UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to _______________________ Commission file number: 001-38738 ETON PHARMACEUTICALS, INC. (Exact name of registrant as specified in its cha ...

Company Overview - Eton Pharmaceuticals is a specialty pharmaceutical company focused on improving existing medicines to address unmet patient needs[5] - The company utilizes the 505(b)(2) NDA pathway for low-cost, low-risk development of innovative branded drugs[5] - Eton has a diversified pipeline of 12 products under development, with four products filed with the FDA and three additional NDA's expected to be filed in 2019[5] - The company expects to become a commercial revenue company in 2019[5] Product Pipeline - Four candidates are currently filed with the FDA, and three additional filings are expected in 2019[16] - The company is developing six injectable product candidates for administration in the hospital setting[16] - Eton is also developing four innovative oral liquid formulations of molecules that are only FDA-approved in oral solid form[18] - EM-100 ophthalmic solution, an innovative over-the-counter ophthalmic solution for treatment of allergic conjunctivitis, has been filed with the FDA and is expected to be approved in 2019[20] - The U S allergic conjunctivitis ophthalmic market is >$600 million annually[20] Financial Information - As of April 1, 2019, the stock price was $7 95[23] - As of March 15, 2019, shares outstanding were 17 6 million[23] - As of April 1, 2019, the market cap was $140 million[23] - As of December 31, 2018, the cash balance was $26 7 million[23]

Financial Data and Key Metrics Changes - Eton Pharmaceuticals reported $500,000 in revenue for Q1 2019, derived from an upfront fee related to the EM-100 asset sale to Bausch Health, compared to no revenue in Q1 2018 [28][29] - R&D expenses increased to $6.5 million in Q1 2019 from $1.3 million in the same period in 2018, primarily due to licensing payments and milestone expenses [29][30] - The net loss for Q1 2019 was $7.4 million, up from a net loss of $3.0 million in Q1 2018, driven by higher R&D expenses [32] Business Line Data and Key Metrics Changes - The company has expanded its pipeline to 12 product candidates, with 4 products submitted to the FDA and 3 additional filings expected by the end of 2019 [11][19] - Eton's strategy includes pursuing a diverse portfolio of product candidates, with a goal of filing at least three NDA products per year [12][13] Market Data and Key Metrics Changes - The market opportunity for ET-202 is significant, with over 7 million vials of concentrated phenylephrine sold annually, and the vasopressor market estimated at over $650 million in sales [24][25] - The company anticipates capturing more than 10% of the market share for ET-202, which is expected to be launched in Q4 2019 [59] Company Strategy and Development Direction - Eton focuses on developing innovative branded products through the FDA's 505(b)(2) pathway, aiming to address unmet patient needs with low-risk, high-reward candidates [6][7] - The company plans to continue its active approach to business development, seeking additional late-stage candidates to enhance its pipeline [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving commercial revenue generation in 2019, highlighting a strong start in Q1 [13][19] - The company is optimistic about the approval and launch of its products, with expectations of becoming cash flow positive by mid-2020 if FDA approvals are received as anticipated [56] Other Important Information - Eton has partnered with Bausch Health for the commercialization of EM-100, which is expected to be the first preservative-free ophthalmic product for allergic conjunctivitis [16][17] - The company has received fast track designation for its DS-200 product, indicating a focus on addressing critical unmet needs in the market [18] Q&A Session Summary Question: Pipeline Expansion - Andrew D'silva inquired about the capacity for further pipeline expansion under the current corporate infrastructure, to which management responded that they aim for 3 to 5 transactions per year [34][35] Question: Commercialization Strategy - D'silva also asked about the commercialization strategy related to the Bausch agreement, and management indicated that they would consider licensing deals that add value [38][39] Question: Sales and Marketing Infrastructure - Ram Selvaraju asked about the establishment of sales and marketing infrastructure for ET-202, and management confirmed plans for a detailed sales team as they approach approval [43][47] Question: Cash Flow Positive Timeline - An unidentified analyst questioned when the company expects to be cash flow positive, with management indicating a potential timeline towards mid-2020 [53][56] Question: Revenue Ramp for ET-202 - Brett Conrad asked about the anticipated revenue ramp for ET-202, and management noted that they expect to convert internal compounders quickly, targeting a significant market share [58][59] Question: Earnings Leverage - Robert London inquired about earnings leverage and gross margins, with management explaining that margins vary by product and that significant operating leverage is expected [61][62] Question: Specialty Generic Opportunities - Selvaraju asked about emerging opportunities in the specialty generic space, and management expressed confidence in their positioning within the 505(b)(2) space [64][66]

Part I - Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Eton Pharmaceuticals reported its first revenues of **$0.5 million** in Q1 2019, with a net loss of **$7.4 million** primarily due to increased R&D expenses, and total assets decreasing to **$23.0 million** [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) Total assets decreased to **$23.0 million** as of March 31, 2019, primarily due to a decline in cash, while total liabilities increased to **$3.8 million**, leading to a decrease in stockholders' equity Condensed Balance Sheet Data (in thousands) | Account | March 31, 2019 (unaudited) | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $19,584 | $26,735 | | Total current assets | $21,527 | $27,502 | | Total assets | $23,017 | $28,327 | | **Liabilities & Equity** | | | | Accounts payable | $3,208 | $1,421 | | Total current liabilities | $3,656 | $2,024 | | Total liabilities | $3,775 | $2,024 | | Accumulated deficit | $(53,278) | $(45,868) | | Total stockholders' equity | $19,242 | $26,303 | [Condensed Statements of Operations](index=5&type=section&id=Condensed%20Statements%20of%20Operations) First-quarter 2019 revenue was **$0.5 million**, but net loss increased to **$7.4 million** due to a substantial rise in research and development expenses to **$6.5 million** Condensed Statements of Operations (in thousands, except per share amounts) | Metric | Three months ended March 31, 2019 | Three months ended March 31, 2018 | | :--- | :--- | :--- | | Revenues | $500 | $— | | Research and development | $6,465 | $1,274 | | General and administrative | $1,589 | $1,690 | | Total operating expenses | $8,054 | $2,964 | | Loss from operations | $(7,554) | $(2,964) | | Net loss | $(7,410) | $(3,018) | | Net loss per share | $(0.42) | $(1.05) | [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly increased to **$6.8 million** in Q1 2019, leading to a **$7.2 million** decrease in cash and cash equivalents, ending at **$19.6 million** Condensed Statements of Cash Flows (in thousands) | Activity | Three months ended March 31, 2019 | Three months ended March 31, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,767) | $(1,850) | | Cash used in investing activities | $(388) | $(91) | | Net cash provided by financing activities | $4 | $— | | **Change in cash and cash equivalents** | **$(7,151)** | **$(1,941)** | | Cash and cash equivalents at end of period | $19,584 | $11,215 | [Notes to Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) Notes detail the company's 505(b)(2) pathway focus, November 2018 IPO, cash sufficiency, first revenue from EM-100 rights sale, and various licensing and development commitments - The company is a specialty pharmaceutical firm focused on developing products via the FDA's 505(b)(2) pathway. It completed its IPO in November 2018, raising net proceeds of **$21.96 million**[18](index=18&type=chunk)[19](index=19&type=chunk) - Management believes its cash and cash equivalents of **$19.6 million** as of March 31, 2019, are sufficient to fund operations for at least the next twelve months[21](index=21&type=chunk) - First-ever revenue of **$500,000** was recognized in Q1 2019 from an upfront payment from Bausch Health for the sale of EM-100 product rights. The agreement also includes potential future milestones and royalties[60](index=60&type=chunk) - The company entered into several licensing agreements in early 2019, including for ET-104 with Liqmeds Worldwide and for ET-202 and ET-203 with Sintetica SA, involving upfront payments and future milestone/royalty obligations[123](index=123&type=chunk)[126](index=126&type=chunk) - Subsequent to the quarter end, on May 6, 2019, the company sold its rights to the CT-100 product to its former parent company, Harrow Health, for potential future milestones and royalties[130](index=130&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's 505(b)(2) pathway focus, increased Q1 2019 net loss of **$7.4 million** due to higher R&D expenses, first revenue of **$0.5 million**, and increased cash used in operations - The company's strategy is to develop low-risk product candidates using the 505(b)(2) pathway, with four candidates already submitted to the FDA for review[134](index=134&type=chunk)[135](index=135&type=chunk) Research and Development Spending by Product (in thousands) | Product candidate | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | DS-200 | $1,656 | $190 | | DS-300 | $559 | $65 | | EM-100 | $96 | $605 | | ET-202 | $2,000 | $— | | ET-203 | $1,000 | $— | | ET-104 | $350 | $— | | Other products | $158 | $93 | | Indirect expenses | $637 | $256 | | **TOTAL** | **$6,465** | **$1,274** | - The increase in cash used in operating activities to **$6.8 million** in Q1 2019 from **$1.9 million** in Q1 2018 was primarily due to higher operating losses from increased product candidate licensing and development activity[143](index=143&type=chunk) - The company's first revenue of **$500,000** resulted from the sale of EM-100 product rights to Bausch Health, which includes potential future commercial milestones up to **$2.5 million** and royalties[147](index=147&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on cash and equivalents, deemed immaterial, with no foreign currency risk or hedging activities - The company's primary market risk is interest rate risk on its cash and cash equivalents[164](index=164&type=chunk) - Management does not believe there is any material exposure to interest rate risk, and the company has no exposure to foreign currency risk[164](index=164&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2019, with no material changes to internal control over financial reporting - Management concluded that as of March 31, 2019, the company's disclosure controls and procedures were effective[167](index=167&type=chunk) - No changes occurred during the quarter that materially affected or are reasonably likely to materially affect the company's internal control over financial reporting[169](index=169&type=chunk) Part II - Other Information [Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings - None[171](index=171&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the 2018 Annual Report on Form 10-K - There have been no material changes in the risk factors included in the 2018 10-K[171](index=171&type=chunk) [Other Items (Items 2, 3, 4, 5)](index=29&type=section&id=Other%20Items) The company reported no unregistered equity sales, no defaults on senior securities, and no mine safety disclosures or other information - Item 2: Unregistered Sales of Equity Securities and Use of Proceeds - None[172](index=172&type=chunk) - Items 3, 4, and 5 are all 'Not applicable'[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) [Exhibits](index=29&type=section&id=Item%206.%20Exhibits) The report lists various asset purchase and licensing agreements as exhibits, along with required CEO and CFO certifications - Exhibits filed include agreements with Bausch Health, Sintetica SA, Liqmeds Worldwide, Harrow Health, and Eyemax LLC, all dated in 2019[179](index=179&type=chunk) - Certifications by the CEO and CFO pursuant to Sarbanes-Oxley Sections 302 and 906 are included as exhibits[179](index=179&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | |------------------------------------------------------------------------------------------|-----------------------------------------------------| | FOR THE TRANSITION PERIOD F ...