AYTU - Earnings call transcript Q1 2020

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Operator

Good afternoon, everyone, and thank you for joining us for the Aytu BioScience First Quarter Fiscal 2020 Business Update Call. With me this afternoon are Aytu's Chairman and Chief Executive Officer, Josh Disbrow; and Chief Financial Officer, Dave Green. Aytu Bioscience issued a press release this afternoon 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.

I'd like to remind everyone that today's call is being recorded. call conference available earnings ID today's telephone using press of and numbers provided replay will by be the release. A in the

archived within a Aytu aytubio.com. Events addition, webcast be at live In will and Presentations BioScience's Investors the and website section under accessible on

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

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

I'd now Aytu's Josh to call like the to over Disbrow. CEO, turn

Joshua Disbrow

afternoon. quarter set XXXX after Thank position new period. the was Thanks us the headed Jess. this to X-month Aytu for QX served which company joining we where for we fiscal during company, us Good and took we you, very the transformational up BioScience. future The believe action a productive today's of transformation is business BioScience Aytu the for QX call. for update for a quarter continued the

into and transactions fully can we've believe X and addition June conducted for transactions announced. transformative products, more the we've payer of acquisition. company. to heritage three go launch the end September each accomplished help Aytu leading to co-promotions, multiple Rx growth following clinical Natesto will call through describe we the and two growth closed multiple of another of to the we end has new The to the planned significant data From of of acquisition the October, major of recently and X the our where been This readout of This frame one formularies. go-forward Natesto

least. during Aytu several X the highlights Russell including that the start addition end. the there months a the It Further, been the private very the institutions the Index placement at health were X quarter, quarter corporate to with closing of a came to Microcap of of productive care after just has quarter and say

revenue performance posted a and quarter patient a It while a face Natesto program, of we was also increased that the sequentially. perspective, of from used cash continuing in support operations the solid product year-over-year the cutting in transition

we growth continue at to but and good to prescription to start. a feel Natesto forward, script our transition home, We expect slowdown see quarter Natesto this going to to a related slight fully off is

transformation to ZolpiMist as scripts from quarter-to-quarter, million to points the around we're Tuzistra company. a well, expect Also, season, revenue cough $XX that but big into our a see we back cold and and now moving are uptick such discussion XX% plus up

highlight build to the we've the last that new months BioScience. key to I'll transactions X that or So in end, so served undertaken Aytu the strategic

$XX.X September XX the and the was quarter commercial acquisition the million, acquisition, revenue this combined than portfolio X $XX consumer XX. for Innovus announced With closing a Pharmaceutical. last specialty health, million XXX% the forma planned on company we pharmaceutical revenue traded growth quarters year. more Aytu's ending the focused representing Innovus of in September and ending First, acquisition Innovus is Cerecor over pro Aytu's quarter for approximately publicly generated of

addition a consumer patients. Aytu and billion offerings to allows enables of care XX, the to million. company over gain the Innovus $XX further through For entry segment the near a operates The into acquisition it our of revenue breakeven portfolio products on and is to increased months September combined health Further, basis. nearly diversify cash that was our product consumer $XX the XX XX and exciting ending scale forma pro for

Because we expect of operating the reduce are we positions removal virtue acquiring public to entire costs the significantly by and redundant expenses company, Innovus the of personnel. company and

and functions. outsourcing We overhead expect the via various overlapping consolidation reduce Innovus facility of also to of logistics of warehousing, the and downsizing

SEC of to review time, calendar expect S-X thereafter. for the shortly And registration by file et file We the the end year. joint comments, cetera, statement depending review the statement on proxy expect to joint by the we

building of than the the revenue X. This September commercial Cerecor part November quarters This and brought much Along planned includes a generated purchase we're acquisition, with growth over and for acquisition the X portfolio ending the scale through device, a better the of I'll that that breakeven. the announced products which and supporting prescription $XX quarter team operated X they've we remind we late closed commercial commercial just business, is the additional commercial X products, million of in and these prescription over XX. drugs Innovus acquisition team, of the acquisition, experienced. at is Further, as last you,

acquired So expense revenue we've without and a products drag. corresponding

both territories. review and process a performance team on underperforming reviewed the integration Already, team. top-to-bottom highest already and heritage territory-by-territory the redundant We've of the begun removed heritage Aytu operation, sales keep and from headcount post-acquisition the to Cerecor a conducted we've the performers basis

we've severance consolidated headcount. best functions, from already again, paid to each of taking We that dollars we've the from several million With side. out in realized expect payments reduction cut commercial this, we expenses this also several be once

the the a in already core therapeutic and care, can effectively level in added in visiting. Cerecor has while we on and cross-training of plan and physician primary underperforming of frequency strong the comes of we're sales products, already increase support, unique removing Natesto, be believe products, We enable that many with specifically, territories. started. and we offices And purchase products in speaking products asset to cross-sold areas, competing of cross-selling several and rationalization can reach along the particular, So large

over the on entities three million the XX. we revenue combined September With quarters $XX in to X financials combined, will based the line ending for top scale

Specifically, forma September basis, for Innovus and reported and was at on as million, million. just Aytu, yesterday pro ending Cerecor, revenue, of $XX combined the right quarter by a today XX shy $XX

accelerate synergize the we Once product to and expect fully we have path profitability. transactions additional sales cost to integrated, to savings our further realize grow operations and

on profitability Cerecor cash the teams expect to an the expect increasingly materially merger, closed of we into Innovus Aytu next view following further Innovus integration get cut have to end process burn. have other side and by the and we the the We clear focus of the we that the that bring the between Once year, transaction. of close and will

getting time the plan. go-forward plans, the burn to two Dave But the following prior and quarter's to operating we smaller I'll our it based By CFO, growth near-term that, be should into expected financials. growth Dave? expense quarters Green, hand on to our get review into even our our over

David Green

slight QX mix Aytu. a quarter Thank do of performance all for joining few XX% XXXX stronger and you our QX gross XXXX, revenue first strong transformed and I'll the make that review fiscal was XX%, QX was you, margin year. then than thank year Sales net and with XX, compared for reported a gross I'll gross Josh, impacted this profit ended Top our comments margin $X.XX million, last XXXX. for to on QX the positively margin. line continued uptick September newly profit QX for results us our a financial net of today. brief

expense, deduct last QX QX fee a FDA by closer lower Reported Cerecor operating operating When XXXX is back operating out expenses such XXXX than adding -- QX for costs amortization year-ago transaction noncash core reveals period. look lower that expenses for actually depreciation QX resulting than the higher expenses, and this to ongoing adjust year. as timing for expenses than actually operating and OpEx than XXXX last Innovus related QX we the $XXX,XXX to the were than were last and more year operating year. adjust But PDUFA expenses transactions, QX refund the difference

another containment, over quarterly average preceding approximately the million cash XX% $X below or which operating look this $XXX,XXX year used for was quarters. net For of $X.X in our QX at X cost million, activities is

greater the loss than per the impacted negatively XX.XX better increase XX. loss or million per $X.X was QX line on of much based million million future million million. on $X.XX average of XXXX $X.X and consideration. the share share by loss charge a QX but count in The loss was bottom a than share related QX $XX.X was Our QX noncash listeners contingent weighted approximately XXXX, in that September remind $X.X realized to shares I expected

cash. $XX.X of balance sheet, million pro our approximately we quarter private September effects ended But the the mid-October, the million. million we $XX of placement cash forma On given $X.X balance was completed with XX the

stable a September number of close cash balance and with million, amount XX, relative asset the the of quarter. note, to were last $X lowering than note of the shares as folded merger other which the a Innovus, end will to the This be to to loan QX issued impacts of Other Additionally, transaction. be the Innovus. Innovus of sheet the represents at recognized items we in into current

note balance on last the sheet. One

quarter. temporarily of Our threshold the NASDAQ of below the fell balance as shareholders' end equity the

private when of in and the the However, then to the We X, November X closed closing with the acquisition. asset connection added cushion on equity we placement. later $XX shareholders' equity balance compliance was the million back in Cerecor weeks announced additional balance

during the operating of Aytu. phase manage up So QX, we growth summary, next downward, we and COGS to while in set continue COGS for

Cerecor and team, major toward ahead, concurrent to the end as legacy Looking addition operating expenses assets step headcount the reducing and in X a Aytu the reduced accelerate company of substantially from we commercial profitability. quarter first November with the commercial

of savings Acerus. annual we of Aytu implement million. will contracts legacy $X.X to million contracts of range restructuring in the to with commercial team This commercial another $X arrangement cost the OpEx begin plus consolidate On top savings Aytu Cerecor million co-promote Natesto and the annualized the expect that, yield we restructured $X.XX as legacy with

me that, over with for the call commentary. Josh let back to some And additional turn

Joshua Disbrow

Dave. Thanks,

now the So new our as growth on Aytu. plans to

grow to revenues expect forward. We going avenues through multiple

First, continue our core we expect organically. grow to products to

heritage sales driving a Natesto, performers, sales solid and team have of Tuzistra. Aytu in We ZolpiMist

Sprinkle AcipHex the core Karbinal, heritage also performers We line. a Cerecor have of vitamin of prescription and sales driving products, team

while a Natesto. Natesto heritage top high-prescribing have of on promoting Natesto. reps And we been they'll the of be Several now primary Second, already promotional cross-trained cross-trained their have reps offices, real-time. already focus group in in the care they're Cerecor increasing

several we underway. partnerships have co-promotional Third,

XX. launch call will We have number Acerus Pharmaceuticals their getting team, sales endocrinologists, on prepared U.S. which specifically. and specialty team This to we'll urologists

Validus with reps promoting Pharmaceuticals, which roughly targets. to have primary promoting now Pharmaceuticals' announced XX co-promotion Poly we Tuzistra Poly's physician And psychiatrists. have agreement now just to is We ZolpiMist our care

promotional OpEx. footprint We've nationwide, We've, an sales to essence, XX XXX this of grown expanded in footprint to Aytu-compensated without our expansion XXX of our over XX representatives representatives. with being only

Finally, some Natesto released reimbursement data we've important clinical developments. and

You Ranjith Ramasamy positive KOL that presented. Ramasamy replacement count. fertility Dr. recall Natesto his to treated Natesto a the not sperm retain study Conference, fertility, from shown a from has The X-month parameters. motility the At hypogonadal Miami, with men that Natesto, of conclusively have by therapy in sperm and American demonstrated our impacting over Medicine it by only as been may been the team announcement of be clinical showed testosterone maintenance Reproductive period conducted Society for concentration, and October data University

a has treatment stand-alone expect by shown These presents group, for were we presented near in compelling data testosterone other a the Dr. the this, category. in and case term. so this hypogonadism Ramasamy's No Natesto publication

XX to signed contracts million national On we payer another more product. the is new development access very Natesto, two than July, positive last patients the front, reimbursement which giving for

the and all to the say We're these now hope to the the a have also merger It beginning new completed quarter excited coming and this underway. Aytu X to that months. happy developments. pleased shape. or busy take to We're our was have transaction it closed we're increased co-promotions. promotional all transaction to implementation to is footprint And very excited with well Innovus we're with have So in is and recent the continue to have of that Cerecor so,

lines the with open questions. So our complete, prepared comments we'll for

Operator

move [Operator Jeffrey to at Ladenburg We'll Cohen Instructions]. first Thalmann.

Jeffrey Cohen

So closed Cerecor X. on you November

the will the theory, X/X quarter of quarter for coming in hit. So

million a $X.X that's million, that should in good flat if So Is a about QX. $X.X guesstimate? expect we

David Green

Jeff. range That's in the reasonableness, of

Jeffrey Cohen

a little can... of Okay, got it. And you talk then you timing can Innovus as about further closing,

Joshua Disbrow

absolutely. to. Yes, Happy

on So we through jointly. I would working obviously finishing are is that some, say, the touches filed SX

transaction year, potentially within Obviously, filed that are end calendar And that upon the with could the their of have We first think the that, than we'll squarely are quickly, expecting review we of realistic a sooner and calendar that a that XXXX proxy. follow thereafter, think it's by we dependent optimistic we quarter filing of to closed. comments, SEC XXXX. calendar the and but in have

So fully Optimistic But line forward. that quarter June under and we our we grow planning think first we with integrate the I think, full we a Innovus we be would how quarter. the about push for the expect will quarter the wraps. base case be things as we quarter top June to purposes, Innovus how that can have that realistically, our

Jeffrey Cohen

Okay.

of expect don't show may QX, the for you anything close than up something So earlier you end but if March?

Joshua Disbrow

start we're done realistically, in up, planning be it's on -- But going in sort I SEC's kind ideal therein. done, We we'll be to would of I something an obviously, could we April Again, internally yes, can timing of and just it QX. setup. holding think yes, the it think an be get get March. if think late but X the if I faster shows review

Jeffrey Cohen

Okay. you plus time that the that's X.X CVRs? if adding that you'll And be us, million at will, shares remind

David Green

Yes, X.X million yes. common,

Jeffrey Cohen

an further And could Okay, you to kind data Natesto? it. cetera? What walk discussion see like your et with update on lastly, feedback as presentations, far as getting? us payers they'd through of got And you're then what

Joshua Disbrow

Yes.

So of a there. couple pieces

meaningful actually aspects just some it engage So that data to one that of that, really of brought to in been any Natesto encouraging way. the the floor willing the hadn't payers actually is

in wasn't can sort I say, that we speaking, of all pique generally It's discussions interest as interest continue, continue the to there. almost what cases. So otherwise

here So the clearly very there's a for differentiator time. first

we this put one While Natesto it has a think differentiators, clinical lot is that the of over top. can

being adding but it about And going so pace, good just while to XX Obviously, the couple to certainly their of feel totaling formularies, own a because move that's we are million lives. payers I at PBMs, announced made. their can't give specifics now we progress big

What under through but data very encouraging. rates the the some the our coupons, at we're by in can at deductions we indications the some that that not they with now and from in say, that we look seeing in I buydowns early, virtue early growth institutes couponing high data do relative that of going belts, as were, as mine are our that's we so we look the couponing

without these base. would X prescriptions. so And we By just those gross potentially brought we board, and that to improved realize expanding payer couponing would of even expect, the on expect PBMs on virtue and really, net we to do less

the And then I'll really to real would us to help double with further get able time, just U.S. around Acerus country. with to to in respect payers. story really to payers interfacing our with expect to arm and arm their the excited with take get and be They're and really efforts reach to expand additional get finally, we say, the here entering our

positives of for are the Natesto. lot moment that at a So really percolating

Jeffrey Cohen

just us organization? associated our as as current lastly a FTEs and with total FTEs me, far And you commercial snapshot then Okay. could give for

Joshua Disbrow

we FTEs XX have essentially, to of we XX moment, roughly XX territories. at the organization, the So the in are across about and neighborhood

terms of through of realistically So realistically, that a kind are still the areas team. will some range we're the vacant. to rationalization, few in backfill context XX But XX the working territories of in commercial that potentially in

Operator

to next Capital go Carl We'll Northland Byrnes, Markets.

Carl Byrnes

what then have add the published. to marketing see formulary with how might in initiatives might follow-up of available. you're you the that's and that to what that wondering question well. as marketing can picked of you up expecting terms quarters? I'm Obviously, get we just data in over And now spermatogenesis in and I around that terms coming performance hand? a Natesto And do that affect in think But

Joshua Disbrow

of So in -- question, good terms Carl.

to as we that into the it help data our feeds strategy So they again, this that guide clinical come into relates well the both partners at how strategy. lockstep payer will as U.S. Acerus something with us in further as be really as the do and

with payers we But perspective, promotion. got again, a marketing from of than do a lot to more physician latitude we've obviously,

already something the getting these to begun again, So or in payers. And good the some Obviously, cases, this introducing large led to that formularies. are process we've to the added being is data of reaction. reintroducing,

terms little be it's to that's In going label more it's of that at -- in a it's promotion, bit rep this not something in moment. the strategic because squarely

physicians specifically our So medical that able are medical to in the it's be engage in being something venues. with time, physicians context that of department, we'll our in personnel. affairs presented real It though, is various obviously engaging to

varying varying expect label. the data levels promotion and you this this would not if levels we this are -- involvement would promotion label. but of -- work promotion, the in as that this So of product it's once if We, have once can accelerate over the to have obviously, gets the reps with into into -- when get

early partners guidance planned like too certainly review. to of any be that and the at promotable, we're look because, so if Still can course, working it on might we something the our will, Acerus to in in that's maximize again, it. really more exactly with what give But clear FDA we to near-term formally we'll, field you get subject

it Dr. contingent, we lot the team to recently, to that at having the just the for to the of paid full very Reproductive full tremendous presentation was a attention late-breaking just audience, the Medicine well that was his Ramasamy very it gave And Conference amount can was tell leader as of certainly. here, received. and I the certainly can degree a to with Society been payers, as community thought we're buzz. But has American recently utilizing you, And gotten

-- the invites sort not will further forward have plans a Some impressed. real-time, Ramasamy. elucidated, just very significant upcoming still that to are come be that so but have potentially publication, to to And of to audience there Dr. and in forth, say are expressing there's determined. other I surprise, conferences that members started But data

So continue the opportunity I to piece. think there's a to out of around spermatogenesis get the lot word

Carl Byrnes

and, for pro question any operations many -- with how cash It this to costs acquired then would how have with Great. the fund like transaction a you're obviously, out Cerecor $XX.X associated balances. forma that given at the And the guidance at on the respect assets? far on you Do the a severance And placement, Innovus looks juncture? million. and private

Joshua Disbrow

Yes.

I and where we adequately than I to a guidance we What from commercial about are can't position is, capitalized doesn't feel other brought say burn specific say a on cash. on that really good will So we're Cerecor, give cash standpoint. bringing infrastructure

boosting So drag top to commensurate the helped we've actually the with line tremendously without by ourselves a respect OpEx.

any doesn't, to pretty senior-level we severance, people, say managers. our is is balance. there severance, have So We it their was reps and impact of the really cash that really least. have in it while way, terminations, small, did And but terminations didn't the

talking we're that X- XX-month packages and separation So not were offered.

tremendous a wasn't there. there amount So

So we certainly, all really year, it we other continue expect. expectation. we don't closing at cash work Again, hand immediately, here's we'll cash get calendar But line we -- don't certainly as exactly from won't the are on we coming to reduce -- next But about spend right we're get that the saying, in reduction of we made we we is of territories operate and, spot. burn as substantial right dependent transactions. long these the dent down as I looking side at a to It in to of in a there. our shared, how chute set be to actually have out the upon we a certainly, expect yes, want about top forward. It on once and said aggressive growth. typically pretty end David But expense of going here good happen smart how habit of Carl, to the prepared how in and my not all, a transaction, the made remarks, we're I

cash good a wise. spot, So we're in

Operator

you There be conference closing the any questions time. additional appear or for at to I'll Mr. back further this to no Disbrow, remarks. turn

Joshua Disbrow

time. the good for look to Great. Thank at quarter's this joining dialing progress questions, call. you. forward thanks in. to everyone again forward for Have our We afternoon's for evening. a that look and and Thanks to call next Thanks sharing

Operator

conference. Ladies thank and that for We gentlemen, today's conclude participation. you your will

this at disconnect may great and You time, a have day.

Aytu BioPharma (AYTU) 14 Nov 192020 Q1 Earnings call transcript