AYTU - Earnings call transcript Q2 2019

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Operator

Good afternoon, everyone. Thank you for joining us for the Aytu BioScience Second Quarter Fiscal 2019 Business Update Call. With me this afternoon are Aytu's Chief Executive Officer, Josh Disbrow; Chief Financial Officer, Dave Green; and Chief Operating Officer, Jarrett Disbrow. Aytu BioScience issued a press release earlier this morning with details of the Company's operational and financial results. A copy of the press release is available on the news page of the Company's website at aytubio.com. everyone call remind being to like that is today's recorded. I'd earnings be of access using the today's replay available code release. call in replay A and will by numbers the provided press telephone

Investor conclusion archived webcast Media be the Presentations In addition, conference page, following call. replay Corporate the an under aytubio.com, this available will on Company's of at and

contain including information. Finally, Safe Harbor customary regarding attention to The call strategies, and I conference the belief, would statements, BioScience. also results future like to certain today goals, the potential will regarding statements of call forward-looking forward-looking your expectations, disclosure Aytu operating

sensitive Although and as to may accurate with be forth reasonable including, the of management revise Disbrow. of factors but to based may no Josh forward-looking statements webcast time risks, are X, result at projections as any SEC. of Aytu of limited materially February results Time and over the the these XXXX uncertainties in Actual assumptions of information believes today, guarantees to undertakes statements call now Aytu's differ are no replay. longer to on these telephonic these not update a or turn any like I'd not obligation estimates performance. CEO, set or other Company's factors statements. the the filings future

Josh Disbrow

the ending remarks quarterly that Natesto Study, on Starting Thank open performance our up portfolio. I'll and then the which X.X you, consecutive quarter and strategic financials the back and the update quarter XXXX. touching following at that over growth quarter all of product call. same growth I'll on in of financial on growth financial early in XX% conclude we ZolpiMist shift XX% our December Q&A. calendar grow the its posted This was integrate to and products detail as Jen. discussion XX. Spermatogenesis significant commercial following We growth million, implemented revenue in it turn Dave an recap represents and into continue over the highlights rapid revenue by Good for in a deeper September the year quarter with afternoon our the year-over-year begin results our and high strong thank sequential closing two revenue some include company trajectory each to results, Natesto our then today's we'll you with it keeps for for XX, and XR After to growth and review third last ending scripts sequential mix. provide greater I'll XXXX, and the joining of we around Tuzistra high a a level, time new

we hard quarterly Along output the growth prescription suppressant this for results. to its ZolpiMist $X was quite great by a entire a first the Natesto, billion this cough with team lot. in our full license work, competing active novel into achieved thank highlights, operating quarter we launching I and XR a market. expanded our Tuzistra commercial quarter portfolio for into quarter their revenue excellent and strong Moving and

that part near relative Tuzistra in to the cough of complimentary a FDA term. the agreement, licensed licensing process approved the could suppressant is As XR be and also we regulatory going

you product mix. with a the will we along pipeline about to addition acquired small this So XR, if we're Tuzistra potential and excited

Mehta, gross and RX from the appointment board prescriptions our prescriptions net. Pharma with million that Armistice grow of to capitalization improving Capital. followed to $X We're we have have product's balance quarter short the this an month and Board equity then of plan RX the we December. company's bolstering CEO while oversubscribed and history. that Natesto to bolster weekly standpoint time we caliber With two the Additionally bringing and to In November, the Natesto the continues new with and company's high our we to continue transformed of a to board, Along the $XX announced We such members and offering Steve a and Founder leadership Directors. posted the this of Principal high Ketan pleased growing strategic planned this the Founder operational on at sheet this investment our in Tris in Armistice of decline. all Boyd, addition and continued RXs the of individuals additional time to important attracted substantially to are quarter, rate on closed the million team. refill execute company well from Capital

some patient a fuller steadily. patient The Natesto model. patients Natesto helping much is increased and specifics last product Natesto prescriptions strategic hands time quarter, Services of year, method touch, Direct, for of on of Patient our Now, that just specifically December. refills achieved with Support sequentially XX% those largely recall likely have revenue Direct QX. was high QX turning increase dramatically participating engagement that of highs we in compliance the get ago, the of impact shift from Natesto from eliminating each Natesto to Program, demonstrates we model on After all-time Total paid and as or yielding performance implementation early We Further quarters rate naval vouchers, almost This four has shift the that providing higher more to testosterone improving Natesto we happy about again high risen built increase to a sought service revenues Natesto. the this this portfolio, we're vouchered to you us a and in simple product, our of Natesto our prescribing refills. say weekly in a plan increased prescriptions off. in have a and and discounted. year made into prescriptions the deeply

as the through have last retail from and through a efficient well, improvement still time continue channels. achieved To to prescription net to our highest that and drive January our Natesto give maintain performed revenue while you retention that to it of the substantial expect a continues December, move in gross same we Direct highest XXX% we paid more through four. to rate, Direct Natesto has increased patients increasing We improve for patient along. refill our Natesto which is to yet at per by consider the performance, sense become factor prescriptions higher

the Natesto. Additionally, momentum the now just various we the fold we've the began period. for looking wholesaler in market move the wholesale at number chain to we We're ZolpiMist, price quarter. increase participating three XX% pleased ZolpiMist, built physicians acquiring the Upon and Natesto field the program, of and now been over Direct early adjusted month it's initial over supply levels to first its in of an some with channel we seen with manage aspects full that I'll promotion. that and a

detail oral QX, ZolpiMist quarter, exciting. new revenues the script details of was current of through the the pharmacy sleep the solid given multiple contributing in This message rapid simplicity our in is the the filling. for this online to convenience Now physicians. absorption opportunity delivery expect have we makes contributor coming meaningful so our prescribing with into bloodstream secondary Natesto With regular to and oral going revenue with with now to primary spray quarter, a for products grow forward our spray revenue resonates products message. Natesto

commercial we XR and the Moving exclusive license underway. acquired to XR, efforts Tuzistra QX over got to Tuzistra in

couple in final numbers script script and we soon finalizing sales January seen we In and our quite the on still and be we've script going magnitude through Tuzistra cough force It's growth. of This data. force promotion quarter, season four weeks is through doing in January, We'll the early weeks as is rapid that the launched first well. to have report XR of early sales we the the of just field full expect uncertain. flu as

we're However, the with pleased ramp XR. early script for quite Tuzistra

and hour As a is All dosed dollar only competes category. XX the cough reminder based hours. in coding $X prescription six XR other are coding billion every four suspension a Tuzistra to suspensions suppressant

offers force. those the ZolpiMist XR Tuzistra details great with our drive leverage with primary drive efforts through force revenue multiple multi-product good sales XR trying portfolio good have Natesto, sales while is mostly nationwide long portfolio primary of in to of we're So Thus, lines product a strong for value we forces endocrinology prescriptions Tuzistra execution and leverage care our hour and The patients think from broadened to formulation Natesto will night. offices, what XR differentiated fit. and can of growth. A urology which the to will placed cough From and we approximately Natesto sales overlapping release, a for care physicians. distinct to this advantage is a they're Tuzistra addition standpoint the company the sleep get across and extended the the ZolpiMist. product day and half most It's nicely a come XX as provide outside our

we're by alongside in over is Instrument more of business looking Outside MiOXSYS and team continues show around progress. MiOXSYS the most urology as very the the good leaders numerous with and to development the we're our some a diagnostic demonstrating reputable MiOXSYS placements This these within to So commercial now world. in fertility of the make the practices papers infertility from thought MiOXSYS. gain continues the and XX business around leaders forward grown platform world, established that. for Further, presentations Natesto. thought more to have with continues male andrology getting laboratories contributing products to in new launching and US, world. support progress countries continues

house is assessment rapid is the assessing the MiOXSYS reminder, a As company's of male and infertility. method platform the stress diagnostic only seminal in oxidative of develop in

results. proud Dave, was and quarter commercial over Dave So that just to that results and It a provide to deeper the With we're a review before I'll were say handing to us operating of for it of financials. good it over me the the hand let strong.

Dave Green

XXXX. the Today month SEC for Thank for today. filing year that the our of our you, Form XX/XX thank fiscal three the six That filed second we results quarter and our you second all ended periods joining XX-Q us ended XXXX report. And full This quarter morning for XX/XX, with contains review Josh. financial I'll 'XX.

found quarter and revenue issued morning announce Today, with release press a growth. of I'm The of can happy www.aytubio.com. consecutive the press results. website financial to be Aytu also QX a quarter the consecutive including for this revenue our on strong second sequential summary and release record XX-Q of third We a statements report the QX

than last revenue quarter same year. greater for contributor. Natesto million revenue which XX% than last and QX was revenue our period is record year. the $X.X Our And same quarter the than year-to-date prior biggest XX% million record higher is $X.X Also XX% million, was the higher of our of $X.X again, last

QX the of for record and that excluding last year. QX we large reported QX, nearly $X.X to million. I'll revenue compared QX gross quarter X.X operating normalized than of million FDA the FDA thirds to was approximately $X.X for of approximately growth, profit of QX also over is a received the addition two QX for expense sold by approximately low which goods QX. was profit were reported this in note non-cash expenses were double of Operating increase items, million higher In QX cost due $X.X QX, gross expense a million to to operating due fees $XXX,XXX level artificially refund which and

FDA QX, program Tuzistra. we for fees XXXX and normalized During Natesto recognize

delta by year-to-date benefit only from expense largely recognized for operating QX operating point the recognized without supports period $X.X the demonstrates expenses And The Op this cash also made lowered related growth. modestly is with regulatory onetime QX adjusted to fee During launch non-cash OpEx operating overall spend, on the artificially add of which further increased our negative our maintaining expansion inflated let's and we the XR. expense and revenue. acquisition and XXXX million, out for if we to expense FDA two or for fees time was one attributable Year-to-date naturally program efficient $XXX,XXX that focus the XX% lower was non-cash context OpEx an is million. COGS more but by vantage progress revenue cost is a look the are clear. OpEx year which of revenue to operating QX remaining same $XXX,XXX. expense excluded QX items while structure $X.XX grew To amounts. while $X.X From COGS This adjustments our the and million. have two compared line expense this costs we also at quarter's to increase year. top refunds, Tuzistra recognition. with only We XXXX same expense FDA That the year-to-date grow our between expense Natesto, launch last with

year-to-date $X.X same $X.X of last bottom was the year. line loss period million to for Our compared loss net million, a

Turning activities in approximately for XXXX. XX-Q, than of in $XXX,XXX net period cash half the the used to lower cash fiscal was first year year statement same the of flow XXXX fiscal operating the

Turning during sheet, we to the balance quarter the the sheet strengthened balance second substantially.

a months with As raised assets just an equity for Josh new million of a the in million quarter new assets cash additional billion, as X/XX, fiscal of of balance year debt compared of six total $XX.X $X cash year X.X million offering our that capital. in million was $XX and million note $XX and of of we added mentioned, the and three public of XXXX of We a to $XX.X form end total ended and XX of ago. million a

strong revenue acquired ZolpiMist list XR. and strength the second the substantially back for summary, portfolio balance the into increased over show third top the launched sheet. in integrated I'll So that, and line product our to to Tuzistra we We continue with growth. Josh. And We turn quarter, of the call

Josh Disbrow

Thank you, Dave.

investment the expand. well note. race. and continue Capital revisit the In We to of this the healthcare terms to with a perspective. $X financing for So had exchange exchange the about and approach accepted Tuzistra Subsequent We quarter equity note. XR securing said, to very their closed for yesterday. we race specifically the QX and positioned growth healthy the This institutional support this increase Dave price exchange. end $X we in in company was transaction brought Tuzistra the a free Armistice's in this million sheet. we to million mix After support of licensing of Armistice debt for agreed balance debt this note one related helping equity market, retiring Armistice leading now Armistice's deal. deal, an fund was this some appreciate infused the the equity oversubscribed large to this successful fact retiring race, important positive and this just to $XX.X near in week, company We're given opportunity. what the registered focused in formally development We from quarter enables company a keeps a investors with and in XR a million to another

be convert combination annual warrants. upcoming our we stock, meeting, to equity the new will preferred and debt, restricted. common the issued at approval unregistered a shareholder expect and officially All will upon So of be stock that

Capital commanded So forward. to board been company both experience deal of Steve we scaling substantial expect a pharmaceutical soon. Pharma our Ketan joined expect experience of end, Armistice Armistice to be team. class and Boyd. Steve Ketan's has and men their that Armistice be would happy announced at to that as quarter, a To to and remarkable. and businesses. moving Founder board is we appointed, and we Steve's with supportive Both the unparalleled to and this Founder scaling both in these board and had already great members as world new well Mehta shareholder Tris the their a specialty healthcare appoint formally markets joining as has capital We're capital the have of market men space healthcare the and launching Ketan

that are study levels The of and PI, expect with restoring are men of read interim with replacement testosterone are with and was presented listeners Study between the by be the an Spermatogenesis the preservation the the study study Ranjith years results to this to testosterone Spermatogenesis that over Natesto treatment we excellent On All levels, completed testosterone remind Natesto center XX is men also published Dr. the first gonadotrophins be quarter a is the it front remind hypogonadal semen interim and while nasal study Natesto and presented I'll you results. for utilizing results he perspective single receive presented by serum evaluating we This summer and testosterone such investigators in thereafter. therapy age to an gonadotropin the The encouraged out fertility levels. company. about early gel. months. ongoing The Study were Natesto data six clinical at and treated exciting evaluates parameters development that XX and Ramasamy. and study's

cohort sperm had treated in sperm of read as at So patients is results, the Natesto. at all normal sperm simply sperm cycles. been point concentration, two remain enrolled time evaluated most for from patients reflecting home measured all months, achieved recap the with months the total now across levels complete six one patients the a study the treatment motility had work after out, interim sperm with three cycle. Natesto time that XX patients all of sperm across evaluated interim been Natesto reflecting importantly In quite treated XX take semen been parameters, their patients normal three Natesto, and the three testosterone treated six modal or month and and complete their of three point had treatment but the Nine count, parameters treatment

and For testosterone on readout implications the to forward are or far, results minimal the is as shown the no looking a final time sperm impact thus the replacement and of seen and results. we've semen exciting continue production If parameters. the shifting. X million we're has therapy first be This far the open. to wish their who low men for results hypogonadal potentially paradigm Dr. would first for reaching. an these so option fertility This therefore keep calls exclusive T Ramasamy TRT options or product potentially to fertility be preserve the

to in indeed in trends of hold studies interventional kind the if excited T. be low see this its we'll first So

showed We on planned capital of we promotion, Tuzistra and sheet XX. RX which we in as balance So its significant and to asset million first the the of revenue to acquired Also, two announced excellent $XX growth. addition recap, was a Steve. and we ZolpiMist into an QX quarter board XR launched strong additions the put of quarter, full we during secured December Ketan quarter, pipeline and

we T. growth what a We're also from to This continue a continued treatment running next XR got up we promising in early of the expect quarter, to high and while can is expect we believe Finally, evidenced could quarter data an are start, execution. change through Tuzistra as good Natesto off revenue to clinical Natesto low glimpse surrounding forward, and and already we company paradigm and our quarters we very ZolpiMist growth. expect contribution and continues growth to meaningful simply grow MiOXSYS growth we a and continued three grow. by Quite consecutive commercial this going continue our

So now concluded, the open Jen to with remarks lines operator our ask for questions. I'll prepared our

Operator

floor Thank from from you. Please Jeffrey And The state Thalmann. open comes question first questions. is for Ladenburg now question. our [Operator your Instructions] Cohen

Jeffrey Cohen

Good can Jarrett, morning, me okay? hear Josh, and you Dave

Josh Disbrow

Very fine Jeff. Good morning.

Jeffrey Cohen

the could hear you parameters or timelines the mentioned, that some more bit cough so other maybe a Awesome, for we other that more little suppressant it? us tell about filing you composition about and may

Josh Disbrow

Yeah, good question.

much haven't position a a antitussive. line Tuzistra us that it. company. about bit [indiscernible] a is there be of licensing And in very to it private is We cautious bottom But about previous complimentary a was the arrangement put that's little that disclosed bit a

virtually call to product, type FDA. identical. point similar it's it but is with is obviously a bit the and ingredient And is different. be It's a similar of mix So the the going

near review. generally of it term FDA. it we've not it all So it, is entails is a And We're FDA. but relatively the a speaking, really is specific front putting timeline to the submitted obviously that in been said that on has

near perhaps it wouldn't opportunity cough cold that in coming say the I one in would that you the near one expect it's fall term surmise this relative following or for and the potentially So We so this relative us. term, season a can

Jeffrey Cohen

far or as would Okay. Tuzistra? than severity it And greater be as than less

Josh Disbrow

I'm sorry, say that again.

Jeffrey Cohen

cough it severe severity where more less would As far on of and as severe it for treatment paradigm, would cases be cold, cases? or the be

Josh Disbrow

a cases, takes symptom. coding, it's the - severe just care would not move treatment of markedly but more but wouldn't it's the on It be too extra far top slightly channel, patient, for of necessarily so. complimentary an be so ingredient an it up - extra It'd

Jeffrey Cohen

And conversion, that Okay, or coming instruments, the some term, the news days you weeks short got it what on and or pure it. you see little then more goes expect color other that mean goes equity? to a deck we'll equity will to on be in

Josh Disbrow

queue. a so the equity disclosed pure is in from near to debt ultimately equity. It Capital Armistice have agreed, we into details the and And market essentially conversion

was payable any a it approached aftermarket advisors conferred was board and forth, three company relatively other convert it. negotiated agreed ultimately and essentially before it time. by to But really with it that and the So yesterday, and us year Armistice recently, take X% day the back really note yesterday

favorable believe as So event. it a we and company subsequent well terms queue for relatively the in is detailed the

Jeffrey Cohen

than Got and OpEx if it, from it previously top expected like line Dave some time may. comps relative okay, demonstrating the one one QX. news then or to it that have as continue like Dave, off for OpEx. is that's looks to expect to the Do we leverage degree I it far great greater in it because to nature you the seems QX as was

Dave Green

to it's good expect Jeff we the and that yes, observation, continue to we've got. use So leverage operating a do

for the after the comp entire place, is structure time. comp new we've cost the - in Our been essentially point the point product is

So our the expenses, the force sales which cost is and whole there's really biggest commercial no commercial need infrastructure operating in the to team. feeding add

where hold expect it revenue is we to expect to grow continue today. So roughly operating and the expense to we

Jeffrey Cohen

previous Okay, in then getting the got about versus your may now any and I M&A the four all if tucked Dave with more or front it. commercial. current appetite, Jarrett, your And or Josh one and for products chat appetite

Josh Disbrow

ultimately we portfolio got will can anything. and and acquisitive, about sales certainly and leveraged a need remain delivery to we product mix their not inbound return good That like said, force. patient we unique buy differentiated to in and we off large know the feel looking overpay I actively be people we'll product and we've for all –certainly calls came assets. Again, treat deal. sense we're to markets, we've ultimately startup would feel such inquisitive deals have products, that in calls that and in front, with the low very in wings the we're don't mutually We've conversations, there we spot portfolio. now. broaden costs efficiently They Jeff. got antitussive these relatively last are got backend But take having that the makes are Yeah, solid phone We the of good but certainly several we've serving question, tend all do beneficial go expect not stay. three have dramatically this say We open are really going that that good obviously not and the and more up Tuzistra we with a and low been in that's really parties right, relatively forward. deals what reward to and done for do both the

entertain, balance sheet, would is off with the it much and today. without could something we have the happy there's nothing it's do we we place if shedding So but we're portfolio in something imminent

Jeffrey Cohen

Okay, got Thanks quarter. again, nice it.

Josh Disbrow

Thank you, Jeff.

Operator

you. Thank

Northland. state question. Our next Carl from Byrnes your question from comes Please

Carl Byrnes

Congratulations got Great four. questions, thanks quarter. a much. so few on or - actually couple I've three a the

would expect that Tuzistra? you be the to with similar complimentary also First, scheduled to comps suppress, three

Josh Disbrow

over up among be for the of actively reasons safety loud preference would heard CXs, have doctors expect yeah. chief not in We to looking those. CXs of we've opioids, We're lot it a a obviously so go chain and terms to that CX, clear

what think as would we be prefer yeah, to I go that's far it But CX. of we about anti-tested as is. expect a that will in the yeah, So describing terms

Carl Byrnes

the to launch, or - launch? us given flu on and give the ZolpiMist with going Tuzistra second season, expecting with coupling like Tuzistra the just that is And look launches? use also that respect and of and strong year you Great, that couponing for us to promotions jump start guidance burns, where considering flu to any might then any Tuzistra or you're cash and to can a half your what season expect

Josh Disbrow

and XR one and the We're that can Yeah, early I'll going take it then the and pig the the in touch in Dave is well. we've other do regulatory Tuzistra you coupon. on first quite doing burden. of the companies past done stage as back. We'll do launch

We US team and it our the actively coverage into third do also do that parlay some had pursuing place that. in look to contracts predecessor coverage had to that payers, that a party so the some we'll of company and are Have pursuing own already. licensed favorable that

we expect term, So and this just season, do couponing the to certainly acceptance ensure near get in to continued to broad the out awareness. first word good, to

we'd that's So approach how that.

we to terms stay to expect static. continued company even for base, going expense we really we the be as expect grow to operating say relatively a coming of burn of and would high expect our And quarters base and Carl, burn, growth decrease the be cash we potentially beyond that's in that. with operating go We've obviously, that, In revenue, cash to driver to the the forward.

and be it's while Dave the done there or there, timers the As whole, so be months, various think I we said, you year-over-year, relatively here to forward., would may go add things may fixed months to sort of expect ultimately lower look cash I use report know and six one at we anything as you if on that over Dave. do if quarter-to-quarter six don't that

Dave Green

line, holding structure out very is, further. we're we're much a It's anything that's as top to build no real growing story. the there's Yeah, need cost the simple the it formula,

structure. that that see the mentioned, changes that cost with see Josh foundation quarter, we or quarter, the we'll only probably more up acquisition are have our one an time overall couple pop a really this that of we'll costs but there's shakes next nature As nothing that

and in to use and profit stabilized grow really go the cash very the expect our we top move So dictate down burn too decline we proportionally so decline to here. expect and burn we that forward the forward much really as as line going will quarter-by-quarter, gross is

Carl Byrnes

obviously Great, year top to expecting thanks shortly to that also again the you that summer, was read be this and just one consistent? thereafter, would prior commented in of Spermatogenesis top fiscal final out question, line end the have you completed is expect to line indicate on Josh, trial results

Josh Disbrow

Potentially in this the are and Ramasamy is trial to obviously we by - quite the released. respectful long something a want and format be that you of and very investigator working so is Miami which hard University time. for remind I'll Dr. he's the at an the color initiated that. results We control This really of been the timing will

exactly upon while And the internally be public expect will when glimpse, do at a their have dependent we on publication when plans. to and presentation so timing that least be made would

would Our a obviously be we're least line this again, it into to to a that potentially respectful of get and a are we be conference. out. But after at desire impact release scientific at be reputable high in journal hope to read they would shortly present results going their top position

more a little guess I So bit that. be to determined on

Carl Byrnes

again, congratulations thanks. great, That's

Josh Disbrow

you. Thank

Operator

And back are more you. there questions to call Josh turn this over at no now the time. Thank I'll Disbrow.

Josh Disbrow

Jen. you, thank Great,

So that your concludes you obviously thank for We the quarterly for thank you joining. call. questions. We

again again. results we me now to forward day. shortly, complete, so this and sharing forward move a report here thanks let on as Have just say the for Look joining. With quarter's thanks good Q&A more out

Operator

participation. teleconference. your today's for you. Thank does conclude We This you thank

now may a your this lines have time You day. great and at disconnect

Aytu BioPharma (AYTU) 7 Feb 192019 Q2 Earnings call transcript