ETON reported blowout earnings last week, leading to a +50% move in price. They produced great numbers across all key metrics:
Revenue up 55% QoQ and 99% YoY, up from 41% YoY
They had stalled out the last couple of quarters but investors were awaiting the launch of HEMANGEOL, which did not disappoint.
They noted that all product lines saw strong growth, not just HEMANGEOL.
HEMANGEOL launched on 5/1, and probably needed some time to ramp, so we may have only seen half the near term quarterly potential from that product. They also offered that product through the Eton Cares program, to expand access. Wondering if that establishes a model for accelerating future product launches.
HEMANGEOL has already become their largest product, but they are already predicting that the next one labeled ASN-001 will double or triple the market of HEMANGEOL.
They have multiple new products slated to launch over the next 12-18 months, and are constantly acquiring & developing new pipeline.
Long-term revenue target is $500M by 2030, representing ~4x revenue growth over the next 4 years. That appears to be given current product pipeline and visibility, which is every expanding. It’s a long way off but feels sandbagged to an extent.
GM improved from 62% to 69%
Adjusted EBITDA was up 184%
Raised their annual guide from +$120M to +$145M
As I’ve mentioned, I have basically no technical knowledge in any of the companies I invest in, I just follow the numbers and the general shape of what seems to be happening. With ETON, I am very attracted to the fact that their entire business model is built around finding and developing new catalysts to growth. My goal this year was to focus on companies that not only have growth in numbers, but also have a mechanism or organic wave that produces attention on their growth. Like it or not, that seems to be ever-important in the investing world we live in.
ETON fits the bill, and are my biggest gainer YTD at 257%.
My thinking exactly. Amazing that revenue jumped 55% sequentially (around $14m) and I think a lot of that must be HEMANGEOL…and it only contributed in 2 out of the 3 months of Q2! Also explains why they raised FY guide to $145m.
So when they say that they expect up to $10,000 per patient on their 8,000 inherited patients ($80 million), I believe them. But I can’t understand why they were able to purchase the rights from Pierre for just $14 million (plus an 8% royalty). Even in just a single year the profit seems to be a lot more than $14m. What am I missing?
Bear
PS - after attempting to ask ChatGPT that question for a while I finally had it read the Q2 transcript, and it can’t figure it out either:
I have to thank you for this pick. I noticed ETON some time ago after reading one of your portfolio summaries. I got interested and took a small position, but it didn’t do much initially, I got frustrated and moved the money into some AI related stocks that were moving a lot more a lot faster. Well, the AI stuff has cooled, and in general I’ve decided to diversify as I was almost entirely invested in AI related companies. I bought back into ETON not long before the ER. That turned out to fortuitous. My only regret is that I didn’t buy more. Actually, I did, after the ER. It’s now ~8.5% of my portfolio.
@brittlerock great timing! I have undertaken a similar diversification effort for the same reasons, and I’m now in a much more comfortable split with ~30% of my portfolio spread across 4 non-AI-infrastructure industries. I can’t really justify going any further at the moment because the numbers are ridiculously great for the most part.
@PaulWBryant Below is a screenshot from the transcript that might explain why they were so successful. It seems the distribution and $0 copay were significant drivers of adoption vs. “off-label adult formulations”. I don’t really know any more than what they mentioned in the call.
So is this likely to prove a single one time uplift if all patients have been converted? Whilst they might be able to achieve an ongoing revenue stream, would this not be ex growth now?
Ant
A little further on in the call they mentioned that they expect the patient population for HEMANGEOL to be 10-15,000 annually, so there is still a little room for growth there but to your point not like it can kep up the growth pace on its own.
But the patient population for ASN-001 is 2-3x larger than HEMANGEOL, so they are pretty confident when that launches it will be their largest product, but that will not be until 2028.
