ETON - NASDAQ

Good afternoon, and welcome to the Eton Pharmaceuticals, Inc. fourth quarter 2025 financial results conference call. At this time, participants are in a listen-only mode. Following the formal remarks, we will open the call for your questions. Please be advised that this call is being recorded at the company’s request. I will now turn the call over to David Krempa, Chief Business Officer at Eton Pharmaceuticals, Inc. Please proceed.

Thank you, Operator. Good afternoon, everyone, and welcome to Eton Pharmaceuticals, Inc.’s fourth quarter 2025 conference call. This afternoon, we issued a press release that outlines the topics we plan to discuss on today’s call. The release is available on our website, etonpharma.com. Joining me on our call today, we have Sean Brynjelsen, our CEO, James Gruber, our CFO, and Ipek Erwan, our Chief Commercial Officer. In addition to taking live questions on today’s call, we will also be answering questions that are emailed to us. Investors can send their questions to [email protected]. Before we begin, I would like to remind everyone that remarks made during this call may contain forward-looking statements and involve risks and uncertainties that could cause actual results to differ materially from those contained in these forward-looking statements. Please see the forward-looking statements disclaimer in our earnings release and the risk factors in the company’s filings with the SEC. I will now turn the call over to our CEO, Sean Brynjelsen.

Thank you, David. Good afternoon, everyone, and thank you for joining us today. As you have seen, it has been a very active time at Eton. A number of major developments in recent weeks. We have some exciting topics to discuss today. During the call, we will review fourth quarter results, provide additional color on the Hemangiol acquisition, and an update on our recent FDA approval and commercial launch of Desmota. We will also cover growth trends in our on-market products and provide an update on clinical development programs. And finally, we will provide 2026 financial guidance and unveil our new long-term goals for the company. Let me start with our financial results. It was another strong quarter for Eton, capping off an outstanding year. 2025 was truly another transformational year for our company as we successfully launched three new products, Incrolex, Galzyn, and Kinduvi. These were not minor products. They represent important cornerstones of our long-term growth plan. These new products helped us more than double our revenue in 2025 compared to 2024 and set us up for major growth in 2026 and beyond. Our fourth quarter product revenue was $21.3 million, an increase of 83% year over year, driven by continuing strong performance from Alkindi Sprinkle and the addition of revenue from Incralex, Galzyn, Kandivy, and Kandivy. Galzen and Incrolex have continued to be great success stories for Eton. Both products were relaunched by Eton in early 2025 and contributed revenue well beyond our initial expectations for the year. A key goal for us is continuing to drive strong revenue growth while maintaining our focus on profitability through disciplined cost management and expanding margins, and I am pleased to report that we made meaningful progress on that in the fourth quarter, as our adjusted EBITDA margin was 29%, a significant improvement from 18% in the prior-year period. We also reported GAAP net income of $1.5 million and non-GAAP net income of $5.4 million. Looking ahead, we expect our profit margin profile to continue improving as revenue scales across our portfolio, and we will further discuss our profitability outlook later in the call when we communicate new long-term goals. Now let me turn to one of our most important recent developments, the approval and launch of our oral liquid formulation of desmopressin, Desmota, which received FDA approval in February for the treatment of central diabetes insipidus. Diabetes insipidus is a serious condition caused by inadequate production of the hormone vasopressin, and treatment with desmopressin is the standard of care. Dosing is patient-specific and must be individualized and fine-tuned over time, but there were historically no products available that could provide accurate low doses of desmopressin. As a result, clinicians and caregivers were forced to use workarounds, including splitting or crushing tablets. As the only FDA-approved liquid oral formulation, Desmota offers patients a treatment option that provides precision, consistency, and convenience, fulfilling a large unmet need frequently expressed to us by pediatric endocrinologists. Leveraging our established team of pediatric endocrinology rare disease specialists, we launched Desmota within two weeks of FDA approval. While we are still in the early phases of launch, I could not be happier with how this Desmota launch is going. I believe this was the most well-prepared we have ever been for a commercial launch. Our entire team was ready to execute on day one, and the initial demand and interest in the product has been incredibly encouraging. Our team has been hard at work promoting the product for two weeks, and we have already seen significant traction. Many institutions that were historically unreceptive to sales rep visits have reached out to us asking for meetings because they are interested in learning about the product. We have already seen a number of patients begin therapy in the first week and a half of launch. Another important aspect of the approval is that Desmota received a clean label with no age restriction. In fact, the FDA’s indication even includes adults. This means that our addressable market will not be solely the 3,000 to 4,000 children in the U.S. We will also be able to meet the therapeutic needs of the 9,000 to 10,000 adults living with central diabetes insipidus. Our historic market assessment and $30 million to $50 million peak sales forecast were based solely on the pediatric market. However, we believe there could be a meaningful incremental opportunity within the adult population for patients who have difficulty swallowing tablets, require precise and titratable dosing, or simply prefer a liquid option. While the percentage of adults needing a liquid or precise dose will likely be smaller, the population is roughly three times as large, so it could be a quite meaningful number of patients. This month, we are launching a pilot initiative where our existing sales team will target high desmopressin-prescribing adult endocrinologists. We will assess the opportunity over the next 90 days, and if we see traction with the adult patient community, we will expand our commercial efforts to fully capture this additional opportunity. Regarding pricing, the dosing varies by patient, but we believe we will net an average of approximately $80,000 per patient per year. As I said, it is still too early in the launch to say definitively, but all initial signs are pointing to a successful launch for Desmota. For now, we are confirming our guidance of $30 million to $50 million in potential peak sales. We should know more in the coming quarters and we will update our outlook accordingly. Desmota also benefits from strong intellectual property protection via multiple patents extending to 2044, which we believe positions the product as a critical long-term value driver for Eton. Turning now to our other pediatric endocrinology assets. When we acquired Incrolex in December 2024, the product only had 67 patients on therapy. We saw a tremendous opportunity to increase awareness and education of severe primary insulin-like growth one deficiency, otherwise known as SPIGFD. In conjunction with our relaunch of Incralex in January 2025, we kicked off an extensive disease and therapy education campaign complementing physician engagement efforts of our seasoned pediatric endocrinology sales team. This included targeted outreach to health care providers, strong conference engagement in the endocrinology space, peer-to-peer presentations, and strategic collaboration with patients and patient advocacy groups. Incrolex is approved for pediatric patients aged two and up and is highly effective at increasing height during critical development years. Because earlier diagnosis leads to better outcomes, increasing awareness and improving time to diagnosis are central to our strategy, ensuring that every patient achieves their full therapeutic potential. We are already seeing encouraging progress. Since acquiring the product, we have meaningfully reduced the average age at which patients begin therapy and continue to see steady growth in the treated population. Based on ongoing discussions with physicians in the community, we remain confident that a significant opportunity for growth remains within the existing indication. We now have over 100 patients on treatment, and our goal is to reach 120 patients by year end. So far this year, we have seen the number of patient age-outs and closures decline significantly from the level we saw earlier in 2025 prior to our last earnings call. Long-term, we see a big opportunity in harmonizing the patient definition between the U.S. and the EU. In the U.S., a patient meets the label criteria if their IGF-1 levels are more than three standard deviations below the median. In Europe, where Incrolex is also available, the definition is two standard deviations below the median. And based on the European patient registry data collected over the past 15 years, we believe that Incrolex is a safe and effective treatment for patients with IGF-1 levels between minus two and minus three standard deviations. We held a meeting with the FDA in December to discuss label harmonization, which we believe was positive. As a result, we submitted the final proposed study protocol to the FDA in February, and we expect to receive their feedback—either clearance to proceed or comments—later this month. Once the FDA signs off, we will initiate the study with our CRO, and we expect to see the first patient dosed in the third quarter of this year. Our proposed study is an open-label study of approximately 30 patients tracked for five years or until they reach full adult height, with a primary endpoint of change in average annual height velocity at month twelve compared to pretreatment height velocity. Given that it is an open-label study, if the data is as compelling and clear as we expect it to be, we believe there may be an opportunity to approach the FDA with interim data after a couple of years. The study is expected to cost approximately $1 million per year. If we are successful with this label harmonization, we believe that the Incrolex market opportunity could increase fivefold in the United States. Also in our pediatric endocrinology portfolio, we continue to see strong growth from our adrenal insufficiency franchise Alkindi Sprinkle and Kindivy. 2025 was Alkindi’s fifth full calendar year on the market, and its strongest year yet in terms of number of patients on therapy and number of new patient referrals. This momentum reflects the continued impact of our focused efforts to expand awareness and adoption of pediatric-appropriate hydrocortisone dosing and to reduce friction for both physicians and caregivers, making it easier for providers to diagnose, prescribe, and initiate therapy for children with adrenal insufficiency. Kin Divvy was developed to address the needs of patients that had an aversion to the texture of the Alkindi granules or who preferred a liquid option, and it is the first and only FDA-approved oral solution of hydrocortisone. Similar to Desmota, the liquid dosage form allows for mixing and accurate dosing tailored to patient needs and does not require refrigeration, mixing, or shaking. Together, Alkindi and Candivi allow us to offer physicians multiple pediatric-appropriate hydrocortisone options, enabling them to choose the formulation that best fits the needs of each child and caregiver. For our combined franchise, our target market is the estimated 5,000 children under the age of eight in the U.S. with adrenal insufficiency. We believe we have captured around 12% of the market to date, and there is still a long runway ahead of us. Eton remains confident that the franchise can achieve peak annual sales of at least $50 million, which requires only around 20% market share, and we ultimately believe that Eton can capture even greater market share if we are successful in expanding the Candivis label. Candivis is currently approved for patients five and over, but we believe the largest unmet need is within children under five. The FDA restricted the age due to limited availability of safety data of the three active ingredients when these ingredients are used in combination. However, we have developed a new formulation which substantially lowers levels of these excipients, and Eton held a meeting with the FDA in the fourth quarter where the agency indicated they were receptive to a label expansion. The agency requested that we run a bioequivalency study and then submit our supplement to the existing NDA. Last week, we dosed the first patient in that bio study and now plan to submit the supplement as soon as the final study is available, which we currently expect to be in the third quarter. The FDA indicated the submission would receive a 10-month review, allowing for a potential launch by mid-2027. Next, I would like to discuss our recent acquisition, which we are very excited about. Earlier this month, we announced the acquisition of Hemangiol, the only FDA-approved treatment for infantile hemangiomas that require systemic therapy. Infantile hemangiomas are noncancerous vascular tumors that typically appear shortly after birth and, in severe cases, can lead to serious complications including loss of vision, trouble breathing, or permanent disfigurement. An estimated 5,000 to 10,000 infants are treated with Hemangiol annually in the United States. We have been clear with our acquisition strategy. Eton seeks opportunities where we can meaningfully add value to a product. We are unlikely to earn remarkable returns and create value for shareholders if we are purchasing assets only to maintain the status quo of their current level of revenue and earnings. We look for opportunities where a rare disease company-wide expertise in commercial infrastructure can unlock significant growth and profitability. Similar to how we successfully executed on Galzin and Incralex last year, we believe there is a significant opportunity for value creation with Hemangiol. Hemangiol had the product characteristics we looked for. It treats a rare condition with a small prescriber base. It is the only FDA-approved treatment in its class. It has a strong safety and efficacy profile, and there is a meaningful opportunity to improve operational efficiency and margin performance. Our team is hard at work preparing for our May 1 relaunch of the product. One of the key opportunities we see is optimizing the product’s distribution model with our dedicated rare disease infrastructure and proven go-to-market capabilities. Currently, the product goes through the traditional pharma distribution model, utilizing the large national wholesalers, open pharmacy distribution, and significant payer rebating. While this may make sense for higher-volume products, we believe transitioning to our rare disease-focused distribution model can significantly lower costs, improve the patient and provider experience, and significantly strengthen the long-term economics of the product by reducing gross-to-net deductions. In addition, we will implement our best-in-class Eton Cares patient support program, which we believe will improve the treatment journey for families and expand access to treatment. For instance, we will be offering our standard zero commercial copay for patients, where today most patients are paying $55 a month on their copay. Hemangiol will also establish a third strategic call point for us. The majority of prescribing occurs within pediatric dermatology, but care for these patients can also involve pediatric hematology-oncology who specialize in vascular anomalies. This is a highly concentrated specialty with roughly 400 pediatric dermatologists and a smaller number of specialized pediatric hematology-oncology physicians actively managing these patients. While we look for other bolt-on opportunities within pediatric dermatology, the Hemangiol opportunity is certainly large enough on its own to justify the dedicated commercial effort. In tandem with the transaction, we are hiring seven new commercial employees that were previously working for the seller and fully dedicated to Hemangiol. They will start with Eton on April 1, and we are excited to have them joining our organization. This existing team had done an excellent job growing Hemangiol in recent years, and we believe their current relationships, combined with Eton’s rare disease infrastructure, expertise, and capabilities, will position the product for accelerated momentum following the relaunch in May. We were pleased that because of our strong cash flow generation in 2025, we were able to pay for the $14 million Hemangiol acquisition entirely with cash on hand and avoid any dilution or incremental debt. This will make the transaction even more accretive to our earnings. With our ongoing plans to streamline distribution, shrink the gross-to-net gap, optimize revenue, and expand access, we believe Hemangiol can be one of Eton’s largest products in 2027. Now let me turn to Galazim, which was another very impressive contributor for the year. When we acquired the product, we expected to be able to grow the product over time, but the product has actually performed well ahead of our expectations. When Eton relaunched in March 2025, we made major investments into physician education, patient awareness, and access support, and those investments are clearly paying off. Through Eton Cares, we know that more people than ever are able to access their medication, and we have heard from many patients that were previously forced to take non-FDA-approved zinc supplements because they could not afford their copay obligations. They are very grateful to now be able to receive the FDA-approved treatment. In addition, we have found that many patients and providers were unaware of the availability of Gallicin or were unaware of the advantages of the prescription product. We have also seen renewed interest from patients and physicians. Now that we know that Eton Cares will provide patients with access to medication regardless of potential insurance pushback or lack of insurance, physicians can prescribe the product with confidence and not worry that the patient will call them back in a week to complain about high copays or looking for alternatives. The benefit to physicians is twofold. First, they have increased comfort knowing that the FDA-approved Galzan is manufactured to pharmaceutical standards for quality, potency, and consistency, whereas the over-the-counter products are not. Second, patients taking the prescription product require periodic refills and return visits, so they have much better compliance with follow-up visits and regular lab monitoring and make any needed dose adjustments. Many over-the-counter users end up failing to return for regular visits, contributing to worse patient outcomes. I am pleased to share that last week, we reached 300 active patients on Galcen, a big accomplishment just one year after our launch. We still believe there are at least 800 Wilson disease patients in the U.S. taking zinc therapy and potentially over a thousand, so most of the market still relies on the non-FDA-approved zinc products. We view this as a substantial opportunity for us to potentially more than double our thousand patients in the coming years. Through our deep collaboration in the Wilson disease community on Galzin, we have seen the strong desire for an extended-release version of Galazin and ET700 was developed to address this need. Currently, Galzin must be taken three times per day with patients fasting both before and after each dose. It is an onerous schedule that can often lead to noncompliance, especially with the middle-of-the-day dose. Eton has developed a proprietary, patent-pending extended-release formula. Our clinical batches have been manufactured, and we are ready to initiate a proof-of-concept positron emission tomography, or PET, study to verify that our proprietary delayed-release formulation can effectively block copper absorption. The study should begin in April, and we expect top-line results later this year. If we are successful, we expect to initiate a dose-ranging study and pivotal clinical trial in early 2027. If approved, we are confident that ET700 has the potential for more than $100 million of peak annual sales. We have also made strong progress advancing our internal pipeline, and in fact, 2026 is set to be by far our busiest year ever in terms of clinical studies. Eton has already touched on the anticipated studies for Candivy, Incralex label harmonization, and ET700, and we also plan to run PK studies on AMGLIDIA and ET800 later this year. Our goal is to submit the AMCLIDIA NDA by the end of this year and the ET800 NDA in 2027, so our pipeline for new product launches in the coming years remains very strong. Overall, 2025 was a standout year for Eton, and we have set the stage for an even stronger 2026, which is reflected in our 2026 financial guidance. We expect 2026 revenue to exceed $110 million and to deliver an adjusted EBITDA margin of at least 30%. As we wrap up 2025 and set our plans for 2026, it was a good moment to reflect on how far we have come and where we are headed. A few years ago, I outlined three long-term goals for the company. Goal number one, have 10 commercial products. Goal number two, reach a $100 million revenue run rate. Goal number three, reach a $1 billion market cap. At this time, we had just three products when the goal was announced. We had only $20 million of revenue and a $100 million market cap. While these goals may have seemed miles away from the outside, internally, we had strong conviction in the opportunity ahead of us, and I believed that these goals were much more attainable than the market perceived them to be. I am pleased to share that we have now achieved two of these long-term goals. With the acquisition of Hemangiol, we have reached 10 commercial products, and as you have heard, we are expecting more than $100 million of revenue this year. While there is still work to do on the market cap goal, we are confident that if we continue executing our strategy and delivering consistent, profitable growth that we expect to achieve, the long-term value creation will be reflected in our stock price. I believe it is important to keep pushing the organization forward towards ambitious but achievable long-term goals. As a result, we are setting some new long-term goals today. First, we want to build the largest rare disease portfolio in the United States. Among the dedicated rare disease companies, we are already near the top, and reaching 13 or 14 commercial products will position Eton as having the largest portfolio of any dedicated rare disease company in the United States. We believe that this is very achievable in the coming years through both our internal pipeline and business development activities. Second, we want to exit 2027 at a $200 million revenue run rate. This requires roughly doubling our revenue within the next 24 months, and we see a very realistic path to doing this: continued growth of Alkindi, Incrolex, Galzin, a successful integration and relaunch of Hemangiol, strong launch of Desmota, and the expected launch of Candivy’s expanded label in 2027. Plus, we remain confident that we can close at least one more product acquisition that will provide incremental revenue before 2027. Third, we want to reach a 50% adjusted EBITDA margin in 2028. Profit has always been a central focus of our company. Unlike many of our peers in the industry, we are not pursuing revenue growth at the expense of profitability. We have made continued progress in our profit margins and expect to continue to see improvement as we grow. Our adjusted EBITDA margins first turned positive from product sales in 2024 when we reported an 8% margin; that grew to 20% in 2025, and we expect to be over 30% this year. With continued revenue growth, we expect to see the benefits of operating leverage that can drive us to 50% EBITDA margins in the coming years. With our existing base of commercial and operational infrastructure, as well as our products continuing to grow, an outsized portion of that growth should fall to the bottom line. Our fourth and final goal is to reach $500 million of revenue by 2030. Again, we believe that this is an achievable goal through our three-pillar growth strategy. First, our existing portfolio has strong organic growth prospects. This includes Incrolex, Alkindi, Tendivi, Galvan, Desmoda. All of these products have achieved just a fraction of the market share that we think they can reach in the years ahead. Second, our existing pipeline has several large programs that could add significant revenue by 2030. This includes ET700, which we believe has peak revenue potential well in excess of $100 million annually on its own, plus our Incralex label expansion opportunity, Amglidia, ET800, and other programs in development that we have not yet announced. And finally, we will layer on more business development deals. We believe we have proven our ability to close, integrate, and create significant value through acquisitions, and we expect to sign more deals like Incrolix, Gelatin, and Hemangiol, which will further boost our revenue in the years to come. It is clear that we have come a long way over the last few years, but I truly believe that we are just getting started. We have found a proven winning strategy, assembled the right team, accumulated a diversified portfolio of growing products, and built an attractive pipeline to fuel long-term growth. We are in the best position we have ever been. Thank you for your continued support, and we look forward to keeping you updated on our critical developments in the months and the years ahead. With that, I will hand it over to James, our Chief Financial Officer, to discuss the financials.

Thank you, Sean. Our fourth quarter revenue increased 83% to $21.3 million, compared to $11.6 million in 2024, and revenue was comprised entirely of product sales in both periods. Revenue growth in the quarter was driven primarily by increased sales of Alkindi Sprinkle, plus the addition of sales from Incralex, Galzan, and Candivy. As we discussed previously, our third quarter revenue included a meaningful contribution from Incralex outside the U.S., tied to the transition of that business to a new licensing partner. Looking strictly at U.S. product sales, our revenue grew sequentially by 8% in the fourth quarter relative to the third quarter. We expect our reported total revenue to resume sequential quarterly growth in 2026 and continue to ramp throughout the year. Cost of sales for the fourth quarter was $8.2 million, compared to $5.2 million in 2024. Adjusted gross profit, which adjusts for the impact of acquired inventory step-up adjustments and intangible amortization, was $15.5 million in 2025, or 73%, compared to adjusted gross profit of $6.8 million and 59% in the prior-year period. The margin improvement was driven by favorable product mix, as well as manufacturing cost efficiencies as the products grow. Hemangiol and Desmota are both expected to have margin profiles well above our company average, so they should be positive contributors to future gross margins. We may still see a slightly lower adjusted gross margin in early 2026 due to margin-dilutive orders of Incralex outside the U.S. as our licensing partner ramps up their distribution efforts in more countries. But on a full-year basis, we expect adjusted gross margin to be comfortably above 70%, and this margin is expected to continue to ramp and reach between 75% and 80% in the coming years. R&D expenses for the quarter were $1.8 million, an increase of $2.7 million compared to negative $0.9 million in the prior-year period, due primarily to increased expenses associated with our development activities. In addition, during 2024, Eton’s ET400 product was granted orphan drug designation by the FDA, which resulted in Eton receiving a $2.0 million refund of the NDA filing fee that was paid and expensed a prior quarter. R&D expense for 2026 depends on the timing and final protocol of the numerous studies that we have planned for this year, and we believe it will likely increase from the $7.8 million in 2025 but will remain below $10.0 million for 2026. General and administrative expenses for the quarter were $8.9 million, compared with $6.7 million in the prior-year period, primarily due to increased promotional and launch-related investments associated with the expansion of our product portfolio, an increase in compensation and benefit expenses due to increased general and administrative headcount, and an increase in FDA program fees. On an adjusted basis, which removes the impact of share-based compensation, transaction-related costs, and other one-time expenses, G&A expense was $7.8 million, compared to $5.8 million in the prior-year period. We have talked extensively about the one-time increase of additional investments made in 2025 to support our long-term growth, driving increased spending in SG&A. However, we are pleased that the increased G&A investment was substantially less than our growth in revenue. One of the factors driving increased G&A spend is the FDA’s annual program fees. For all NDA products, the FDA charges a program fee each year. The FDA grants an exemption for products that have orphan designations if the parent company has gross sales of less than $50 million. Eton has previously received these exemptions and thus avoided the fees. However, starting with the 10/01/2025 annual program fees, Eton no longer qualified for an exemption. For the FDA’s fiscal year 2026, the annual program fee is $442,000 per strength for NDA products. As of October 2025, when the annual fee was assessed, Eton had eight unique strengths, for a total annual fee of $3.5 million. The annual fee is prepaid on October 1, and for accounting purposes, the expense is amortized throughout the year. As a result, $0.9 million was recorded as an SG&A expense in Q4 2025. These program fees are estimated to drive an incremental $2.8 million increase in SG&A spend for 2026 over 2025. Regarding overall SG&A spending for 2026, we have two main growth drivers: FDA program fees and Hemangiol. The FDA program fees are estimated to add an incremental $2.8 million expense over 2025, and the Hemangiol acquisition is expected to add $3.5 million in annualized SG&A spend, and about $2.5 million in the partial year 2026. Separately from those two one-time step-ups, we believe that our base SG&A spending would have increased by less than 10% in 2026. Adjusted EBITDA for 2025 was $6.2 million, 29% of revenue, compared to $2.1 million, or 18% of revenue, in 2024. Again, adjusted EBITDA will likely see large fluctuations quarter to quarter depending on the timing of inconsistent R&D expenses and ex-U.S. Incralex orders, but we expect the full-year adjusted EBITDA margin to be above 30%. Total company GAAP net income was $1.5 million for the quarter, compared to a net loss of $0.6 million in the prior-year period. Net income per basic and diluted share during the quarter was $0.06 and $0.05, respectively, compared to a net loss per basic and diluted share of $0.02 in the prior-year period. On a non-GAAP basis, we reported net income of $5.4 million for 2025, compared to $0.7 million in the prior-year period, and diluted earnings per share of $0.19 for 2025, compared to $0.02 per share in the prior-year period. Eton finished the fourth quarter with $25.9 million of cash on hand. We had an operating cash outflow of $11.6 million in 2025, compared to an operating cash inflow of $12.0 million in the previous quarter. The fourth quarter included $12.4 million of Medicaid rebate payments as multiple quarters’ worth of Incralex rebates were paid in Q4, $3.5 million of the aforementioned FDA program fees, and $1.4 million of inventory payments associated with the one-time transition of ex-U.S. Incralex distribution in Europe. Looking forward, we expect to generate significant operating cash flow throughout 2026 and beyond. This concludes our remarks on fourth quarter results. We will now open for questions. I will turn it back over to the Operator for Q&A.

We will now open for questions. To ask a question, please press star-1-1 on your telephone. To remove yourself from the queue, you may press star-1-1 again. Our first question comes from the line of Chase Knickerbocker of Craig-Hallum. Your line is open, Chase.

Good afternoon. Congrats on all the progress here. A lot to get to. But maybe just first on Hemangiol. You mentioned that that could be one of your largest products in 2027. That implies quite a lot of growth from kind of the roughly $12 million in 2025 sales. Can you walk us through your assumptions on how the product gets there? What do you think from a volume perspective? And then what does that assume as far as any actions on price or gross-to-net improvements? Thanks.

Hi, Chase. This is Sean. Thanks for the question. We believe we will increase the number of patients on product, partly that zero copay was preventing a lot of patients from using the product. It previously had a higher copay amount and went to other alternatives. So we think that is part of it that will certainly drive more patient adoption. We will be raising awareness, working with the advocacy groups, and certainly detailing the product at a much more aggressive level. Would you want to use that word? But to the task, we want to be able to reach out, make sure that all the patients that can use the product will get the product. And in terms of the pricing, we have not made any final decisions on that. We will launch it on May 1, and we will see where we end up on that. But our philosophy has always been to be at the lower end of rare disease pricing, and so as a general rule, that is our approach. And it is largely based upon how many patients are out there and making sure that the pricing is competitive with the rare disease products out.

Got it. And maybe just on Desmota, on how you see the pace to peak. The value proposition is pretty similar to the idea behind Kindivy. You obviously know all these physicians already, selling to multiple assets. How do you think about the time to peak sales, as far as being potentially quicker here because of those dynamics?

Well, I do not know if I could comment too much on the time to peak sales, but I can tell you the launch has gone well. We are very pleased. We are getting scripts continuously. Doctors are very excited about the product. I will say I believe the launch to peak sales will be far quicker than what we had in Alkindi. This is a very specific unmet need. Obviously, Alkindi was an unmet need in a bit of a different way. But unlike Alkindi, there were not a lot of compounders out there compounding desmopressin, so doctors are thrilled to have the product. We know that the uptake has been right according to plan, if not better. So I would say that it will be faster. We guided to that $30 million to $50 million. Million—you know, I am hoping we are well on our way there in, you know, six months or so.

Got it. And maybe just last kind of two-parter here. Maybe just one for James on how you see cash flow conversion from EBITDA in 2026. And then, Sean, just lastly, on that $200 million run rate exiting 2027, could you delineate between what might come through BD and how you see the existing portfolio today performing to get to that run rate at the end of 2027? Thanks for taking the question.

Yeah, sure. James, why do you not take the first part?

Sure. Maybe we can try to give some context on the Q3, Q4 cash flow of 2025. 2026 will firmly be in positive operating cash flow territory. We will have some timing with supplier commitments, namely with Incralex, that will be planned for the second half of the year. In the first half of the year, there should be not nearly as much as we experienced in 2025, but some of the larger-than-average volume with study orders in Europe for Incralex. But other than that, we are firmly in positive operating cash flow territory. We will start making debt principal payments, which will be new in 2026. 2025, but even with that, we will be generating a lot of positive cash flow.

Okay. And then, Chase, regarding your question on the $200 million run rate, as you know, and as I think we have demonstrated throughout the history of our company, we generally set goals which are achievable. We believe the $200 million run rate in Q4 of next year is entirely achievable, primarily based on what we have on deck. This does not really include new product deals, licensing, that type of thing. We believe that Hemangiol will be a great product for the company. We believe Desmota will continue to grow quickly. We are seeing higher sales than ever on Alkindi and Kindivy. Those continue to increase. We are very pleased with the Incralex business and how that grows, and it has been nice because we have not lost as many of the older patients, and now we are gaining momentum and going forward on that. That has been solid. And really, all areas of the business are functioning well. There are a lot of growth prospects in the coming quarters in terms of the revenue. Hitting the $200 million run rate in Q4 next year, I think, is entirely achievable. We will be providing further updates on future conference calls to try to better ascertain what is the number, what can it be, and that type of thing.

Awesome. Thanks again.

Sure. No problem. Welcome.

Thank you. Our next question comes from the line of Madison Wynne El-Saadi of B. Riley Securities. Your line is open, Madison.

Hey, guys. Thanks for taking our question, and congrats on a lot of positive updates here. Maybe to follow up on Desmota, it sounds like you are having interest both de novo and from existing. Could you characterize if the majority of interest is from the existing Alkindi population? How much of it is de novo? Also curious if you are seeing already some adult patient interest. And then secondly, on Incralex, as you prepare for this registry study, just wondering if you had any payer discussions regarding potential internal payer reimbursements for the registry patients, if that is something that is possible. Thanks.

Sure. So, Madison, I am going to have Ipek, our Chief Commercial Officer, answer the first part of your question with regards to Desmota and the pediatric versus adult.

Hi, Madison. So I think you are right. From our script, more than 97%–98% of our existing relationships with pediatric endocrinology are actually our target prescribers for central diabetes insipidus, which is for Desmota. So these relationships are already there from day one of launch, which was March 9. Our team was already talking to these physicians. There is a lot of excitement from key writers, thought leaders, big institutions already in the past two weeks. What we are excited about is call points that our team traditionally have not gone after, which are the adult endocrinologists, like Sean mentioned. We gave our team, two weeks ago when we launched the product, more than 3,000 new targets, and they just started going after those. We talked to several who are big in the adult space. Some of them actually end up still keeping the pediatric patients. So they definitely see room, and it is the right therapy for several adult patients as well, and they also see the pediatric patients based on the region and institution. So there is definitely a dual-path opportunity that is incremental to our relationships there.

Understood. And remind me again the second part of your question.

And then on Incralex, if there have been any early payer discussions related to—

No. Yeah. The payer discussions have not happened because we feel it would not be any different. If we get the label expansion, there should not be any issues with payers. Right now, if a doctor has to even prescribe something off label from time to time due to a medical need and can demonstrate that, there will be reimbursement. But generally speaking, what we want to do is initiate that study as soon as possible. That protocol feedback should happen by the end of this month. And I am quite confident that we will be undertaking the study later this year. And obviously, it is going to have a huge impact on our Incralex sales. We are hoping that when we are a portion of the way into the study—it is open label—we can go to the agency and get that label updated as soon as possible.

Got it. Congrats again, guys.

Thank you. Thank you.

Our next question comes from the line of Swayampakula Ramakanth with H.C. Wainwright. Your line is open, RK.

Thank you. This is RK from H.C. Wainwright. Good afternoon, Sean and James. So, I mean, obviously, there is a lot of things to chew here, and all good stuff. In terms of the ongoing business, especially focusing on Galzin, you said you have already eclipsed 300 active patients at this point. And then we can still see about 500 remaining out there and possibly on OTC products. What portion of that is achievable in the immediate couple of quarters? And how much contribution of that are you assuming going into 2027, when you are trying to hit that $50 million per quarter in the fourth quarter?

Thanks, RK, for the question. Obviously, we got to 300 patients much faster than we had expected. It continues to increase week over week. I am going to ask Ipek, actually, to comment a little bit more on the second part.

Hi, RK. I think your diagnosis of the fact that the next chapter of growth needing to come from the OTC products is correct. The good part is, in the Wilson disease space, the centers of excellence are pretty established. And at this point, after a year into launch, we have pretty strong relations and ongoing initiatives with several of these Centers of Excellence health leaders and the top prescribers. So we do know where some of these patients—some of that Wilson population—is. I think based on our projections, I am confident to say within that time frame that you mentioned, we would be able to get to half of the remaining population out there who are on zinc therapy or some form that is not FDA approved. Between everything that we are doing in the field with these prescribers, as well as the awareness and education initiatives that we are closely working on with the Wilson Disease Association, which is the key patient advocacy group—really a lot of patients are very much in sync and present in that community as part of this community.

Great. So my next question is on the label expansions or the indication expansions that you are trying to achieve. One is on Incralex. What specific feedback do you need from the FDA at this point in terms of harmonizing the definition of SPIGFD and to get your study going? And the second part is on the Kindivy one. If the patient population gets increased successfully below age five, what sort of population are we assuming that you will have access to?

Sure. On Incralex, we have already received feedback from the agency on that. We took the feedback and put that in the form of a protocol. So, they send you feedback, the general letter—they say we want to see this and this and this. Then you formalize that in a scientific protocol. That takes a number of weeks, then you submit it to the agency. They then should look at that, make sure that they feel you incorporated their thoughts and comments. And hopefully when we get it back, there are few or no changes. If that is the case, which it should be unless they change their mind, then our belief is we can start the study. We hope to have that protocol back by the end of this month. So that is that one. And then regarding the Tyndivi formulation, we should have that wrapped up for the study here shortly, get it submitted in the third or fourth quarter—maybe third quarter; I am guessing third quarter submission—and then it will launch next year. The population is really intended for under five. That is really what the whole product was about. We believe it will do in excess of $20 million of additional revenue in a rather short quarter.

Okay. And then the last question is on the inventory burn-off. How much is the remaining inventory step-up from the acquisitions, and to be fully amortized through the P&L?

Yeah. Very well. There will be a slight amount remaining in early 2026, but a small fraction. We burned through most of it in 2025.

Perfect. Thank you. Thanks for taking all my questions.

Thanks.