Aytu BioPharma(US:AYTU)2021-05-18 00:24Financial Data and Key Metrics Changes - Net revenue for Q3 2021 was $13.5 million, up from $8.2 million in the same quarter last year, reflecting a significant growth driven by the consumer health division [7][19] - The company ended the quarter with $46.8 million in cash, cash equivalents, and restricted cash after paying down $15 million on the Neos term loan [8][18] - Net loss for the quarter was $25.5 million, or $1.41 per share, compared to a net loss of $5.3 million, or $1.51 per share, for the same period last year [21] Business Line Data and Key Metrics Changes - Consumer health division net revenue reached a record $8.4 million, up from $3.5 million in the same quarter last year, driven by multiple product launches and e-commerce growth [19] - Prescription revenue for the Rx division was $5.1 million, up from $4.7 million in the same quarter last year, including revenue from Neos ADHD products only for the period after the merger [19][21] Market Data and Key Metrics Changes - The merger with Neos Therapeutics transformed Aytu into a pro forma $100 million annual revenue specialty pharma company, enhancing its footprint in pediatrics and adjacent specialty care segments [4][5] - The company expects to see continued growth in its e-commerce channel, which allows for efficient sales with lower marketing spend [11] Company Strategy and Development Direction - Aytu is focusing on building a leading pediatrics company by divesting non-core products like Netesto and reallocating resources to ADHD and pediatric brands [7] - The company plans to integrate Aytu heritage products into the Neos RxConnect pharmacy network to improve patient access and drive growth [9][10] - Aytu is pursuing acquisitions and partnerships to enhance its late-stage development pipeline, particularly in pediatric onset rare diseases [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving annual operating cost synergies of approximately $15 million starting in fiscal year 2022 following the Neos merger [5][18] - The company anticipates a return to historical gross margins for ADHD products after the technology transfer is completed in 2023, potentially exceeding 80% [24] Other Important Information - Aytu is advancing its Healight technology, which has shown potential antiviral effects and plans to initiate a Phase II trial for SARS-CoV-2 in the second half of the calendar year [14] - The company has acquired a global license for AR101, targeting the treatment of vascular Ehlers-Danlos Syndrome, with plans to start pivotal trials in the second half of the year [15] Q&A Session Summary Question: Plans on ADHD business and outsourcing impact - Management indicated that the technology transfer costs are expected to be less than $2.5 million over the next 18 months, with anticipated gross margins for ADHD products potentially exceeding 80% post-transfer [24] Question: Incremental contribution from ADHD products - Management noted that while they do not provide guidance, they expect revenue to be similar to historical figures, with margins affected by inventory write-offs in the next quarter [26][27] Question: FDA discussions and pivotal trial updates - Management confirmed ongoing discussions with the FDA regarding the AR101 program, with an IND submission expected by the end of the year and trials starting early next year [29] Question: Operating expenses outlook - Management acknowledged that operating expenses would be higher than usual in the coming quarter due to one-time costs, with a new normal expected in the following fiscal year [30][32]