Rosewind: Aytu Bioscience Provides Third Quarter Fiscal 2017 Business Update

The following excerpt is from the company's SEC filing.

May 11, 2017

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

ENGLEWOOD, Colo., May 11, 2017 — Aytu BioScience, Inc. (OTCQX: AYTU), a specialty life sciences company focused on global commercialization of novel products in the field of urology, today provided an overview of its business and growth strategy, as well as its financial results, for the three and nine months ended March 31, 2017. The Company will host a live conference call and webcast today at 4:30 p.m. ET. Details are provided at the end of this press release.

Corporate Highlights:

Prescriptions for Natesto® in the t hird quarter increased 25% over the last quarter

Continued to demonstrate increasing adoption of MiOXSYS® outside the U.S., recording increases in both instrument placements and revenues

Presented new clinical data for Natesto demonstrating Natesto’s hematologic safety in hypogonadal men and Natesto’s clinical efficacy and tolerability in hypogonadal men with seasonal allergies

Published fourth peer-reviewed MiOXSYS study in the journal Urology demonstrating clinical efficacy as a marker of sperm quality in patients suffering from oligozoospermia

Acquired New Enterprise Associates-backed Nuelle, Inc. the developer and marketer of Fiera® as a subsidiary, giving the Company another on market, revenue-generating product in a complementary therapeutic area

Financial Highlights:

Recorded net revenues of nearly $900,000 – in line with expectations

Reduced cash used in operations by 16% quarter-over-quarter to $2.4 million

Successfully completed a warrant exchange and received $2.2 million gross from the exercise of warrants

Divested Primsol® to Allegis Holdings in the amount of $1.75 million to bring in non-dilutive capital and dispense of a non-strategic product

Aytu’s Chief Executive Officer, Josh Disbrow, stated, “Aytu continues to execute on its plan to become a leading specialty life sciences company focused on urological and related conditions. I am proud of the progress that our team continues to make, as demonstrated in our third quarter results. We continue to successfully launch our lead product Natesto in the U.S., and all key indicators remain positive. It’s still early in the Natesto launch, but we are very pleased to have already eclipsed 100 total prescriptions in a week, which is a pace we didn’t anticipate until midsummer 2017. The trends are encouraging for our goal to develop Natesto as an important and novel therapeutic option for the 13 million men who are affected by low testosterone.”

“We are also continuing to see significant uptake with MiOXSYS outside the U.S. posting increased revenues, with 25 instruments placed this quarter and instrument placements in 20 countries to date and more expansion expected in the near-term. Through our team’s work with prominent academic and clinical collaborators worldwide, MiOXSYS is rapidly gaining international acceptance as a novel and important diagnostic tool used as an aid in the overall assessment of male infertility. Additionally, the acquisition of Nuelle, Inc., a company venture backed by New Enterprise Associates and its Fiera product, represents another exciting growth opportunity for the Company given the significant unmet need and market potential for Fiera in the field of female sexual arousal,” he continued.

The Company had $3.5 million in cash, cash equivalents, and restricted cash as of March 31, 2017, which does not include the cash and receivables received through the May 5, 2017 acquisition of Nuelle, Inc.

Mr. Disbrow concluded, “The third quarter was strong both operationally and financially in that we achieved net revenues approaching $1 million, while also reducing our cash used in operations compared to last quarter. Based on the promising prescription trends of Natesto, we continue to believe we are on pace to achieve break-even by next year. Importantly, we successfully raised additional capital through a warrant tender that brought in $2.2 million, gross, and by divesting our non-strategic asset Primsol for $1.75 million. We believe we are well positioned for the quarters ahead to continue to increase revenues while further decreasing our cash burn with a near-term eye toward profitability.”

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, 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 10106783.

About Aytu BioScience, Inc.

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

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: our anticipated future cash position and our need for additional capital in the near term, the risk of integrating Nuelle into our operations and realizing benefits from the acquisition, risks relating to gaining and increasing 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, 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, as amended by our Form 10-Q for the quarter ended March 31, 2017 and in the other reports and documents we file with the Securities and Exchange Commission from time to time.

Investor contact:

Amato and Partners, LLC

Investor Relations Counsel

admin@amatoandpartners.com

Aytu BioScience, Inc.

Balance Sheets

Unaudited

June 30,

Assets

 Current assets

Cash and cash equivalents

3,470,158

8,054,190

Restricted cash

75,107

Accounts receivable, net

342,537

162,427

Inventory, net

208,197

524,707

Prepaid expenses and other

342,113

215,558

Prepaid research and development - related party  (Note 11)

121,983

Investment in Acerus

1,041,362

Total current assets

4,438,112

10,120,227

Fixed assets, net

271,276

231,430

Developed technology, net

641,875

1,159,736

Customer contracts, net

585,000

1,353,375

Trade names, net

65,000

194,472

Natesto asset, net

9,560,754

10,549,797

Goodwill

74,000

221,000

Patents, net

277,611

296,611

Long-term portion of prepaid research and development - related party  (Note 11)

213,471

Deposits

Total long-term assets

11,478,404

14,222,780

 Total assets

15,916,516

24,343,007

Liabilities and Stockholders' Equity

 Current liabilities

Accounts payable and other

1,408,953

2,322,605

Accrued liabilities

1,050,816

1,197,106

Natesto payable

5,379,675

Accrued compensation

845,571

1,200,930

Deferred  rent

Contingent consideration

42,667

Total current liabilities

3,354,437

10,104,425

4,037,664

3,869,122

Deferred rent

Warrant derivative liability

275,992

Total liabilities

7,395,220

14,257,754

 Commitments and contingencies (Note 7)

 Stockholders' equity

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

Common Stock, par value $.0001; 100,000,000 shares authorized; shares issued

and outstanding 13,836,607 and 3,741,944, respectively as of

March 31, 2017 and June 30, 2016

Additional paid-in capital

70,839,253

56,646,304

Accumulated deficit

(62,319,341

(46,561,425

Total stockholders' equity

8,521,296

10,085,253

Total liabilities and stockholders' equity

Statements of Operations

Three Months Ended March 31,

Nine Months Ended March 31,

Product revenue

893,548

647,112

2,385,701

1,560,854

License revenue

21,429

64,286

Total revenue

668,541

1,625,140

Operating expenses

Cost of sales

324,438

340,796

1,067,654

622,222

Research and development

279,049

1,143,676

774,526

3,308,009

Research and development - related party (Note 11)

291,963

47,998

387,960

143,994

Sales, general and administrative

4,385,145

2,165,135

13,732,226

5,416,038

Sales, general and administrative - related party (Note 11)

35,767

79,612

137,311

254,680

Amortization of finite-lived intangible assets

437,013

118,697

1,311,043

284,633

Total operating expenses

5,753,375

3,895,914

17,410,720

10,029,576

Loss from operations

(4,859,827

(3,227,373

(15,025,019

(8,404,436

Other (expense) income

Interest (expense)

(80,722

(4,074,668

(884,187

(4,428,136

Derivative income (expense)

16,662

27,983

212,809

(50,054

Unrealized gain on investment

230,936

(Loss) on investment

(292,455

Total other (expense)

(356,515

(4,046,685

(732,897

(4,478,190

 Net loss

(5,216,342

(7,274,058

(15,757,916

(12,882,626

Weighted average number of

common shares outstanding

10,938,603

1,569,078

7,562,342

1,314,308

Basic and diluted net loss

 per common share

Statements of Cash Flows

Cash flows from operating activities

Adjustments to reconcile net loss to cash used in operating activities

Stock-based compensation expense

2,241,989

547,109

Depreciation, amortization and accretion

2,263,975

433,471

Issuance of restricted stocks

655,416

Amortization of debt issuance costs

178,338

Amortization of beneficial conversion feature

3,942,613

Derivative (income) expense

(212,809

Amortization of prepaid research and development - related party (Note 11)

335,454

91,487

Loss on investment

61,519

Common stock issued to executives

509,996

Issuance of warrants to initial investors

596,434

(Gain) on sale of asset

(428,374

Warrant amendment

Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable

(180,110

72,784

Decrease (increase) in inventory

290,984

(581,910

(Increase) in prepaid expenses and other

(126,555

(572,238

(Decrease) increase in accounts payable and other

(307,854

50,053

(Decrease) in accrued liabilities

(146,290

(68,372

(Decrease) increase in accrued compensation

(355,359

591,451

Increase in interest payable

208,941

(Decrease) increase in deferred rent

(2,775

10,560

(Decrease) in deferred revenue

(64,286

Net cash used in operating activities

(10,560,768

(7,992,571

Cash flows used in investing activities

Purchases of fixed assets

(53,435

(203,577

Purchase payment for Natesto asset

(6,000,000

Sale of investment in Acerus

1,071,707

Sale of investment in Acerus cost

(91,864

Installment payments for Primsol asset

(750,000

(540,000

Sale of Primsol asset

1,750,000

Net cash used in investing activities

(4,073,592

(741,579

Cash flows from financing activities

Ampio stock subscription payment

5,000,000

Sale of stock subscription

200,000

Costs related to the conversion of the convertible promissory notes to equity

(29,754

Proceeds from convertible promissory notes, net

5,175,000

Debt issuance costs (Note 8)

(298,322

Issuance of common stock to Lincoln Park Capital

631,481

Costs related to sale of common stock

(24,247

Warrant tender offer

2,243,281

Warrant tender offer cost

(332,567

Registered offering

8,602,500

Registered offering costs

(997,865

Over-allotment warrants purchased by placement agents

Net cash provided by financing activities

10,125,435

10,046,924

Net change in cash, cash equivalents and restricted cash

(4,508,925

1,312,774

Cash, cash equivalents and restricted cash at beginning of period

7,353,061

Cash, cash equivalents and restricted cash at end of period

3,545,265

8,665,835

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

Conversion of convertible promissory notes and interest of $143,000 to common stock

4,268,000

Reclassification of liability based warrants to equity presentation related to the convertible promissory notes

87,000

Beneficial conversion feature of $4,943,073 less $3,942,613 of accretion related to unconverted convertible promissory notes

1,001,000

Debt issuance costs related to notes that converted to equity

(183,000

Fixed asset purchases included in accounts payable

58,683

Warrants issued in connection with the equity financing to the placement agents

292,630

Warrants amended in connection with warrant tender offer

63,183

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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Other recent filings from the company include the following:

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