Aytu BioPharma(US:AYTU)2021-11-14 16:00Financial Performance - Total net product revenue for the three months ended September 30, 2021, was $21.9 million, an increase of approximately $8.4 million, or 62%, compared to $13.5 million for the same period in 2020[165] - Net loss for the three months ended September 30, 2021, was $27.9 million, compared to a net loss of $4.3 million for the same period in 2020, representing an increase of 547%[158] - As of September 30, 2021, the company had an accumulated deficit of approximately $206.2 million[158] Expenses - The cost of sales increased to $9.4 million, a rise of $5.3 million, or 132%, compared to $4.1 million in the prior year[166] - Research and development expenses surged to $2.1 million, an increase of $1.9 million, or 1,045%, compared to $0.2 million for the same period in 2020[167] - Total operating expenses reached $40.2 million, an increase of $27.1 million, or 209%, compared to $13.0 million in the prior year[170] Asset and Financing Activities - The company signed an Asset Purchase Agreement with UAB "Caerus Biotechnologies" for the divestiture of MiOXSYS, receiving approximately $0.5 million and a 5% royalty on global net revenue for five years[162] - The company has approximately $48.0 million available for sale under the 2020 Shelf registration statement as of September 30, 2021[177] - A new shelf registration statement was filed on September 28, 2021, allowing for the offering of up to $100.0 million of various securities, effective October 7, 2021[177] - As of September 30, 2021, the company issued a total of 3,155,039 shares of common stock for aggregate proceeds of $23.4 million from its at-the-market offering program[178] Cash Flow - During the three months ended September 30, 2021, net operating cash outflows totaled $3.8 million, with cash usage approximately $24.1 million less than the net loss due to non-cash charges[181] - Net cash used in operating activities for the three months ended September 30, 2020, was $8.0 million, which was greater than the net loss of $4.3 million[185] - Net cash used in investing activities during the three months ended September 30, 2021, was $0.1 million, primarily due to payment of contingent considerations and capital expenditure[186] - Net cash used in financing activities during the three months ended September 30, 2021, was $5.5 million, primarily from a $3.4 million paydown on the revolving loan[187] Debt Obligations - The company has obligations related to its loan and credit facilities, including $16.0 million outstanding under the Deerfield facility with a 12.95% annual interest rate[189] - The company is contractually obligated to make fixed payments of $3.1 million in fiscal year 2022 and $3.0 million in milestone payments upon certain events[192] - The company has a loan agreement with Encina providing up to $25.0 million in revolving loans, with interest payable monthly at a variable rate[190] Stock-Based Compensation - The company recognized stock-based compensation expense based on fair values on the date of grant, with costs recognized ratably over the service period[207] - The fair value of employee stock-based awards is determined using the Black Scholes option pricing model, which involves subjective assumptions such as stock price volatility and expected life of stock options[208] - The average expected life of stock options was determined using the "simplified method," which is the midpoint between the vesting date and the end of the contractual term[208] - The company has not paid and does not anticipate paying cash dividends, assuming an expected dividend rate of 0%[208] Impairment and Fair Value Assessments - The company recognized an impairment loss of $19.5 million related to the Aytu BioPharma segment during the three months ended September 30, 2021[170] - As of September 30, 2021, the company recognized an impairment loss of $19.5 million related to the Aytu BioPharma segment due to a decline in stock price, indicating that the fair value of this segment is less than its carrying value[212] - The quantitative test indicated no impairment at Aytu Consumer Health segment, as it resulted in an implied fair value greater than the carrying value as of September 30, 2021[212] - Contingent consideration liabilities related to business acquisitions are classified within Level 3, with fair value estimated based on projected payment dates, discount rates, probabilities of payment, and projected revenues[213] - Fixed payment arrangements related to business acquisitions are recognized at their amortized cost basis and are accreted up to their ultimate face value over time[215] - The fair value of contingent value rights is based on a model that discounts each obligation at a 30% discount rate to reflect the overall risk to future payouts[214] - Changes in the fair value of liability classified derivative financial instruments are recorded as derivative income or expense and reported as a component of cash flows from operations[218] Revenue Recognition - The company’s revenue recognition involves significant judgment and estimates of the net sales price, including variable considerations such as discounts and rebates[197] - The principal estimates and assumptions used in impairment assessments include revenue growth, operating margins, and capital expenditures[212]