Eton Pharmaceuticals Sells Hospital Products to Focus on Rare Disease Business

Eton Pharmaceuticals Sells Hospital Products to Focus on Rare Disease Business

DEER PARK, Ill., June 24, 2022 (GLOBE NEWSWIRE) — Eton Pharmaceuticals, Inc (Nasdaq: ETON), an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases, today announced that it has sold its hospital products to Dr. Reddy’s Laboratories SA, a subsidiary of Dr. Reddy’s Laboratories, Ltd. (collectively, “Dr Reddy’s”) (NYSE: RDY) for total payments of up to $50 million.

“The sale of our hospital products allows us to focus our resources on our core rare disease business, which is rapidly growing, and also provides an attractive opportunity to monetize the value we have created with our hospital products. The proceeds from the transaction put us in an even stronger financial position and provide significant capital to further invest in additional rare disease products,” said Sean Brynjelsen, CEO of Eton Pharmaceuticals.

Transaction Terms

Under terms of the transaction, Dr Reddy’s purchased the Biorphen®, Rezipres®, and Cysteine Hydrochloride products. Dr Reddy’s will immediately take ownership of Eton’s rights and interests in the products. Eton will continue to sell its existing Biorphen ampule inventory until the end of 2022.

Eton received approximately $5 million at closing, and will receive additional payments of up to $45 million, based on the achievement of certain event-based and sales-based milestones:

• $20.0 million upon launch of Cysteine hydrochloride injection, assuming a successful court outcome relating to an ongoing litigation and commercial launch within six years from the transaction closing.¹
• $5.0 million if no competing Cysteine injection products are marketed other than the innovator product (Elcys®) on the six-month anniversary of Dr. Reddy’s Cysteine product launch.¹
• $1.0 million upon FDA approval of Biorphen vial, provided it occurs before January 1, 2023. If it occurs after January 1, 2023 but before March 1, 2023, Eton receives $0.5 million.
• $2.5 million upon FDA approval of Biorphen bag, provided it occurs before July 1, 2023.
• $1.5 million upon FDA approval of Rezipres vial, provided it occurs before January 1, 2023. If it occurs after January 1, 2023 but before March 1, 2023, Eton receives $0.75 million.
• $15.0 million of total commercial milestones when combined net sales of all Biorphen products exceed certain revenue targets ranging from $15 to $40 million in a twelve-month period.²

Eton Going Forward

Following the transaction, Eton’s commercial activities will be solely focused on rare disease products with a portfolio of four product candidates, two of which are currently FDA-approved commercial products.

• ALKINDI SPRINKLE®
• Carglumic Acid tablets
• Dehydrated alcohol injection: Product candidate for methanol poisoning that has been submitted to the FDA and has received orphan drug designation.
• ZENEO® hydrocortisone autoinjector: Product candidate under development for the potential treatment of adrenal crisis, which is expected to be submitted to the FDA in 2023.

In addition to the rare disease products, Eton is entitled to royalty milestone payments of up to $70 million including the payments from Dr. Reddy’s mentioned above and from products that it divested in a previous transaction with Azurity Pharmaceuticals. Eton is also entitled to receive royalties from two commercial products, Alaway® Preservative Free and EPRONTIA™, and two additional product candidates that have been submitted to the FDA, zonisamide oral suspension and lamotrigine for suspension.

¹37.5% of the two Cysteine related milestone payment will be paid out to Eton’s original licensing partner on the product.

²Eton retains obligations to pay its original licensing partner commercial milestones of up to $4.5 million based Rezipres and Biorphen reaching certain sales levels.

About Eton Pharmaceuticals

Eton Pharmaceuticals, Inc. is an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases. The product currently commercializes ALKINDI SPRINKLE® and Carglumic Acid tablets and has two additional rare disease products under development, dehydrated alcohol injection and the ZENEO® hydrocortisone autoinjector. In addition, the company’s royalty segment is entitled to receive milestone payments or royalties on six different products.