Aytu BioPharma(AYTU) - 2025 Q4 - Annual Report

Cautionary Information Regarding Forward-Looking Statements This Annual Report contains forward-looking statements regarding anticipated regulatory events, future financial position, business strategy, and clinical trials, which are subject to various risks, uncertainties, and assumptions - This Annual Report contains forward-looking statements regarding anticipated regulatory events, future financial position, business strategy, and clinical trials, which are subject to various risks, uncertainties, and assumptions[10] Summary of Risk Factors This section provides an overview of the company's key risk factors, including financial, commercialization, intellectual property, and operational challenges Risks Related to Our Business and Financial Position The company has a history of operating losses and no assurance of profitability, requiring additional funding which may not be available on acceptable terms. It faces risks related to debt obligations, potential litigation, and limitations on using net operating loss carryforwards - The company has incurred losses since inception, with a net loss of $13.6 million for the year ended June 30, 2025, and an accumulated deficit of $333.5 million[17][98][102] - The company may need to raise additional funding through public or private equity or debt financings, which could dilute existing stockholders or impose restrictive covenants[17][103][106] - As of June 30, 2025, the company had federal net operating loss carryforwards of $516.7 million, but previous ownership changes have significantly limited their usability, with $324.7 million expected to expire unused by 2037[113][114][86] Risks Related to Commercialization Commercialization risks include heavy dependence on product success, difficulty differentiating products from generics, potential delays in product launches, reliance on limited third-party manufacturers, intense competition, and government restrictions on pricing and reimbursement - The company is heavily dependent on the commercial success of its products but has not generated sufficient net revenue to achieve company-wide profitability[17][116] - The company relies on third parties to manufacture its products, introducing risks of costs, delays, and inefficiencies that may prevent successful commercialization[17][125] - Government restrictions on pricing and reimbursement, as well as other healthcare payor cost-containment initiatives, may negatively impact the company's ability to generate net revenue[17][138] - Adzenys and Cotempla, classified as Schedule II controlled substances, are subject to extensive regulation by the DEA regarding their manufacture, use, sale, and distribution[17][161] Risks Related to Our Intellectual Property The company faces risks from intellectual property disputes, dependence on license agreements, potential expiration or loss of patent protection, and challenges in enforcing intellectual property rights globally - A dispute concerning the infringement or misappropriation of proprietary rights could be time-consuming and costly, potentially leading to damages or injunctions[18][172] - The company is dependent on license and commercialization agreements, and the expiration or loss of patent protection (e.g., Adzenys patents expire in 2026/2032, Cotempla in 2032/2038) may adversely affect future net revenue[18][173][176] Risks Related to Our Organization, Structure and Operations Risks include significant investments required for business expansion, difficulties integrating acquired businesses, high customer concentration, dependence on key personnel, and potential product liability lawsuits - Efforts to expand and transform businesses, including acquisitions and partnerships, may require significant investments and could lead to increased financial pressure if unsuccessful[19][187][189] - In fiscal 2025, four significant customers accounted for 85% of gross revenue and 89% of gross accounts receivable, posing a material adverse effect if any are lost or delay payments[20][193][194] PART I This section provides an overview of the company's business, risk factors, properties, and legal proceedings Business Overview Aytu BioPharma is a pharmaceutical company focused on advancing innovative medicines for complex central nervous system (CNS) diseases, particularly Major Depressive Disorder (MDD) with the upcoming launch of EXXUA, and Attention Deficit Hyperactivity Disorder (ADHD). The company has strategically divested its Consumer Health business and suspended clinical development programs to concentrate on its revenue-generating prescription product portfolios and achieve profitability Company Overview Aytu BioPharma focuses on innovative CNS medicines, building a portfolio through in-licensing, acquisition, development, and commercialization, with EXXUA as a key growth driver - Aytu BioPharma, Inc. is a pharmaceutical company focused on advancing innovative medicines for complex central nervous system (CNS) diseases to improve the quality of life for patients[22] - The company's strategy involves in-licensing, acquiring, developing, and commercializing novel prescription therapeutics to build a portfolio of revenue-generating products[23] - Aytu anticipates launching EXXUA (gepirone) extended-release tablets for Major Depressive Disorder (MDD) in the fourth calendar quarter of 2025, expecting it to be a major growth catalyst[24] - The company has indefinitely suspended active development of clinical programs and divested unprofitable operations, including the Consumer Health business, to focus on accelerating commercial business growth and achieving positive operating cash flows[25] - The continuing operations are focused on EXXUA and current prescription pharmaceutical products, primarily the ADHD Portfolio (Adzenys XR-ODT and Cotempla XR-ODT) and the Pediatric Portfolio (Karbinal ER, Poly-Vi-Flor, and Tri-Vi-Flor)[26] - The company incurred a net loss of $13.6 million for the year ended June 30, 2025, and had an accumulated deficit of $333.5 million, expecting to become profitable through commercial business growth[27] Recent Business Development Recent developments include the divestiture of the Consumer Health business, product portfolio revenue, manufacturing transfers, suspension of clinical programs, and ongoing patent litigation - Aytu completed the wind down and divestiture of its Consumer Health business in the first quarter of fiscal 2025 to prioritize its prescription business[29] Net Revenue by Product Portfolio (Fiscal Year 2025) | Product Portfolio | Net Revenue (in millions) | | :---------------- | :------------------------ | | ADHD Portfolio | $57.6 | | Pediatric Portfolio | $8.8 | | Total Net Revenue | $66.4 | - The Pediatric Portfolio grew to $8.8 million in fiscal 2025, a 20% increase from fiscal 2024, reflecting positive effects from a recently implemented return-to-growth plan[30] - Manufacturing of Adzenys and Cotempla was transferred to a United States-based third-party contract manufacturer in Q4 fiscal 2024 to reduce costs and improve profitability[31] - The company terminated license agreements for Healight and NT0502 and indefinitely suspended clinical development programs, including AR101, transferring all rights to EnzCo, LLC[32] - Aytu received a Paragraph IV Certification Notice Letter from Granules Pharmaceuticals, Inc. regarding a generic version of Adzenys, leading to a patent infringement lawsuit filed on December 11, 2024, with a trial scheduled for December 7, 2026[34] Debt and Equity Financings The company secured recent equity financings totaling $16.6 million gross proceeds and manages debt obligations including a $13.0 million term loan and a $14.5 million revolving loan - In June 2025, Aytu raised gross proceeds of $16.6 million ($14.8 million net) from the issuance of common stock and prefunded warrants, intended for working capital, general corporate purposes, and EXXUA commercialization[35] - In June 2024, the exercise of Tranche B Warrants generated $3.5 million in proceeds, partially used to repay a $15.0 million term loan[36] - The company has an Eclipse Term Loan with an outstanding principal of $13.0 million (SOFR + 7.0%) and an Eclipse Revolving Loan with a potential maximum borrowing base of $14.5 million (SOFR + 4.5%), both maturing on June 12, 2029[38][39] Commercial Business Overview Aytu's commercial operations focus on EXXUA for MDD, the ADHD Portfolio (Adzenys XR-ODT, Cotempla XR-ODT), and the Pediatric Portfolio, distributed in the US and internationally - Aytu operates through one business segment, focusing on EXXUA, the ADHD Portfolio, and the Pediatric Portfolio, primarily distributed in the United States through third-party channels[40][41] - EXXUA is a novel first-in-class selective serotonin 5HT1a receptor agonist, FDA-approved for MDD, and is believed to be the only antidepressant acting on serotonin receptors without a sexual dysfunction warning[42][24] - The ADHD Portfolio includes Adzenys XR-ODT and Cotempla XR-ODT, the first and only FDA-approved amphetamine and methylphenidate extended-release, orally disintegrating tablets for ADHD[43] - The Pediatric Portfolio comprises Karbinal ER (antihistamine) and Poly-Vi-Flor/Tri-Vi-Flor (fluoride-based multivitamin supplements) for infants and children[44] - The Aytu RxConnect patient support program offers affordable, predictable copays and hassle-free availability for commercially insured patients through a network of over 1,000 pharmacies[46] - Aytu has international commercial agreements for Adzenys and Cotempla with Medomie Pharma Ltd (Israel/Palestinian Authority, July 2023) and Lupin Pharma Canada Ltd (Canada, September 2024)[47] Strategy The company's strategy prioritizes increasing net revenue, enhancing financial performance through operational efficiencies, and portfolio optimization, with a focus on the EXXUA launch and existing product growth - The company's strategic priorities include increasing net revenue, enhancing financial performance through operational and manufacturing efficiencies, and portfolio prioritization[49] - Key strategic initiatives include successfully launching EXXUA in Q4 2025, growing existing commercial products (Adzenys, Cotempla, Karbinal, Poly-Vi-Flor, Tri-Vi-Flor), leveraging the Aytu RxConnect platform, and improving gross margins for the ADHD product franchise through manufacturing transfers[52] Products and Markets Aytu's product portfolio targets the MDD market with EXXUA, the ADHD market with Adzenys and Cotempla, and the pediatric market with Karbinal ER and fluoride-based multivitamin supplements - The United States MDD market is significant, with over 340 million antidepressant prescriptions written in 2024, but high patient dissatisfaction due to side effects like sexual dysfunction and weight gain[51][54] - EXXUA is a novel first-in-class selective serotonin 5HT1a receptor agonist, FDA-approved for MDD, and is unique as the only antidepressant acting on serotonin receptors without a label warning about sexual dysfunction[53] - EXXUA demonstrated efficacy in two pivotal Phase 3 trials, with symptom improvement by week 2-3 and a favorable tolerability profile, avoiding significant sexual dysfunction or weight gain[55][56][57] - ADHD is a common neurobehavioral disorder, with approximately 104 million prescriptions for ADHD medications written in the United States in 2024, generating $28.6 billion in sales[58][59] - Adzenys and Cotempla are the first and only extended-release orally disintegrating tablets (XR-ODT) for ADHD, offering ease of administration, taste-masking, and prevention of 'cheeking'[61][62][66][67] - Adzenys composition-of-matter patents expire in 2026 and 2032, with a generic version by Actavis (Teva) approved to launch on September 1, 2025[63][120] - Cotempla composition-of-matter patents expire in 2032, and a method-of-use patent extends protection to 2038, with a generic version by Teva approved to launch on July 1, 2026[68][120] - Karbinal ER is the only FDA-approved, 12-hour carbinoxamine oral suspension, indicated for various allergic conditions in patients two years and older, positioned as a second-line treatment[70][72] - Poly-Vi-Flor and Tri-Vi-Flor are prescription fluoride-based multivitamin supplements for infants and children with fluoride deficiency, containing proprietary L-methylfolate forms (Metafolin and Arcofolin) for enhanced bioavailability[74][77][79] Manufacturing Aytu relies on Contract Manufacturing Organizations (CMOs) for product manufacturing and testing, with key supply agreements in place for EXXUA, ADHD, and Pediatric portfolio products - Aytu contracts with CMOs for product manufacturing and testing, overseeing activities with internal technical, manufacturing, and quality experience personnel[80] - Key supply agreements include Fabre-Kramer for EXXUA (through September 2028), a US-based CMO for Adzenys and Cotempla (through November 2028), Tris for Karbinal (through August 2032), and US-based CMOs for Poly-Vi-Flor and Tri-Vi-Flor[84] Research and Development Research and development activities have been indefinitely suspended to reallocate resources towards commercialization efforts, resulting in a significant reduction in R&D spending - Research and development activities have been indefinitely suspended to focus resources on commercialization efforts, leading to a significant decline in R&D spending[81] Intellectual Property Aytu actively seeks trademark protection for its brands in the United States and may license intellectual property from third parties to support its product portfolio - Aytu seeks trademark protection in the United States for its brands (e.g., Aytu, EXXUA, Adzenys, Cotempla, Karbinal, Poly-Vi-Flor, Tri-Vi-Flor) and may obtain licenses from third-party intellectual property holders[82] Government Regulation The company's products are subject to extensive regulation by the FDA and other agencies, requiring rigorous testing, approval, and post-market compliance, especially for controlled substances like Adzenys and Cotempla - The company is subject to extensive regulation by the FDA and other federal, state, and local agencies, including requirements for testing, development, manufacturing, approval, labeling, and marketing of products[83] - FDA approval of a New Drug Application (NDA) is required before any new drug can be marketed in the United States, involving preclinical testing, clinical trials (Phase 1, 2, 3), and post-approval regulation[85][86][87][89] - Adzenys and Cotempla are regulated as Schedule II controlled substances by the DEA, subjecting their manufacture, use, sale, and distribution to strict requirements, including annual registration and production quotas[88][90] Human Capital As of June 30, 2025, Aytu employed 83 individuals, primarily in commercialization, fostering a team-oriented, entrepreneurial culture focused on attracting and retaining diverse talent - As of June 30, 2025, Aytu employed 83 individuals (82 full-time), with 52 in commercialization, 5 in operations, and 26 in general and administrative activities, all located in the United States[92] - The company's values emphasize a team-oriented, hard-working, and entrepreneurial culture, focusing on attracting, retaining, and developing diverse talent through competitive pay, benefits, and engagement[93] Available Information Aytu provides free access to its SEC filings, including annual, quarterly, and current reports, on its corporate website - Aytu maintains a website (https://aytubio.com) where its SEC filings, including annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, are available free of charge[95] Code of Ethics The company has adopted a written code of ethics applicable to all officers, directors, and employees, publicly available on its corporate governance website - The company has adopted a written code of ethics applicable to officers, directors, and employees, publicly disclosed on its corporate governance website[96] Risk Factors This section details the significant risks facing Aytu BioPharma, including its history of operating losses and uncertainty of future profitability, the need for additional funding, restrictions imposed by debt agreements, and potential limitations on net operating loss carryforwards. It also covers commercialization challenges such as intense competition, reliance on third-party manufacturers, government pricing controls, and the difficulty of differentiating products. Intellectual property risks, organizational challenges, customer concentration, and legal proceedings are also highlighted - The company has incurred significant losses since inception, with a net loss of $13.6 million for the year ended June 30, 2025, and an accumulated deficit of $333.5 million, with no assurance of future profitability[98][102] - The company may require additional funding through equity or debt financings, which could lead to significant dilution for existing stockholders or impose further restrictive covenants[103][105][106] - As of June 30, 2025, the company has a $13.0 million term loan and up to $16.0 million in secured revolving loans, with failure to satisfy obligations potentially leading to acceleration of amounts due and enforcement of security interests[108][110] - The company's ability to use its $516.7 million federal net operating loss carryforwards is limited by Section 382 of the IRC due to ownership changes, with $324.7 million expected to expire unused by 2037[113][114] - Competition from generic versions of its products, such as Actavis' generic Adzenys (expected September 1, 2025) and Teva's generic Cotempla (expected July 1, 2026), could materially adversely impact net revenue and profitability[120] - Reliance on limited single-source suppliers and third-party manufacturers for products like Adzenys and Cotempla poses risks of supply chain disruptions, increased costs, and delays in commercialization[122][125] - Government restrictions on pricing and reimbursement, including the PPACA and Health Care Reconciliation Act, may negatively impact the company's ability to generate net revenue and achieve profitability[138] - Four customers contributed over 10% of gross revenue in fiscal 2025, accounting for 85% of gross revenue and 89% of gross accounts receivable, creating significant customer concentration risk[193][194] - The company is currently involved in a patent infringement lawsuit against Granules Pharmaceuticals, Inc. regarding a generic version of Adzenys, with a trial scheduled for December 7, 2026[34][238] - The company's stock price is highly volatile and may be influenced by numerous factors beyond its control, including product success, regulatory decisions, competition, and general economic conditions[211] Unresolved Staff Comments There are no unresolved staff comments to report for the fiscal year - No unresolved staff comments were reported[227] Cybersecurity Aytu BioPharma relies on internal and third-party IT systems, facing risks from cyber-attacks and data breaches. The company has implemented security measures, including employee training, system monitoring, MFA, cloud-based operations, and adherence to NIST Cybersecurity Framework 2.0. The Board of Directors and Audit Committee oversee cybersecurity risk management, led by the CFO. No material cybersecurity incidents occurred in fiscal 2025 - The company relies on internal and third-party information technology systems and networks, making them vulnerable to damage, disruption, or unauthorized access from cyber-attacks[228][229] - Aytu has implemented various cybersecurity measures, including regular employee training, system monitoring, multi-factor authentication (MFA), cloud-based environments, and external vulnerability assessments[230] - The Board of Directors, through its Audit Committee, actively oversees cybersecurity risk management, receiving quarterly updates on posture, threats, and incidents[231] - The Chief Financial Officer leads cybersecurity operations, overseeing strategy, policies, and a team with over 20 years of experience in the field[232] - Aytu adheres to the National Institute of Standards and Technology (NIST) Cybersecurity Framework 2.0 and has developed internal policies and a systems disaster recovery plan[233] - No cybersecurity incidents materially affected the company's business strategy, results of operations, or financial condition during fiscal 2025[234] Properties Aytu BioPharma leases its corporate headquarters in Denver, CO, and an additional office in Berwyn, PA, continuously reviewing and evaluating its property portfolio to optimize business operations Company Properties (as of June 30, 2025) | Location | Type | Purpose | | :---------- | :------ | :------------------ | | Denver, CO | Leased | Corporate headquarters | | Berwyn, PA | Leased | Office | Legal Proceedings Aytu BioPharma is involved in ongoing legal proceedings, including a patent infringement lawsuit against Granules Pharmaceuticals, Inc. regarding a generic version of Adzenys, with a trial scheduled for December 7, 2026. The company was also a nominal plaintiff in the 'Revive Investing' lawsuit, which resulted in a jury verdict of no liability on January 29, 2025, and is currently under appeal - The company filed a patent infringement lawsuit on December 11, 2024, against Granules Pharmaceuticals, Inc. concerning a generic version of Adzenys, triggering a 30-month stay on FDA approval; a trial is scheduled for December 7, 2026[238][479] - In the 'Revive Investing' lawsuit, a jury returned a verdict of no liability on January 29, 2025, and the plaintiffs filed an appeal on March 6, 2025; the outcome is not expected to materially affect the company's financial condition[239][480] Mine Safety Disclosures This item is not applicable to Aytu BioPharma - This item is not applicable to the company[240] PART II This section covers the company's common equity market, financial condition, results of operations, market risks, financial statements, and internal controls Market for Common Equity and Stockholder Matters Aytu BioPharma's common stock trades on Nasdaq under 'AYTU.' As of September 15, 2025, there were 9,911,913 shares outstanding and 183 record holders. The company has an equity compensation plan (2023 Equity Incentive Plan) with 397,409 shares available for future issuance. No dividends have been declared or paid, with current intent to retain earnings for business development - As of September 15, 2025, the company had 9,911,913 shares of common stock outstanding and 183 holders of record[5][242][451] - The company's common stock has been listed on the Nasdaq under the symbol 'AYTU' since October 20, 2017[3][242] Equity Compensation Plan Information (as of June 30, 2025) | Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column A) | | :------------------------------------------- | :---------------------------------------------------------------------------------------- | :-------------------------------------------------------------------------- | :--------------------------------------------------------------------------------------------------------------------------------- | | 2023 Equity Incentive Plan (Outstanding stock options) | 211,618 | $4.51 | 397,409 | | 2023 Equity Incentive Plan (Unvested restricted stock) | 32,912 | N/A | | | Equity compensation plans not approved by security holders | 4 | N/A | — | | Total for all plans | 244,534 | | 397,409 | - The company has never declared or paid any dividends on its capital stock and intends to retain all available funds and future earnings to fund business development[246] Reserved This item is reserved and contains no information - This item is reserved[247] Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Aytu BioPharma's financial performance and condition for the year ended June 30, 2025, compared to 2024. It highlights the company's strategic shift to focus on CNS prescription products, particularly the upcoming EXXUA launch and growth in ADHD and Pediatric portfolios, while divesting non-core assets. Key financial results show a net loss of $13.6 million in fiscal 2025, an increase in total net revenue, but a decrease in gross profit percentage due to higher cost of goods sold. Operating expenses decreased across selling, marketing, general, administrative, and R&D, but impairment expense increased significantly. The company's liquidity is supported by recent equity financings and loan agreements, but it continues to assess the impact of economic uncertainties and new legislation Objective The MD&A aims to provide relevant information for assessing and understanding the company's results of operations, cash flows, and financial condition for the year ended June 30, 2025 - The Management's Discussion and Analysis (MD&A) aims to provide relevant information for assessing and understanding the company's results of operations and cash flows for the year ended June 30, 2025, and its financial condition[248] Overview Aytu BioPharma focuses on CNS medicines, building a revenue-generating portfolio, with EXXUA's upcoming launch as a key catalyst in the over $22 billion US MDD market - Aytu BioPharma is a pharmaceutical company focused on advancing innovative medicines for complex central nervous system diseases, aiming to build a portfolio of revenue-generating products through in-licensing, acquiring, developing, and commercializing novel prescription therapeutics[249] - The company anticipates launching EXXUA for Major Depressive Disorder (MDD) in the fourth calendar quarter of 2025, expecting it to be a major growth catalyst in the over $22 billion United States prescription MDD market[250] - The Consumer Health business was divested in the first quarter of fiscal 2025, and the company now operates as a single operating and reporting segment focused on prescription pharmaceutical products, including the ADHD and Pediatric Portfolios[251][252] - The company incurred a net loss of $13.6 million for the year ended June 30, 2025, and had an accumulated deficit of $333.5 million, but expects to become profitable through continued commercial business growth[253] Significant Developments Significant developments include ongoing inflationary pressures, a patent infringement lawsuit, strong net revenue from ADHD and Pediatric portfolios, manufacturing transfers, suspension of R&D programs, recent equity financing, new loan agreements, and assessment of new legislation - The company continues to experience inflationary pressures, economic uncertainty, and supply chain disruptions due to global geopolitical factors, but has maintained adequate supply for its ADHD and pediatric products[255] - A patent infringement lawsuit against Granules Pharmaceuticals, Inc. regarding a generic version of Adzenys is ongoing, with a trial scheduled for December 7, 2026[256] - Aytu recorded net revenue of $66.4 million for fiscal 2025, with the ADHD Portfolio generating $57.6 million and the Pediatric Portfolio growing 20% to $8.8 million[258] - Manufacturing of Adzenys and Cotempla was transferred to a United States-based third-party manufacturer in Q4 fiscal 2024 to reduce costs[259] - The company indefinitely suspended clinical development programs, including AR101, and terminated related license agreements to focus on revenue-generating products and profitability[260] - In June 2025, the company raised $14.8 million in net proceeds from a public offering of common stock and prefunded warrants, intended for working capital and EXXUA commercialization[261] - The company has a $13.0 million Eclipse Term Loan (SOFR + 7.0%) and an Eclipse Revolving Loan with a potential maximum borrowing base of $14.5 million (SOFR + 4.5%), both maturing on June 12, 2029[264] - The enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, may adversely affect the company's business, financial condition, and future plans, with an ongoing assessment of its potential impact[265] Results of Operations Aytu's fiscal 2025 results show a net loss of $13.6 million, an increase in net revenue to $66.4 million, but a decrease in gross profit percentage due to higher cost of goods sold. Operating expenses decreased across most categories, except for a significant impairment expense Consolidated Statements of Operations (Year Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :----------------------------------------- | :------------------ | :------------------ | :-------------------- | | Net revenue | $66,382 | $65,183 | $1,199 | | Cost of goods sold | $20,551 | $16,129 | $4,422 | | Gross profit | $45,831 | $49,054 | $(3,223) | | Selling and marketing | $20,906 | $22,083 | $(1,177) | | General and administrative | $17,379 | $19,954 | $(2,575) | | Research and development | $1,326 | $2,769 | $(1,443) | | Amortization of intangible assets | $3,683 | $3,683 | $0 | | Restructuring costs | $2,101 | $2,156 | $(55) | | Impairment expense | $8,263 | $0 | $8,263 | | Total operating expenses | $53,658 | $50,645 | $3,013 | | Loss from operations | $(7,827) | $(1,591) | $(6,236) | | Other (expense) income, net | $(512) | $870 | $(1,382) | | Interest expense | $(3,703) | $(5,059) | $1,356 | | Derivative warrant liabilities loss | $(1,703) | $(4,004) | $2,301 | | Loss on extinguishment of debt | $0 | $(594) | $594 | | Loss from continuing operations before income tax expense | $(13,745) | $(10,378) | $(3,367) | | Income tax expense | $(437) | $(2,142) | $1,705 | | Net loss from continuing operations | $(14,182) | $(12,520) | $(1,662) | | Net income (loss) from discontinued operations, net of tax | $620 | $(3,324) | $3,944 | | Net loss | $(13,562) | $(15,844) | $2,282 | | Basic and diluted - net loss per share | $(2.16) | $(2.86) | $0.70 | Net Revenue by Product Portfolio (Year Ended June 30, 2025 vs. 2024) | Product Portfolio | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :---------------- | :------------------ | :------------------ | :-------------------- | | ADHD Portfolio | $57,576 | $57,784 | $(208) | | Pediatric Portfolio | $8,769 | $7,280 | $1,489 | | Other | $37 | $119 | $(82) | | Total net revenue | $66,382 | $65,183 | $1,199 | - Gross profit decreased by $3.2 million (7%) in fiscal 2025, with the gross profit percentage falling to 69% from 75% in fiscal 2024, primarily due to increased cost of goods sold for ADHD Portfolio inventory[268] - Selling and marketing expense decreased by $1.2 million (5%) in fiscal 2025, but is expected to increase in fiscal 2026 due to the anticipated EXXUA launch[269] - General and administrative expense decreased by $2.6 million (13%) in fiscal 2025 due to cost reduction efforts, but is expected to increase in fiscal 2026 due to EXXUA launch support[270] - Research and development expense decreased by $1.4 million (52%) in fiscal 2025 due to the suspension of development programs, with further slight decreases expected[271] - Impairment expense of $8.3 million was recognized in fiscal 2025, primarily due to the increased focus on EXXUA and the ADHD Portfolio[274] - Interest expense decreased by $1.4 million (27%) in fiscal 2025, mainly due to the extinguishment of a $15.0 million term loan and more favorable terms on the new $13.0 million Eclipse Term Loan[277] - A derivative warrant liabilities loss of $1.7 million was recognized in fiscal 2025, driven by an increase in the fair value of June 2025 Prefunded Warrants, partially offset by a decrease in other warrants' fair value[278] - Income tax expense from continuing operations was $0.4 million in fiscal 2025, compared to $2.1 million in fiscal 2024, primarily driven by Section 382 limitations on net operating loss utilization[280] - Net income from discontinued operations was $0.6 million in fiscal 2025, compared to a net loss of $3.3 million in fiscal 2024, related to the wind down and divestiture of the Consumer Health business[281] Liquidity and Capital Resources Aytu's liquidity is supported by recent equity financings and loan agreements, with net cash provided by financing activities totaling $15.4 million in fiscal 2025, despite net cash used in operating and investing activities Consolidated Statements of Cash Flows (Year Ended June 30, 2025 vs. 2024) | Cash Flow Activity (in thousands) | 2025 | 2024 | | :------------------------------------------ | :-------- | :-------- | | Net cash used in operating activities | $(1,937) | $(1,388) | | Net cash used in investing activities | $(2,560) | $(329) | | Net cash provided by (used in) financing activities | $15,443 | $(1,262) | | Net change in cash and cash equivalents | $10,946 | $(2,979) | | Cash and cash equivalents at beginning of period | $20,006 | $22,985 | | Cash and cash equivalents at end of period | $30,952 | $20,006 | - Net cash used in operating activities totaled $1.9 million in fiscal 2025, primarily due to increases in accounts receivable and prepaid expenses, partially offset by positive cash earnings[284] - Net cash used in investing activities was $2.6 million in fiscal 2025, primarily from a $3.0 million cash payment for acquired intangible assets related to the EXXUA Commercialization Agreement[287] - Net cash provided by financing activities was $15.4 million in fiscal 2025, primarily from $14.8 million in net proceeds from equity offerings and $6.7 million from the Eclipse Revolving Loan[288] - The company finances operations through common stock and warrant sales, borrowings under its revolving credit facility, and cash generated from operations[290] - A shelf registration statement on Form S-3, effective October 15, 2024, covers up to $100.0 million in securities, with the full amount remaining available[291] - In June 2025, the company raised $14.8 million in net proceeds from a public offering of common stock and prefunded warrants, intended for working capital and EXXUA commercialization[292] - The company has a $13.0 million Eclipse Term Loan (SOFR + 7.0%) and an Eclipse Revolving Loan with a potential maximum borrowing base of $14.5 million (SOFR + 4.5%), both maturing on June 12, 2029[294] - Contractual obligations include loan agreements, milestone payments for licensed products, and manufacturing purchase commitments[295] - A $3.1 million settlement liability related to the termination of the Tuzistra License Agreement was paid in full during the first quarter of fiscal 2026[296] - The AR101 Rumpus Asset Purchase Agreement was terminated on August 5, 2025, transferring all rights to EnzCo, with no remaining obligations or penalties[298] Critical Accounting Estimates Critical accounting estimates involve significant judgment in revenue recognition for 'Gross to Net' adjustments, annual impairment assessments of long-lived assets, and fair value measurement of liability classified warrants - Revenue recognition involves significant judgment in estimating 'Gross to Net' adjustments for product sales, considering legal interpretations, historical experience, payor channel mix, and inventory levels[303][304] - The company assesses impairment of long-lived assets annually and when circumstances indicate carrying value may not be recoverable, leading to an $8.3 million impairment charge in fiscal 2025 due to shifted commercial focus[306][307] - Liability classified warrants are carried at fair value using Black-Scholes or Monte Carlo models, with changes in fair value recorded as a gain or loss[309] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Aytu BioPharma is not required to provide information under this item - The company is not required to provide information under this item as it is a smaller reporting company[310] Financial Statements and Supplementary Data This section presents the audited consolidated financial statements of Aytu BioPharma, Inc. and its subsidiaries for the fiscal years ended June 30, 2025, and 2024, including the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Stockholders' Equity, Cash Flows, and accompanying Notes. It also includes critical audit matters related to variable consideration and significant accounting policies - Grant Thornton LLP audited the consolidated financial statements for the periods ended June 30, 2025, and 2024, and issued an unqualified opinion[315] - A critical audit matter identified was the variable consideration related to certain gross to net adjustments, particularly for the ADHD Portfolio savings offers, due to inherent limitations in management's visibility into source data and reliance on external data[321][322] Consolidated Balance Sheets (as of June 30, 2025 and 2024) | ASSETS (in thousands) | 2025 | 2024 | | :------------------------------------ | :------ | :------ | | Cash and cash equivalents | $30,952 | $20,006 | | Accounts receivable, net | $31,155 | $23,526 | | Inventories | $11,434 | $12,141 | | Prepaid expenses and other current assets | $5,638 | $5,097 | | Current assets of discontinued operations | $0 | $1,121 | | Total current assets | $79,179 | $61,891 | | Property and equipment, net | $532 | $693 | | Operating lease right-of-use assets | $1,061 | $829 | | Intangible assets, net | $42,201 | $52,453 | | Other non-current assets | $1,204 | $2,185 | | Non-current assets of discontinued operations | $0 | $44 | | Total non-current assets | $44,998 | $56,204 | | Total assets | $124,177 | $118,095 | | LIABILITIES (in thousands) | 2025 | 2024 | | Accounts payable | $10,601 | $10,314 | | Accrued liabilities | $38,164 | $38,143 | | Revolving credit facility | $9,063 | $2,395 | | Current portion of debt | $1,857 | $1,857 | | Other current liabilities | $3,379 | $8,962 | | Current liabilities of discontinued operations | $0 | $557 | | Total current liabilities | $63,064 | $62,228 | | Debt, net of current portion | $10,895 | $10,877 | | Derivative warrant liabilities | $26,334 | $12,745 | | Other non-current liabilities | $4,918 | $4,529 | | Total non-current liabilities | $42,147 | $28,151 | | STOCKHOLDERS' EQUITY (in thousands) | 2025 | 2024 | | Common stock | $1 | $1 | | Additional paid-in capital | $352,500 | $347,688 | | Accumulated deficit | $(333,535) | $(319,973) | | Total stockholders' equity | $18,966 | $27,716 | | Total liabilities and stockholders' equity | $124,177 | $118,095 | Consolidated Statements of Operations (Year Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :----------------------------------------- | :------------------ | :------------------ | | Net revenue | $66,382 | $65,183 | | Cost of goods sold | $20,551 | $16,129 | | Gross profit | $45,831 | $49,054 | | Operating expenses: | | | | Selling and marketing | $20,906 | $22,083 | | General and administrative | $17,379 | $19,954 | | Research and development | $1,326 | $2,769 | | Amortization of intangible assets | $3,683 | $3,683 | | Restructuring costs | $2,101 | $2,156 | | Impairment expense | $8,263 | $0 | | Total operating expenses | $53,658 | $50,645 | | Loss from operations | $(7,827) | $(1,591) | | Other (expense) income, net | $(512) | $870 |\ | Interest expense | $(3,703) | $(5,059) | | Derivative warrant liabilities loss | $(1,703) | $(4,004) | | Loss on extinguishment of debt | $0 | $(594) | | Loss from continuing operations before income tax expense | $(13,745) | $(10,378) | | Income tax expense | $(437) | $(2,142) | | Net loss from continuing operations | $(14,182) | $(12,520) | | Net income (loss) from discontinued operations, net of tax | $620 | $(3,324) | | Net loss | $(13,562) | $(15,844) | | Basic and diluted - net loss per share | $(2.16) | $(2.86) | Consolidated Statements of Cash Flows (Year Ended June 30, 2025 vs. 2024) | Cash Flow Activity (in thousands) | 2025 | 2024 | | :------------------------------------------ | :-------- | :-------- | | Net cash used in operating activities | $(1,937) | $(1,388) | | Net cash used in investing activities | $(2,560) | $(329) | | Net cash provided by (used in) financing activities | $15,443 | $(1,262) | | Net change in cash and cash equivalents | $10,946 | $(2,979) | | Cash and cash equivalents at beginning of period | $20,006 | $22,985 | | Cash and cash equivalents at end of period | $30,952 | $20,006 | - The company's continuing operations now operate in a single operating and reportable segment following the divestiture of the Consumer Health business on July 31, 2024[338][373] - The company is subject to credit risk from accounts receivable, with four large wholesale distributors accounting for 85% of gross revenue and 89% of gross accounts receivable in fiscal 2025[361][363] Intangible Assets (as of June 30, 2025) | Asset Type | Gross Carrying Amount (in thousands) | Accumulated Amortization (in thousands) | Net Carrying Amount (in thousands) | Weighted Average Remaining Life (in years) | | :------------------------ | :----------------------------------- | :-------------------------------------- | :--------------------------------- | :----------------------------------------- | | Product technology rights | $22,200 | $(5,592) | $16,608 | 12.7 | | Technology rights | $30,200 | $(7,607) | $22,593 | 12.7 | | Commercialization rights | $3,000 | $0 | $3,000 | N/A (expected to be 12.7 upon launch) | | Total | $55,400 | $(13,199) | $42,201 | 12.7 | - The company recorded a full impairment of Karbinal ($2.7 million) and Poly-Vi-Flor/Tri-Vi-Flor ($5.6 million) intangible assets in June 2025 due to a shifted focus on EXXUA and the ADHD Portfolio[401][402] - As of June 30, 2025, the company had federal net operating losses of $516.7 million, with $190.0 million carried forward indefinitely and $324.7 million expected to expire by 2037 due to Section 382 limitations[439] - As of June 30, 2025, the company had 14,130,669 warrants and prefunded warrants outstanding, with 10,293,983 being prefunded warrants with no expiration date[464][469] - The company incurred $2.1 million in restructuring costs in fiscal 2025, primarily related to the closure of its Grand Prairie, Texas manufacturing site, and does not anticipate additional significant restructuring costs[472] - The EXXUA Commercialization Agreement includes an upfront cash payment of $3.0 million, a second $3.0 million payment (potentially $5.0 million if sales exceed $35.0 million) within 45 days of the one-year anniversary of launch, and milestone payments ranging from $5.0 million to over $100.0 million based on sales[473] - The AR101 Rumpus Asset Purchase Agreement was terminated on August 5, 2025, transferring all rights to EnzCo, with no remaining obligations or penalties[487] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There have been no changes in or disagreements with accountants on accounting and financial disclosure for the fiscal year - No changes in or disagreements with accountants on accounting and financial disclosure were reported[489] Controls and Procedures Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, and concluded they were effective at reasonable assurance levels. The company acknowledges inherent limitations in internal control systems but reports no material changes in internal control over financial reporting during Q4 fiscal 2025 - Management concluded that disclosure controls and procedures were effective as of June 30, 2025, at reasonable assurance levels[491] - No changes to internal control over financial reporting occurred during the fourth quarter of fiscal 2025 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[493] Other Information No directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - No directors or executive officers adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the quarter ended June 30, 2025[499] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to Aytu BioPharma - This item is not applicable[500] PART III This section incorporates by reference information regarding directors, executive compensation, security ownership, related transactions, and principal accountant fees from the company's proxy statement Directors, Executive Officers and Corporate Governance Information required for this item is incorporated by reference from the company's Definitive Proxy Statement on Schedule 14A for the 2026 annual meeting of stockholders - Information required by this item is incorporated by reference from the company's Definitive Proxy Statement on Schedule 14A relating to its 2026 annual meeting of stockholders[503] Executive Compensation Information required for this item is incorporated by reference from the company's Definitive Proxy Statement on Schedule 14A for the 2026 annual meeting of stockholders - Information required by this item is incorporated by reference from the company's Definitive Proxy Statement on Schedule 14A relating to its 2026 annual meeting of stockholders[504] Security Ownership and Related Stockholder Matters Information required for this item is incorporated by reference from the company's Definitive Proxy Statement on Schedule 14A for the 2026 annual meeting of stockholders - Information required by this item is incorporated by reference from the company's Definitive Proxy Statement on Schedule 14A relating to its 2026 annual meeting of stockholders[505] Certain Relationships, Related Transactions, and Director Independence Information required for this item is incorporated by reference from the company's Definitive Proxy Statement on Schedule 14A for the 2026 annual meeting of stockholders - Information required by this item is incorporated by reference from the company's Definitive Proxy Statement on Schedule 14A relating to its 2026 annual meeting of stockholders[506] Principal Accountant Fees and Services Information required for this item is incorporated by reference from the company's Definitive Proxy Statement on Schedule 14A for the 2026 annual meeting of stockholders - Information required by this item is incorporated by reference from the company's Definitive Proxy Statement on Schedule 14A relating to its 2026 annual meeting of stockholders[507] PART IV This section details the financial statements, supplementary data, and a comprehensive list of exhibits filed as part of the Annual Report Exhibits and Financial Statement Schedules This section lists the financial statements filed as part of the Annual Report, including the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Stockholders' Equity, Cash Flows, and accompanying Notes. It also provides a comprehensive list of exhibits, including merger agreements, certificates of incorporation, loan and security agreements, and equity incentive plans - The section includes the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Stockholders' Equity, Cash Flows, and Notes to the Consolidated Financial Statements[510] - A comprehensive list of exhibits is provided, detailing various agreements and corporate documents, including merger agreements, certificates of incorporation, loan and security agreements, and equity incentive plans[511][512][513][514][515] Form 10–K Summary This item is not applicable to Aytu BioPharma - This item is not applicable[517] Signatures The report is formally signed by the Chief Executive Officer, Chief Financial Officer, and other directors on September 23, 2025 - The report is signed by Joshua R. Disbrow, Chief Executive Officer, and Ryan J. Selhorn, Chief Financial Officer, along with other directors, on September 23, 2025[521][523]