Englewood, CO – August 31, 2017 – Aytu BioScience, Inc. (OTCQX: AYTUD), a specialty life sciences company focused on global commercialization of novel products in the field of urology, today provided an overview of its business, including the Company’s operational and financial accomplishments for its 2017 fiscal year. The Company will host a live conference call and webcast today at 10:30 a.m. ET. Details are provided at the end of this press release.

Fiscal 2017 Corporate Highlights:

  • Continued to execute on the strategy of building a commercial-stage company focused on acquiring and growing unique, revenue-generating urology products
  • Prescriptions of its lead product, Natesto®, the only intranasally-administered testosterone, have grown to over 150 prescriptions per week
  • Total Natesto prescriptions have grown 40%, on average, per month from April through June 2017, and grew 98% from the previous quarter
  • Expanded its commercialization of MiOXSYS®, the Company’s proprietary CE marked device for the rapid assessment of male infertility, outside of the U.S., by increasing disposable sensor revenues via existing customers, and expanding instrument placements through its international distributor network
  • Divested a non-core asset, Primsol® (trimethoprim) Solution, in order to focus commercial efforts on Natesto, MiOXSYS, and newly acquired Fiera®
  • Acquired the novel female personal care device, Fiera, via the acquisition of female wellness company Nuelle, Inc. and expanded into the women’s female sexual wellness market
  • Re-capitalized the Company via a $11.8M private placement in August 2017, primarily with institutional investors, which the Company believes will enable Aytu to operate into the middle of fiscal 2019 and achieve cashflow breakeven

Fiscal 2017 Financial Highlights:

  • Company annual net product revenue increased to $3.2 million, which is up approximately 57% over the same period last year and only includes revenues from Primsol through March, as it was divested in April
  • Generated net product revenue of $836,000 in the fourth quarter, representing 71% growth over the same quarter last fiscal year
  • Increased factory unit sales of Natesto from 1,800 in Q3 to 4,200 in Q4, delivering $1 million in gross factory sales – more than a three-fold increase over Q2
  • Natesto gross factory sales are on an annual run rate of nearly $7.0 million over the last four weeks
  • Reduced cash used in operations by 31% from the first half to the second half of fiscal 2017

“Fiscal 2017 was a fundamentally strong year for Aytu as we have begun to establish ourselves as a leading commercial-stage urology company,” stated Josh Disbrow, Chairman and Chief Executive Officer of Aytu. “The addition of Natesto in early fiscal 2017 to the Aytu portfolio has transformed the Company as Natesto has the potential to become a significant product in the $2 billion testosterone replacement therapy (TRT) market. Natesto is highly differentiated from other TRTs given its unique delivery, established efficacy, and improved safety profile, and we believe we are beginning to realize Natesto’s substantial commercial potential. Our sales force is still in the early stages of establishing Natesto with their physician customers, and now, having consistently eclipsed 150 prescriptions per week, we believe that the recent prescription trend is just the beginning of establishing Natesto as the new standard for the millions of men with hypogonadism. Over the past year since acquiring and re-launching Natesto in the U.S. we have successfully rolled out our nationwide sales force targeting the highest prescribing physicians of testosterone replacement therapies. Prescriptions have grown 98% since last quarter and have achieved an average monthly growth rate of 40% over the fourth quarter. Additionally, MiOXSYS and Fiera are becoming meaningful products for the Company as we continue our rollout of MiOXSYS outside the U.S., and have begun the process of integrating Fiera into our portfolio. MiOXSYS instrument placements more than doubled from the first half to the second half of fiscal 2017 overseas, and we have now placed MiOXSYS in 20 countries around the world. Given these commercial developments, we are now well positioned going forward, and expect to be at a revenue run-rate to achieve profitability in the next twelve months. Additionally, with the closing of our recent $11.8M private placement, we believe we have adequate cash to operate into the middle of fiscal 2019 and to achieve cashflow breakeven. The Company is well capitalized with substantial cash on the balance sheet, has demonstrated consistent month to month prescription and factory sales growth of Natesto, and has demonstrated that both MiOXSYS and Fiera stand to become meaningful revenue-generating products for the Company as part of our unique, commercial-stage urology portfolio.”

Natesto is the only FDA-approved nasally-delivered TRT, and Aytu has the exclusive U.S. license to Natesto through the term of the product’s extensive patent portfolio. Due to its unique intranasal delivery, Natesto has an efficacy and safety profile that is fundamentally different than all other TRTs. The Company and its licensing partner, Acerus Pharmaceuticals, have presented new data in the last year that is helping to establish Natesto as an important new treatment option for the 13 million American men that are diagnosed with low testosterone.

While Natesto is the Company’s lead product, Aytu remains committed to establishing MiOXSYS as novel and important diagnostic for the millions of men worldwide faced with male factor infertility. In the past year Aytu, along with the Company’s clinical collaborators, has published and presented compelling new clinical data to strengthen the body of evidence supporting the important role of MiOXSYS in the diagnosis and management of infertility. In fiscal 2017 the Company’s collaborators published two peer-reviewed articles and made twelve presentations at major scientific conferences around the world. Additionally, in fiscal 2017 the Company added nine new distributors for MiOXSYS bringing the Company’s international distribution network to 19 companies, achieving instrument sales in 20 countries.

On May 9th, the Company announced the acquisition of Nuelle, Inc. in an all-stock transaction. The acquisition of Nuelle and the on-market product, Fiera, enables Aytu to expand into an adjacent and complementary therapeutic area in female sexual wellness. Additionally, the Company believes Fiera serves to complement our Natesto efforts while adding another unique product that can be efficiently commercialized through our established U.S. sales force. Fiera serves a large and growing need in female sexual health and is positioned to help many of the 44% of women worldwide who report a sexual problem. With this transaction, Aytu also received approximately $600,000 in cash, $1 million in inventory, and several prominent healthcare institutional investors, inclusive of venture capital firm New Enterprise Associates.

ProstaScint® remains an important portfolio product for the Company given its revenue contribution and its role in the screening and staging of prostate cancer, despite the fact that minimal promotional effort is expended on this product.

On April 3rd, the Company announced that it had entered into an agreement with Allegis Holdings to divest Primsol® (trimethoprim) Solution. This was a strategic transaction given that Primsol was not a core promotional product, and that the transaction provided non-dilutive capital that has been deployed toward the commercialization of the Company’s core products.

Net product revenue for fiscal 2017 was $3.2 million, which was related to sales of ProstaScint, Primsol (through March), sales of MiOXSYS and minimal initial wholesaler sales of Natesto. This represents a product revenue growth rate of 57% over fiscal 2016. Fiera contributed minimally to fiscal 2017 revenue but is expected to contribute meaningful revenue in fiscal 2018. We expect the majority of 2018 revenue to be driven from Natesto sales with revenue contributions from sales of MiOXSYS (outside of the U.S.) and revenues from Fiera sales. Revenues will be generated from ProstaScint sales, but the Company expects ProstaScint proportional sales contributions to diminish over the next 12 to 18 months.

On August 15th, the Company announced the closing of a private placement of equity units, which resulted in gross proceeds of $11.8 million, before deducting fees. With this infusion of capital, the Company believes that it has adequate financial resources to adequately fund operations through the middle of fiscal 2019 and enables the Company to achieve cashflow breakeven.

On August 25th, the Company announced that a previously approved 1-for-20 reverse split of its outstanding shares of common stock was effected, and trading commenced on a post-split basis on Tuesday, August 29th. The stock split is intended to increase the per share trading price of the Company’s common stock to enable the Company to satisfy the minimum bid price requirement for a planned listing on a senior exchange. The Company’s trading symbol is temporarily changed to “AYTUD” for a period of twenty business days, which began on August 29th. After this period the symbol will revert to the original symbol of “AYTU.”

Conference Call Information:

The live conference call and webcast will begin today 10:30 a.m. Eastern Time. Interested participants and investors may access the conference call by dialing either:

  • 1 (855) 656-0926 (U.S.)
  • 1 (412) 542-4198 (international)

The webcast will be accessible live and archived on Aytu’s website, http://aytubio.com, for 90 days.

A replay of the call will be available for seven days. Access the replay by calling 1 (877) 344-7529 (U.S.) or 1 (412) 317-0088 (international) and using the replay access code 10111805.

About Aytu BioScience, Inc.

Aytu BioScience is a commercial-stage specialty life sciences company focused on global commercialization of novel products in the field of urology, with a focus on products addressing vitality, sexual wellness, and reproductive health. The Company currently markets two prescription products in the U.S.: Natesto®, the first and only FDA-approved nasal formulation of testosterone for men with hypogonadism (low testosterone, or “Low T”) and ProstaScint® (capromab pendetide), the only FDA-approved imaging agent specific to prostate specific membrane antigen (PSMA) for prostate cancer detection and staging. Additionally, Aytu is developing MiOXSYS®, a novel, rapid semen analysis system with the potential to become a standard of care for the diagnosis and management of male infertility caused by oxidative stress. MiOXSYS® is commercialized outside the U.S. where it is a CE Marked, Health Canada cleared product, and Aytu is planning U.S.-based clinical trials in pursuit of 510k medical device clearance by the FDA. Aytu’s strategy is to continue building its portfolio of revenue-generating products, leveraging its focused commercial team and expertise to build leading brands within growing markets. For more information visit aytubio.com. Aytu also has a wholly-owned subsidiary Aytu Women’s Health (formerly Nuelle, Inc.), a personal health and wellness company focused on women’s sexual wellbeing and intimacy. Aytu Women’s Health markets Fiera, a personal care device for women that is scientifically proven to enhance physical arousal and sexual desire. Fiera is a consumer device and is not intended to treat, mitigate, or cure any disease or medical condition.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act. All statements other than statements of historical facts contained in this presentation, including statements regarding our anticipated future clinical and regulatory events, future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. Forward looking statements are generally written in the future tense and/or are preceded by words such as “may,” “will,” “should,” “would,” “forecast,” “could,” “expect,” “suggest,” “believe,” “estimate,” “continue,” “anticipate,” “intend,” “plan,” or similar words, or the negatives of such terms or other variations on such terms or comparable terminology. These statements are just predictions and are subject to risks and uncertainties that could cause the actual events or results to differ materially. These risks and uncertainties include, among others: the company’s ability to increase Natesto prescriptions, and product sales of MiOXSYS and Fiera, the company’s ability to fund operations into the middle of fiscal 2019, and the company’s ability to further reduce cash used in operations through fiscal 2018. We also refer you to the risks described in “Risk Factors” in Part I, Item 1A of Aytu BioScience, Inc.’s Annual Report on Form 10-K, and in the other reports and documents we file with the Securities and Exchange Commission from time to time.

Investor contact:

Amato and Partners, LLC

Investor Relations Counsel

admin@amatoandpartners.com

 

Aytu BioScience, Inc.
Balance Sheets
Unaudited
 
  June 30,
  2017 2016
Assets
Current Assets
Cash and cash equivalents $802,328 $8,054,190
Restricted cash 75,214
Accounts receivable, net 528,039 162,427
Inventory, net 1,312,221 524,707
Prep aid expenses and other 310,760 215,558
Prep aid research and development – related party 121,983
Investment in Acerus 1,041,362
Total current assets 3,028,562 10,120,227
Fixed assets. net 647,254 231,430
Developed technology, net 1,337,333 1,159,736
Customer contracts, net 77,667 1,353,375
Trade names, net 164,037 194,472
Natesto asset 9,231,072 10,549,797
Goodwill 238,426 221,000
Patents, net 271,278 296,611
Long-term portion of prepaid research and development – related party 213,471
Deposits 2,888 2,888
Total long-term assets 11,969,955 14,222,780
Total assets $14,998,517 $24,343,007
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and other $2,220,400 $2,322,605
Accrued liabilities 782,536 1,197,106
Natesto payable 5,379,675
Accrued compensation 339,704 1,200,930
Deferred rent 6,673 4,109
Current contingent consideration 261,155
Total current liabilities 3,610,468 10,104,425
Contingent consideration 7,386,782 3,869,122
Deferred rent 1,451 8,215
Warrant derivative liability 275,992
Total liabilities 10,998,701 14,257,754
Commitments and Contingencies
Stockholders’ equity
Preferred Stock par value $.0001; 50,000,000 shares authorized: none issued
Common Stock, par value $.0001; 100,000,000 shares authorized; shares issued and outstanding 824,331 in 2017 and 187,098 in 2016 82 19
Additional paid -in capital

.Ampio stock subscription

73,069,463

56,646,659

Accumulated deficit (69,069,729) (46,561,425)
Total stockholders’ equity 3,999,816 10,085,253
Total liabilities and stockholder’s equity $14,998,517 $24,343,007

 

Aytu BioScience, Inc.
Statements of Operations
Unaudited
Three Months Ended June 30, Year Ended June 30,
2017 2016 2017 2016
Revenue
  Product and service revenue   $835,889 $489,984   $3,221,590 $2,050,838
  License revenue 447,321 511,607
      Total revenue 835,889 937,305 3,221,590 2,562,445
Operating expenses
Cost of sales 349,702 334,854 1,417,355 957,076
Research and development 185,331 2,819,763 959,857 6,127,772
Research and development – related party 47,997 387,960 191,991
Sales, general and administrative 3,710,399 3,101,554 17,442,627 8,517,592
Sales, general and administrative – related party 27,820 53,024 165,131 307,704
Impairment of intangible assets 1,265,125 7,500,000 1,265,125 7,500,000
Amortization of intangible assets 397,728 380,074 1,708,771 664,707
Total operating expenses 5,936,105 14,237,266 23,346,826 24,266,842
Loss from operations (5,100,216) (13,299,961) (20,125,236) (21,704,397)
Other (expense)
Interest (expense) (1,650,172) (1,063,351) (2,534,358) (5,491,486)
(Loss) on investment (971,629) (61,519) (971,629)
Derivative income (expense) 37,483 212,809 (12,572)
Total other (expense) (1,650,172) (1,997,497) (2,383,068) (6,475,687)
Net loss $(6,750,388) $(15,297,458) $(22,508,304) $(28,180,084)
Weighted average number of Aytu common shares outstanding 731,620 150,148 466,024 87,057
Basic and diluted Aytu net loss per common share $(9.23) $(101.88) $(48.30) $(323.70)

 

Aytu BioScience, Inc.
Statements of Cash Flows Unaudited
 
  Year Ended June 30,
  2017 2016
Cash flows from operating activities:
Net loss $ (22,508,304) $ (28,180,084)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation, amortization and accretion 4,364,680 874,789
Asset impairment 1,265,125 7,500,000
Stock-based compensation expense 2,502,092 902,946
Issuance of restricted stock 724,613
Amortization of debt issuance costs 182,759
Amortization of beneficial conversion feature 4,943,073
Noncash interest expense 221,024
Derivative (income) expense (212,809) 12,572
Amortization of prepaid research and development – related party 335,454 121,983
Loss on investment 61,519 971,629
Common stock issued to executives 509,996
Issuance of warrants to initial investors 596,434
Gain on sale of asset (428,374)
Warrant amendment 1,507
Adjustments to reconcile net loss to net cash used in operating activities:
(Increase) in accounts receivable (355,031) (5,369)
Decrease (increase) in inventory 195,427 (485,265)
(Increase) decrease in prepaid expenses and other (95,202) 155,330
Increase in accounts payable and other 493,217 698,237
(Decrease) increase in accrued liabilities (414,570) 925,232
(Decrease) increase in accrued compensation (861,226) 1,004,427
(Decrease) increase in deferred rent (4,200) 10,875
(Decrease) in deferred revenue                     –      (511,607)
Net cash used in operating activities (13,829,652) (10,657,449)
Cash flows used in investing activities:
Purchases of fixed assets (111,608) (252,932)
Purchase of Natesto assets (6,000,000) (2,000,000)
Investment in Acerus 1,071,707 (2,012,991)
Sale of investment in Acerus cost (91,864)
Sales of Primsol assets 1,750,000
Purchase of Primsol asset (750,000) (1,040,000)
Cash proceed from Nuelle 613,309
Cost related to Nuelle acquisition (16,082)
Deposits                     –          1,998
Net cash used in investing activities (3,534,538)     (5,303,925)
Cash flows from financing activities:
Issuance of common stock to Lincoln Park 739,857
Costs related to the sale of common stock (90,924)
Warrant tender offer 2,243,282
Warrant tender offer cost (312,159)
Proceeds from convertible promissory notes, net 5,175,000
Debt issuance costs (298,322)
Costs related to the conversion of the convertible promissory notes to equity (29,754)
Ampio stock subscription payment 5,000,000
Registerd offering 8,602,499 7,520,493
Registered offering costs (997,865) (904,914)
Over-allotment warrants purchased by placement agents 2,852
Sale of stock subscription                     – 200,000
Net cash provided by financing activities 10,187,542 16,662,503
Net change in cash and cash equivalents (7,176,648) 701,129
Cash and cash equivalents at beginning of period 8,054,190  7,353,061
Cash and cash equivalents at end of period $877,542 $8,054,190
Non-cash transactions:
Issuance of common stock to Nuelle share holders $1,837,500 $ –
Fixed   assets included in   accounts payable $10,789 $ –
Warrants issued in connection with the equity financing to the placement agents $292,630 $ –
Warrants amended in connection with warrant tender offer $63,182 $ –
Warrant derivative liability related to the issuance of the convertible promissory notes $ – $102,931
Primsol asset purchase included in primsol payable, $1,250,000 less future accretion of $173,000 $ – $1,077,000
Conversion of convertible promissory notes and interest of $221,000 to common stock $ – $5,396,024
Natesto asset purchase included in Natesto payable, $6,000,000 less future accretion of $620,325 $ – $5,379,675
Warrant derivative liability related to the issuance of the registered offering placement agent warrants $ – $297,317
Reclassification of liability based warrants to equity presentation related to the convertible promissory notes $ – $136,828
Beneficial conversion feature related to convertible promissory notes $ – $4,943,073
Debt issuance costs related to notes that converted to equity $ – (218,494)