Aytu BioPharma(US:AYTU)2019-10-15 00:10Aytu 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.