Eton Pharma (ETON) Q3 2025 Earnings Transcript

Motley Fool Transcribing11-09

Image source: The Motley Fool. DATEThursday, November 6, 2025 at 4:30 p.m. ETCALL PARTICIPANTSChief Executive Officer — Sean BrynjelsenChief Financial Officer — James GruberExecutive Vice President, ...

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Email [email protected]RISKSNonrecurring Incralex ex-US Revenue — James Gruber stated that $900,000 in third-quarter product revenue from finish goods sales for Incralex in Europe, and $2.4 million in semi-finished inventory supplied to Astevi, are not expected to recur regularly and could negatively affect reported total product sales in the coming quarter.Net Loss on a GAAP Basis — The company reported a net loss of $1.9 million during the quarter versus net income of $600,000 in the same period last year.Lower Revenue per Incralex Patient — James Gruber noted a \"less favorable payer mix in the third quarter,\" resulting in lower revenue per Incralex patient relative to the prior quarter.Adjusted Gross Margin Impacted — Adjusted gross margin fell to 45% from 64% in the prior year, due to \"transition of ex-US distribution and the supply agreement with Astevi,\" with third quarter adjusted gross margin below core historical levels.TAKEAWAYSProduct revenue -- $22.5 million in Q3 2025, an increase of 129% year-over-year and up 19% compared to Q2, driven by Alkindi Sprinkle, kerglumic acid, and the recently acquired Incralex and Galzin.Cash Generation -- $12 million in operating cash flow for the quarter, including a $4.3 million payment from Astevi for Incralex international rights.Gross Margin -- Adjusted gross margin was 45%, down from 64% year-over-year, with ex-US Incralex transition costs cited as a major factor; management expects Q4 adjusted gross margin of approximately 70%.Adjusted EBITDA -- $2.9 million, affected by nonrecurring Incralex transition costs, with management guiding to higher EBITDA in future periods.Net Loss -- GAAP net loss of $1.9 million, or 7¢ per share, versus net income of $600,000, or 2¢ per share, last year; non-GAAP net income for the quarter was $1.5 million, or 4¢ per share, compared to $1.9 million, or 7¢ per share, in the prior year.Incralex Patient Count -- Net active US patient count reached 100 by August (five months ahead of plan) and remained flat in the quarter due to new patient additions being offset by age-outs; goal of 110 patients by next month.Pipeline/Regulatory Milestones -- FDA accepted ET600 NDA with a February 25 PDUFA date; ET700 (extended-release Galzin) PET study to begin next quarter, with top-line data expected in 2026; submission of revised Kindivy formulation planned for 2026 to address age label expansion, with potential FDA approval in 2027.Business Development -- In late-stage discussions for two potential acquisitions of ultra-rare disease products with the aim to launch at least two more products in 2026; management indicated confidence in closing transactions soon.Cash Position -- $37.1 million in cash as of period end, supporting both organic growth and potential acquisitions.Product Penetration -- Less than 15% of the estimated 5,000 US target adrenal insufficiency patients have been converted to Alkindi and Kindivy, suggesting substantial remaining market opportunity.SUMMARYEton Pharmaceuticals, Inc. (ETON 11.70%) delivered record quarterly revenue and significant sequential growth driven by the adoption of newly acquired and legacy rare disease therapies. The company achieved substantial operating cash flow and maintained a strong cash reserve, providing capacity for strategic expansion through acquisitions. Management identified ongoing regulatory and pipeline milestones, including anticipated label expansions and new product launches, as primary drivers of future growth.Sean Brynjelsen highlighted that efforts to harmonize the Incralex label between the US and EU could \"potentially increase the Incralex market opportunity roughly fivefold\" pending planned FDA discussions and study initiation in 2026.The ET600 product, if approved, would be the first oral liquid desmopressin formulation for pediatric central diabetes insipidus, with inventory production and commercial planning already underway in anticipation of a prompt launch after the PDUFA date.Sean Brynjelsen indicated it \"would be receptive to a label expansion\" for the revised Kindivy formulation, pending successful completion and review of an upcoming bioequivalence study, which management expects could allow for expanded pediatric adoption by 2027.James Gruber indicated that, excluding nonrecurring ex-US Incralex activity, core US adjusted gross margin was \"just over 70% for the quarter,\" demonstrating underlying profitability potential once transition effects subside.Product launches, regulatory submissions, and clinical milestones are projected to result in both margin expansion and top-line growth throughout 2026, as supported by specific management comments and outlined operational priorities.INDUSTRY GLOSSARYPDUFA Date: The deadline set by the FDA under the Prescription Drug User Fee Act for completing its review of a new drug application.Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, excluding certain nonrecurring or non-cash expenses as reconciled by management.Bioequivalence Study: A clinical trial that tests whether a new drug formulation performs similarly in the body to an existing approved formulation.Age-Outs: Patients who discontinue therapy upon reaching adulthood or outgrowing pediatric indication eligibility, particularly relevant for rare disease therapies.Peak Sales: The highest annual sales level expected for a pharmaceutical product under current or projected market conditions.Full Conference Call TranscriptSean Brynjelsen: Thank you, David. Good afternoon, everyone, and thank you for joining us today. I'm thrilled to report another record quarter for the company with triple-digit year-over-year revenue growth. I look forward to discussing the underlying drivers in more detail and highlighting some of our initiatives that help deliver this growth. In addition, we have made significant progress with our development activities, which were not reflected in this quarter's numbers but will propel our revenue and earnings growth for many years to come. Third quarter product revenue was $22.5 million, an increase of 129% year over year and up 19% compared to the second quarter.It was our nineteenth straight quarter of sequential product revenue growth driven by strong year-over-year growth from Alkindi Sprinkle and kerglumic acid as well as additions from the recently acquired products Incralex and Galzin, which are both tracking ahead of our deal models. Alkindi Sprinkle has delivered reliable growth for many years and shows no signs of stopping. Kerglumic acid had previously plateaued, but we had a few new patient adds in recent months that helped deliver the year-over-year increase, which was nice to see. In addition to delivering on the top line, we remain focused on profitability. I am pleased to share that we generated $12 million of cash from operations in the quarter.Eton is committed to controlling our expenses, and I am proud to report that even though our revenue is growing rapidly, we were able to reduce our adjusted SG&A expense sequentially from the second quarter to the third quarter. Continued control of our operating expenses in tandem with strong revenue growth will position us for significant margin expansion. We reported adjusted EBITDA of $2.9 million in the quarter, and this figure was weighed down by some nonrecurring Incralex ex-US transition costs that James will provide more details on. So we expect to deliver even stronger EBITDA in the quarters ahead. Now turning to product-specific commentary. I'll start with Incralex, which has been our largest revenue contributor this year.Incralex revenue and patient count continue to track well ahead of our original projections for the product. Prior to our acquisition, the product and the condition had suffered from low awareness. Our efforts to improve education and awareness have paid off, allowing us to deliver significant growth so far this year. Our commercial team has done an excellent job on the relaunch. Through our rare disease specialists' outreach to healthcare providers, our conference engagements, and peer-to-peer presentations, as well as collaborating closely with patients and patient advocacy groups, we have been able to substantially grow awareness and increase product usage in a matter of months.When Eton took the product over in December 2024, there were only 67 active patients on therapy. By August, we had reached our 100 patient goal, five months ahead of schedule. We continue to add a number of new patient starts during the last three months, but we saw a higher number of patients age out and discontinue treatment during the same period, which resulted in our net active patient count remaining relatively flat around 100. In severe primary insulin growth-like factor one deficiency, success is partially measured not only by how many patients are on therapy, but in addition, what truly drives outcomes is how early the treatment begins and how well it's optimized.Early initiation during the critical growth window and appropriate vial utilization are key to maximizing efficiency during the treatment duration. Since we have inherited several older pediatric patients in December during transition, we saw a large group of age-outs coming through from that cohort. Our focus remains on both expanding new patient starts and driving growth through earlier diagnosis and optimized dosing to ensure every patient achieves their full therapeutic potential. We believe these efforts will increase the average duration of treatment. I expect to continue bringing new patients into treatment and continue growing the net patient count. As a reminder, Incralex is approved for pediatric patients age two and up with severe primary IGF-1 deficiency.These are patients who present with extremely short stature and need IGF supplementation to grow up. Incralex is very effective in increasing patient height during their growing years but is no longer needed once patients reach their adult height, typically around 18 years old. We believe with our ongoing educational and awareness campaigns, we will start seeing patients diagnosed earlier in life, which would likely lead to a longer duration of therapy. Eton is confident in the long-term growth opportunity for the product, and as we expect to continue converting more of the estimated 200 patients in the US that meet the current label.In addition, we remain committed to expanding access to even more children in need through the harmonization of the US and EU definitions of severe primary IGF-1 deficiency. Last month, we submitted a meeting request to the FDA with our proposed clinical study to support the harmonization. We expect to have the FDA's feedback by December, and if they are in agreement, we would initiate the study in 2026. Given the European patient registry data that has been collected over the last fifteen years, we believe that Incralex is a safe and effective treatment for patients with IGF-1 levels between minus two and minus three standard deviations. We are confident our proposed study would confirm that for the FDA.And if successful in harmonizing the labels, it could potentially increase the Incralex market opportunity roughly fivefold. Alkindi was another major contributor to our Q3 revenue growth, and I am proud of the team's ability to continue generating consistent growth. As you remember, starting in January, we split our Salesforce into two teams, one of which is now 100% dedicated to pediatric endocrinology. We think it's contributed to Alkindi Sprinkle's strong year, and 2025 is the product's fifth calendar year on the market and remains on pace to be the strongest year of its history by number of patients on therapy and number of new patient referrals.So far, we have not been seeing much of any cannibalization of Alkindi from the launch of Kindivy. Though Alkindi continues to see strong growth, we developed and launched Kindivy to address the needs of patients that did not like the texture of the Alkindi granules or preferred the convenience of a liquid dosage form. Kindivy is the first and only FDA-approved oral solution of hydrocortisone. Kindivy allows simple and accurate dosing tailored to patient needs and does not require refrigeration, mixing, or shaking. The FDA approved Kindivy for patients five and over.The agency restricted the age due to a limited amount of existing safety data on three of the inactive ingredients in the formulation when being used in combination. Unfortunately, the largest unmet need for this product is among young children under five years old, and as a result, the label restriction has weighed on the adoption of Kindivy. However, our team has been working on a plan to address this. When we first heard of the FDA's restriction this summer, we immediately developed a new formula with substantially lower levels of the excipients. And in September, we held a meeting with the FDA to discuss this new formulation.We believe the meeting was successful as the FDA indicated they would be receptive to a label expansion with our revised formulation. In response, we will conduct a bioequivalency study, which is scheduled to start by January 2026, and I expect to submit the new formulation as a supplement to our existing NDA in 2026. The FDA indicated a ten-month review for the formulation, so this could allow for approval by 2027. We believe this label expansion would significantly accelerate adoption of the product. Even with the current Kindivy label, we continue to see attractive long-term growth for our adrenal insufficiency franchise.Eton has only converted less than 15% of the estimated 5,000 target patients in the United States, so we see a long runway of growth ahead of us. We remain confident that Alkindi and Kindivy can combine for peak sales of more than $50 million with the current Kindivy label and ultimately higher levels if the label is expanded. Another bright spot in our portfolio this quarter was Galzin. As I mentioned, we're extremely pleased with this performance. Eton now has over 200 active patients, a number we originally set as our year-end 2025 target. The product is continuing to grow well ahead of our original expectations, and we couldn't be happier with the team's efforts to support this relaunch.During our eight months in the field actively commercializing Galzin, we've been surprised by the low level of awareness that the product had both among physicians and patients. Even though Galzin is the only FDA-approved zinc therapy for Wilson disease, many patients and prescribers were unaware of it, misinformed, or mistakenly believed the product was discontinued after a prior shortage in 2020 and subsequent lack of promotion. We view this low awareness as a positive for the long-term growth prospects for Galzin. While we have work to do educating the market, it is clear that this represents a substantial growth opportunity as we inform patients, healthcare practitioners, and caregivers, and raise awareness of this critical medication.Our entry into Wilson disease has been warmly received by patients and healthcare providers. Before our relaunch, very few pharmacies stocked Galzin. Out-of-pocket costs were high, and there was a lack of support services to help patients navigate the insurance process. We have now implemented full patient support services, increased access to medication, and substantially reduced out-of-pocket costs for patients. These changes have resonated with the patient community, and we have heard strong positive feedback and appreciation for the new programs. In October, our team attended the Wilson Disease Association annual summit where patients, caregivers, and leading physicians gathered to discuss diagnosis, treatment, and management of the disease.Our team was able to engage with numerous patients and prescribers, helping to drive awareness and give us the chance to better understand the struggles that patients and prescribers are dealing with. Working to understand the needs of patients, caregivers, and healthcare providers is a top priority for us and our vision to be a champion of those in the Wilson disease community. Our expanded access and patient support services have made a major impact on Wilson disease patients, and we think we can make an even greater impact on their lives with ET700, our extended-release version of Galzin.Currently, Galzin is taken three times per day with patients fasting both before and after, and this cumbersome regimen leads to high rates of noncompliance. Eton has heard directly from patients and caregivers just how challenging the current dosing schedule is. We know there's a very strong interest in an extended-release version. Eton is working quickly and making meaningful progress with our development of ET700. We've already developed a proprietary formulation, filed a patent, and met with the FDA to discuss the regulatory pathway. We are now nearing production of clinical study supply and starting our clinical program, with our positron emission tomography or PET study scheduled to begin in the first quarter.This study is a proof-of-concept study designed to verify that our proprietary delayed-release formulation is able to effectively block copper absorption in patients with less frequent dosing. We expect to receive top-line results from this study in 2026, and if positive, it would support the initiation of a dose-ranging and pivotal clinical study later in the year. Switching back to our pediatric endocrinology portfolio, during the quarter, we had another piece of good news when the FDA accepted our ET600 NDA submission for review and assigned it a February 25 PDUFA date. We developed ET600 in direct response to an unmet need expressed by pediatric endocrinologists for an oral solution of desmopressin to treat central diabetes insipidus.If approved, ET600 would be the first oral liquid formulation available and would allow for the small, precise, titratable doses required to treat pediatric patients. The review of the product appears to be proceeding well, and we scheduled the production of inventory at risk in preparation for an anticipated commercial launch shortly after the PDUFA target action date. Prelaunch marketing activities, including key thought leader engagements, advisory boards, and patient focus groups, are also underway. We recently held an ET600 advisory board with key opinion leaders at the National Endo Conference. We continue to hear positive feedback and strong excitement for the product.Since ET600 shares the same pediatric endocrinology call points as Alkindi, Kindivy, and Incralex, Eton can leverage our well-established relationships and existing commercial footprint, and we expect to be able to hit the ground running upon launch next year. Given the growth opportunity ahead for our commercial products and the attractive pipeline and label expansion opportunities discussed today, it is clear that our business is set up for very attractive long-term growth for many years to come. However, we believe that we can accelerate our growth through additional business development transactions. I remain confident that we have the necessary skills and capabilities to execute value-creating acquisitions and believe that our track record speaks for itself.We continue to explore opportunities to acquire additional strategically aligned ultra-rare disease products where Eton is positioned to add value. With $37 million in cash on our balance sheet and a diverse growing business that is already generating strong EBITDA, we have plenty of capacity to finance acquisitions large or small. We'll continue to approach opportunities from a position of strength and with our customary discipline. 2025 has been a transformational year for us, highlighted by three high-value commercial product launches, record levels of product sales and profitability, and the submission of an NDA for ET600. We continue to push full speed ahead to close out the year strong and position us for an even more impressive 2026.Next year, we expect a number of critical milestones, including continued strong revenue growth from Alkindi Sprinkle, Incralex, Galzin, and Kindivy, increased profitability and operating margin expansion, the expected launch of ET600, the submission of our revised formulation of Kindivy, the completion of our ET700 pilot study, and the initiation of our Incralex label harmonization clinical study. As you can see, we have some very exciting and event-filled quarters ahead of us, and we look forward to keeping all of you up to date on our progress. We thank you for your continued support. And with that, I'll hand it over to James, our Chief Financial Officer, to discuss the financials. James?James Gruber: Thank you, Sean. Our third quarter revenue increased 118% to $22.5 million compared to $10.3 million in 2024, and revenue was primarily comprised of product sales in both periods. Third quarter revenue included $900,000 of product revenue from the sale of finished product inventory to Ipsen and Astevi, to facilitate the ownership transition of Incralex in certain European countries, and these sales are expected to be nonrecurring. In addition, $2.4 million of revenue was derived from an initial loading order of semi-finished Incralex inventory for Astevi. When Eton out-licensed the rights to ex-US Incralex, it entered into a long-term supply agreement with Astevi, under which Eton will provide semi-finished goods to Astevi at a fixed transfer price.The company expects these ongoing purchases to produce roughly $2 to $3 million of annual revenue. However, the ordering patterns may be inconsistent and not occur every quarter. Revenue growth in the quarter was driven primarily by increased sales of Alkindi Sprinkle and kerglumic acid, plus the addition of sales from Incralex and Galzin. While Sean mentioned that the Incralex net active patient count was relatively flat, we saw a less favorable payer mix in the third quarter, which resulted in lower revenue per patient compared to the second quarter.Eton expects US product sales to continue to grow sequentially in the fourth quarter compared to the third quarter, but given that some of the third quarter Incralex-related ex-US revenue is not expected to recur, total product sales may be flat or slightly decline in Q4 relative to Q3. Cost of sales for the third quarter was $14.6 million compared to $4 million in 2024, an increase of $10.6 million driven by increased sales volumes and approximately $7.4 million of costs associated with the transition of the ex-US distribution of Incralex.Adjusted gross profit was $10.2 million in the third quarter, representing an adjusted gross margin of 45% compared to adjusted gross profit of $6.6 million and adjusted gross margin of 64% in the prior year period. Adjusted gross margin in the quarter was negatively impacted by Incralex ex-US related costs, including the transition of ex-US distribution and the supply agreement with Astevi. The company expects to report fourth quarter adjusted gross margin of approximately 70%. R&D expenses for the quarter were $1.1 million, an increase of $600,000 compared to the prior year period, due primarily to increased expenses associated with our ET700 and ET800 development activities.General and administrative expenses for the quarter were $8.1 million compared with $5.3 million in the prior year period, due primarily to an increase in product advertising and launch year promotional expenses, higher stock-based compensation expense, and an increase in compensation and benefit expenses due to an increase in general and administrative headcount. General and administrative expenses were down $1.6 million compared to the second quarter of 2025. On an adjusted basis, which removes the impact of share-based compensation, transaction-related costs, and other one-time expenses, G&A expense was $6.9 million compared to $4.3 million in the prior year period and $7.6 million in the second quarter of 2025. We were pleased to see this sequential decline in spending.As we have discussed previously, the first half of this year had increased G&A expenses associated with our three product launches, and we expect adjusted G&A spending in the second half of the year to remain materially lower. Adjusted EBITDA for the third quarter of 2025 was $2.9 million compared to $2 million in 2024. Total company net loss was $1.9 million for the quarter compared to net income of $600,000 in the prior year period. Net loss per basic and diluted share during the quarter was 7¢ compared to a net income per basic and diluted share of 2¢ in the prior year period.On a non-GAAP basis, we reported net income of $1.5 million for the third quarter of 2025 compared to $1.9 million in the prior year period and diluted earnings per share of $0.04 for the third quarter of 2025 compared to $0.07 per share in the prior year period. Eton finished the third quarter with $37.1 million in cash on hand, and we generated $12 million in operating cash flow during the quarter. This includes a $4.3 million payment received from Astevi for the international rights to Incralex. This concludes our remarks on third quarter results. And with that, we'll turn it back over to the operator for Q&A.Operator: Thank you. At this time, we will conduct the question and answer session. And as a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Chase Knickerbocker of Craig Hallum. Your line is now open.Chase Knickerbocker: Good afternoon. Thanks for taking the questions. James, maybe just first, a quick one. If you back out those, you know, $2 to $3 million in ex-US kind of related revenue on those inventory shipments, and then the associated costs that got into COGS, can you just give us what kind of call it pro forma gross margins would be kind of on the core US business?James Gruber: Sure. So adjusted the GAAP gross margins with all that inform with the ex-US Incralex activity in there was 35%. Adjusted was 45%. And if we remove all of that Incralex ex-US activity, it's north of just over 70% for the quarter.Chase Knickerbocker: Got it. Thank you. And then Sean, maybe just as we think about that reacceleration for Alkindi, is it truly just that kind of refocusing of the Salesforce, you know, kind of solely on pediatric endocrinology? Or are there kind of other drivers that you would point to as far as kind of how that sequential revenue growth has accelerated so far through '25?Sean Brynjelsen: I think the big lever certainly was the focus of the pediatric endocrinology group. Secondary aspect, you know, I would say our physicians are comfortable with the product. They know it works. It's a product that has, you know, early adopters. You've got late adopters, and we're seeing a lot of late adopters and those who took a wait-and-see attitude now. You know, they believe in it, and I would say that we'll continue to add patients for the foreseeable future. It's not a perfect product. That's why we came out with the liquid version, and so we've got we want to be able to offer that.We think that will really jump-start the growth mixture, but right now, it's a steady increase in Alkindi patients in addition to the Kindivy. As we said during the call, we don't see a lot of cannibalization. Really, it's additive.Chase Knickerbocker: Got it. And then maybe just on Incralex. First, could you just, if you wouldn't mind, give that gross adds number since August just so we can kind of get a sense for demand generation? And then just second, on Incralex. You know, any additional thoughts or details that you can give us as far as that trial design that you submitted to FDA that we're waiting to hear feedback on, you know, kind of timelines, number of patients sort of thing as far as how you're thinking.Sean Brynjelsen: So on the numbers, we're roughly where we were at on our last call, and it had to do with the number of ads. But then we had a number of folks go off, but now we're seeing more ads. We just saw a number of ads just the past week in terms of new scripts. So, you know, we're gonna see if we can hit that 110 number by the end of next month. And, you know, but I would say that we're very pleased with the product overall. We knew it was gonna slow down a little bit, but it's a little bit lumpy in terms of when people come on and off the product.We had that significant increase in Q1, going a little bit into Q2. So that's that. And then regarding the clinical, we've submitted it. We expect to get feedback from the FDA in the coming weeks. And I do think that will be favorable. And, hopefully, we can start enrolling patients in the first half of next year.Chase Knickerbocker: Last one for me. Maybe just as we start to look into 2026 as you guys prepare your budget, any initial thoughts that you'd be willing to give us just as far as how you're thinking about top-line growth next year? You know, it looks like the street is somewhere kind of mid to high twenties as far as top-line growth goes from a percentage perspective. I mean, do you have any initial thoughts that you'd be willing to give on '26?Sean Brynjelsen: Sure. I'll let David answer that one.David Krempa: Hi, Chase. As we said in the prepared remarks, you know, we expect significant growth to continue for Incralex, Galzin, Alkindi, Kindivy. So we're expecting healthy growth, but we're not gonna get into any direct guidance yet. When we report our Q4 numbers, we will have something to share with you.Chase Knickerbocker: Got it. Thank you, guys.David Krempa: Thank you.Operator: Our next question comes from the line of Madison El-Saadi of B. Riley. Your line is now open.Madison El-Saadi: Hi. Good afternoon, and thank you for taking our questions and congrats on the progress and multiple positive updates. Question about the Incralex US registry. Would this take place at the same sites that are active in the global registry trial? There are a few sites in that global registry that are US-based.Sean Brynjelsen: Madison, it would be just the US. It would just be US sites. We would not be enrolling folks overseas.Madison El-Saadi: Right. Would it be at separate sites then that are activated in the global registry? I think there are about seven US sites that are active as part of that global registry.David Krempa: It would probably be different sites, Madison. If one of those sites did have a meaningful number of patients within that negative two to negative three standard deviation, we would consider adding them. But it'll probably be different sites within the US.Madison El-Saadi: Understood. And then maybe if you could comment on how important or how you're ranking the potential business development opportunities as we look to the end of the year and even into next year and beyond.Sean Brynjelsen: Well, I would say right now, they're strong. We're in late discussions. We've been in late-stage discussions with two parties. And we're hoping to get something done before the end of the year. If not, it would be shortly thereafter. Obviously, nothing is done until, you know, you sign, but these are ultra-rare disease products. They're late-stage, very good strategic fit. We think they would add, you know, appreciable revenue over the next twelve to twenty-four months. So, you know, we'll see what happens, but that's always been a core part of our strategy as a company is to take on the right acquisitions. Obviously, we don't just do acquisitions for the sake of doing acquisitions.They have to be the right fit. And with or without the acquisitions, we're gonna continue to grow. We've got a good, you know, pipeline of internal products, but I believe we will close transactions. We will end up with, I'll say, at least two additional product launches next year.Madison El-Saadi: Understood. That's helpful, Sean. Thank you.Sean Brynjelsen: Thank you.Operator: Our next question comes from the line of Swayampakula Ramakanth of H. C. Wainwright. Your line is now open.Swayampakula Ramakanth: Thank you. Good afternoon, Sean and James and David. Quick question on Incralex. You know, you said there were some patients who discontinued as you are putting on some patients. So generally, you know, what are the reasons for the discontinuation? And, you know, is there anything either your Salesforce or some amount of additional detailing needed, you know, for kind of stopping that getting off the drug?David Krempa: Hi, RK. Primarily, it's patients aging out. So discontinuation is almost misleading. All the kids are gonna be on it until they stop growing. So typically around age 18, they will age out. They no longer need it. So it is expected and normal you're always gonna have it. That's the vast majority of the discontinuations. We see very little of what you think about as traditional discontinuations where somebody stops taking treatment before they reach their full adult or their full height. Primarily because there's no other alternatives. It's not something like Alkindi where they try to go to something else. So it was primarily age-outs. I think we are starting to promote, educate the market better.We think we are getting patients that are diagnosed earlier. So their total duration on therapy is gonna be longer. You know, they're gonna age out around 18 regardless of when they start. But if we can get them diagnosed and starting much earlier, that's gonna lead to much better outcomes for the patients. And they're gonna be on treatment much longer. So we think our average age is shifting much lower than it was when we inherited the business at the start of the year.Swayampakula Ramakanth: Okay. Thanks for that. And, James, you know, you guided for a 70% gross margin into the fourth quarter. But in general, if I start thinking about beyond '25 and '26 to '28 or '29, as you start seeing the new formulation of Kindivy come on board and whatnot, you know, what would be the cadence of the gross margin over that time period?James Gruber: In our case, we have stated before. We think we can get to north of 75% by 2028. And how we get there is as the majority of our product revenue growth is concentrated in the products where we own more of the economics in Kindivy and Alkindi and Incralex. That product mix shifts more toward those high-margin products, which will continue to increase our margin profile over the next several years.Swayampakula Ramakanth: And then last question. Sean, in general, you know, what's the pricing power that you have with your product? And, you know, are you seeing any pressures at all either from the government or from some of your private payers?Sean Brynjelsen: No. I'd say we're always trying to be on the lower end in terms of the pricing compared to the number of patients. So we're a company that prides itself on pricing products appropriately. We don't believe that all the pricing discussions will fall down to orphan drug products. You know, we're talking about many of these diseases have only a few hundred patients. And so for them to start putting pressure on those...Swayampakula Ramakanth: Thank you. Thanks for taking my questions.Sean Brynjelsen: Thanks, RK.Operator: I am showing no further questions at this time. I'd like to thank you for your participation in today's conference. This does conclude the program. 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