.

The weighted average grant date fair value of stock option awards for the six months ended June 30, 2025 was $ 13.37 per share.

During the three months ended March 31, 2025, the Company issued 108,451 shares of its common stock resulting from stock option exercises at a weighted average exercise price of $ 3.63 per share with an intrinsic value of $ 1,167 .

During the three months ended March 31, 2024, the Company issued 2,500 shares of its stock resulting from stock option exercises at a weighted average exercise price of $ 2.97 per share with an intrinsic value of $ 2 .

During the six months ended June 30, 2024, the Company issued 2,500 shares of its stock resulting from stock option exercises at a weighted average exercise price of $ 2.97 per share with an intrinsic value of $ 2 .

Restricted Stock Units (RSUs)

The following table summarizes restricted stock unit activity during the three months ended March 31, 2025 :

The following table summarizes restricted stock unit activity during the six months ended June 30, 2025 :

Number of Units

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( 889 ) $ 14.30

Outstanding and unvested as of March 31, 2025

( 30,940 ) $ 6.30

Stock-based compensation related to RSUs was $ 190 and $ 60 for the three -month periods ended March 31, 2025 and 2024 , respectively.

As of March 31, 2025 , there was $ 2,685 of unrecognized stock-based compensation expense related to unvested RSUs, which will be recognized over a weighted average period of approximately 2.8 years.

Outstanding and unvested as of June 30, 2025

378,651 $ 8.01

The following table summarizes restricted stock unit activity during the six months ended June 30, 2024:

Number of Units

Weighted Average Grant-Date Fair Value Per Unit

Outstanding and unvested as of December 31, 2023

274,204 $ 2.63

( 3,000 ) $ 2.63

Outstanding and unvested as of June 30, 2024

271,204 $ 2.63

Stock-based compensation related to RSUs was $ 1,582 and $ 117 for the six -month periods ended June 30, 2025 and 2024 , respectively.

As of June 30, 2025 , there was $ 2,981 of unrecognized stock-based compensation expense related to unvested RSUs, which will be recognized over a weighted average period of approximately 2.6 years.

Employee Stock Purchase Plan

The Company’s 2018 Employee Stock Purchase Plan (“ESPP”) provides for an initial reserve of 150,000 shares, and this reserve is automatically increased on January 1 of each year by the lesser of 1 % of the outstanding common shares at December 31 of the preceding year or 150,000 shares, subject to reduction at the discretion of the Company’s board of directors.

As of March 31, 2025 , there were 842,581 shares available for issuance under the ESPP.

As of June 30, 2025 , there were 842,581 shares available for issuance under the ESPP.

The annual offerings consist of two stock purchase periods, with the first purchase period ending in June and the second ending in December.

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The terms of the ESPP provide a restart feature if the Company's stock price is lower at the end of a six -month period within the twelve -month offering period than it was at the beginning of the twelve -month offering period.

For the three -month periods ended March 31, 2025 and 2024 , there were no share issuance under the ESPP.

The Company recorded an expense of $ 81 and $ 56 related to the ESPP during the three -month periods ended March 31, 2025 and 2024 , respectively.

As of March 31, 2025 and December 31, 2024 , the accompanying Condensed Balance Sheet include $ 276 and $ 42 , respectively, in accrued liabilities for employee ESPP contributions.

The Company recorded a credit to expense of ( $ 42 ) and expense of $ 112 related to the ESPP during the six -month periods ended June 30, 2025 and 2024 , respectively.

For the six -month periods ended June 30, 2025 , there were no shares issued under the ESPP due to the Company being unable to issue shares associated with ESPP purchases as a result of the previously disclosed requirement to file audited financial statements of INCRELEX® for the years ended December 31, 2023 and 2022 and the nine months ended September 30, 2024 and 2023, as well as unaudited proforma financial information for the years ended December 31, 2024 and 2023, related to the purchase of INCRELEX® from Ipsen S.

As of June 30, 2025 and December 31, 2024 , the accompanying Condensed Balance Sheet include $ 35 and $ 42 , respectively, in accrued liabilities for employee ESPP contributions.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

Note 8 — Basic and Diluted Net Loss per Common Share

For the three months ended March 31, 2025, basic and diluted net loss per share is computed using the weighted average number of shares of common stock outstanding during the period and includes common stock equivalents (using the treasury stock and “if converted” method) from stock options, RSUs, and warrants.

For the three months ended March 31, 2025 and 2024, 4,130,700 and 5,942,961 , respectively, in common stock equivalents are excluded from the calculation of diluted net loss per share because the effect is anti-dilutive.

During the three months ended March 31, 2025 and 2024, included in the basic and diluted net loss per share calculation were RSUs awarded to directors that had vested, but the issuance and delivery of the shares are deferred until the director retires from service as a director.

For the three and six months ended June 30, 2025 and 2024, basic and diluted net loss per share is computed using the weighted average number of shares of common stock outstanding during the period and includes common stock equivalents (using the treasury stock and “if converted” method) from stock options, RSUs, and warrants.

For the three months ended June 30, 2025 and 2024, 7,425,645 and 6,636,723 , respectively, in common stock equivalents are excluded from the calculation of diluted net loss per share because the effect is anti-dilutive.

For the six months ended June 30, 2025 and 2024, 7,183,998 and 6,284,721 , respectively, in common stock equivalents are excluded from the calculation of diluted net loss per share because the effect is anti-dilutive.

During the three and six months ended June 30, 2025 and 2024, included in the basic and diluted net loss per share calculation were RSUs awarded to directors that had vested, but the issuance and delivery of the shares are deferred until the director retires from service as a director.

The following table shows the computation of basic and diluted net loss per common share:

Three Months Ended

Six Months Ended

$ ( 2,585 ) $ ( 3,041 ) $ ( 4,157 ) $ ( 3,852 )

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$ ( 0.10 ) $ ( 0.12 ) $ ( 0.15 ) $ ( 0.15 )

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

Note 9 — Income Taxes

The following table summarizes the Company's income tax expense and effective tax rates for the three months ended March 31, 2025 and 2024:

The following table summarizes the Company's income tax expense and effective tax rates for the three and six months ended June 30, 2025 and 2024 :

Three Months Ended

Six Months Ended

Loss before income taxes

$ ( 1,498 ) $ ( 811 )

Income tax expense

Effective tax rate

(4.9 %) 0.0 %

The Company's quarterly income tax provision is calculated under the discrete method, which treats the interim period as if it were the annual period and determines the income tax expense or benefit on that basis.

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The Company believes, at this time, the use of the discrete method is more appropriate as the annual effective tax rate cannot be reliably estimated given the Company's full valuation allowance recorded on its deferred tax assets and annual utilization limitations that prevent the Company from fully offsetting its expected current income tax liabilities with its available net operating loss and income tax credits.

The effective tax rate for the three months ended March 31, 2025 varies from the three months ended March 31, 2024, primarily as a result of the Company's valuation allowance recorded against its net deferred tax assets and annual tax attribute limitations that result in current income tax expense.

Income taxes paid during the three months ended March 31, 2025 and 2024 were $ 8 and $ 0 , respectively.

Subsequent to the end of the fiscal second quarter, on July 4, 2025, the United States enacted into law new tax legislation, the One Big Beautiful Bill Act, (OBBBA).

The OBBBA includes provisions modifying the corporate income tax code, including the immediate expensing of domestic research and development expenditures for tax purposes and changes to the Medicaid program.

For Medicaid, the law requires states to establish work requirements and more frequent redeterminations, and cost sharing for the Expansion program over the period from 2027 to 2029, among other modifications.

These changes are expected to reduce enrollment in state Medicaid programs, but the timing and magnitude of the reductions may vary by state depending on how quickly states implement the changes, as well as macroeconomic factors since some changes are subject to suspension in case of increases in local unemployment rates.

The law also reduces revenues that states can raise through provider taxes to finance their share of Medicaid spending and limits payments to Medicaid providers to 100 percent of the mandated Medicare rate for Expansion states and 110 percent of the Medicare rate for non-Expansion states.

These particular changes are scheduled to begin in 2028, and we expect may take 5 to 15 years to be fully implemented.

Their impact is uncertain at this time and will depend on how states may adapt their future tax and Medicaid funding policies in response.

The Company is currently evaluating the impacts of the bill, but does not anticipate the impact in 2025 to be material.

Note 10 — Related-Party Transactions

Chief Executive Officer

The CEO has a partial interest in a company that the Company had partnered with for its EM- 100/Alaway® Preservative Free eye allergy product as described below.

The Company acquired the exclusive rights to sell the EM- 100 product in the United States pursuant to a Sales and Marketing Agreement (the “Eyemax Agreement”) dated August 11, 2017, between the Company and Eyemax LLC (“Eyemax”), an entity affiliated with the Company’s CEO.

Under the terms of the Eyemax Agreement, the Company would pay Eyemax $ 250 upon FDA approval, $ 500 upon the first commercial sale of the product, and a royalty of 10 % on the net sales of all products.

The Eyemax Agreement was for an initial term of ten years from the date of the Eyemax Agreement, subject to successive two -year renewals unless the Company elected to terminate the Eyemax Agreement.

On February 18, 2019, the Company entered into an Amended and Restated Agreement with Eyemax amending the Sales Agreement (the “Amended Agreement”).

Pursuant to the Amended Agreement, Eyemax sold the Company all of its right, title and interest in EM- 100, including any such product that incorporates or utilizes Eyemax’s intellectual property rights.

Pursuant to the Amended Agreement, the Company paid Eyemax two milestone payments:

(i) one milestone payment for $ 250 upon regulatory approval in the territory by the FDA of the first single agent product and (ii) one milestone payment for $ 500 following the first commercial sale of the first single agent product in the territory.

From the effective date of the Amended Agreement, the Company has realized a total of $ 1,840 of the non-royalty and royalty revenue through March 31, 2025 .

The EM- 100 asset and its associated product rights were sold to Bausch Health on February 18, 2019, and future potential royalties of twelve percent on Bausch Health sales of the product, named Alaway® Preservative Free by Bausch, which was approved by the FDA in September 2020, would be split between Eyemax and the Company.

There were no amounts due to Eyemax under the terms of the Amended Agreement as of March 31, 2025 , and Bausch Health discontinued sales of Alaway® Preservative Free effective March 24, 2023.

The CEO has a partial interest in a company that the Company has entered into an agreement with as described below.

The Chief Executive Officer (“CEO”) has a partial interest in a company that the Company has entered into an agreement with as described below.

Previously, the Company acquired DS- 200 and all related intellectual property pursuant to an asset purchase agreement (the “Selenix Agreement”) dated June 23, 2017 between the Company and Selenix LLC (“Selenix”), an entity affiliated with the CEO.

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Selenix is 50 % owned by Messa Holdings LLC (“Messa”), which is 100 % owned by the CEO.

As of March 31, 2025 , the Company’s Condensed Balance Sheet reflected a $ 675 payment due to Selenix in accrued liabilities.

Note 11 — Leases

The Company recognizes a right-of-use (“ROU”) asset and a lease liability on the balance sheet for substantially all leases, including operating leases, and separates lease components from non-lease components related to its office space lease.

In June 2024, the Company renewed its office lease for a two -year period through March 2027 and recorded $ 219 in ROU assets and $219 in operating lease liabilities in association with the lease extension.

The Company’s operating lease cost as presented as G&A in the Condensed Statements of Operations was $ 22 and $ 20 , respectively.

For the three months ended March 31, 2025 and 2024 , cash paid for amounts included in the measurement of operating lease liabilities was $ 23 and $ 10 , respectively.

The ROU asset non-cash lease expense for the three months ended March 31, 2025 and 2024 was $ 17 and $ 18 , respectively, and is reflected within non-cash lease expense on the Company’s Condensed Statements of Cash Flows.

As of March 31, 2025 , the remaining lease term was 2.0 years and the weighted average discount rate was 8.6 %.

In March 2025, the Company recognized licensing revenue of $ 1,500 and $ 675 in cost of sales from a development milestone .

In June 2025, t he Company paid $ 675 to Selenix.

Eton Pharmaceuticals, Inc.

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(in thousands, except share and per share amounts)

Note 11 — Leases (continued)

The table below presents the lease-related assets and liabilities recorded on the balance sheet as of March 31, 2025 and December 31, 2024 (in thousands).

Note 11 — Leases

In May 2025, the Company entered into an amendment to its office lease agreement to expand its office space, from 5,507 square feet, to 8,079 square feet and to renew its lease term.

The amendment to the lease agreement is effective September 1, 2025 and the renewal period for the office lease is for a sixty-five month period through January 2031 and which includes tenant improvement allowances.

The Company removed its existing ROU asset and liability and recorded $ 330 in ROU assets, $ 189 in tenant improvement allowances and $ 519 in operating lease liabilities in association with the lease extension.

The Company’s operating lease cost for the six months ended June 2025 and 2024 as presented as G&A in the Condensed Statements of Operations was $ 43 and $ 39 , respectively.

For the six months ended June 30, 2025 and 2024 , cash paid for amounts included in the measurement of operating lease liabilities was $ 45 and $ 13 , respectively.

The ROU asset non-cash lease expense for the six months ended June 30, 2025 and 2024 was $ 30 and $ 36 , respectively, and is reflected within non-cash lease expense on the Company’s Condensed Statements of Cash Flows.

The table below presents the lease-related assets and liabilities recorded on the balance sheet as of June 30, 2025 and December 31, 2024 (in thousands).

Classification

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Total operating lease liabilities

The Company’s future lease commitments as of March 31, 2025 , are as indicated below:

The Company’s future lease commitments as of June 30, 2025 , are as indicated below:

2025 (Remainder)

2030 and thereafter

Undiscounted lease payments

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17.0 % on net sales.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

In March 2024, the Company acquired the U.S.

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In August 2024 , the Company entered into an agreement to sell its DS- 200 product candidate.

The Company received $ 500 upfront, and in March 2025 the Company recognized licensing revenue of $ 1,500 from a development milestone and the $ 1,500 is reflected in the Company's accounts receivable balance as of March 31, 2025.

The Company could receive additional payments of up to $ 5,000 based on the achievement of certain future development and commercial milestones related to DS- 200 .

The Company will retain 45 % of the proceeds from the transaction with the balance being distributed to other partners.

The Company received $ 500 upfront and in March 2025, the Company recognized licensing revenue of $ 1,500 from a development milestone.

In addition, the Company could receive additional milestone payments of up to $ 5,000 based on the achievement of certain future development and commercial milestones related to DS- 200, of which the Company could recognize 45 % of the proceeds from future milestone from the transaction, with the balance being distributed to other partners.

In November 2024, the Company entered into a licensing agreement with AMMTeK.

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Amglidia was approved by the European Medicines Agency in 2018 and has been granted Orphan Drug Designation by the U.S.

has conducted a post-approval study tracking five years of real-world safety and efficacy in European patients, which will be used to support the Company's s New Drug Application (“NDA”) submission.

The Company intends to hold a meeting with the FDA in 2025.

Under the terms of the licensing agreement, the Company will not make any upfront payments and retains the right to terminate the licensing agreement based on FDA meeting results prior to any payments being owed.

The Company could pay up to $ 2,350 as follows:

$ 500 following the receipt of FDA minutes;

$ 550 upon NDA acceptance for review by FDA;

and $ 1,300 upon NDA approval by the FDA and first commercial sale.

has conducted a post-approval study tracking five years of real-world safety and efficacy in European patients, which will be used to support the Company's s NDA submission.

In July 2025, the Company paid $ 500 to AMMTek upon the receipt of FDA meeting minutes and under the terms of the licensing agreement, the Company could pay up to $1,850 as follows:

$ 550 upon NDA acceptance for review by the FDA and $ 1,300 upon NDA approval by the FDA and first commercial sale.

The Company would also be required to pay a royalty of 14 % of net sales to AMMTek.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

Note 12 — Commitments and Contingencies (continued)

In December 2024, the Company acquired GALZIN® (zinc acetate) from Teva Pharmaceuticals USA, Inc and assumed the commercialization of the product in the U.S.

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The Company paid $ 22,500 and paid an additional $ 7,500 for product inventory.

The Company will also make payments to seller of $ 2,500 on each of the first and second anniversaries of closing.

The Company determined that the asset purchase agreement met the definition of a business under ASC 805;

therefore, the Company accounted for the asset purchase agreement as a business combination and applied the acquisition method of accounting.

In addition, the Company will also make payments to seller of $ 2,500 on each of the first and second anniversaries of closing.

As of June 30, 2025, the present value of the deferred consideration was $ 4,522 , with $ 478 to be accreted to interest expense over the remainder of the deferred consideration term using the effective interest rate method.

As of June 30, 2025, $ 2,500 was classified as accrued liabilities and $ 2,022 was classified as other long-term liabilities in the accompanying Condensed Balance Sheet.

In June 2025, in connection with the asset purchase agreement with Ipsen S.A, the Company purchased $ 11,540 in inventory.

Under the terms of the inventory purchase agreement, the Company will be required to make eight equal quarterly installment payments to Ipsen S.A, beginning in the third quarter of 2025.

Accordingly, the Company has classified $ 6,949 in accounts payable and $ 6,949 as a long-term inventory payable in in the accompanying Condensed Balance Sheet.

In March 2025, the Company out-licensed the commercial rights to INCRELEX® in territories outside of the U.S.

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In addition, the Company also entered into a supply agreement and will supply product to Esteve at a fixed transfer price.

In accordance with the accounting pronouncement guidance in ASC 606 with respect to the license and supply agreements between the Company and Esteve, the Company recognized as of and for the three months ended March 31, 2025, $ 4,327 in accounts receivable, licensing revenues of $ 1,786 and deferred revenues of $ 2,541 .

With respect to the $ 2,541 in deferred revenues, $ 330 and $ 2,211 are reflected in accrued liabilities and other long-term liabilities, respectively in the Company Condensed Balance Sheet as of March 31, 2025.

In accordance with the accounting pronouncement guidance in ASC 606 with respect to the license and supply agreements between the Company and Esteve, the Company recognized in March 2025, $ 4,327 in accounts receivable, licensing revenues of $ 1,786 and deferred revenues of $ 2,541 .

With respect to the $ 2,541 in deferred revenues, $ 330 and $ 2,211 are reflected in accrued liabilities and other long-term liabilities, respectively in the Company's Condensed Balance Sheet as of June 30, 2025.

Deferred revenues will be amortized to licensing revenues over the course of the agreements based on quarterly INCRELEX® product sales, and at the end of the license agreement, a deferred revenue residual will be recognized at the end of the initial term of the license agreement.

During the six months ended June 30, 2025, the Company recognized $ 2,330 in inventory step-up expense associated with the inventory purchase from Ipsen S.A.

Indemnification

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The Company believes the fair value of the indemnification rights and agreements is minimal.

Accordingly, the Company has not recorded any liabilities for these indemnification rights and agreements as of March 31, 2025 or December 31, 2024 .

Note 13 — Subsequent Events

On April 28, 2025, the Company submitted an NDA to the FDA for ET- 600, the Company's proprietary, patented oral solution of desmopressin under development for the treatment of central diabetes insipidus.

The Company expects the application to be assigned a 10 -month FDA review, allowing for potential approval and launch in the first quarter of 2026.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

Accordingly, the Company has not recorded any liabilities for these indemnification rights and agreements as of June 30, 2025 or December 31, 2024 .

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

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Eton is an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases.

We currently have seven commercial rare disease products:

INCRELEX®, ALKINDI SPRINKLE®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone.

We have six additional product candidates in late-stage development:

ET-400, ET-600, Amglidia®, ET-700, ET-800 and ZENEO® hydrocortisone autoinjector.

We currently have eight commercial rare disease products:

INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM , GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone.

We have five additional product candidates in late-stage development:

ET-600, Amglidia®, ET-700, ET-800 and ZENEO® hydrocortisone autoinjector.

Results of Operations (dollars in thousands)

During the three months ended March 31, 2025, we had $17,282 in total revenues that generated a gross profit of $9,861 compared to total revenues of $7,966 during the three-month period ended March 31, 2024 that generated a gross profit of $5,007 for the period.

During the three months ended March 31, 2025, we had product sales and royalties, net of $13,996, compared to product sales and royalties, net of $7,966 during the three months ended March 31, 2024, an increase of $6,030.

The increase in product sales and royalties, net was the result of increased sales of our INCRELEX®, ALKINDI SPRINKLE® and Carglumic Acid products in the current period, along with sales volume from Nitisinone and PKU GOLIKE® products launched in 2024.

Licensing revenue during the three months ended March 31, 2025 was $3,286, compared to zero licensing revenue during the three months ended March 31, 2024.

The increase in licensing revenue during the three months ended March 31, 2025 was due to $1,786 from our out-licensing of INCRELEX® rights outside of the U.S.

During the three months ended June 30, 2025, we had $18,928 in total revenues that generated a gross profit of $11,924 compared to total revenues of $9,074 during the three-month period ended June 30, 2024 that generated a gross profit of $5,626 for the period.

The increase in product sales and royalties, net was the result of increased sales of ALKINDI SPRINKLE® and the addition of revenues from INCRELEX® and GALZIN® products in the current period.

During the six months ended June 30, 2025, we had $36,210 in total revenues that generated a gross profit of $21,785 compared to total revenues of $17,040 during the six-month period ended June 30, 2024 that generated a gross profit of $10,633 for the period.

During the six months ended June 30, 2025, we had product sales and royalties, net of $32,924, compared to product sales and royalties, net of $17,040 during the six months ended June 30, 2024, an increase of $15,884.

The increase in product sales and royalties, net was the result of increased sales of our INCRELEX®, ALKINDI SPRINKLE® and GALZIN® products in the current period.

Licensing revenue during the six months ended June 30, 2025 was $3,286, compared to $0 licensing revenue during the six months ended June 30, 2024.

The increase in licensing revenue during the six months ended June 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.

Research and Development Expenses

During the three months ended March 31, 2025, we incurred $1,161 of research and development (“R&D”) expenses as compared to $651 for the same period in 2024.

The increase was primarily due to increased expenses associated with our ET-700 and ET-800 project development activities.

During the three months ended June 30, 2025, we incurred $3,712 of research and development (“R&D”) expenses as compared to $2,970 for the same period in 2024.

During the six months ended June 30, 2025, we incurred $4,873 of R&D expenses as compared to $3,621 for the same period in 2024.

The increase was primarily due to a $2,155 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, legal and professional fees, product marketing expenses, distribution expenses, business insurance, travel expenses, and general office expenses.

During the three-month periods ended March 31, 2025 and 2024, we incurred $9,170 and $5,156, respectively, of G&A expenses.

The increase in G&A expenses during the three months ended March 31, 2025 was primarily attributable to an increase in product advertising and promotional expenses, an increase in product development expenses and an increase in compensation and benefit expenses due to an increase in general and administrative headcount.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

During the three-month periods ended June 30, 2025 and 2024, we incurred $9,687 and $5,591, respectively, of G&A expenses.

During the six-month periods ended June 30, 2025 and 2024, we incurred $18,857 and $10,747, respectively, of G&A expenses.

The increase in G&A expenses during the six months ended June 30, 2025 was primarily attributable to an increase in product advertising and promotional expenses, an increase in stock-based compensation expense and an increase in compensation and benefit expenses due to an increase in general and administrative headcount.

Liquidity and Capital Resources

As of March 31, 2025, we had total assets of $84.0 million, cash and cash equivalents of $17.4 million and working capital of $24.6 million.

As of June 30, 2025, we had total assets of $101.7 million, cash and cash equivalents of $25.4 million and working capital of $29.8 million.

We believe that our cash and cash equivalents on hand, along with continued product revenues, 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 be inaccurate, 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 expect to support our operations.

The following table sets forth a summary of our cash flows for the three-month periods ended March 31, 2025 and 2024 (dollars in thousands):

Three months ended

March 31, 2025

March 31, 2024

Net cash from operating activities

Cash from investing activities

Cash from financing activities

The following table sets forth a summary of our cash flows for the six-month periods ended June 30, 2025 and 2024 (dollars in thousands):

Six months ended

June 30, 2025

June 30, 2024

Net cash from (used in) operating activities

Cash from (used in) investing activities

Cash from (used in) financing activities

Change in cash and cash equivalents

The increase in cash from operating activities during the three months ended March 31, 2025 was primarily due to higher cash collections from product sales and a filing fee refund from the FDA related to ET-400.

During the three months ended March 31, 2024, net cash from investing activities was $1,882, which reflected $1,868 payment associated with the acquisition of the PKU GOLIKE® product license in March 2024.

During the three months ended March 31, 2025, net cash provided by financing activities was $394 and was associated with proceeds from stock option exercises, compared to net cash used by financing activities of $378, which reflected $385 repayment of debt and proceeds of $7 from stock option exercises during the three months ended March 31, 2024.

The increase in cash from operating activities during the six months ended June 30, 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.

During the six months ended June 30, 2024, net cash from investing activities was $1,882, which reflected $1,868 payment associated with the acquisition of the PKU GOLIKE® product license in March 2024.

During the six months ended June 30, 2025, net cash provided by financing activities was $394 and was associated with proceeds from stock option exercises, compared to net cash used by financing activities during the six months ended June 30, 2024 of $594, which reflected $770 repayment of debt and proceeds of $176 from stock option exercises during the six months ended June 30, 2024.

Non-GAAP Financial Measures

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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.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

Reconciliations of reported GAAP net loss to 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):

For the three months ended

For the six months ended

GAAP net loss

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Severance expense (5)

Divestiture-related costs (6)

Acquisition/divestiture-related costs (6)

Total of Other non-GAAP adjustments

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Inventory step-up expense (3)

Share-based compensation (4)

Stock-based compensation (4)

Severance expense (5)

Divestiture-related costs (6)

Acquisition/divestiture-related costs (6)

Total pre-tax non-GAAP adjustments

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Total non-GAAP adjustments

Non-GAAP Net Income

Non-GAAP Net Income (Loss)

Weighted average number of common shares outstanding, basic

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Intangible amortization expenses are associated with our intellectual property rights related to INCRELEX®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone.

During the three months ended March 31, 2025, we recognized in cost of sales $1,142 for inventory step-up expense primarily attributable to INCRELEX® inventory revalued in connection with this product acquisition.

During the three and six months ended June 30, 2025, we recognized in cost of sales $1,207 and $2,349, respectively, for inventory step-up expense primarily attributable to INCRELEX® inventory revalued in connection with this product acquisition.

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.

Represents severance and benefit expenses associated with role redundancy within commercial operations during the three months ended March 31, 2025.

Represents severance and benefit expenses associated with role redundancy within commercial operations during the first quarter of 2025.

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.

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As discussed further in Note 9, 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.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

Critical Accounting Policies

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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 months ended March 31, 2025 and 2024, all revenues recognized in the Condensed Statements of Operations were point in time sales to our customers.

For the six months ended June 30, 2025 and 2024, all revenues recognized in the Condensed Statements of Operations were point in time sales to our customers.

Milestone Payments – If a commercial contract arrangement includes development milestone payments, we will evaluate whether the milestone conditions have been achieved and if it is probable that a significant revenue reversal would not occur before recognizing the associated revenue.

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Significant Financing Component – In determining the transaction price, we will adjust consideration for the effects of the time value of money if the expected period between payment by the licensees and the transfer of the promised goods or services to the licensees will be more than one year.

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.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

The Company has developed estimates for future returns and chargebacks and the impact of other discounts and fees it pays, although INCRELEX®, ALKINDI SPRINKLE®, GALZIN®, Carglumic Acid, Betaine Anhydrous, and Nitisinone sales are not subject to returns.

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 monitors actual product returns, chargebacks, discounts and fees subsequent to the sale.

For its INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI

TM , 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.

INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI

TM , GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone sales

are not subject to returns.

The Company stores its INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI

TM , 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 accounts for business acquisitions using the acquisition method of accounting.

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The expected term of stock options granted is based on vesting periods and the contractual life of the options.

Expected volatilities are based on the Company's historical volatility subsequent to our IPO, which we believe represents the most accurate basis for estimating expected future volatility under the current conditions.

Expected volatilities are based on the Company's 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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements