AYTU - Earnings call transcript Q2 2020

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Operator

Good afternoon and thank you for joining us for the Aytu BioScience Second Quarter Fiscal 2020 Business Update Call for the Quarter Ended December 31, 2019. 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 earlier this afternoon with details of the company's operational and financial results for the fiscal second quarter.

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

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

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

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

Josh Disbrow

with to in forward corporate Also we $X.X transformation. move the to our for joining operational you, Good and our which more our accomplished a second for productive quarter. history, our revenue during we afternoon, amount Thank than call. revenue quarter quarter fiscal most Cynthia. the XXXX This million tremendous highest this and our thanks quarter, update doubling busiest perhaps was posted on record, sequentially

Innovus merger. proxy purchase, and statement portfolio we Additionally, for filed we asset commercial the Cerecor completed S-X Pharmaceuticals the the

that shortly off the Tuzistra kicked the began. was top of quarter also two on We announced before co-promotes co-promote

soon on pro consumer and Finally, just both acquisition with required health business. that forma $XX soon. million planned takes revenue to acquisition Innovus the Rx very received on to now a growth With acquisition, votes that and be our today, revenues to complete, over ahead to the expect we close that approve we basis, the

most in transformative getting period Without this company's started. has but been the still question, history, productive just we're and our

As comments, with bank in that financing. equity active a assist whom introductory securing engaged having my share health Further, a fund part a a I'll has side, company investment we're to on the funding non-dilutive healthcare-focused received final care we've commitment from discussions. of institutional the also

last year. Now company's turning in we performance. around specifics to the over revenue and same quarter quarter the last that over $X.X XX% I'm our our history proud the say highest Again, up with XXX% to million, posted

Importantly, that Cerecor this revenue increase includes the the acquired from only revenue closing. time given portfolio, of two months of commercial recently

as we Innovus Rx expanded Starting of as QX, in numbers realized quarter Thus, current realize which begin transaction. full expanded any And had of to of recognizing way these revenues, benefit close account entire that of the portfolio. no benefit with booking for yet the would full for the we soon we not this revenue the in begin quarter, portfolio. course, we'll a

we integrated, strong and Rx highlights several with growth we numbers. performance expect product and our there, as note. excited the sharing the saw revenue we people are From Across get portfolio, to products portfolio about of QX

underway agreement see XX% TRxs to encouraged this period the six-month with ending in their XX/XX, period. prior up the we're And starting preceding make uptick For a co-promotion Pharmaceuticals to meaningful ZolpiMist October, Validus are team that from the sales considering impact. got to six-month just

and things to launched early of in to December's Pharmaceuticals full of last Rxs Tuzistra, to comparing yield The first be is going excited Poly co-promotion and results. are and season promising season prescriptions December up are last XX% cold well. beginning cough cough year, year. than newly is our more Tuzistra when significant promotion our We're with with

quarter Karbinal, extended-release With and XX% XX% over the also our outstanding the Karbinal respect same grew an had to multiple on fronts. successful Rxs over preceding quarter newly year. acquired it a last was quarter liquid antihistamine QX. Natesto,

continue through as to the program, we're we patients at to physicians Natesto transition program. seeing good that new home and First, uptake

at nice refills since and that prescriptions a the We program. Natesto the are from home and retail compared the seeing preceding up higher doubled Rxs, scripts fourfold to home quarter. through when most refills have the generate rate uptick valuable view as in at we're refill Natesto a given September prescriptions these

quarters Natesto, footprint team force revised Acerus specialty has partnership their fielding coming to with revised Acerus end our promotional launched sales underway QX. for as Second, their will to expects it force call team, specialty and urologists endocrinologists. calls and relates – substantially the and the of U.S. our of on expand got contract Natesto at will this that in XX-person their the footprint. expand so a Recall

Natesto Importantly, and just this We about having accelerate fully funded of partnership closing them their launching fully this We're week, and for U.S. growth equity the of in team. to operational. the Acerus for financing announced this by Acerus an U.S. $XX infusion excited congratulate now million

Earlier, few our promotion Tuzistra I partner. Tuzistra, and noteworthy. and signs their XX essentially are months each underway alluded the footprint early from to is of reps contribution solid of our they're promotional Poly's now with first co-promote their doubling in ZolpiMist, co-promotions and contribution on both with

just Validus, in yet also a aid sleep voice expect their months share this ZolpiMist from are so of prescribing, co-promotion partner a additional Psychiatrists XX% the promising. fielded, has team of nice partnerships few proving bump Both psychiatry, and we on again, ZolpiMist. returns selling in. fruitful, represent we're our early are

prepared following financial Dave’s with continue on commentary performance. comments our I'll my

it to to hand Dave financials. now cover over I'll the So

Dave Green

XXX% rates review record represents for of million revenue million $X.X and quarter. $X.X million year and our you in XXXX. and for QX and all million a Josh, XX, was high growth for for second last QX I'll to fiscal compared financial December of net joining Thank XXXX year-over-year Today, us. thank XX% $X.X ended The that sequentially. Aytu you, net Top XXXX quarter line $X.X results revenue the of our

the to a revenue net November six-month XXXX we product two $X.X XXXX. of of the last portfolio in XX% from acquired Year-to-date, revenue same period for from net year-over-year was million Cerecor year, from QX million contribution benefited months sales increase. $X.X compared

$X.X XXXX profit million Gross of QX QX improvement the profit $X.X approximately excluding million quarter. operating than last expenses, last was compared in the gross greater QX Gross was QX Operating were reported XX%, operating margin expenses XX% to $X.X expenses sold, cost was greater total million quarter. for and QX last year, last than in which margin $X.X goods for approximately over year. million this approximately million million and realized a substantial in $X.X profit XXXX of $X.X year,

on the former representing commercial transaction due increase approximately related million, The team on cost and million. year completed Therefore, reduction and absorbing in adjusted expenses to approximately net apples-for-apples an is $X.XX of operating $X.X October, costs approximately we Cerecor quarter a were and this ago both lower force integrating the an $XXX,XXX basis, by offset basis. altogether of quarter than both last in quarter a

quarter of quarter both would loss quarter last and in last operating By to was of $X.X QX of been transaction quarter second operating last million year. million and costs million for XXXX the the smaller $X.X for compared $X expense, fiscal The year. out operating in the $X.X have than QX adjusting million $X.X loss the million,

lower for quarter $X.X again, loss XXXX last been for the with million, was and of have $X.X million QX last and million year of loss year. quarter. EBITDA transaction million removing $X.X $X.X costs, quarter EBITDA would than the QX compared ago million Again, last $X.X our both

QX million ago to million quarter. $X.X quarter $X.X was the in Our net $X.X XXXX million loss for compared and last year

for of last from from EPS compared approximately gain restated potential million an per with the net lower million was arising loss share future Acerus $X.X a per of substantially a loss of in $X.X $X.XX share scheduled a ago benefits driven in The a year additional quarter. payments, loss $X.XX $XX by to quarter milestones share for in largely million QX and per were milestone agreement and were noncash $X.XX loss the resulting eliminated.

balance the to Turning sheet.

as substantial the asset due to assets value fair is of XX/XX changes million to double some of our of including goodwill. $XX.X year-end key driven the last were fiscal than processes Other by and $XX.X higher more increase items administrative reported associated a at include AR sales, to the purchase the the acquired the recognition AR in largely The XXXX. assets, total Our million, increased reflects related the June which balance, collections.

new to asset the asset the increased a recognized and was other third-parties purchase, owed operating Inventory costs. to for and current reimbursable asset, for certain amounts company asset, due by balances prepaid each

Our cash balance $X.X ending million. QX totaled

former related liabilities transaction $X.X approximately result expense our absorbing increased million associated payable commercial a On of acquisition, to $X.X the by side, of team accounts Cerecor the and liability with the million operating assuming as asset increased costs.

due new the other product-related purchase. to liabilities fees the Accrued asset to assumption $X million increased primarily of royalty approximately tied and

obligations obligations requiring purchase. approximately asset of stated now One million, fixed long-term portion fixed liabilities million. Our the January $XX the amount in were of XXXX, with approximately of which in of matures assumed include $XX the a payment payment payment

result certain fixed a obligations. have and much as sheet liabilities balance So have summary, of asset in purchase a larger we assumed and other the

from revenue we overlapping addition to to acquired we shed the and two asset purchase the ahead, rate resulted quarters. product costs burn line growth portfolio Looking top continue of over to the the with next as the that expect and decline grows three

call that, to Josh. back turn with And I’ll over the

Josh Disbrow

Society count. motile men maintaining scientific an quarter Dave. Ranjith the were Reproductive Ramasamy, story. the over positive the breakout at at of motility the that and corporate the Meeting XX, the on the testosterone announced from while extremely you, company had Natesto, of Urology a University October busy results development particularly Medicine. and of study’s Annual period Spermatogenesis respect and to with Miami, increased which normal principal total serum American the quarter, of investigator sperm their Again, transformational Study, Director Natesto’s six-month for also Natesto sperm its course front. it treatment clinical on a presented levels sperm hypogonadal Thank presented On with was Reproductive and concentration, the Dr.

This readout their other separates has from in therapy other convincingly that demonstrated. Natesto men taking maintain treatments T data testosterone-replacement while something Natesto, low no fertility

work the for at concert getting our into following data domain, We’ll discussions in Acerus forward. initiative about label with to potential partners begin on that modification to Natesto. we’ll scientific excited and look these We’re move that,

we asset purchase differentiated Now in XX/XX consists five the portfolio. portfolio Rx commercial of XX transformation. In on Cerecor and novel revenue corporate that commercial the ended million This generated $XX.X QX, and to our therapeutics. months again, of closed for

kept over In conjunction Phillips. their Matt move, the we low-performing former highest commercial Cerecor immediately organizations. rationalized leader, asset the and both of and or across with much sales the multiple bring legacy performers Following purchase, overlapping to legacy that territories moved group we

of cross-training together The now is $XX the teams all we’ve Natesto, conducted national alongside on concluded commercial Rx annual the grow resources With portfolio, legacy revenues across increased portfolio. best such promoting there in evaluate that basis, extensive and portfolio we as implement put At work sales our more to we first We’ll the that have and acquisition Natesto to reps out to come a store. the Cerecor ago. to continue an opportunities meeting, product on million reps. weeks line the as are our former and one, cross-selling Aytu meeting few we’ve just sales growth believe

of Now component acquisition recent on pending our the Innovus. to of transformation, most the

segments. merger special their over close was Aytu shareholder $XX will annual revenues expect Just to meetings, in during This take held would this approved. million short acquisition the order. With transaction we across which to transformation this the complete morning, and the companies business approval, both both

elements both expect the we growing shareholder now and path make the the line The to accelerate to value. across grow top that Rx sense, unnecessary and health redundant and the products. our and substantially plan is both to or breakeven consumer integrate increase expenses eliminate functions to By portfolios,

for an the we get is newly transaction. today transformed day work So company, once and the Aytu BioScience the to Innovus to growing exciting close we’re ready

are we the An previously important new note is secure pay working believe off for and this scale described entity. combined revenue to aspect positioned the capital to that non-dilutive now well Deerfield financing, to enough provide of gaining we

to help underway. We’re and engaged process the is healthcare-focused investment bank financing, with this secure a

needed. debt We also complement funding to commitments have equity the side as secured that on

a closing, in was So productive, quarter. transformative QX

expanded business, We’re newly combined consumer closing, poised the Rx the business. to now and and Rx operate healthcare upon

we’re and We unnecessary will redundant integrate the the each, from and best actively rationalizing expenses.

line we a expense this profitability. clear quarters. of people savings, will products of rationalized infrastructure have and have be expect, and the over in We place All to several sight now the and

we’ll complete, please Cynthia, up lines. comments some So the and questions. with our take prepared for time open it prepare

Operator

first Byrnes for now question of Thank Instructions] Securities. comes you. state Please Carl Our question. open Northland questions. your from is [Operator floor The

Carl Byrnes

Great. comment the weeks? week, with around Congratulations. anticipate anticipate that an safe and is put your would – that, the What My you going burn. closing obviously, six next Innovus it next assume and your question forward relating Thanks. that to to first transaction vote favorable that? is, you might in you two imminently, relative the sort of And today brackets additional the months can be XX then question What would you cash cash needs? months in to

Josh Disbrow

Hi, for question. Carl. your Thanks

would we the within yes, suggest that so. certainly next So or it’s week

we’re of get be are very accordingly, very very with to so to short update Innovus We’re but and in closed Obviously, where tied, details we sort but order. process. to acquisition we’ll respect the and everyone spot transactional very with close, the feel ticked good comfortable final in

to respect the come and cut to said, at other on very costs. these you we’re said, look so particularly where well burn true described, that Dave get comfortable down, I we will as continue burn as – a side basis, it on cash we’re the as very as the of David With and need, when we apples-to-apples deal

that when we mentioned, clear clear also to that profitability, to not have specifically we I line will is. As sight view – when do so really guiding of increasingly but be, a of

this nice And having. debt particularly And get process. to we’re really in. it’s Innovus side for revenue people an provides of on to say, that merger, to when given good come begun investment the to side scale, engaged obviously, bank and we that we importantly, a other I basis pleased for Again, think we’re it the lenders the know the that suffice interactions with have

needs. and the I what about sort a as and of We’ll, cash make debt of respect come say would and any non-dilutive an cash with in. that’s would it aspect would of only feel be kind needed, and that equity attempt So obviously, to in good bring to complement obviously, that

Carl Byrnes

you. Great, thank

Josh Disbrow

Thank you.

Operator

from next Our Please question. question state Ladenburg Jeffrey comes your Thalmann. Cohen of

Jeffrey Cohen

know about Hi, Acerus of it’s Jeff what as Couple are questions. you? you as Could we thus feedback far the as in quick the as How Cohen. far talk co-promote? far

Josh Disbrow

and on they Good engage Yes. I’ll, say the I’ll with obviously give started obviously, partners is earnings next the process north question, now on what the But there rely have to their to are our specifics to and Jeff. call they’ve fully at Acerus as underway. opportunity investors.

get that territories territories, Natesto we with representatives As previously in earlier an of started for transitioned announced, we them. really subset been very selling They’re be large some enabled will to some and now that over them exclusively Acerus nice the in had to are Northeast. initial working productive,

They amount with form $XX this high where, they equity recently, kick into out just just that’s the have a that started. to gear of respect the the So million obviously, will footprint. significant announced obviously secured footprint funding week, in in building very them that of

speak you certainly to the line gear, I’d exact in time haven’t it specifics they ready like full and so So now about say will, to not other publicly, planned than to sprint, full is if scale. given

I sufficient tread the as on that what that’s they So on privately, investors. want probably with so share just kept to think they’ll to basis anything be of not

Jeffrey Cohen

you’re which co-promotions targeting talk Tuzistra Okay. key ZolpiMist? about for and the by you of Got territories could it. some And your

Josh Disbrow

cover. of really where in less – And again, of key than – a ZolpiMist, in little it’s terms than it’s it’s geographies dozen terms a psychiatry. key less territories, they

Texas. the it’s Southeast the Northeast, large metropolitan in to primarily Mid-Atlantic, So areas, over

the Poly upward. Southeastern fairly With to footprint is respect largely eastward U.S. Poly’s DFW of and areas Pharmaceuticals, from So substantial in sort

really then in and very southward, So kind westward Texas. moving Louisiana of footprint large to in and Texas, a Tennessee and Got starting Mississippi.

in So they’re cold antitussives those very refer on prescribers very, I entrenched extensive often and cough, as in in experience the antihistamines. to and what calling markets belt. Very high of

we are. So areas where they in some are

carved and out diligently have prescribers obviously, retained, high that to we exclusive so well. are And very as we’ve targets Poly,

other. so to off partitioned or limits various those the one such And that off party sort of offices, we’ve are

maximizing each other, tripping we’re and we’re over footprint. So not truly the

So got – have, XX-ish doubling and doubling again, reps our we’re and or they from or organic they’ve so. XX reps about than – to footprint the our to essentially in-house more what

their So geographies. yes, that’s

Jeffrey Cohen

out. Okay. a I once more, as Innovus Perfect. far or your more we’re Dave, little north as expecting? And into gross gross everything look if tucked of bump got then Do expect where may. one margins, in mean healthy on ramifications south I to any or kind margins gets pretty you’ve you on

Dave Green

this quite which on. what got quarter, margins coming not realized we business. are Rx Innovus nice the profit Well, we strong assets is gross Cerecor reflective as the of in bump a as probably

still be So – in hit of a north the blend – of or But revenue. been we the in will was XX% XX%, of nice. the from this a much those in different XX% bit which we’ve profit will where the blended, range. where shouldn’t quarter, XX% too We altogether probably past. range little A lower we’ve bit be but brings gross that margin, little Innovus of quite been

Jeffrey Cohen

it. That’s for Got Good again. Okay. it me. Thanks, news.

Dave Green

Thank you.

Josh Disbrow

you, Jeff. Thank

Operator

And back will further to for time. no the any at Mr. be Disbrow, comments. questions over closing I to there gentlemen, conference turn you this appear

Josh Disbrow

your everyone the Thank interest. and for to thanks Thanks, today. our Cynthia. questions, call for again, We you, joining appreciate

excited We’re on forward Look we’re more company future the call. sharing about quarterly next the and to with our forward. where moving

have evening. that, again, with So good and a I’ll say thanks

Operator

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

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

Aytu BioPharma (AYTU) 13 Feb 202020 Q2 Earnings call transcript