Aytu BioScience, Inc. (NASDAQ:AYTU) Q3 2020 Results Earnings Conference Call May 14, 2020 4:30 PM ET Company Participants Joshua Disbrow - Chairman & CEO David Green - CFO Conference Call Participants Jeffrey Cohen - Ladenburg Thalmann Operator Good afternoon, and thank you for joining us at the Aytu BioScience Third Quarter Fiscal 2020 Business Update Call for the quarter ending March 31, 2020. With me this afternoon are Aytu's Chairman and Chief Executive Officer, Josh Disbrow; and Chief Financial Officer ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.0001 per share AYTU The NASDAQ Stock Market LLC FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended: March 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission ...

Financial Performance - Revenues for the three months ended December 31, 2019 increased by 77% compared to the same period in 2018, with annual revenues increasing by 100% and 14% for the years ended June 30, 2019 and 2018, respectively [149]. - Product revenue for Q4 2019 was $3.2 million, a 77% increase from $1.8 million in Q4 2018, driven by the acquisition of the Pediatric Therapeutics portfolio [167]. - For the six months ended December 31, 2019, product revenue was $4.6 million, a 43% increase from $3.2 million in the same period of 2018 [166]. - The company reported a net loss of $214,247 in Q4 2019, significantly improved from a net loss of $4.7 million in Q4 2018, marking a 95% reduction [165]. - The gain from derecognition of contingent consideration was approximately $5.2 million in Q4 2019, contributing to the overall financial improvement [176]. Operating Expenses - Total operating expenses for Q4 2019 were $8.1 million, a 34% increase from $6.3 million in Q4 2018, with selling, general and administrative costs rising by 29.1% [165]. - Selling, general and administrative costs for the six months ended December 31, 2019, increased by 35.3% to $11.7 million from $8.6 million in the prior year [172]. - Research and development expenses decreased by 55.3% to $66,675 in Q4 2019 compared to $149,029 in Q4 2018, primarily due to reduced costs associated with the MiOXSYS System [170]. Cash Flow and Financing - Cash used in operations during the six months ended December 31, 2019 was $9.1 million, compared to $7.0 million for the same period in 2018, primarily due to the acquisition of the Pediatric Portfolio [149]. - Net cash used in operating activities for the six months ended December 31, 2019, was $9.1 million, higher than the net loss of $5.1 million due to derecognition of contingent consideration and increased accounts receivable [178]. - Net cash provided by financing activities in the six months ended December 31, 2019, was $9.3 million, primarily from an October 2019 offering [181]. Acquisitions and Mergers - The acquisition of the Pediatric Portfolio included a total consideration of $4.5 million in cash and approximately 9.8 million shares of Series G Convertible Preferred Stock, along with the assumption of up to $3.5 million in Medicaid rebates and product returns [157]. - The company expects to require capital beyond operating needs to complete and integrate the Pediatric Portfolio acquisition and the merger with Innovus Pharmaceuticals, Inc., which is expected to close on February 14, 2020 [149]. - The merger with Innovus Pharmaceuticals, Inc. is expected to involve the retirement of up to approximately 3.7 million shares of common stock and up to $16 million in milestone payments contingent on achieving certain revenue and profitability milestones [160]. - The company used $4.5 million for the acquisition of Cerecor during the six months ended December 31, 2019 [180]. Asset Position and Equity - The company has a current asset position of $74.5 million, which, along with expected receipts from ongoing product sales, will be used to fund operations [153]. - As of September 30, 2019, the company's stockholders' equity totaled approximately $2.3 million, but subsequent equity financing raised approximately $14.8 million, bringing the equity balance above the minimum Nasdaq requirement of $2.5 million [155]. Future Plans - The company plans to continue seeking to acquire additional commercial-stage or near-market products that offer distinct clinical advantages and patient benefits [148]. - The company has engaged a placement agent to refinance fixed obligations and is in discussions with lenders to establish a debt facility to provide capital [153].

Aytu BioScience, Inc. (NASDAQ:AYTU) Q2 2020 Earnings Conference Call February 13, 2020 4:30 PM ET Company Participants Josh Disbrow – Chairman and Chief Executive Officer Dave Green – Chief Financial Officer Conference Call Participants Carl Byrnes – Northland Securities Jeffrey Cohen – Ladenburg Thalmann Operator Good afternoon and thank you for joining us for the Aytu BioScience Second Quarter Fiscal 2020 Business Update Call for the Quarter Ended December 31, 2019. With me this afternoon are Aytu's Chair ...

Aytu BioScience, Inc. (NASDAQ:AYTU) Q1 2020 Earnings Conference Call November 14, 2019 4:30 PM ET Company Participants Joshua Disbrow - Chairman & CEO David Green - CFO, Secretary & Treasurer Conference Call Participants Jeffrey Cohen - Ladenburg Thalmann & Co. Carl Byrnes - Northland Capital Markets Operator Good afternoon, everyone, and thank you for joining us for the Aytu BioScience First Quarter Fiscal 2020 Business Update Call. With me this afternoon are Aytu's Chairman and Chief Executive Officer, Jo ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.0001 per share AYTU The NASDAQ Stock Market LLC FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended: September 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 Commis ...

Aytu BioScience, Inc. Conference Call Summary Company Overview - **Company**: Aytu BioScience, Inc. (NASDAQ:AYTU) - **Date**: October 14, 2019 - **Participants**: - Josh Disbrow - Chairman and Chief Executive Officer - Jeffrey Cohen - Ladenburg Thalmann - Carl Byrnes - Northland Capital Markets Key Points Acquisition Details - Aytu BioScience announced the acquisition of a six-product commercial portfolio from Cerecor, valued at **$12.4 million** in revenue, which is profitable on a standalone basis [5][11] - This acquisition, along with the planned acquisition of Innovus Pharmaceuticals, will increase Aytu's top line revenue to over **$44 million**, marking a **500% increase** from just over **$7 million** for the 12 months ending June 30 [6][11] - The acquisition of Cerecor's portfolio will triple Aytu's Rx portfolio size and expand its total addressable market to over **$14 billion** [10][11] Financial Implications - Aytu will pay approximately **$4.5 million** in cash and **$12.5 million** in preferred stock for the Cerecor portfolio, totaling **$17 million**, which is **1.4 times LTM revenues** [11][12] - The deal includes assuming **$16 million** in secured debt, bringing the total deal consideration to approximately **2.6 times sales** [12] - Aytu's cash position post-financing is approximately **$17.3 million** [6] Product Portfolio - The six products acquired include: - **Poly-Vi-Flor** and **Tri-Vi-Flor**: Prescription supplements for fluoride deficiency - **Karbinal ER**: Extended-release liquid antihistamine - **AcipHex Sprinkle**: Proton pump inhibitor for GERD - **Cefaclor**: Second-generation antibiotic [14][15] - The portfolio addresses common pediatric conditions and is expected to benefit from cross-promotion with Aytu's existing products [15][16] Growth Strategy - Aytu aims to leverage its existing sales force to cross-sell the new products, enhancing market reach and driving revenue growth [15][18] - The company anticipates significant cost savings through operational rationalization, estimating **$9 million** in annual savings from redundancies and operational efficiencies [41][42] Market Position and Future Outlook - Aytu's combined product portfolio will address a market potential exceeding **$55 billion**, with nine Rx products and over 30 consumer products [17] - The company expects to achieve break-even status within a year, targeting a revenue growth to **$55 million** to **$58 million** [43][44] - Aytu's management is confident in the integration of the new acquisitions and the potential for accelerated growth through synergies [20][21] Additional Insights - The acquisition of Innovus Pharmaceuticals is expected to enhance Aytu's consumer health segment, with Innovus generating over **$24 million** in revenue for the four quarters ending June 30 [7][9] - Aytu's management believes that the gross margins for the combined entities could improve to the **mid-70s to low-80s** over time [27][28] - None of the acquired products are genericized, providing a competitive advantage in pricing and reimbursement [36] Conclusion Aytu BioScience is positioned for significant growth following the strategic acquisitions of Cerecor and Innovus, with a focus on expanding its product portfolio and enhancing operational efficiencies. The company is optimistic about achieving break-even and driving revenue growth in the near future.

Aytu BioScience, Inc. (NASDAQ:AYTU) Q4 2019 Earnings Conference Call September 26, 2019 4:30 PM ET Company Participants Josh Disbrow - Chairman & Chief Executive Officer David Green - Chief Financial Officer Conference Call Participants Jeffrey Cohen - Ladenburg Thalmann & Co. Inc. Carl Byrnes - Northland Capital Markets Operator Good morning, everyone. Thank you for joining us for the Aytu BioScience’s Year-End and Fourth Quarter Business Update Call for the Year-Ended June 30, 2019. With me this afternoon ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Aytu BioScience commercializes a portfolio of novel pharmaceutical and diagnostic products through a strategy of sales growth and asset acquisition [Company Overview and Strategy](index=5&type=section&id=Company%20Overview%20and%20Strategy) The company's business model focuses on acquiring and commercializing novel products, supported by a four-pronged growth strategy - The company's business model is to acquire and commercialize novel pharmaceutical products, with a current portfolio of **four FDA-approved products and one diagnostic system**[13](index=13&type=chunk)[14](index=14&type=chunk) - Aytu's four-pronged strategy includes growing U.S. product sales, expanding the MiOXSYS system ex-U.S, seeking FDA clearance for MiOXSYS, and acquiring new assets[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) [Products and Markets](index=6&type=section&id=Products%20and%20Markets) The product portfolio targets large U.S. and global markets for testosterone replacement, cough, insomnia, and male infertility diagnostics Key Products and Target Markets | Product | Indication | Market Size | Key Feature | | :--- | :--- | :--- | :--- | | **Natesto®** | Testosterone Replacement | $1.8 billion U.S. market | Only TRT delivered via nasal gel, no black box warning for transference | | **Tuzistra® XR** | Cough (Antitussive) | >$3 billion U.S. market | Only FDA-approved 12-hour codeine-based antitussive | | **ZolpiMist™** | Insomnia | $1.8 billion U.S. market | Only oral spray formulation of zolpidem tartrate | | **MiOXSYS®** | Male Infertility Diagnostic | Global market to exceed $4.7B by 2025 | Rapid, point-of-care system to measure oxidative stress in semen. CE marked, seeking U.S. FDA clearance | [Government Regulation and Intellectual Property](index=9&type=section&id=Government%20Regulation%20and%20Intellectual%20Property) Products are subject to extensive FDA and DEA regulation, with market exclusivity protected by licensed and owned patent portfolios - Natesto®, Tuzistra® XR, and ZolpiMist™ are regulated as **controlled substances by the DEA** (Schedule III and IV), requiring stringent compliance[48](index=48&type=chunk)[180](index=180&type=chunk) - The MiOXSYS® system is protected by a robust patent portfolio with **44 issued patents and 18 pending applications** in the U.S. and key foreign jurisdictions[60](index=60&type=chunk)[61](index=61&type=chunk) - The company has exclusive U.S. licenses for Natesto® (patents to 2024), Tuzistra® XR (patents to 2029), and ZolpiMist™[27](index=27&type=chunk)[56](index=56&type=chunk)[59](index=59&type=chunk) [Competition and Manufacturing](index=13&type=section&id=Competition%20and%20Manufacturing) The company faces intense competition from large pharmaceutical firms and outsources all product manufacturing to cGMP-compliant partners - The company competes against large, well-resourced pharmaceutical companies, including **AbbVie (AndroGel) for Natesto and generic manufacturers for ZolpiMist**[69](index=69&type=chunk)[70](index=70&type=chunk)[72](index=72&type=chunk) - Aytu's business strategy is to use **cGMP-compliant contract manufacturers** for all clinical and commercial supplies[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) Key risks include a history of net losses, need for capital, intense competition, and reliance on third-party manufacturers and licensors - The company has a history of losses, with a **net loss of $27.1 million for the year ended June 30, 2019**, and may need to raise additional funding[87](index=87&type=chunk)[90](index=90&type=chunk) - Natesto, Tuzistra XR, and ZolpiMist are **controlled substances subject to strict DEA regulation**, which could limit commercialization and impose significant compliance costs[179](index=179&type=chunk)[180](index=180&type=chunk) - The company faces substantial competition from larger companies with **greater financial and technical resources**, placing it at a significant disadvantage[69](index=69&type=chunk)[149](index=149&type=chunk) - **Armistice Capital holds a significant ownership percentage (up to 40% potential)** and has a board seat, giving it the ability to exert significant control[221](index=221&type=chunk)[222](index=222&type=chunk) - The company **relies on third-party manufacturers** for all its products, creating risks related to regulatory compliance and supply disruptions[167](index=167&type=chunk)[168](index=168&type=chunk) [Unresolved Staff Comments](index=45&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved comments from SEC staff - None[262](index=262&type=chunk) [Properties](index=46&type=section&id=Item%202.%20Properties) The company leases its principal executive offices in Englewood, Colorado and additional office space in Raleigh, North Carolina - The company maintains operating leases for its principal executive offices in Englewood, CO, and additional office space in Raleigh, NC[264](index=264&type=chunk)[265](index=265&type=chunk) [Legal Proceedings](index=46&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - The company is currently not party to any material legal proceedings[267](index=267&type=chunk) [Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - Not applicable[267](index=267&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=47&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ under 'AYTU', and the company does not anticipate paying cash dividends - The company's common stock is listed on the **NASDAQ Capital Market under the symbol 'AYTU'**[269](index=269&type=chunk) Fiscal Year 2019 Common Stock Price Range ($) | Quarter | High | Low | | :--- | :--- | :--- | | Q1 (ended Sep 30, 2018) | $7.80 | $2.40 | | Q2 (ended Dec 31, 2018) | $3.23 | $0.68 | | Q3 (ended Mar 31, 2019) | $2.53 | $0.78 | | Q4 (ended Jun 30, 2019) | $2.61 | $1.50 | - The company has not paid cash dividends and does not intend to in the foreseeable future, planning to **retain earnings for operations**[274](index=274&type=chunk) [Selected Financial Data](index=48&type=section&id=Item%206.%20Selected%20Financial%20Data) This section is not applicable as the company is a smaller reporting company - Not applicable[276](index=276&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY2019 revenue doubled to $7.3M, but net loss widened to $27.1M, raising substantial doubt about its ability to continue as a going concern Results of Operations Comparison (Years ended June 30) | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $7,320,357 | $3,660,120 | +$3,660,237 | | **Loss from Operations** | $(16,846,637) | $(19,700,234) | +$2,853,597 | | **Net Loss** | $(27,131,908) | $(10,187,863) | -$(16,944,045) | - The **100% increase in product revenue** in FY2019 was driven by higher Natesto sales and the launch of Tuzistra XR and ZolpiMist[285](index=285&type=chunk) - The significant increase in net loss was primarily due to a **non-cash loss from the change in fair value of contingent consideration of $9.8 million** in FY2019[283](index=283&type=chunk) Cash Flow Summary (Years ended June 30) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(13,831,377) | $(15,940,322) | | Net cash used in investing activities | $(1,061,985) | $(484,292) | | Net cash provided by financing activities | $19,075,062 | $22,659,599 | - The company has **substantial doubt about its ability to continue as a going concern** due to recurring losses and an accumulated deficit of $106.4 million[280](index=280&type=chunk)[399](index=399&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company is a smaller reporting company - Not applicable[298](index=298&type=chunk) [Financial Statements and Supplementary Data](index=51&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains audited financial statements, with the auditor's report highlighting substantial doubt about the company's going concern status - The Report of Independent Registered Public Accounting Firm expresses **substantial doubt about the Company's ability to continue as a going concern**[376](index=376&type=chunk)[383](index=383&type=chunk) - As of June 30, 2019, the company had **cash and cash equivalents of $11.0 million** and an **accumulated deficit of $106.4 million**[386](index=386&type=chunk) - Subsequent to the fiscal year-end, the company signed a **definitive merger agreement with Innovus Pharmaceuticals, Inc**[533](index=533&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=51&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - None[299](index=299&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls, procedures, and internal control over financial reporting were effective as of June 30, 2019 - Management concluded that both disclosure controls and procedures and internal control over financial reporting were **effective as of June 30, 2019**[299](index=299&type=chunk)[301](index=301&type=chunk) [Other Information](index=52&type=section&id=Item%209B.%20Other%20Information) The company reports no other material information for this item - None[303](index=303&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=53&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details the company's leadership team, board structure, and corporate governance policies, including its code of ethics - The Board of Directors is comprised of five members, and key executive officers include **Joshua R. Disbrow (CEO), Jarrett T. Disbrow (COO), and David A. Green (CFO)**[305](index=305&type=chunk)[306](index=306&type=chunk) - The Board has an Audit Committee, Compensation Committee, and Nominating and Governance Committee, with charters available on the company's website[320](index=320&type=chunk) - Director John A. Donofrio Jr. qualifies as an **audit committee financial expert**[321](index=321&type=chunk) [Executive Compensation](index=56&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation combines cash and equity, with CEO total compensation of $1.04 million in FY2019 and severance provisions in place FY 2019 Named Executive Officer Compensation | Name and Principal Position | Salary ($) | Bonus ($) | Stock Award ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | **Joshua R. Disbrow**, CEO | 330,000 | 135,000 | 578,705 | 1,043,705 | | **Jarrett T. Disbrow**, COO | 250,000 | 105,000 | 438,413 | 793,413 | | **David A. Green**, CFO | 250,000 | 95,000 | 340,988 | 685,988 | - Non-employee director compensation includes an annual cash retainer (**$25,000 base, $40,000 for chair**) and stock awards (**initial grant of 65,000 restricted shares**)[325](index=325&type=chunk) - Executive employment agreements include a provision for a lump sum payment of **two times base salary** if terminated without cause or for good reason[339](index=339&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=63&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Armistice Capital, LLC is the largest beneficial owner with 57.06% of common stock as of August 31, 2019 Beneficial Ownership as of August 31, 2019 | Name | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Owned | | :--- | :--- | :--- | | **Armistice Capital, LLC** | 16,504,008 | 57.06% | | **Joshua Disbrow** (CEO) | 492,830 | 2.81% | | **Jarrett Disbrow** (COO) | 377,256 | 2.15% | | **David Green** (CFO) | 274,580 | 1.57% | - Beneficial ownership is based on **17,688,071 shares of common stock outstanding** as of August 31, 2019[345](index=345&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=65&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company discloses significant transactions with affiliate Armistice Capital and reports that six of seven directors are independent - **Armistice Capital is considered an affiliate and related party**, holding a potential ownership stake of up to 40% of the company's common stock[353](index=353&type=chunk) - The company had a master services agreement with TrialCard Incorporated, where director **John Donofrio was an executive officer** until February 2019[354](index=354&type=chunk) - **Six of the seven directors are independent** under NASDAQ rules; CEO Josh Disbrow is not independent[358](index=358&type=chunk) [Principal Accountant Fees and Services](index=66&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Total fees paid to the independent auditor, Plante Moran, PLLC, were $209,000 in FY2019 and $275,000 in FY2018 Accountant Fees | Fee Type | FY 2019 | FY 2018 | | :--- | :--- | :--- | | Audit fees | $154,000 | $223,000 | | Audit-related fees | $55,000 | $52,000 | | Tax fees | $0 | $0 | | **Total fees** | **$209,000** | **$275,000** | Part IV [Exhibits and Financial Statement Schedules](index=67&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and material contracts filed as part of the annual report - The report includes the company's consolidated financial statements and notes[364](index=364&type=chunk) - Key exhibits filed include the **License and Supply Agreements** for Natesto, ZolpiMist, and Tuzistra XR[368](index=368&type=chunk)[369](index=369&type=chunk) [Subsequent Events](index=102&type=section&id=Subsequent%20Events) Post-fiscal year, the company amended its Natesto agreement and signed a definitive merger agreement to acquire Innovus Pharmaceuticals - On July 29, 2019, the company amended its License and Supply Agreement for Natesto with Acerus, which will assume regulatory and clinical responsibilities[530](index=530&type=chunk) - On September 12, 2019, Aytu signed a definitive agreement to **merge with Innovus Pharmaceuticals, Inc.** for up to $8 million in stock and $16 million in CVRs[533](index=533&type=chunk)