Eton Pharmaceuticals, Inc. (ETON) Earnings

Management highlights

### Overall Financial Performance • Achieved record Q2 2026 revenue and expanded adjusted EBITDA margins, demonstrating the operating leverage and scalability of the company's rare disease business model • Completed all strategic transactions announced in 2026 without external financing, while expanding profitability, reflecting disciplined capital allocation ### Commercial Operations • Successfully relaunched Hemangiol on May 1, 2026, with 95% of existing patients transitioned to the new single-channel Eaton Cares distribution model by the end of June, well ahead of the original 3-4 month timeline • Transition reduced patient out-of-pocket costs from up to $100 per month to a $0 copay, eliminating a key barrier to adoption and reducing reliance on off-label adult formulations for infantile hemangioma • Launched Dysmoda (oral liquid desmopressin) at the end of Q1 2026; early clinician response is strong, with the product's flexible precise dosing resonating and helping expand commercial reach to adult endocrinologists beyond the company's traditional pediatric focus • Galzin (Wilson disease) continues to grow as the company converts patients from off-label over-the-counter zinc products, with strategic partnerships and provider engagement supporting ongoing expansion ### Research & Pipeline Progress • Submitted a PAS (prior approval supplement) for Candivi label expansion to include patients under 5 years of age, with approval expected in H1 2027 • Received FDA fast-track designation for onGlydia (neonatal diabetes treatment); a bioavailability study will initiate in Q3 2026, with an NDA submission planned by the end of 2026 and potential approval in 2027 • The ET-700 (extended-release zinc acetate for Wilson disease) pilot study is ongoing, with initial results expected within 1-2 months and full results by the end of 2026; a successful study will support a pivotal trial initiation in early 2027 • The Incrylex label harmonization study protocol has been approved by the FDA, with study startup underway targeting first patient dosing by the end of 2026 • Licensed ASN-001, a topical FDA-ready therapy for moderate infantile hemangioma, which will complement Hemangiol and address a 10,000 annual patient unmet need; the required bioavailability bridging study (already protocol reviewed by the FDA) will initiate in the coming weeks, with an NDA submission expected in H2 2027 and potential launch in 2028 ### Strategic Direction • The company's core repeatable strategy is to enter new specialty therapeutic areas, rapidly build leadership positions by leveraging existing commercial infrastructure, and expand portfolios via strategic accretive acquisitions • The goal is to bring as many rare disease therapies to U.S. patients as possible, while creating long-term shareholder value; the company will continue pursuing value-creating business development opportunities enabled by growing profitability and a strong balance sheet

Guidance

• Full-year 2026 revenue guidance is raised to exceed $145 million, up from the prior guidance of more than $120 million • Full-year 2026 adjusted EBITDA margin guidance is raised to exceed 35%, up from the prior guidance of greater than 30%, even after accounting for ASN-001 related R&D expenses • Full-year 2026 adjusted gross margin is expected to exceed 70%, including a potential commercial milestone to be recorded in Q4 2026 • Full-year 2026 R&D spending is expected to be between $10 million and $14 million, including the $3 million upfront ASN-001 licensing payment to be expensed in Q3 2026 • The company remains on track to exceed its long-term targets: a $200 million annualized revenue run rate by the end of 2027, a 50% adjusted EBITDA margin in 2028, and $500 million in annual revenue by 2030, all of which are now expected to be achieved or exceeded following recent transactions

Segment performance

Total Q2 2026 revenue was $37.6 million, a 99% year-over-year (YoY) increase from $18.9 million in Q2 2025. The newly relaunched Hemangiol (pediatric dermatology segment) was the largest contributor to revenue growth and is now the company's largest product by revenue. The pediatric endocrinology segment (including Alkindi Sprinkle, Candivi, Dysmoda, and Incrylex) delivered consistent steady growth, with Incrylex posting strong YoY revenue gains and the segment exceeding 600 active patients. The Wilson disease franchise (Galzin) delivered strong quarterly revenue growth, with less than half of the target patient population converted to date. Impovito (Leishmaniasis treatment, recently acquired U.S. rights) will begin U.S. distribution in late September 2026, with no revenue contribution in Q2 2026. Gross profit was $25.4 million, up 113% YoY; adjusted gross margin was 73% vs. 75% YoY, with the decline driven by higher lower-margin international sales. Adjusted EBITDA increased to $16.2 million (43% of revenue) from $3.1 million (16% of revenue) YoY. GAAP net income was $11.6 million, compared to a net loss of $2.6 million in Q2 2025.

Risks & headwinds

• Forward-looking statements are inherently uncertain, and actual results may differ materially from current projections due to market and clinical development risks • The company remained in a cumulative loss position at the end of Q2 2026, requiring a full valuation allowance against deferred tax assets; if the cumulative loss position is eliminated in H2 2026, a portion or all of the $22 million valuation allowance could be released as a one-time non-cash benefit, but this outcome is not guaranteed • Clinical development of new products carries inherent regulatory and trial execution risk, even for late-stage candidates like ASN-001 where only one small registrational study remains • Off-label use of existing products continues to limit market adoption of the company's branded approved therapies, and efforts to convert patients may not meet growth expectations

Analyst Q&A

• Q: What is Hemangiol's current net realized price, and how much patient volume has been retained from the pre-acquisition base? /

  A: Management confirms Hemangiol's average net price remains in the previously guided $8,000 to $10,000 range per full course of treatment, with minor monthly variation tied to patient mix during the transition period. 95% of pre-acquisition patients were transitioned by end of June, and all remaining patients have now been converted, matching the historical 8,000 annual patient base; the new priority is growing volume by converting patients currently using off-label adult formulations.

• Q: What is the FDA's requirement for ASN-001, and will existing clinical data be accepted? /

  A: Management states the only remaining required study before NDA submission is the small 24-patient bioavailability bridging study, whose protocol has already been reviewed and approved by the FDA. All other clinical data from the completed Phase III trial (and existing clinical data from global development) will be included in the regulatory submission, and the study is viewed as low risk and straightforward, with NDA submission on track for H2 2027.

• Q: What synergies exist between ASN-001 and the existing Hemangiol franchise? /

  A: ASN-001 treats a different segment of the infantile hemangioma market (moderate cases, addressing an unmet need for an FDA-approved topical therapy) and will not compete with Hemangiol. It will be prescribed by the same group of pediatric dermatologists and vascular anomaly specialists already targeted by the Hemangiol commercial team, allowing full leverage of the existing commercial infrastructure, provider relationships, and Eaton Cares patient support platform with no need for significant incremental overhead.