Aytu BioScience Provides Second Fiscal Quarter Business Update

Live Conference Call and Webcast TODAY at 4:30 p.m. ET

Feb 16, 2016, 16:05 ET from Aytu BioScience, Inc.

ENGLEWOOD, Colo., Feb. 16, 2016 /PRNewswire/ -- Aytu BioScience, Inc. (OTCQX: AYTU), a specialty healthcare company focused on developing treatments for urological and related conditions, provided today an overview of its business and growth strategy, as well as its financial results for the quarter ended December 31, 2015.

Corporate Highlights:

  • Launched urology-focused U.S. sales force
  • Initiated marketing ProstaScint® to urologists in the U.S.
  • Preparing to market Primsol®; acquired in October 2015
  • Actively negotiating additional urology asset purchases
  • Obtained CE Marking for MiOXSYS™ diagnostic platform for male infertility

Financial Highlights:

  • Strong cash position of $11 million as of December 31, 2015
  • Showed initial revenue growth; ~$1 million in sales for first half FY2016
  • Rapidly achieved first MiOXSYS ex-U.S. sales; building distribution network
  • Upgraded to OTCQX® Best Market
  • Achieved increased stock liquidity through distribution of Ampio Pharmaceuticals' majority stake in Aytu
  • Enhanced liquidity and capital structure through conversion of $4.1 million of debt to Aytu Common Stock

Josh Disbrow, Chief Executive Officer of Aytu BioScience, Inc., stated, "We've built considerable momentum since our formation in April of last year, and we believe we are poised for significant growth over the coming quarters as we initiate commercialization of our acquired products and advance the development of MiOXSYS in male infertility toward commercialization.  We launched our commercial organization and have already begun to build revenue for our initial products ProstaScint and Primsol.  In parallel, we have continued to execute on our strategy of acquiring valuable late-stage assets and best-in-class, specialty commercial products.  We believe Aytu is well positioned for long-term incremental growth based on our early commercial success with our expanding pipeline of substantially de-risked assets in the $10 billion global urology market."

In late November 2015, Aytu relaunched ProstaScint into the urology market primarily targeting its existing user base in the U.S. and has already demonstrated prescription growth during the first two full months of promotion.  Aytu continues to anticipate booking approximately $1.7 million in revenue for this product in fiscal 2016 with expected revenue growth to follow. 

The growth strategy for ProstaScint includes leveraging new data regarding ProstaScint's superior clinical performance over existing diagnostics, expanding use by leveraging both product indications in high-risk, newly diagnosed patients and recurrent patients, and seeking distribution partners in key markets outside the U.S. in order to market ProstaScint globally – all of which hadn't been a priority for ProstaScint's prior owners. 

Aytu is preparing to relaunch Primsol, the only FDA-approved liquid oral formulation of a gold standard antibiotic, trimethoprim, for treating uncomplicated urinary tract infections, or UTIs.  Primsol will utilize Aytu's existing U.S. urology sales channel, and similar to ProstaScint, Aytu expects revenue growth from both products throughout calendar year 2016.  Revenue from Aytu's commercial-stage assets will enable Aytu to scale its sales organization accordingly and offset development costs as the Company advances MiOXSYS toward global commercialization for male infertility. 

In early January 2016, Aytu received CE Marking for MiOXSYS, an in vitro diagnostic device for male infertility, and within just weeks, the Company announced that it had begun booking initial revenue for this product.  In order to gain substantial, robust clinical experience using MiOXSYS, Aytu has engaged some of the world's most influential clinicians and researchers in the field of andrology and infertility with the expectation that they will present and publish compelling clinical utility data following their implementation of MiOXSYS in clinical settings.  In the relative near term, Aytu expects to establish a distribution network to begin growing sales in territories where MiOXSYS is currently available commercially, as clinicians integrate MiOXSYS into their routine assessments of male infertility status.  Later this year, the Company expects to initiate the FDA process for MiOXSYS and begin formal clinical studies under the FDA 510k de novo process. 

Aytu reported nearly $1 million in revenue through the first half of fiscal 2016 (ended December 31, 2015), and ended its fiscal second quarter 2016 with $11 million in cash and cash equivalents.  This strong cash position should enable the Company to execute on its strategic plan into fiscal 2017.  Additionally, in February 2016, Aytu retired $4.1 million in debt principal from its September 2015 convertible debt offering, leaving only $1.05 million in debt principal on the balance sheet.

On January 4, 2016, Ampio Pharmaceuticals executed its previously announced strategy to distribute most of its 81.5% equity position in Aytu to Ampio shareholders.  This key milestone event resulted in Aytu becoming a free-standing company with a more liquid stock, forming a solid foundation for potential value creation.

Mr. Disbrow concluded, "We are committed to the continued expansion of our commercial operations and to building significant value driven by sales from our novel urology product portfolio.  We've also made important strides to augment our liquidity and improve our capital structure, as well as increase our exposure to new investors and potential strategic partners by presenting the Aytu story at numerous industry conferences.  Based on our prior experience building successful specialty healthcare companies, we believe this critical groundwork and our early achievements to date place Aytu on a strong trajectory for delivering long-term value."

Conference Call Information:

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, www.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 10081057.

About Aytu BioScience, Inc.
Aytu BioScience is a commercial-stage specialty healthcare company focused on global commercialization of novel products in the field of urology. Aytu's current portfolio of commercial and late-stage urology products addresses prostate cancer, urinary tract infections, male infertility and male sexual dysfunction, and the company plans to expand into other urological indications for which there are significant medical needs. The Company currently markets ProstaScint® (capromab pendetide), the only radio-labeled monoclonal antibody that targets prostate specific membrane antigen (PSMA), a protein highly expressed by prostate cancer cells. ProstaScint is FDA-approved as an imaging agent for use in both newly diagnosed, high-risk prostate cancer patients and patients with recurrent prostate cancer. Aytu also markets Primsol® (trimethoprim hydrochloride) – the only FDA-approved trimethoprim-only oral solution for urinary tract infections. Additionally, Aytu markets the CE Marked MiOXSYS™ System outside the U.S. and is conducting U.S.-based clinical trials, following which the Company expects to receive 510k de novo medical device clearance. The MiOXSYS System is a novel, rapid semen analysis system with the potential to become a standard of care in the diagnosis and management of male infertility. MiOXSYS is the only rapid test for assessing oxidative stress in semen and seminal plasma, a leading contributor of idiopathic male infertility. Aytu's strategy is to continue building its portfolio of revenue-generating urology products and late-stage development assets, leveraging its commercial team and expertise to further build those brands within well-established markets.

For Investors & Media:
Tiberend Strategic Advisors, Inc.
Joshua Drumm, Ph.D.: jdrumm@tiberend.com; (212) 375-2664
Janine McCargo: jmccargo@tiberend.com; (646) 604-5150

Forward Looking Statement
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," "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: risks relating to gaining market acceptance of our products, obtaining reimbursement by third-party payors, the potential future commercialization of our product candidates, the anticipated start dates, durations and completion dates, as well as the potential future results, of our ongoing and future clinical trials, the anticipated designs of our future clinical trials, anticipated future regulatory submissions and events, our anticipated future cash position and future events under our current and potential future collaborations. 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.

AYTU BIOSCIENCE, INC.

Balance Sheet








December 31,
2015


June 30,
2015

Assets

Current assets




     Cash and cash equivalents

$10,959,546


$7,353,061

     Accounts receivable

288,466


157,058

     Inventory

653,115


39,442

     Prepaid expenses, other

741,544


370,888

     Prepaid research and development - related party

121,983


121,983

          Total current assets

12,764,654


8,042,432





     Fixed assets, net

143,826


29,706

     Developed technology, net

1,242,569


780,125

     Customer contracts, net

1,456,875


711,000

     Trade names, net

210,139


79,000

     Goodwill

221,000


74,000

     In-process research and development

7,500,000


7,500,000

     Patents, net

593,382


628,776

     Long-term portion of prepaid research & development - related party

274,463


335,454

     Deposits

2,888


4,886


11,645,142


10,142,947





Total assets

$24,409,796


$18,185,379





Liabilities and Stockholders' Equity

Current liabilities




     Accounts payable and accrued liabilities

$1,076,295


$1,195,368

     Primsol payable

1,111,057


-

     Accrued compensation

492,584


196,503

     Deferred revenue

85,714


85,714

     Related party payable

38,451


-

          Total current liabilities

2,804,101


1,477,585





Convertible promissory notes, net of amortization discount of $253,448

4,921,552


-

     Contingent consideration

687,685


664,000

     Long-term deferred revenue

383,036


425,893

Interest payable

161,988


-

Deferred rent

11,694


1,449

Warrant derivative liability

180,969


-

Total liabilities

9,151,025


2,568,927





Commitments and contingencies








Stockholders' equity




Preferred Stock, par value $.0001; 50,000,000 shares authorized; none issued

-


-

Common Stock, par value $.0001; 300,000,000 shares authorized; shares
issued and outstanding 14,259,693 and 14,259,681, respectively, as of
December 31, 2015 and June 30, 2015

1,426


1,426

Additional paid-in capital

39,247,254


38,996,367

Ampio stock subscription

-


(5,000,000)

Accumulated deficit

(23,989,909)


(18,381,341)

          Total stockholders' equity

15,258,771


15,616,452





Total liabilities and stockholders' equity

$24,409,796


$18,185,379






 

AYTU BIOSCIENCE, INC.

Statements of Operations






Three Months Ended

December 31,


Six Months Ended

December 31,


2015


2014


2015


2014









Product and service revenue

$447,786


$6,906


$913,742


$13,060

License revenue

21,428


21,429


42,857


42,858

Total revenue

469,214


28,335


956,599


55,918









Operating expenses








Cost of sales

244,100


-


281,425


225

Research and development

1,308,460


789,967


2,164,334


1,723,720

Research and development - related party

47,998


53,998


95,996


107,996

Sales, general and administrative

1,774,167


749,837


3,425,971


1,863,416

Amortization of finite-lived intangible assets

108,489


17,697


165,936


35,394

Total operating expenses

3,483,214


1,611,499


6,133,662


3,730,751









Loss from operations

(3,014,000)


(1,583,164)


(5,177,063)


(3,674,833)









Other (expense) income








Interest (expense)

(240,214)


(37,547)


(353,467)


(74,849)

Derivative (expense)

(78,166)


-


(78,038)


-

Total other (expense) income

(318,380)


(37,547)


(431,505)


(74,849)









Net loss, before income tax

(3,332,380)


(1,620,711)


(5,608,568)


(3,749,682)

Deferred income tax benefit

-


-


-


23,910

Net loss

$(3,332,380)


$(1,620,711)


$(5,608,568)


$(3,725,772)









Weighted average number of Aytu common
shares outstanding

14,259,693


7,901,426


14,259,687


7,901,426









Basic and diluted Aytu net loss per
common share

$         (0.23)


$        (0.21)


$       (0.39)


$      (0.47)

 

AYTU BIOSCIENCE, INC.

Statements of Cash Flows




Six Months Ended

December 31,


2015


2014





Cash flows from operating activities




Net loss

$(5,608,568)


$(3,725,772)

Stock-based compensation expense

250,887


477,660

Depreciation, amortization and accretion

242,427


49,164

Amortization of debt issuance costs

147,805


-

Derivative expense

78,038


-

Amortization of prepaid research and development - related party

60,991


60,992

Deferred taxes

-


(23,910)

Adjustments to reconcile net loss to net cash used in operating activities





(Increase) in accounts receivable

(131,408)


(6,906)

(Increase) in inventory

(613,673)


(10,453)

(Increase) decrease in prepaid expenses, other

(370,656)


485,889

(Increase) in prepaid research and development - related party

-


(150,000)

(Decrease) in accounts payable and accrued liabilities

(126,781)


(298,677)

Increase (decrease) in related party payable

38,451


(561,059)

Increase in accrued compensation

296,081


94,247

Increase in interest payable

161,988


74,936

Increase in deferred rent

10,245


-

(Decrease) in deferred revenue

(42,857)


(42,858)

Net cash used in operating activities

(5,607,030)


(3,576,747)





Cash flows used in investing activities




Deposits

1,998


(1,998)

Purchases of fixed assets

(125,161)


-

Purchase of Primsol business

(540,000)


-

Net cash used in investing activities

(663,163)


(1,998)





Cash flows from financing activities




Proceeds from convertible promissory notes, net

5,175,000


-

Debt issuance costs

(298,322)


-

Ampio stock subscription payment

5,000,000


-

Contribution from Ampio

-


1,100,000

Net cash provided by financing activities

9,876,678


1,100,000





Net change in cash and cash equivalents

3,606,485


(2,478,745)

Cash and cash equivalents at beginning of period

7,353,061


2,639,650

Cash and cash equivalents at end of period

$10,959,546


$160,905





Non-cash transactions:




Warrant derivative liability related to the issuance of the
convertible promissory notes

$102,931


$                 -

Primsol business purchase included in Primsol payable,
1,250,000 less future accretion of $173,000

$1,077,000


$                 -

Fixed asset purchases included in accounts payable

$7,708


$                 -






 

SOURCE Aytu BioScience, Inc.



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