Good afternoon, and welcome to the Eton Pharmaceuticals third quarter 2024 financial results conference call. At this time, all participants are in listen-only mode. Following the formal remarks, we will open the call up for your questions. Please be advised that this call is being recorded at the company's request. At this time, I would like to turn it over to David Krempa, Chief Business Officer at Eton Pharmaceuticals. Please proceed.
Thank you, Operator. Good afternoon, everyone, and welcome to Eton's third quarter 2024 conference call. This afternoon, we issued a press release that outlines the topics we plan to discuss on today's call. The release is available on our website, etonpharma.com. Joining me on our call today, we have Sean Brynjelsen, our CEO, and James Gruber, our CFO. In addition to taking live questions on today's call, we will be answering questions that are emailed to us. Investors can send their questions to investorrelations@etonpharma.com. Before we begin, I would like to remind everyone that remarks made during today's call may contain forward-looking statements and involve risks and uncertainties that could cause actual results to differ materially from those contained in these forward-looking statements. Please see the forward-looking statements disclaimer in our earnings release and the risk factors in the company's filings with the SEC.
Now, I will turn the call over to our CEO, Sean Brynjelsen.
Thank you, David. Good afternoon, everyone, and thank you for joining us today. It's been a busy and exciting few months for us, and I'm looking forward to talking with all of you today at such a critical moment in Eton's history. Throughout the last year, we have been talking about our three-pillar strategy: one, organic growth of our existing portfolio; two, advancement of internal pipeline products; and three, value-creating business development transactions to accelerate growth. I'm pleased to report that we have delivered major progress on all three of these pillars. First, our commercial organization continues to deliver attractive organic growth from our existing products, producing our 15th straight quarter of sequential product revenue growth. Secondly, the third quarter brought a critical milestone for our important pipeline product, ET-400, which was accepted for review by the FDA and assigned a February 28th PDUFA date.
Lastly, on the business development front, we announced the signing of an asset purchase agreement to acquire Increlex last month, which represented a transformational opportunity for the company. I could not be more proud of our team's hard work to achieve these results over the last few months, and I look forward to discussing each of these accomplishments in more detail. I'll start with our Q3 results. As I mentioned, we delivered another record quarter of product sales. Product sales were up 40% year- over- year, and the growth continues to be driven by strong increases in both Alkindi Sprinkle and carglumic acid. The strong sales allowed us to reach positive GAAP net income in the third quarter.
We previously said our goal was to reach GAAP net income by the fourth quarter of this year, so I am pleased that we were able to achieve it one quarter ahead of schedule. Reaching GAAP profitability is a major milestone for any company. In the pharmaceutical world, revenue and earnings are often the result of many years' worth of investment and development activities. Our case is no different. As we are starting to see the fruits of our labor after many years spent working hard on drug development and regulatory activities, building out our commercial infrastructure, and evaluating business development opportunities, we expect much more to come in the months and years ahead. Profitability has always been and always will be a central part of our strategy at Eton. We are not interested in chasing unprofitable growth.
We have worked tirelessly to produce attractive revenue growth while maintaining a disciplined cost structure. This approach has allowed us to reach a cash flow break-even in 2023 and now positive GAAP income this quarter. By closely monitoring our spending, we have been able to build up Eton's attractive rare disease portfolio and pipeline while minimizing dilution to shareholders. We are very pleased to have reached this critical profitability milestone for the company, but we are far from finished. In fact, I think we are in the early stages of our growth story. With the expected additions of Increlex and ET-400 on top of continued growth from our existing portfolio, we are very excited about what we expect to deliver in 2025.
During our last call, I had mentioned that I was optimistic about acquiring a larger commercial asset this year, and we were pleased to see it materialize last month when we announced that we had signed an asset purchase agreement with Ipsen for the purchase of Increlex. Increlex is an FDA and EMA-approved product for the treatment of severe primary insulin-like growth factor-1 deficiency. It is an attractive biologic product that fits perfectly with our pediatric endocrinology focus. With our strong presence and relationships in the pediatric endocrinology community, we believe we can raise awareness of this condition, which appears to be both underdiagnosed and undertreated. We plan to finance the acquisition entirely with cash on hand and an expansion of our existing credit facility.
The transaction is expected to close toward the end of this year, and we will be able to share more about the product and our expectations for it after the transaction closes. In order to help support the addition of Increlex, as well as the expected near-term launch of ET-400, we are planning an expansion and realignment of our sales force in 2025. Our current sales force will be split into two separate units, with approximately 12 rare disease specialists focused on pediatric endocrinology, promoting Increlex, Alkindi Sprinkle, and ET-400. An additional five specialists will focus exclusively on our metabolic portfolio, promoting carglumic acid, PKU GOLIKE, betaine, and nitisinone. We believe this realignment will allow us to maximize the revenue potential of our entire product portfolio. Now on to our product-specific results.
Alkindi Sprinkle revenue and active patients continue to grow, and even with a higher discontinuation rate than we would like, the product delivered 55% year-over-year growth and has a long runway ahead of it. The product has patent protection through 2034, and we believe that roughly 90% of the target population has yet to be converted. Despite the current growth rate, we expect the franchise's growth trajectory to accelerate with the launch of ET-400 next year. We remain confident that the combined products can reach an active patient count that is significantly higher than the current level. Regarding our metabolic portfolio, we saw another nice quarter of revenue growth driven primarily by Carglumic Acid. PKU GOLIKE continues to see strong interest since our acquisition earlier this year.
We have seen an increase in referrals since we re-engaged promotional activities in the second quarter, and we believe that having a fully dedicated metabolic sales force, plus the anticipated launch of TYR GOLIKE early next year, will lead to significant growth in this franchise in 2025. Moving on to our pipeline candidates. During the quarter, we received the exciting news that the FDA has accepted our new drug application for ET-400, a proprietary patented formulation of hydrocortisone oral solution, and assigned it a PDUFA action date of February 28th, 2025. We are now more than six months into the review of the application, and we believe that it is going well. As a result, we have scheduled the manufacturing of initial launch inventory later this quarter. This will enable us to have a commercial product available shortly after the potential FDA approval.
Our team is hard at work on all other aspects of launch preparation, including our marketing campaign. In addition, last week, we received good news that the U.S. Patent and Trademark Office has granted us a second patent for ET-400, further strengthening our IP protection on this important product. On to ET-600, where our pivotal study has now been initiated. This study should be completed relatively quickly, and we anticipate having an initial data readout near the end of this year. If successful, this will allow us to file the product's NDA by the end of the first quarter in 2025. As you may recall, we previously ran and passed a pilot study in the first part of this year, so we are optimistic about the outcome of this pivotal study, and with Increlex now further bolstering our pediatric endocrinology presence, we are very excited about the prospects for ET-600.
If everything goes as planned, ET-600 will be our fourth commercial pediatric endocrinology product and could be on the market as early as the first quarter of 2026. As you've seen from our results, we are executing on all fronts. I am proud of the team for delivering another stellar quarter of financial results that resulted in GAAP net income, making progress, advancing our pipeline candidates, and executing a transformational acquisition. I could not be more excited for how we are positioned entering 2025. With all of this progress, we are well on our way to reaching our three long-term goals for the company. That is 10 commercial rare disease products with Increlex and potential near-term launches of ET-400 and ET-600. We have a clear path to eight. We hope to have additional commercial products in 2025. Secondly, reaching $100 million in revenue.
The expected launches of both ET-400 and Increlex should put us on a trajectory path to achieve this in the near term. Thirdly, reaching a $1 billion market cap. If we're successful in delivering on our strategy on these first two goals and developing and launching new products and continuing to execute value-creating acquisitions, we believe we can reach this milestone in the coming years. We appreciate all of our shareholders' support, and we continue to believe big things are ahead for Eton. With that, I'll turn it over to James, our Chief Financial Officer, to discuss the financials. James?
Thank you, Sean. Our third- quarter revenue was $10.3 million compared to $7.0 million in the third quarter of 2023. Revenue for the third quarter of 2024 included $0.5 million of licensing revenue resulting from the sale of our DS-200 product candidate in September of 2024, and we reported zero licensing revenue in the third quarter of 2023. Net product sales for the third quarter of 2024 increased 40% to $9.8 million compared to $7.0 million in the prior year period, primarily driven by growth in Alkindi Sprinkle and Carglumic Acid. R&D expenses for the quarter were $0.5 million compared with $0.6 million in the prior year period, as overall development activities were relatively flat year-over-year. General and administrative expenses for the quarter were $5.3 million compared with $4.3 million in the prior year period, due primarily to increased sales and marketing activities, legal expenses, and employee-related expenses.
Total company net income was $0.6 million for the quarter compared to a net loss of $0.6 million in the prior year period. Net income per basic and diluted share during the quarter was $0.02 compared to a net loss per basic and diluted share of $0.02 in the prior year period. It is worth noting that even without the profit associated with one-time licensing revenue this quarter, Eton still generated positive net income, which, as Sean mentioned, is a very important milestone for the company. Eton finished the third quarter with $20.3 million of cash on hand and generated $2.9 million of operating cash flow during the quarter. This concludes our remarks on third quarter results, and with that, I'll turn it back over to the operator for Q&A.
Thank you. We will now open the line for questions. As a reminder, please press star one to join the queue. If you are called upon to ask your question or are now listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Chase Knickerbocker with Craig-Hallum, please go ahead.
Good afternoon, guys. Congrats on all the progress here, and thanks for taking the questions. Obviously, you guys are well familiar with many of the potential and current prescribers of Increlex. Can you kind of let us in on what you heard from them as you were kind of doing your work on the product that got you very interested to pursue the deal? Just kind of any color on kind of your due diligence there that got you really excited. Thanks.
Sure. Thanks, Chase. So we won't be able to go too much into it before the deal closed, but obviously, we're very excited about the opportunity. As you mentioned, we know a lot of the doctors. We've talked to them. They've said it's a very good product. It's a needed product. There's no other alternatives for these children. So it was a critical product. They wanted to make sure we kept it on the market and available to all these patients. I think they thought there was an opportunity for even more education and awareness within the community, and that's what we intend to do. We think we've got a good presence, good relationships with the community, and we look forward to increasing the awareness, education, and we think the treatment within the population.
Great. And then to the extent that you can, kind of before closing, first, kind of how we can think about Increlex on the top line under Eton ownership. It looks to have been fairly steady with some kind of recent fluctuations under Ipsen. Any thoughts on what you guys can do to potentially return the product to growth? And then on the expense side, how should investors think about kind of SG&A needing to increase as a result of this transaction?
Hi, Chase. This is Sean. So on the top line, we certainly don't think it'll be less than what it's done historically. The plan here is they have a dedicated sales team that is bringing that product really back to the forefront of these doctors' minds as they have patients come in who have growth issues that Increlex is another tool within their bag they can use to treat them. We know that at one point, there was just under 200 patients on product, and we think we can get back to that just by simple promotion and education, and hopefully, the doctors will be able to diagnose and administer more broadly. So we're looking at that as one lever. At some point, we'll see.
Europe has far more patients than the U.S., and we'll have to figure out what's going on there and how that perhaps we can understand that and perhaps grow the market above the 200 patients. But those will be the initial steps. Our plan will also include putting together an advisory board of medical doctors and leading healthcare providers that understand the disease state and will help us to make sure the patients are number one because at the company, it's patients first, then products, and then services, patient support services, in that order. We want to help as much as we can. And then the second part of your question regarding the expenses, I guess I'll let that to either maybe James want to take that one.
Sure. Hey, Chase. Regarding SG&A, as Sean mentioned in his remarks, here in the U.S., we are going to increase the expansion of sales force, so there'll be additional investment there. As David mentioned, there'll be additional investment in market education. So a decent amount of investment here in the United States, and then outside the U.S., a decent amount of investment in ex-U.S. infrastructure, logistics, a decent amount of regulatory investment. So after the deal closes, we'll provide a little more detail behind specific 2025, but a decent amount of investment expected next year.
Got it. And then on Carglumic, I mean, you noted sequential growth again. Did you add a couple more patients in the quarter, and kind of do you think that growth can kind of continue sequentially? And then, Sean, any engagement with FDA on ET-400 in the quarter, or kind of what informs kind of the confidence that you mentioned in the prepared remarks?
Sure. On Carglumic, maybe James, you want to speak to that in terms of the sales rate?
Yeah. It's been a great contributor of revenue growth for us to date. We've overachieved what we expected to from a market share standpoint. So while additional growth is certainly possible, the reason we've built out our internal pipeline and been so active in M&A is to bolster the product portfolio with additional products because we're never going to say the product's not going to continue to grow, but it's got limited opportunity from a go-forward standpoint.
I think that's fair, and really, as we go forward with these new opportunities, we're looking at patent-protected, IP-protected, true-branded products and really hitting unmet needs. Carglumic, as you know, is an AB-rated version of Carbaglu, and so that offers, I guess, another option for patients, but it wasn't really filling an unmet need for Carbaglu that need met. It's really just offering a lower price, but our real passion here is to bring in products that can address unmet needs. Like I always say, there's over 5,000 rare diseases, most of which are ultra-rare. That's the work we like to do, and to that point, ET-400 review is going very well, in my opinion. We don't have any open items at this time, and we're expecting labeling in the near future, so once the labeling comments start coming in, we'll feel pretty good about the February 28th PDUFA date.
Great. Thanks for taking the question, guys. Appreciate it. Congrats again.
Yeah. Our pleasure.