Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 31, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2022 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-38738 | |
Entity Registrant Name | ETON PHARMACEUTICALS, INC. | |
Entity Central Index Key | 0001710340 | |
Entity Tax Identification Number | 37-1858472 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 21925 W. Field Parkway | |
Entity Address, Address Line Two | Suite 235 | |
Entity Address, City or Town | Deer Park | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60010-7278 | |
City Area Code | 847 | |
Local Phone Number | 787-7361 | |
Title of 12(b) Security | Common stock, $0.001 par value per share | |
Trading Symbol | ETON | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 25,297,037 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 13,378 | $ 14,406 |
Accounts receivable, net | 1,498 | 5,471 |
Inventories | 481 | 550 |
Prepaid expenses and other current assets | 1,063 | 3,177 |
Total current assets | 16,420 | 23,604 |
Property and equipment, net | 73 | 115 |
Intangible assets, net | 4,973 | 3,621 |
Operating lease right-of-use assets, net | 42 | 104 |
Other long-term assets, net | 12 | 21 |
Total assets | 21,520 | 27,465 |
Current liabilities: | ||
Accounts payable | 1,054 | 1,774 |
Current portion of long-term debt | 708 | 1,418 |
Accrued liabilities | 2,899 | 1,366 |
Total current liabilities | 4,661 | 4,558 |
Long-term debt, net of discount and including accrued fees | 5,678 | 5,262 |
Operating lease liabilities, net of current portion | 15 | |
Total liabilities | 10,339 | 9,835 |
Commitments and contingencies (Note 11) | ||
Stockholders’ equity | ||
Common stock, $0.001 par value; 50,000,000 shares authorized; 25,297,037 and 24,626,004 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 25 | 25 |
Additional paid-in capital | 115,202 | 111,718 |
Accumulated deficit | (104,046) | (94,113) |
Total stockholders’ equity | 11,181 | 17,630 |
Total liabilities and stockholders’ equity | $ 21,520 | $ 27,465 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 25,297,037 | 24,626,004 |
Common stock, shares outstanding | 25,297,037 | 24,626,004 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues: | ||||
Total net revenues | $ 3,219 | $ 775 | $ 12,753 | $ 15,739 |
Cost of sales: | ||||
Total cost of sales | 1,201 | 654 | 4,795 | 2,455 |
Gross profit | 2,018 | 121 | 7,958 | 13,284 |
Operating expenses: | ||||
Research and development | 744 | 2,678 | 3,052 | 5,554 |
General and administrative | 4,169 | 3,290 | 14,228 | 10,539 |
Total operating expenses | 4,913 | 5,968 | 17,280 | 16,093 |
(Loss) income from operations | (2,895) | (5,847) | (9,322) | (2,809) |
Other (expense) income: | ||||
Interest and other expense, net | (150) | (247) | (611) | (731) |
Gain on PPP loan forgiveness | 365 | |||
Gain on equipment sale | 181 | |||
(Loss) income before income tax expense | (3,045) | (6,094) | (9,933) | (2,994) |
Income tax expense | ||||
Net (loss) income | $ (3,045) | $ (6,094) | $ (9,933) | $ (2,994) |
Net loss (income) per share, basic | $ (0.12) | $ (0.24) | $ (0.40) | $ (0.12) |
Net loss (income) per share, diluted | $ (0.12) | $ (0.24) | $ (0.40) | $ (0.12) |
Weighted average number of common shares outstanding, basic | 25,365 | 25,276 | 25,066 | 25,181 |
Weighted average number of common shares outstanding, diluted | 25,365 | 25,276 | 25,066 | 25,181 |
Licensing Revenue [Member] | ||||
Revenues: | ||||
Total net revenues | $ 5,000 | $ 14,000 | ||
Cost of sales: | ||||
Total cost of sales | 990 | 1,500 | ||
Product Sales and Royalties [Member] | ||||
Revenues: | ||||
Total net revenues | 3,219 | 775 | 7,753 | 1,739 |
Cost of sales: | ||||
Total cost of sales | $ 1,201 | $ 654 | $ 3,805 | $ 955 |
Condensed Statements of Stockho
Condensed Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2020 | $ 24 | $ 107,797 | $ (92,158) | $ 15,663 |
Beginning balance, shares at Dec. 31, 2020 | 24,312,808 | |||
Stock-based compensation | 2,518 | 2,518 | ||
Stock option exercises | $ 1 | 338 | 339 | |
Stock option exercises, shares | 144,233 | |||
Net income (loss) | (2,994) | (2,994) | ||
Employee stock purchase plan | 134 | 134 | ||
Employee stock purchase plan, shares | 29,326 | |||
Warrant exercises | ||||
Warrant exercises, shares | 94,808 | |||
Common stock issued related to restricted stock units | ||||
Common stock issued related to restricted stock units, shares | 25,000 | |||
Ending balance, value at Sep. 30, 2021 | $ 25 | 110,787 | (95,152) | 15,660 |
Ending balance, shares at Sep. 30, 2021 | 24,606,175 | |||
Beginning balance, value at Jun. 30, 2021 | $ 25 | 109,769 | (89,058) | 20,736 |
Beginning balance, shares at Jun. 30, 2021 | 24,600,175 | |||
Stock-based compensation | 1,009 | 1,009 | ||
Stock option exercises | 9 | 9 | ||
Stock option exercises, shares | 6,000 | |||
Net income (loss) | (6,094) | (6,094) | ||
Ending balance, value at Sep. 30, 2021 | $ 25 | 110,787 | (95,152) | 15,660 |
Ending balance, shares at Sep. 30, 2021 | 24,606,175 | |||
Beginning balance, value at Dec. 31, 2021 | $ 25 | 111,718 | (94,113) | 17,630 |
Beginning balance, shares at Dec. 31, 2021 | 24,626,004 | |||
Stock-based compensation | 3,088 | 3,088 | ||
Stock option exercises | 35 | 35 | ||
Stock option exercises, shares | 25,000 | |||
Net income (loss) | (9,933) | (9,933) | ||
Employee stock purchase plan | 117 | 117 | ||
Employee stock purchase plan, shares | 47,585 | |||
Warrant exercises | ||||
Warrant exercises, shares | 598,448 | |||
Warrant extensions | 244 | 244 | ||
Ending balance, value at Sep. 30, 2022 | $ 25 | 115,202 | (104,046) | 11,181 |
Ending balance, shares at Sep. 30, 2022 | 25,297,037 | |||
Beginning balance, value at Jun. 30, 2022 | $ 25 | 114,218 | (101,001) | 13,242 |
Beginning balance, shares at Jun. 30, 2022 | 25,272,037 | |||
Stock-based compensation | 949 | 949 | ||
Stock option exercises | 35 | 35 | ||
Stock option exercises, shares | 25,000 | |||
Net income (loss) | (3,045) | (3,045) | ||
Ending balance, value at Sep. 30, 2022 | $ 25 | $ 115,202 | $ (104,046) | $ 11,181 |
Ending balance, shares at Sep. 30, 2022 | 25,297,037 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities | ||
Net loss | $ (9,933) | $ (2,994) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Stock-based compensation | 3,332 | 2,518 |
Depreciation and amortization | 1,522 | 325 |
Debt discount amortization | 96 | 110 |
Gain on forgiveness of debt | (365) | |
Gain on sale of equipment | (181) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 3,973 | (337) |
Inventories | 69 | 908 |
Prepaid expenses and other assets | 2,129 | (283) |
Accounts payable | (720) | 699 |
Accrued liabilities | 1,513 | (4) |
Net cash provided by operating activities | 1,981 | 396 |
Cash flows from investing activities | ||
Proceeds from sale of equipment | 700 | |
Purchase of product license rights | (2,750) | |
Purchases of property and equipment | (26) | (5) |
Net cash (used in) provided by investing activities | (2,776) | 695 |
Cash flows from financing activities | ||
Repayment of long-term debt | (385) | (150) |
Proceeds from employee stock purchase plan and stock option exercises | 152 | 473 |
Net cash (used in) provided by financing activities | (233) | 323 |
Change in cash and cash equivalents | (1,028) | 1,414 |
Cash and cash equivalents at beginning of period | 14,406 | 21,295 |
Cash and cash equivalents at end of period | 13,378 | 22,709 |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | $ 545 | $ 603 |
Company Overview
Company Overview | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Company Overview | Note 1 — Company Overview Eton is an innovative pharmaceutical company focused on developing, acquiring, and commercializing innovative products to address unmet needs in patients suffering from rare diseases. The Company currently has three commercial rare disease products, ALKINDI SPRINKLE® for the treatment of adrenocortical insufficiency, Carglumic Acid for the treatment of acute hyperammonemia due to N-acetylglutamate synthase (NAGS) deficiency, and Betaine Anhydrous for the treatment of homocystinuria and has three additional product candidates in late-stage development. The Company is developing dehydrated alcohol injection, which has received Orphan Drug Designation for the treatment of methanol poisoning, ZENEO® hydrocortisone autoinjector for the treatment of adrenal crisis, and ET-400. In addition, the Company is entitled to royalties or milestone payments from six FDA-approved products that the Company developed and out-licensed. The products are Alaway® Preservative Free, EPRONTIA™, Cysteine Hydrochloride, Zonisade®, Biorphen®, and Rezipres®. |
Liquidity Considerations
Liquidity Considerations | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity Considerations | Note 2 — Liquidity Considerations The Company currently believes its existing cash and cash equivalents of $ 13,378 Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 3 — Summary of Significant Accounting Policies Basis of Presentation The Company has prepared the accompanying condensed financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). 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 September 30, 2022 and the results of its operations and its cash flows for the periods ended September 30, 2022 and 2021. The financial data and other information disclosed in these notes related to the three-month and nine-month periods ended September 30, 2022 and 2021 are also unaudited. The results for the three-month and nine-month periods ended September 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022, any other interim periods or any future year or period. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, provisions for uncollectible receivables and sales returns, valuation of inventories, useful lives of assets, the impairment of intangible assets, the accrual of research and development expenses and the valuation of common stock, stock options and warrants, and restricted stock units. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates or assumptions. Segment Information The Company operates the business on the basis of a single reportable segment, which is the business of developing and commercializing prescription drug products. The Company’s chief operating decision-maker is the Chief Executive Officer (“CEO”), who evaluates the Company as a single operating segment. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. All cash and cash equivalents are held in U.S. financial institutions or invested in short-term U.S. treasury bills or high-grade money market funds. As of September 30, 2022, the Company’s cash is in a non-interest bearing account as well as a government money market fund. From time to time, amounts deposited with its bank exceed federally insured limits. The Company believes the associated credit risk to be minimal. Accounts Receivable Accounts receivable are recorded at the invoiced amount and are non-interest bearing. Accounts receivable are recorded net of allowances for doubtful accounts, cash discounts for prompt payment, distribution fees, chargebacks and returns and allowances. The total for these reserves amounted to $ 448 96 Inventories 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 will record a write-down if an impairment is identified. Inventories at September 30, 2022 and December 31, 2021 consist solely of purchased finished goods. At September 30, 2022 and December 31, 2021 inventories are shown net of a reserve for its Biorphen product of $ 0 1,414 Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) Note 3 — Summary of Significant Accounting Policies (continued) Property and Equipment Property and equipment are stated at cost. Depreciation of property and equipment is computed utilizing the straight-line method based on the following estimated useful lives: computer hardware and software is depreciated over three years five years Maintenance and repairs are charged to expense as incurred, while renewals and improvements are capitalized. Intangible Assets The Company capitalizes payments it makes for licensed products when the payment relates to an FDA-approved product and the cost is recoverable based on expected future cash flows from the product. The cost is amortized on a straight-line basis over the estimated useful life of the product commencing on the approval date in accordance with Accounting Standards Codification (“ASC”) 350 — Intangibles - Goodwill and Other. In November 2021, the Company purchased the rights for its Carglumic Acid product for $ 3,250 ten years 750 five years 275 75 750 five years 738 2,000 five years 1,777 135 1,398 Schedule of Intangible Assets Amortization Expense Year Amortization Expense Remainder of 2022 $ 219 2023 725 2024 725 2025 725 2026 725 Thereafter 1,854 Total estimated amortization expense $ 4,973 Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the Company’s statements of operations for the amount by which the carrying amount of the asset exceeds the fair value of the asset. No impairment has been recognized since the Company’s inception in 2017. Debt Issuance Costs and Debt Discount and Detachable Debt-Related Warrants Costs incurred to issue debt are deferred and recorded as a reduction to the debt balance in the accompanying balance sheets. The Company amortizes debt issuance costs over the expected term of the related debt using the effective interest method. Debt discounts related to the relative fair value of warrants issued in conjunction with the debt and are also recorded as a reduction to the debt balance and accreted over the expected term of the debt to interest expense using the effective interest method. Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) Note 3 — Summary of Significant Accounting Policies (continued) Revenue Recognition for Contracts with Customers The Company accounts for contracts with its customers in accordance with ASC 606 — Revenue from Contracts with Customers. ASC 606 applies to all contracts with customers, except for contracts that are within the scope of other standards. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. The Company assesses whether these options provide a material right to the customer and, if so, they are considered performance obligations. The exercise of a material right is accounted for as a contract modification for accounting purposes. The Company recognizes 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 or over time, and if over time this is based on the use of an output or input method. Any amounts received prior to revenue recognition will be recorded as deferred revenue. Amounts expected to be recognized as revenue within the twelve months following the balance sheet date will be classified as current portion of deferred revenue in the Company’s balance sheets. Amounts not expected to be recognized as revenue within the twelve months following the balance sheet date are classified as long-term deferred revenue, net of current portion. Milestone Payments Royalties – Significant Financing Component – The Company sells its Alkindi Sprinkle and Carglumic Acid product to one pharmacy distributor customer which provides order fulfilment and inventory storage/distribution services. 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) (Unaudited) Note 3 — Summary of Significant Accounting Policies (continued) For its Alkindi Sprinkle and Carglumic Acid 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 are 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. Because of the shelf life of the product and the Company’s lengthy return period, there may be a significant period of time between when the product is shipped and when it issues credits on returned product. 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 Alkindi Sprinkle and Carglumic Acid sales are not subject to returns. When estimating these adjustments to the transaction price, the Company reduces it sufficiently to be able to assert that it is probable that there will be no significant reversal of revenue when the ultimate adjustment amounts are known. The Company stores its Alkindi Sprinkle and Carglumic Acid inventory at its pharmacy distributor customer location, and sales are recorded when stock is pulled and shipped to fulfill specific patient orders. 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. 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. In addition, the Company anticipates it will receive revenues from product licensing agreements where it has contracted for milestone payments and royalties from products it has developed or acquired. Cost of Sales Cost of sales consists of the profit-sharing and royalty fees with the Company’s product licensing and development partners, the purchase costs for finished products from third-party manufacturers, freight and handling/storage costs from the Company’s 3PL logistics service providers, and amortization expense of certain intangible assets. The cost of sales for profit-sharing and royalty fees and costs for purchased finished products and the associated inbound freight expense is recorded when the associated product sale revenue is recognized in accordance with the terms of shipment to customers while outbound freight and handling/storage fees charged by the 3PL service provider are expensed as they are incurred. Cost of sales also reflects any write-downs or reserve adjustments for the Company’s inventories. Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) Note 3 — Summary of Significant Accounting Policies (continued) Research and Development Expenses Research and development (“R&D”) expenses include both internal R&D activities and external contracted services. Internal R&D activity expenses include salaries, benefits and stock-based compensation and other costs to support the Company’s R&D operations. External contracted services include product development efforts such as certain product licensor milestone payments, clinical trial activities, manufacturing and control-related activities and regulatory costs. R&D expenses are charged to operations as incurred. The Company reviews and accrues R&D expenses based on services performed and relies upon estimates of those costs applicable to the stage of completion of each project. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. Upfront payments and milestone payments made for the licensing of products that are not yet approved by the FDA are expensed as R&D in the period in which they are incurred. Nonrefundable advance payments for goods or services to be received in the future for use in R&D activities are recorded as prepaid expenses and are expensed as the related goods are delivered or the services are performed. Income (Loss) Per Share Basic net income (loss) per common share is computed by dividing net income (loss) attributable to common stockholders for the period by the weighted average number of common shares outstanding during the period. 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. For the three-month and nine-month periods ended September 30, 2022, common stock equivalents of 5,349,891 5,118,574 4,339,508 4,279,400 Stock-Based Compensation The Company accounts for stock-based compensation under the provisions of ASC — 718 Compensation — Stock Compensation. The guidance under ASC 718 requires companies to estimate the fair value of the stock-based compensation awards on the date of grant and record expense over the related service periods, which are generally the vesting period of the equity awards. The Company estimates the fair value of stock-based option awards using the Black-Scholes-Merton option-pricing model (“BSM”). The BSM requires the input of subjective assumptions, including the expected stock price volatility, the calculation of expected term, forfeitures and the fair value of the underlying common stock on the date of grant, among other inputs. The risk-free interest rate was determined from the implied yields for zero-coupon U.S. government issues with a remaining term approximating the expected life of the options or warrants. Dividends on common stock are assumed to be zero for the BSM valuation of the stock options. The expected term of stock options granted is based on vesting periods and the contractual life of the options. Expected volatilities are based on comparable companies’ historical volatility along with a limited weighting included for the Company’s own volatility, which management believes represents the most accurate basis for estimating expected future volatility under the current conditions. The Company accounts for forfeitures as they occur. The Company uses the closing common stock price on the date of grant for the fair value of the common stock. Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) Note 3 — Summary of Significant Accounting Policies (continued) Fair Value Measurements We measure certain of our assets and liabilities at fair value. Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value accounting requires characterization of the inputs used to measure fair value into a three-level fair value hierarchy as follows: Level 1 Level 2 Level 3 Fair value measurements are classified based on the lowest level of input that is significant to the measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the assets and liabilities and their placement within the fair value hierarchy levels. The determination of the fair values stated below take into account the market for the Company’s financials, assets and liabilities, the associated credit risk and other factors as required. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. The Company’s financial instruments included cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and long-term debt obligation. The carrying amounts of these financial instruments, except for the long-term debt obligation, approximate their fair values due to the short-term maturities of these instruments. Based on borrowing rates currently available to the Company, the carrying value of the long-term debt obligation approximates its fair value. Impact of New Accounting Pronouncements There were no new accounting pronouncements issued by the FASB during the period that would apply to the Company would have a material impact on its financial position or results of operations. Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 4 – Property and Equipment Property and equipment consist of the following: Schedule of Property and Equipment September 30, December 31, Computer hardware and software $ 177 $ 157 Furniture and fixtures 112 106 Equipment 52 132 Leasehold improvements 71 71 Property and equipment, gross 412 466 Less: accumulated depreciation (339 ) (351 ) Property and equipment, net $ 73 $ 115 Depreciation expense for the three months ended September 30, 2022 and 2021 was $ 14 24 53 132 |
Long Term Debt
Long Term Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Long Term Debt | Note 5 — Long Term Debt SWK Loan On November 13, 2019, the Company entered into a credit agreement (the “SWK Credit Agreement”) with SWK Holdings Corporation (“SWK”) which provided for up to $ 10,000 5,000 5,000 2,000 3,000 2,000 10.0 2.0 2.0 5.0 The Company was required to maintain a minimum cash balance of $ 3,000 In connection with the initial $ 5,000 51,239 5.86 51,239 226 5.75 seven 95 0 1.8 In connection with the additional $ 2,000 18,141 6.62 18,141 94 6.85 seven 95 0 0.4 Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) Note 5 — Long Term Debt (continued) These warrants (the “SWK Warrants”) are exercisable immediately and have a term of seven years from the date of issuance. The SWK Warrants are subject to a cashless exercise feature, with the exercise price and number of shares issuable upon exercise subject to change in connection with stock splits, dividends, reclassifications and other conditions. Interest expense of $ 699 96 766 110 191 On April 5, 2022, the Company and SWK entered into an amendment to the SWK Credit Agreement which allowed for a deferral of loan principal payments until May 2023 and reduced the interest rate to LIBOR 3-month plus 8.0 2.0 708 The table below reflects the future payments for the SWK loan principal and interest as of September 30, 2022. Schedule of Future Payments of Long Term Debt Amount 2022 $ 186 2023 1,740 2024 6,504 Total payments 8,430 Less: amount representing interest (1,815 ) Loan payable, gross 6,615 Less: current portion of long-term debt (708 ) Less: unamortized discount (229 ) Long-term debt, net of unamortized discount $ 5,678 Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Common Stock | Note 6 — Common Stock The Company has 50,000,000 0.001 During the nine months ended September 30, 2022, a holder of the Company’s common stock warrants exercised 600,000 598,448 2,268 47,585 |
Common Stock Warrants
Common Stock Warrants | 9 Months Ended |
Sep. 30, 2022 | |
Common Stock Warrants | |
Common Stock Warrants | Note 7 — Common Stock Warrants The Company’s outstanding warrants to purchase shares of its common stock at September 30, 2022 are summarized in the table below. Summary of Warrants Outstanding Description of Warrants No. of Shares Exercise Price Placement Agent Warrants – 2017 Preferred Stock Offering 467,242 $ 3.00 Placement Agent Warrants - IPO 414,000 $ 7.50 SWK Warrants – Debt – Tranche #1 51,239 $ 5.86 SWK Warrants – Debt – Tranche #2 18,141 $ 6.62 Total 950,622 $ 5.18 The holders of these warrants or their permitted transferees, are entitled to rights with respect to the registration under the Securities Act of 1933, as amended (the “Securities Act”) for 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. On June 26, 2022, 467,242 3.00 December 26, 2022 244 Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) |
Share-Based Payment Awards
Share-Based Payment Awards | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Payment Awards | Note 8 — 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 5,000,000 673,773 Shares 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 annually by 4 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 50,000 five In July 2022 and September 2022, the Company’s board of directors approved modifications of certain outstanding awards of two senior executives, one of whom retired in May 2022 and the other whose employment was terminated in July 2022. The combined awards had an exercise price range of $ 1.37 8.61 16 88 For the three months ended September 30, 2022 and 2021, the Company’s total stock-based compensation expense was $ 949 1,009 893 838 56 171 For the nine months ended September 30, 2022 and 2021, the Company’s total stock-based compensation expense was $ 3,332 2,518 3,102 2,110 230 408 Stock Options The following table summarizes stock option activity during the nine months ended September 30, 2022: Summary of Stock Option Activity Shares Weighted Price Weighted Average Remaining Contractual Term (Yrs) Aggregate Intrinsic Value Outstanding as of December 31, 2021 3,513,719 $ 5.22 Issued 1,268,770 $ 3.76 Exercised (25,000 ) $ 1.38 Forfeited/Cancelled (420,197 ) $ 6.04 Outstanding as of September 30, 2022 4,337,292 $ 4.73 7.7 $ 437 Exercisable at September 30, 2022 2,789,537 $ 4.63 7.1 $ 401 Vested and expected to vest at September 30, 2022 4,287,292 $ 4.77 7.7 $ 401 Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) Note 8 — 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 September 30, 2022 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 $ 853 2,850 4,532 2.38 25,000 1.38 31 144,233 2.35 682 Restricted Stock Units (RSUs) The following table summarizes restricted stock unit activity during the nine months ended September 30, 2022: Schedule of Restricted Stock Unit Activity Number of Units Weighted Average Grant-Date Fair Value Per Unit Outstanding and unvested as of December 31, 2021 — $ — Granted 373,606 $ 2.63 Vested — — Forfeited (4,000 ) $ 2.63 Outstanding and unvested as of September 30, 2022 369,606 $ 2.63 Stock-based compensation related to RSUs was $ 53 919 4 The Company’s 2018 Employee Stock Purchase Plan (the “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 582,595 The annual offerings consist of two stock purchase periods, with the first purchase period ending in June and the second purchase period ending in December. The terms of the ESPP permit employees of the Company to use payroll deductions to purchase stock at a price per share that is at least the lesser of (1) 85% of the fair market value of a share of common stock on the first date of an offering or (2) 85% of the fair market value of a share of common stock on the date of purchase. After the initial offering period ended, subsequent twelve-month offering periods automatically commence over the term of the ESPP on the day that immediately follows the conclusion of the preceding offering, each consisting of two purchase periods approximately six months in duration For the first nine months of 2022 and 2021 there were 47,585 29,326 1.32 2.83 174 192 97 83 65 22 Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) |
Related-Party Transactions
Related-Party Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Note 9 — Related-Party Transactions Harrow The Chief Executive Officer of Harrow Health, Inc. (“Harrow”) was a member of the Company’s board of directors until March 17, 2021 when he retired from service with the board. The Company issued 25,000 1,982,000 7.8 In March 2021, the Company closed its laboratory operation in Lake Zurich, Illinois and in May 2021 it reached an agreement for Imprimis Pharmaceuticals, a subsidiary of Harrow, to purchase its lab equipment for $ 700 181 Chief Executive Officer The CEO has a partial interest in a company that the Company has 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. The Company also held a right of first refusal to obtain the exclusive license rights for geographic areas outside of the United States. Pursuant to the Eyemax Agreement, the Company was responsible for all costs of testing and FDA approval of the product, other than the FDA filing fee which was paid by Eyemax. The Company was also to be responsible for commercializing the product in the United States at its expense. The Company paid Eyemax $ 250 250 500 10 The Eyemax Agreement was for an initial term of 10 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. Under the Amended Agreement, the Company assumed certain liabilities of Eyemax under its Exclusive Development & Supply Agreement with Excelvision SAS dated as of July 11, 2013, as amended (the “Excelvision Agreement”), with respect to certain territories and arising during certain time periods. Pursuant to the Amended Agreement, the Company paid Eyemax two milestone payments: (i) one milestone payment for $ 250 500 2,000 1,799 There were no amounts due to Eyemax under the terms of the Amended Agreement as of September 30, 2022 or December 31, 2021. Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Leases | Note 10 — 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. The Company’s operating lease cost as presented in the “Research and Development” and “General and Administrative” captions in the condensed statements of operations was $ 0 22 0 21 0 64 9 64 66 21 62 20 69 0.5 5.4 The table below presents the lease-related assets and liabilities recorded on the balance sheet as of September 30, 2022 (in thousands). Schedule of Lease-related Assets and Liabilities Assets Classification Operating lease right-of-use assets Operating lease right-of-use assets, net $ 42 Total leased assets $ 42 Liabilities Operating lease liabilities, current Accrued liabilities $ 36 Total operating lease liabilities $ 36 The Company’s future lease commitments for its administrative offices in Deer Park, Illinois as of September 30, 2022 is as indicated below: Schedule of Future Lease Commitments Total 2022 2023 2024 Thereafter Undiscounted lease payments $ 37 22 15 — — Less: Imputed interest (1 ) Total lease liabilities $ 36 The Company is evaluating its future facility needs and has not renewed its lease which expires on March 31, 2023 Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11 — Commitments and Contingencies Legal The Company is subject to legal proceedings and claims that may arise in the ordinary course of business. The Company is not aware of any pending or threatened litigation matters at this time that may have a material impact on the operations of the Company. License and product development agreements The Company has entered into various agreements in addition to those discussed above which are described below. The Company acquired the exclusive rights to sell the Cysteine Hydrochloride product in the United States pursuant to a sales and marketing agreement dated November 17, 2017 with an unaffiliated third party (the “Sales Agreement”). Pursuant to the Sales Agreement, the licensor is responsible for obtaining FDA approval, at its expense, and the Company was responsible for commercializing the product in the United States at its expense. In February 2020, the Sales Agreement was amended and under the revised terms, the Company would be responsible for paragraph IV related litigation and will be entitled to 62.5 10 On February 8, 2019, the Company entered into an Exclusive Licensing and Supply Agreement (the “ET-202 License Agreement”) with Sintetica SA (“Sintetica”) for marketing rights in the United States to Biorphen® which is used for the treatment of clinically important hypotension resulting primarily from vasodilation in the setting of anesthesia. The product was submitted to the FDA for review and subsequently received FDA approval on October 21, 2019. Pursuant to the terms of the ET-202 License Agreement, the Company is responsible for marketing activities and Sintetica is responsible for development, manufacturing, and the regulatory activities related to approval. Sintetica is entitled to receive the first $ 500 50 50 On February 8, 2019, the Company also entered into an Exclusive Licensing and Supply Agreement (the “ET-203 License Agreement”) with Sintetica for marketing rights in the United States to ephedrine HCl (brand name Rezipres®), an injectable product candidate for use in the hospital setting. Pursuant to the terms of the ET-203 License Agreement, the Company will be responsible for marketing activities and Sintetica will be responsible for development, manufacturing, and regulatory activities related to obtaining regulatory approval. The product was successfully resubmitted in late 2020 and the Company paid a $ 600 750 500 50 50 ten In June 2022, the Company sold its rights in the three aforementioned products Cysteine Hydrochloride, Biorphen®, and Rezipres® to Dr. Reddy’s. Under the terms of the transaction, Dr. Reddy’s assumed immediate ownership of Eton’s rights and interest in the products. Eton will continue to sell its existing Biorphen inventory until the end of 2022. The Company received $ 5,000 45,000 5,000 250 10 812 The three oral solution pediatric neurology product candidates discussed below, Topiramate, Zonisamide and Lamotrigine were developed by the Company and its various product candidate development partners, and the Company subsequently sold all its rights and interests in these three products to Azurity Pharmaceuticals, Inc. (“Azurity”) in 2021. The Company has recognized $ 17,000 25,000 Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) Note 11 — Commitments and Contingencies (continued) During the years ended December 31, 2021, 2020 and 2019, the Company worked with Tulex Pharmaceuticals, Inc. (“Tulex”) as a third-party contract manufacturer to develop an oral solution for Topiramate (fka ET-101) which targets a neurological condition. The Company subsequently filed the product with the FDA in October 2020, received approval from the FDA in November 2021, and the product was launched by Azurity in December 2021. The Company recognized a $ 5,000 On January 23, 2019, the Company entered into a Licensing and Supply Agreement (the “Agreement”) with Liqmeds Worldwide Limited (“LMW”) for Zonisamide oral liquid, a development stage product candidate (“ET-104”). Pursuant to the terms of the Agreement, the Company was responsible for regulatory and marketing activities and LMW was responsible for development and manufacturing of ET-104. The Company will pay $ 650 500 10,000 35 10 On June 12, 2019, the Company entered into an Exclusive Licensing and Supply Agreement (the “ET-105 License Agreement”) with Aucta Pharmaceuticals, Inc. (“Aucta”) for marketing rights in the United States to Lamotrigine, an oral suspension product candidate for use as an adjunct therapy for partial seizures, primary generalized tonic-clonic seizures, and generalized seizures of Lennox-Gastaut syndrome in patients two years of age and older. Pursuant to the terms of the ET-105 License Agreement, the Company was to be responsible for marketing activities and Aucta will be responsible for development, manufacturing, and regulatory activities related to obtaining regulatory approval. The Company will pay $ 2,450 1,000 1,500 1,500 450 3,000 1,000 when net sales exceed $10 million in a calendar year 2,000 when net sales exceed $20 million in a calendar year On March 27, 2020, the Company entered into an Exclusive Licensing and Supply Agreement (the “Alkindi License Agreement”) with Diurnal Limited (“Diurnal”) for marketing Alkindi Sprinkle in the United States. Alkindi Sprinkle’s New Drug Application (“NDA”) was approved by the FDA on September 29, 2020 as a replacement therapy in pediatric patients with adrenocortical insufficiency. For the initial licensing milestone fee, the Company paid Diurnal $ 3,500 379,474 1,264 3.33 4,764 2,500 On June 15, 2021, the Company acquired U.S. and Canadian rights to Crossject S.A.’s (“Crossject”) ZENEO® hydrocortisone needleless autoinjector, which is under development as a rescue treatment for adrenal crisis. The Company paid Crossject $ 500 500 4,000 6,000 10 On October 28, 2021, the Company acquired the U.S. marketing rights to Carglumic Acid Tablets. The product’s Abbreviated New Drug Application (“ANDA”), which is owned by Novitium Pharma, was approved by the FDA on October 12, 2021. The product is an AB-rated, substitutable generic version of Carbaglu®. The Company paid $ 3,250 50 On September 13, 2022, the Company acquired an FDA approved ANDA for Betaine Anhydrous for oral solution. The ANDA was approved by the FDA on January 28, 2022. The Company paid $ 2,000 65 Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) Note 11 — Commitments and Contingencies (continued) Indemnification As permitted under Delaware law and in accordance with the Company’s Amended and Restated Bylaws, the Company is required to indemnify its officers and directors for certain events or occurrences while the officer or director is or was serving in such capacity. The Company is also party to indemnification agreements with its directors and officers. 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 September 30, 2022 or December 31, 2021. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12 — Subsequent Events The Company has evaluated subsequent events through the filing date of this Form 10-Q and has determined that no subsequent events have occurred that would require recognition in the condensed financial statements or disclosure in the notes thereto. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company has prepared the accompanying condensed financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). |
Unaudited Interim Financial Information | 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 September 30, 2022 and the results of its operations and its cash flows for the periods ended September 30, 2022 and 2021. The financial data and other information disclosed in these notes related to the three-month and nine-month periods ended September 30, 2022 and 2021 are also unaudited. The results for the three-month and nine-month periods ended September 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022, any other interim periods or any future year or period. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, provisions for uncollectible receivables and sales returns, valuation of inventories, useful lives of assets, the impairment of intangible assets, the accrual of research and development expenses and the valuation of common stock, stock options and warrants, and restricted stock units. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates or assumptions. |
Segment Information | Segment Information The Company operates the business on the basis of a single reportable segment, which is the business of developing and commercializing prescription drug products. The Company’s chief operating decision-maker is the Chief Executive Officer (“CEO”), who evaluates the Company as a single operating segment. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. All cash and cash equivalents are held in U.S. financial institutions or invested in short-term U.S. treasury bills or high-grade money market funds. As of September 30, 2022, the Company’s cash is in a non-interest bearing account as well as a government money market fund. From time to time, amounts deposited with its bank exceed federally insured limits. The Company believes the associated credit risk to be minimal. |
Accounts Receivable | Accounts Receivable Accounts receivable are recorded at the invoiced amount and are non-interest bearing. Accounts receivable are recorded net of allowances for doubtful accounts, cash discounts for prompt payment, distribution fees, chargebacks and returns and allowances. The total for these reserves amounted to $ 448 96 |
Inventories | Inventories 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 will record a write-down if an impairment is identified. Inventories at September 30, 2022 and December 31, 2021 consist solely of purchased finished goods. At September 30, 2022 and December 31, 2021 inventories are shown net of a reserve for its Biorphen product of $ 0 1,414 Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) Note 3 — Summary of Significant Accounting Policies (continued) |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation of property and equipment is computed utilizing the straight-line method based on the following estimated useful lives: computer hardware and software is depreciated over three years five years Maintenance and repairs are charged to expense as incurred, while renewals and improvements are capitalized. |
Intangible Assets | Intangible Assets The Company capitalizes payments it makes for licensed products when the payment relates to an FDA-approved product and the cost is recoverable based on expected future cash flows from the product. The cost is amortized on a straight-line basis over the estimated useful life of the product commencing on the approval date in accordance with Accounting Standards Codification (“ASC”) 350 — Intangibles - Goodwill and Other. In November 2021, the Company purchased the rights for its Carglumic Acid product for $ 3,250 ten years 750 five years 275 75 750 five years 738 2,000 five years 1,777 135 1,398 Schedule of Intangible Assets Amortization Expense Year Amortization Expense Remainder of 2022 $ 219 2023 725 2024 725 2025 725 2026 725 Thereafter 1,854 Total estimated amortization expense $ 4,973 |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the Company’s statements of operations for the amount by which the carrying amount of the asset exceeds the fair value of the asset. No impairment has been recognized since the Company’s inception in 2017. |
Debt Issuance Costs and Debt Discount and Detachable Debt-Related Warrants | Debt Issuance Costs and Debt Discount and Detachable Debt-Related Warrants Costs incurred to issue debt are deferred and recorded as a reduction to the debt balance in the accompanying balance sheets. The Company amortizes debt issuance costs over the expected term of the related debt using the effective interest method. Debt discounts related to the relative fair value of warrants issued in conjunction with the debt and are also recorded as a reduction to the debt balance and accreted over the expected term of the debt to interest expense using the effective interest method. Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) Note 3 — Summary of Significant Accounting Policies (continued) |
Revenue Recognition for Contracts with Customers | Revenue Recognition for Contracts with Customers The Company accounts for contracts with its customers in accordance with ASC 606 — Revenue from Contracts with Customers. ASC 606 applies to all contracts with customers, except for contracts that are within the scope of other standards. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. The Company assesses whether these options provide a material right to the customer and, if so, they are considered performance obligations. The exercise of a material right is accounted for as a contract modification for accounting purposes. The Company recognizes 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 or over time, and if over time this is based on the use of an output or input method. Any amounts received prior to revenue recognition will be recorded as deferred revenue. Amounts expected to be recognized as revenue within the twelve months following the balance sheet date will be classified as current portion of deferred revenue in the Company’s balance sheets. Amounts not expected to be recognized as revenue within the twelve months following the balance sheet date are classified as long-term deferred revenue, net of current portion. Milestone Payments Royalties – Significant Financing Component – The Company sells its Alkindi Sprinkle and Carglumic Acid product to one pharmacy distributor customer which provides order fulfilment and inventory storage/distribution services. 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) (Unaudited) Note 3 — Summary of Significant Accounting Policies (continued) For its Alkindi Sprinkle and Carglumic Acid 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 are 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. Because of the shelf life of the product and the Company’s lengthy return period, there may be a significant period of time between when the product is shipped and when it issues credits on returned product. 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 Alkindi Sprinkle and Carglumic Acid sales are not subject to returns. When estimating these adjustments to the transaction price, the Company reduces it sufficiently to be able to assert that it is probable that there will be no significant reversal of revenue when the ultimate adjustment amounts are known. The Company stores its Alkindi Sprinkle and Carglumic Acid inventory at its pharmacy distributor customer location, and sales are recorded when stock is pulled and shipped to fulfill specific patient orders. 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. 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. In addition, the Company anticipates it will receive revenues from product licensing agreements where it has contracted for milestone payments and royalties from products it has developed or acquired. |
Cost of Sales | Cost of Sales Cost of sales consists of the profit-sharing and royalty fees with the Company’s product licensing and development partners, the purchase costs for finished products from third-party manufacturers, freight and handling/storage costs from the Company’s 3PL logistics service providers, and amortization expense of certain intangible assets. The cost of sales for profit-sharing and royalty fees and costs for purchased finished products and the associated inbound freight expense is recorded when the associated product sale revenue is recognized in accordance with the terms of shipment to customers while outbound freight and handling/storage fees charged by the 3PL service provider are expensed as they are incurred. Cost of sales also reflects any write-downs or reserve adjustments for the Company’s inventories. Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) Note 3 — Summary of Significant Accounting Policies (continued) |
Research and Development Expenses | Research and Development Expenses Research and development (“R&D”) expenses include both internal R&D activities and external contracted services. Internal R&D activity expenses include salaries, benefits and stock-based compensation and other costs to support the Company’s R&D operations. External contracted services include product development efforts such as certain product licensor milestone payments, clinical trial activities, manufacturing and control-related activities and regulatory costs. R&D expenses are charged to operations as incurred. The Company reviews and accrues R&D expenses based on services performed and relies upon estimates of those costs applicable to the stage of completion of each project. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. Upfront payments and milestone payments made for the licensing of products that are not yet approved by the FDA are expensed as R&D in the period in which they are incurred. Nonrefundable advance payments for goods or services to be received in the future for use in R&D activities are recorded as prepaid expenses and are expensed as the related goods are delivered or the services are performed. |
Income (Loss) Per Share | Income (Loss) Per Share Basic net income (loss) per common share is computed by dividing net income (loss) attributable to common stockholders for the period by the weighted average number of common shares outstanding during the period. 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. For the three-month and nine-month periods ended September 30, 2022, common stock equivalents of 5,349,891 5,118,574 4,339,508 4,279,400 |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation under the provisions of ASC — 718 Compensation — Stock Compensation. The guidance under ASC 718 requires companies to estimate the fair value of the stock-based compensation awards on the date of grant and record expense over the related service periods, which are generally the vesting period of the equity awards. The Company estimates the fair value of stock-based option awards using the Black-Scholes-Merton option-pricing model (“BSM”). The BSM requires the input of subjective assumptions, including the expected stock price volatility, the calculation of expected term, forfeitures and the fair value of the underlying common stock on the date of grant, among other inputs. The risk-free interest rate was determined from the implied yields for zero-coupon U.S. government issues with a remaining term approximating the expected life of the options or warrants. Dividends on common stock are assumed to be zero for the BSM valuation of the stock options. The expected term of stock options granted is based on vesting periods and the contractual life of the options. Expected volatilities are based on comparable companies’ historical volatility along with a limited weighting included for the Company’s own volatility, which management believes represents the most accurate basis for estimating expected future volatility under the current conditions. The Company accounts for forfeitures as they occur. The Company uses the closing common stock price on the date of grant for the fair value of the common stock. Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) Note 3 — Summary of Significant Accounting Policies (continued) |
Fair Value Measurements | Fair Value Measurements We measure certain of our assets and liabilities at fair value. Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value accounting requires characterization of the inputs used to measure fair value into a three-level fair value hierarchy as follows: Level 1 Level 2 Level 3 Fair value measurements are classified based on the lowest level of input that is significant to the measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the assets and liabilities and their placement within the fair value hierarchy levels. The determination of the fair values stated below take into account the market for the Company’s financials, assets and liabilities, the associated credit risk and other factors as required. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. The Company’s financial instruments included cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and long-term debt obligation. The carrying amounts of these financial instruments, except for the long-term debt obligation, approximate their fair values due to the short-term maturities of these instruments. Based on borrowing rates currently available to the Company, the carrying value of the long-term debt obligation approximates its fair value. |
Impact of New Accounting Pronouncements | Impact of New Accounting Pronouncements There were no new accounting pronouncements issued by the FASB during the period that would apply to the Company would have a material impact on its financial position or results of operations. Eton Pharmaceuticals, Inc. Notes to Condensed Financial Statements ( in thousands, except share and per share amounts) (Unaudited) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Intangible Assets Amortization Expense | Schedule of Intangible Assets Amortization Expense Year Amortization Expense Remainder of 2022 $ 219 2023 725 2024 725 2025 725 2026 725 Thereafter 1,854 Total estimated amortization expense $ 4,973 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consist of the following: Schedule of Property and Equipment September 30, December 31, Computer hardware and software $ 177 $ 157 Furniture and fixtures 112 106 Equipment 52 132 Leasehold improvements 71 71 Property and equipment, gross 412 466 Less: accumulated depreciation (339 ) (351 ) Property and equipment, net $ 73 $ 115 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Future Payments of Long Term Debt | The table below reflects the future payments for the SWK loan principal and interest as of September 30, 2022. Schedule of Future Payments of Long Term Debt Amount 2022 $ 186 2023 1,740 2024 6,504 Total payments 8,430 Less: amount representing interest (1,815 ) Loan payable, gross 6,615 Less: current portion of long-term debt (708 ) Less: unamortized discount (229 ) Long-term debt, net of unamortized discount $ 5,678 |
Common Stock Warrants (Tables)
Common Stock Warrants (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Common Stock Warrants | |
Summary of Warrants Outstanding | The Company’s outstanding warrants to purchase shares of its common stock at September 30, 2022 are summarized in the table below. Summary of Warrants Outstanding Description of Warrants No. of Shares Exercise Price Placement Agent Warrants – 2017 Preferred Stock Offering 467,242 $ 3.00 Placement Agent Warrants - IPO 414,000 $ 7.50 SWK Warrants – Debt – Tranche #1 51,239 $ 5.86 SWK Warrants – Debt – Tranche #2 18,141 $ 6.62 Total 950,622 $ 5.18 |
Share-Based Payment Awards (Tab
Share-Based Payment Awards (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Stock Option Activity | The following table summarizes stock option activity during the nine months ended September 30, 2022: Summary of Stock Option Activity Shares Weighted Price Weighted Average Remaining Contractual Term (Yrs) Aggregate Intrinsic Value Outstanding as of December 31, 2021 3,513,719 $ 5.22 Issued 1,268,770 $ 3.76 Exercised (25,000 ) $ 1.38 Forfeited/Cancelled (420,197 ) $ 6.04 Outstanding as of September 30, 2022 4,337,292 $ 4.73 7.7 $ 437 Exercisable at September 30, 2022 2,789,537 $ 4.63 7.1 $ 401 Vested and expected to vest at September 30, 2022 4,287,292 $ 4.77 7.7 $ 401 |
Schedule of Restricted Stock Unit Activity | The following table summarizes restricted stock unit activity during the nine months ended September 30, 2022: Schedule of Restricted Stock Unit Activity Number of Units Weighted Average Grant-Date Fair Value Per Unit Outstanding and unvested as of December 31, 2021 — $ — Granted 373,606 $ 2.63 Vested — — Forfeited (4,000 ) $ 2.63 Outstanding and unvested as of September 30, 2022 369,606 $ 2.63 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Schedule of Lease-related Assets and Liabilities | The table below presents the lease-related assets and liabilities recorded on the balance sheet as of September 30, 2022 (in thousands). Schedule of Lease-related Assets and Liabilities Assets Classification Operating lease right-of-use assets Operating lease right-of-use assets, net $ 42 Total leased assets $ 42 Liabilities Operating lease liabilities, current Accrued liabilities $ 36 Total operating lease liabilities $ 36 |
Schedule of Future Lease Commitments | The Company’s future lease commitments for its administrative offices in Deer Park, Illinois as of September 30, 2022 is as indicated below: Schedule of Future Lease Commitments Total 2022 2023 2024 Thereafter Undiscounted lease payments $ 37 22 15 — — Less: Imputed interest (1 ) Total lease liabilities $ 36 |
Liquidity Considerations (Detai
Liquidity Considerations (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Cash and cash equivalents | $ 13,378 | $ 14,406 |
Schedule of Intangible Assets A
Schedule of Intangible Assets Amortization Expense (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Accounting Policies [Abstract] | |
Remainder of 2022 | $ 219 |
2023 | 725 |
2024 | 725 |
2025 | 725 |
2026 | 725 |
Thereafter | 1,854 |
Total estimated amortization expense | $ 4,973 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Nov. 30, 2021 | Sep. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2019 | Dec. 31, 2022 | Jun. 30, 2022 | |
Property, Plant and Equipment [Line Items] | ||||||||||
Allowances for doubtful accounts | $ 448 | $ 448 | $ 96 | |||||||
Inventory write-down | 0 | $ 1,414 | ||||||||
Payments to Acquire Intangible Assets | 2,750 | |||||||||
Accumulated amortization | 1,777 | 1,777 | ||||||||
Amortization of intangible assets | $ 135 | $ 1,398 | ||||||||
Antidilutive securities | 5,349,891 | 4,339,508 | 5,118,574 | 4,279,400 | ||||||
Betaine Anhydrous Product [Member] | ||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||
Payments to Acquire Intangible Assets | $ 2,000 | |||||||||
Finite-lived intangible asset, useful life | 5 years | |||||||||
Carglumic Acid Product Rights [Member] | ||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||
Payments to Acquire Intangible Assets | $ 3,250 | |||||||||
Finite-lived intangible asset, useful life | 10 years | |||||||||
Biorphen Product [Member] | ||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||
Payments to Acquire Intangible Assets | $ 750 | |||||||||
Finite-lived intangible asset, useful life | 5 years | |||||||||
Biorphen [Member] | ||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||
Accumulated amortization | $ 275 | |||||||||
Biorphen [Member] | Subsequent Event [Member] | ||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||
Accumulated amortization | $ 75 | |||||||||
Rezipres Product [Member] | ||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||
Payments to Acquire Intangible Assets | $ 750 | |||||||||
Finite-lived intangible asset, useful life | 5 years | |||||||||
Dr Reddys [Member] | ||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||
Accumulated amortization | $ 738 | |||||||||
Computer Equipment [Member] | ||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||
Estimated useful lives for property and equipment | 3 years | |||||||||
Furniture and Fixtures [Member] | ||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||
Estimated useful lives for property and equipment | 5 years |
Schedule of Property and Equipm
Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Abstract] | ||
Computer hardware and software | $ 177 | $ 157 |
Furniture and fixtures | 112 | 106 |
Equipment | 52 | 132 |
Leasehold improvements | 71 | 71 |
Property and equipment, gross | 412 | 466 |
Less: accumulated depreciation | (339) | (351) |
Property and equipment, net | $ 73 | $ 115 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation and amortization expense | $ 14 | $ 24 | $ 53 | $ 132 |
Schedule of Future Payments of
Schedule of Future Payments of Long Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | ||
2022 | $ 186 | |
2023 | 1,740 | |
2024 | 6,504 | |
Total payments | 8,430 | |
Less: amount representing interest | (1,815) | |
Loan payable, gross | 6,615 | |
Less: current portion of long-term debt | (708) | $ (1,418) |
Less: unamortized discount | (229) | |
Long-term debt, net of unamortized discount | $ 5,678 | $ 5,262 |
Long Term Debt (Details Narrati
Long Term Debt (Details Narrative) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | ||||||
Apr. 05, 2022 USD ($) | Aug. 11, 2020 USD ($) | Nov. 13, 2019 USD ($) | Aug. 31, 2020 USD ($) $ / shares shares | Nov. 30, 2019 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 USD ($) | Jun. 26, 2022 $ / shares shares | |
Debt Instrument [Line Items] | ||||||||
Borrowing amount | $ 2,000 | $ 2,000 | ||||||
Issuance of warrants | shares | 950,622 | 467,242 | ||||||
Exercise price of warrants | $ / shares | $ 5.18 | $ 3 | ||||||
Interest expenses | $ 699 | $ 766 | ||||||
Debt discount amortization | 96 | $ 110 | ||||||
Accrued interest | $ 191 | |||||||
London Interbank Offered Rate (LIBOR) [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | $ 708 | |||||||
Interest rate | 8% | |||||||
LIBOR Floor Rate [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate | 2% | |||||||
Warrant [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Borrowing amount | $ 2,000 | $ 5,000 | ||||||
Issuance of warrants | shares | 18,141 | 51,239 | ||||||
Exercise price of warrants | $ / shares | $ 6.62 | $ 5.86 | ||||||
Fair value adjustment of warrants | $ 94 | $ 226 | ||||||
Warrants and rights outstanding, term | 7 years | 7 years | ||||||
Warrant [Member] | Measurement Input, Exercise Price [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Exercise price of warrants | $ / shares | $ 6.85 | $ 5.75 | ||||||
Warrant [Member] | Measurement Input, Option Volatility [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Warrants and rights outstanding, measurement input | 95 | 95 | ||||||
Warrant [Member] | Measurement Input, Expected Dividend Rate [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Warrants and rights outstanding, measurement input | 0 | 0 | ||||||
Warrant [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Warrants and rights outstanding, measurement input | 0.4 | 1.8 | ||||||
Food and Drug Administration's [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Borrowing amount | 3,000 | |||||||
SWK Credit Agreement [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | 10,000 | |||||||
Proceeds from related party | $ 5,000 | |||||||
Interest rate | 5% | |||||||
DebtInstrument description | The Company was required to maintain a minimum cash balance of $3,000, only pay interest on the debt until February 2022 and then pay 5.5% of the loan principal balance commencing on February 15, 2022 and then every three months thereafter until November 13, 2024 at which time the remaining principal balance is due. Borrowings under the SWK Credit Agreement are secured by the Company’s assets. The SWK Credit Agreement contains customary default provisions and covenants which include limits on additional indebtedness. In March 2020, SWK provided a waiver for the Company to obtain loans with the Small Business Association. In February 2021, the Company notified SWK that it will not require additional borrowing capacity under the SWK Credit Agreement and terminated the additional borrowing capacity with SWK. | |||||||
Minimum cash balance | $ 3,000 | |||||||
SWK Credit Agreement [Member] | Unused lines of Credit [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate | 2% | |||||||
SWK Credit Agreement [Member] | London Interbank Offered Rate (LIBOR) Swap Rate [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate | 10% | |||||||
SWK Credit Agreement [Member] | Stated LIBOR Floor Rate [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate | 2% | |||||||
SWK Credit Agreement [Member] | Food and Drug Administration's [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from related party | $ 5,000 |
Common Stock (Details Narrative
Common Stock (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Common stock, shares authorized | 50,000,000 | 50,000,000 | ||
Common stock, par value | $ 0.001 | $ 0.001 | ||
Warrant exercised | $ 2,268,000 | |||
Common stock to employees stock purchase plan | $ 117,000 | $ 134,000 | ||
Warrant [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Stock warrants exercised | 600,000 | |||
Common Stock [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Stock warrants exercised | 598,448 | |||
Common stock to employees stock purchase plan | $ 47,585 |
Summary of Warrants Outstanding
Summary of Warrants Outstanding (Details) - $ / shares | Sep. 30, 2022 | Jun. 26, 2022 |
No. of shares, total | 950,622 | 467,242 |
Exercise price | $ 5.18 | $ 3 |
Placement Agent Warrants - 2017 Preferred Stock Offering [Member] | ||
No. of shares, total | 467,242 | |
Exercise price | $ 3 | |
Placement Agent Warrants - IPO [Member] | ||
No. of shares, total | 414,000 | |
Exercise price | $ 7.50 | |
SWK Warrants - Debt (Tranche #1) [Member] | ||
No. of shares, total | 51,239 | |
Exercise price | $ 5.86 | |
SWK Warrants - Debt (Tranche #2) [Member] | ||
No. of shares, total | 18,141 | |
Exercise price | $ 6.62 |
Common Stock Warrants (Details
Common Stock Warrants (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Jun. 26, 2022 | |
Number of securities called by warrants or rights | 950,622 | 950,622 | 467,242 |
Exercise price of warrants | $ 5.18 | $ 5.18 | $ 3 |
Warrant expiration date | Dec. 26, 2022 | ||
Modification expense | $ 16 | $ 88 | |
General and Administrative Expense [Member] | |||
Modification expense | $ 244 |
Summary of Stock Option Activit
Summary of Stock Option Activity (Details) - Equity Option [Member] $ / shares in Units, $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) $ / shares shares | |
Offsetting Assets [Line Items] | |
Shares, options outstanding, beginning balance | shares | 3,513,719 |
Weighted average exercise price, options outstanding, beginning balance | $ / shares | $ 5.22 |
Shares, issued | shares | 1,268,770 |
Weighted average exercise price, issued | $ / shares | $ 3.76 |
Shares, exercised | shares | (25,000) |
Weighted average exercise price, exercised | $ / shares | $ 1.38 |
Shares, forfeited/cancelled | shares | (420,197) |
Weighted average exercise price, forfeited/cancelled | $ / shares | $ 6.04 |
Shares, options outstanding, ending balance | shares | 4,337,292 |
Weighted average exercise price, options outstanding, ending balance | $ / shares | $ 4.73 |
Weighted average remaining contractual term, options outstanding, ending balance | 7 years 8 months 12 days |
Aggregate intrinsic value, options outstanding, ending balance | $ | $ 437 |
Shares, options exercisable, ending balance | shares | 2,789,537 |
Weighted average exercise price, options exercisable, ending balance | $ / shares | $ 4.63 |
Weighted average remaining contractual term, options exercisable, ending balance | 7 years 1 month 6 days |
Aggregate intrinsic value, options exercisable, ending balance | $ | $ 401 |
Shares, options vested and expected to vest, ending balance | shares | 4,287,292 |
Weighted average exercise price, options vested and expected to vest, ending balancee | $ / shares | $ 4.77 |
Weighted average remaining contractual term, options vested and expected to vest, ending balance | 7 years 8 months 12 days |
Aggregate intrinsic value, options vested and expected to vest, ending balance | $ | $ 401 |
Schedule of Restricted Stock Un
Schedule of Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) [Member] | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of units outstanding, Beginning | shares | |
Weighted average grant date fair value per unit outstanding, Beginning | $ / shares | |
Number of units, granted | shares | 373,606 |
Weighted average grant date fair value per unit, granted | $ / shares | $ 2.63 |
Number of units, vested | shares | |
Weighted average grant date fair value per unit, vested | $ / shares | |
Number of units, forfeited | shares | (4,000) |
Weighted average grant date fair value per unit, forfeited | $ / shares | $ 2.63 |
Number of units outstanding, Ending | shares | 369,606 |
Weighted average grant date fair value per unit outstanding, Ending | $ / shares | $ 2.63 |
Share-Based Payment Awards (Det
Share-Based Payment Awards (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2018 | Dec. 31, 2021 | May 31, 2017 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Modification expense | $ 16 | $ 88 | |||||
Stock-based compensation expense | 949 | $ 1,009 | 3,332 | $ 2,518 | |||
Equity Option [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Stock-based compensation expense | 853 | 2,850 | |||||
Unrecognized compensation costs | 4,532 | $ 4,532 | |||||
Weighted average grant date fair value | $ 2.38 | ||||||
Share- based payment award, options, exercises in period | 25,000 | 144,233 | |||||
Exercise price | $ 1.38 | ||||||
Share-Based Payment Arrangement, Option [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Exercise price | $ 2.35 | ||||||
Aggregate intrinsic value, vested | 31 | 682 | $ 31 | $ 682 | |||
Restricted Stock Units (RSUs) [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Stock-based compensation expense | 53 | 53 | |||||
Unrecognized compensation costs | 919 | $ 919 | |||||
Weighted average | 4 years | ||||||
General and Administrative Expense [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Modification expense | $ 244 | ||||||
Stock-based compensation expense | 893 | 838 | 3,102 | 2,110 | |||
Research and Development Expense [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Stock-based compensation expense | $ 56 | $ 171 | $ 230 | $ 408 | |||
Common Stock [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Share- based payment award, options, exercises in period | 25,000 | 6,000 | 25,000 | 144,233 | |||
Employee stock purchase plan, shares | 47,585 | 29,326 | |||||
Product Consultant [Member] | Common Stock [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Stock options expiration period | 10 years | ||||||
Number of stock options issued to purchase common stock | 50,000 | ||||||
Stock options expiration period | 5 years | ||||||
Board of Directors [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Exercise price, upper range limit | $ 1.37 | ||||||
Exercise price lower range limit | $ 8.61 | ||||||
2017 Equity Incentive Plan [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Share-based payment award, number of shares authorized | 5,000,000 | ||||||
2018 Equity Incentive Plan [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Number of shares available for grant | 673,773 | 673,773 | |||||
2018 Equity Incentive Plan [Member] | January 1, 2019 and Through January 1, 2028 [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Percentage for total number of shares outstanding | 4% | ||||||
2018 Employee Stock Purchase Plan [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Number of shares available for grant | 582,595 | 582,595 | 150,000 | ||||
Stock-based compensation expense | $ 97 | $ 83 | |||||
Weighted average grant date fair value | $ 1.32 | $ 2.83 | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Description | 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 | ||||||
Description for deductions to purchase stock at price per share | The terms of the ESPP permit employees of the Company to use payroll deductions to purchase stock at a price per share that is at least the lesser of (1) 85% of the fair market value of a share of common stock on the first date of an offering or (2) 85% of the fair market value of a share of common stock on the date of purchase. After the initial offering period ended, subsequent twelve-month offering periods automatically commence over the term of the ESPP on the day that immediately follows the conclusion of the preceding offering, each consisting of two purchase periods approximately six months in duration | ||||||
Employee stock purchase plan, shares | 47,585 | 29,326 | |||||
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Amount | $ 174 | $ 192 | |||||
Employee-related Liabilities | $ 65 | $ 65 | $ 22 |
Related-Party Transactions (Det
Related-Party Transactions (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Feb. 18, 2019 | Aug. 11, 2017 | May 31, 2021 | Apr. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Related Party Transaction [Line Items] | ||||||||
Proceeds from sale of machinery and equipment | $ 700 | |||||||
Payment of research and development expense | $ 744 | $ 2,678 | 3,052 | $ 5,554 | ||||
Imprimis Pharmaceuticals [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Proceeds from sale of machinery and equipment | $ 700 | |||||||
Gain on sale of lab equipment | $ 181 | |||||||
Eyemax [Member] | Amended and Restated Agreement [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Sale of product expense | $ 2,000 | $ 1,799 | ||||||
Eyemax [Member] | One Milestone [Member] | Amended and Restated Agreement [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction | 250 | |||||||
Eyemax [Member] | Two Milestone [Member] | Amended and Restated Agreement [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction | $ 500 | |||||||
Harrow Health Inc [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Ownership percentage | 7.80% | 7.80% | ||||||
Harrow Health Inc [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Common stock shares outstanding | 1,982,000 | |||||||
Eyemax [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction | $ 250 | |||||||
Payment of research and development expense | 250 | |||||||
Sale of product expense | $ 500 | |||||||
Percentage of royalty fee | 10% | |||||||
Related party transaction, description | The Eyemax Agreement was for an initial term of 10 years from the date of the Eyemax Agreement, subject to successive two-year renewals unless the Company elected to terminate the Eyemax Agreement | |||||||
Chief Executive Officer [Member] | Restricted Stock [Member] | Harrow Health Inc [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of restricted common stock issued for services | 25,000 |
Schedule of Lease-related Asset
Schedule of Lease-related Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Leases | ||
Total leased assets | $ 42 | |
Total leased assets | 42 | $ 104 |
Total operating lease liabilities | 36 | |
Total operating lease liabilities | $ 36 |
Schedule of Future Lease Commit
Schedule of Future Lease Commitments (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Leases | |
Undiscounted lease payments, Total | $ 37 |
Undiscounted lease payments, 2022 | 22 |
Undiscounted lease payments, 2023 | 15 |
Undiscounted lease payments, 2024 | |
Undiscounted lease payments, Thereafter | |
Less: Imputed interest | (1) |
Total lease liabilities | $ 36 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Operating lease payments | $ 66 | |||
Operating lease right of use asset amortization expense | $ 21 | $ 20 | $ 62 | $ 69 |
Operating lease weighted average remaining lease term1 | 6 months | 6 months | ||
Operating lease weighted average discount rate percent | 5.40% | 5.40% | ||
Lease expiration date | Mar. 31, 2023 | |||
Research and Development Expense [Member] | ||||
Operating lease cost | $ 0 | 0 | $ 0 | 9 |
General and Administrative Expense [Member] | ||||
Operating lease cost | $ 22 | $ 21 | $ 64 | $ 64 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||||
Sep. 13, 2022 | Oct. 28, 2021 | Jun. 15, 2021 | Mar. 27, 2020 | Jun. 12, 2019 | Feb. 08, 2019 | Jan. 23, 2019 | Nov. 17, 2017 | Mar. 31, 2022 | Jul. 31, 2021 | Sep. 30, 2022 | Jun. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 26, 2020 | |
Product Liability Contingency [Line Items] | ||||||||||||||||||
Litigation related product profit, percentage | 62.50% | |||||||||||||||||
Credit agreement term | 10 years | 10 years | ||||||||||||||||
Revenues | $ 3,219 | $ 775 | $ 12,753 | $ 15,739 | ||||||||||||||
Held in escrow | 250 | |||||||||||||||||
Cost of goods sold | 1,201 | 654 | 4,795 | 2,455 | ||||||||||||||
Revenue recognized | 17,000 | |||||||||||||||||
Additional milestone revenues | 25,000 | |||||||||||||||||
Research and Development Expense | 744 | 2,678 | 3,052 | 5,554 | ||||||||||||||
Percentage of net profits payments to third party from sale of product | 65% | 50% | ||||||||||||||||
Payments for licensing rights | $ 2,000 | $ 3,250 | ||||||||||||||||
Sintetica [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Cost of goods sold | $ 812 | |||||||||||||||||
Tulex Pharmaceuticals Inc [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Milestone payment amount | $ 5,000 | |||||||||||||||||
Diurnal Limited [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Payment for obtaining product orphan drug | 2,500 | |||||||||||||||||
Licensing Revenue [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Revenues | 5,000 | $ 5,000 | 14,000 | |||||||||||||||
Additional payment received | $ 45,000 | |||||||||||||||||
Additional payment rate | 10% | |||||||||||||||||
Cost of goods sold | $ 990 | $ 1,500 | ||||||||||||||||
Exclusive License and Supply Agreement (ET-202 ) [Member] | Sintetica [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Proceeds from licensing | $ 500 | |||||||||||||||||
Percentage for additional profit | 50% | |||||||||||||||||
Exclusive License and Supply Agreement (ET-203) [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Percentage for additional profit | 50% | |||||||||||||||||
Payment of milestone fee | $ 600 | |||||||||||||||||
Exclusive License and Supply Agreement (ET-203) [Member] | Upon FDA Approval [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Payments for royalties | $ 750 | |||||||||||||||||
Exclusive License and Supply Agreement (ET-203) [Member] | Sintetica [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Proceeds from licensing | $ 500 | |||||||||||||||||
Percentage for additional profit | 50% | |||||||||||||||||
License and Supply Agreement (ET-203) [Member] | Licensor [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Credit agreement term | 10 years | |||||||||||||||||
Licensing and Supply Agreement [Member] | Licensor [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Percentage of net profits payments to third party from sale of product | 35% | |||||||||||||||||
Licensing and Supply Agreement [Member] | Upon Issuance of Patent Covering [Member] | Licensor [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Research and Development Expense | $ 650 | |||||||||||||||||
Licensing and Supply Agreement [Member] | Product Sales [Member] | Licensor [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Research and Development Expense | 500 | |||||||||||||||||
Licensing and Supply Agreement [Member] | Calendar Year [Member] | Licensor [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Research and Development Expense | $ 10,000 | |||||||||||||||||
Exclusive License and Supply Agreement (ET-105 ) [Member] | Aucta Pharmaceuticals, Inc [Member] | Maximum [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Milestone payment amount | $ 3,000 | |||||||||||||||||
Exclusive License and Supply Agreement (ET-105 ) [Member] | Azurity Pharmaceuticals Inc [Member] | Intellectual Property [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Payments for royalties | 450 | |||||||||||||||||
Exclusive License and Supply Agreement (ET-105 ) [Member] | Upon FDA Approval [Member] | Aucta Pharmaceuticals, Inc [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Payments for royalties | 2,450 | |||||||||||||||||
Exclusive License and Supply Agreement (ET-105 ) [Member] | Upon Issuance of Orange-book Listed Patent [Member] | Aucta Pharmaceuticals, Inc [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Payments for royalties | 1,000 | |||||||||||||||||
Exclusive License and Supply Agreement (ET-105 ) [Member] | Upon FDA Acceptance of Product Filing [Member] | Aucta Pharmaceuticals, Inc [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Payments for royalties | $ 1,500 | |||||||||||||||||
Exclusive License and Supply Agreement (ET-105 ) [Member] | Sales Exceed $10 Million [Member] | Aucta Pharmaceuticals, Inc [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Milestone payment description | 1,000 when net sales exceed $10 million in a calendar year | |||||||||||||||||
Exclusive License and Supply Agreement (ET-105 ) [Member] | Sales Exceed $20 Million [Member] | Aucta Pharmaceuticals, Inc [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Milestone payment description | 2,000 when net sales exceed $20 million in a calendar year | |||||||||||||||||
Exclusive License and Supply Agreement [Member] | Diurnal Limited [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Cash paid for licensing milestone fee | $ 3,500 | |||||||||||||||||
Stock issued during period, shares, new issues | 379,474 | |||||||||||||||||
Issuance of shares, value | $ 1,264 | |||||||||||||||||
Shares issued, price per share | $ 3.33 | |||||||||||||||||
Aggregate value of licensing milestone amount | $ 4,764 | |||||||||||||||||
Distribution and Promotion License Agreement [Member] | Crossject S.A. [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Research and Development Expense | $ 500 | $ 500 | ||||||||||||||||
Sale of stock, percentage | 10% | |||||||||||||||||
Distribution and Promotion License Agreement [Member] | Crossject S.A. [Member] | Maximum [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Cash paid for licensing milestone fee | $ 6,000 | |||||||||||||||||
Distribution and Promotion License Agreement [Member] | Upon FDA Acceptance of Product Filing [Member] | Crossject S.A. [Member] | ||||||||||||||||||
Product Liability Contingency [Line Items] | ||||||||||||||||||
Research and Development Expense | $ 4,000 |