Aytu BioPharma at Planet MicroCap: Strategic Realignment and Growth

On Wednesday, 23 April 2025, Aytu BioPharma (NASDAQ:AYTU) presented at the Planet MicroCap Showcase: VEGAS 2025, outlining a strategic shift towards its prescription business. The company highlighted positive EBITDA and streamlined operations, but also acknowledged challenges in its pediatric portfolio. CEO Josh Tisbro emphasized growth through ADHD and pediatric brands, supported by the Aytu RxConnect program.

Key Takeaways

• Aytu BioPharma reported over $60 million in annualized revenue.
• The company achieved consistent positive EBITDA over the past two years.
• Aytu RxConnect offers competitive copay advantages in a genericized market.
• International expansion includes licensing in Canada and Israel.
• Operating expenses reduced to approximately $40 million annually.

Financial Results

• Annualized Revenue: Over $60 million based on the trailing twelve months.
• EBITDA: Approximately $8 million annualized run rate.
• Gross Margins: 70% plus.
• Operating Expenses (OpEx): Reduced to approximately $40 million.
• Cash Position: Over $20 million as of December.
• Pediatric Portfolio: Recent quarter net sales rebounded to $2.5 million.

Operational Updates

• Streamlined Operations: Exited R&D, closed a manufacturing facility, and sold the consumer health unit.
• Focus Areas: ADHD and pediatric brands with a strong commercial sales team of over 40 representatives.
• Aytu RxConnect: Guarantees a maximum $50 copay for branded prescriptions.
• International Expansion: Licensing agreements in Canada and Israel.

Future Outlook

• Growth Strategy: Focus on driving sales of core ADHD brands and pediatric products.
• Acquisition Plans: Seeking bolt-on acquisitions, especially in the psychiatric space.
• Profitability Goal: Breakeven at approximately $16 million per quarter.
• Market Trends: Opportunities in fluoride products due to municipal changes.

Q&A Highlights

• Acquisition Targets: Psychiatric assets and branded medications in generic categories.
• Market Trends: Removal of fluoride from water supplies benefits the fluoride franchise.
• Tariffs Impact: Minimal due to US manufacturing.

For a detailed discussion, please refer to the full transcript below.

Full transcript - Planet MicroCap Showcase: VEGAS 2025:

Robert, Host, Planet Microcap: Okay. Our next presentation is gonna come from Aytu BioPharma. Presenting from the company is the chief executive officer, Josh Tisbro. Josh, please proceed.

Josh Tisbro, Chief Executive Officer, Aytu BioPharma: Thanks, Robert. Thanks, everyone, for being here. Thanks to Planet Microcap for having A2 to to the conference. Looking forward to sharing with you some of the latest, that we’ve undertaken here. As Robert said, A2 Biopharma, NASDAQ, ticker symbol, a y t u.

Company was founded just about ten years ago by myself and two other gentlemen, and, we’ve made a lot of progress, particularly over the last few years as we’ve undertaken a fairly substantial transformation to really streamline the organization and focus on what we believe can be the most profitable aspect of our business, which is our prescription business, which is what I’ll be speaking about here today. And as a reminder, maybe making some forward looking statements along the way. If you’re hearing the story for the first time, you’re certainly catching it, I think, at the right time when we’ve undertaken some significant endeavors to really right size the company and focus on our prescription business, which has been really the strongest piece of our business over the last several years. We’ve completed a multistage strategic realignment to do just that, focused on the prescription pharmaceutical business. And we’ve really turned the company, around in that we’ve essentially had a transition from a negative burn in twenty twenty one, twenty twenty two to consistently positive EBITDA over the last two plus years.

Really, almost every quarter since the transformation began, we’ve been posting positive EBITDA. That that transition started, and I should take a step back and say the company perhaps was doing a little bit too much if you look back, say, three or four years ago where we had the prescription business, which has really been our bread and butter from the beginning since our founding. But along the way, we picked up some acquisitions inclusive of a consumer health business. We made an acquisition that brought on the ADHD brands back in 2021. With that came a manufacturing facility, which was quite large.

And we also endeavored to initiate a clinical trial for a rare disease. Long story short is that that was probably a little bit too much for the company to digest and really effectively execute on. So along the way, we essentially cut out r and d. We’ve now essentially stopped that spending entirely and suspended the pipeline development. We have, shut down the Grand Prairie manufacturing facility that was making the ADHD meds in favor of a contract manufacturer.

And we sold out the consumer health unit, back in the middle of twenty twenty five, such that when you look at where the company is today, it is a, again, a streamlined, clean and tidy prescription only business whose hallmark is very specifically ADHD and pediatric brands. These are brands that compete in large markets. The brands have been growing, particularly in the case of the ADHD brands. Had a little bit of a setback with our pediatric product line, which I’ll speak to. But all in all, the company is positioned now at $60,000,000 in annualized revenue when you look at over the trailing twelve months and consistent EBITDA quarter after quarter.

One of the calling cards of the company is not just our unique brands in ADHD and pediatrics, but equal parts, our patient access program, which we call A2RX Connect. It’s an in house developed program that enables seamless transactions for a patient getting prescriptions for branded medications, which is not nearly as easy as it needs to be for US health care consumers today. We’ve cut through all the noise that is created by the PBMs and many of the large chain retailers to create a seamless, easy process for patients to get the A2 prescriptions without hassle at a predictable low price month after month after month as long as they have commercial insurance. We’ve got a commercial sales team of about 40, sales reps covering most of the major markets in The US and covering the lion’s share of the ADHD category. We also have brought on two licensees outside The US, One in Canada, One in Israel.

And we’re always on the hunt for new acquisitions, one of which we’ve recently launched, with a product called Medidates CD. All on the way, we’ve maintained or or grown our commercial our commercial business while reducing OpEx materially year over year over year, such that OpEx is now to the lowest it’s been in in quite some time. And couple that with a fully outsourced manufacturing play, the company’s lean, mean, focused, and really really focused on driving growth from here. We would suggest it’s a very compelling valuation if you look at us from where we sit today, dollars 61,000,000 plus in trailing 12 revenue, consistent EBITDA, 70% plus gross margins, enterprise value to EBITDA is quite low. So we think it’s an opportunity to take a look, particularly when you consider our cash on hand as of December was just over $20,000,000 So a good time to be looking at the company.

Our brands, as I’ve alluded to, compete in the categories of attention deficit, hyperactivity disorder, ADHD, and we have the two only orally disintegrating tablet formulations of stimulants, extended release stimulants that is. At Zenas XR ODT is a quick dissolve. It dissolves very rapidly in the mouth and lasts a full twelve hours. It competes with the likes of Adderall XR, if you’re familiar with that. And at a time when patients can intermittently struggle to find their Adderall XR prescriptions at a Walgreens or a neighborhood pharmacy, we’ve never had a stock out.

We’ve been able to consistently fill the gap that was fairly pervasive about a year ago, has started to abate a bit. And and what you’re seeing now is more of a normalized growth curve for our Adzenys product, which competes very favorably in that category. Cotempla is a methylphenidate, also an orally disintegrating tablet. Again, very quickly within an hour. Patients are experiencing symptom relief, lasts a full twelve hours.

That product competes with the likes of Concerta and Ritalin LA, Focalin LA, if you’ve heard of those. And then we have a line of pediatric products that is largely our antihistamine, which we call Carbonyl ER. It’s a long acting twelve hour antihistamine. It’s a workhorse that frankly works when many others don’t. So patients that have tried and failed Claritin and others, Carbonyl ER is great for long standing allergies, post nasal drip, and a whole host of things.

And then we have a line of pediatric multivitamins called PolyBiflor and TriBiflor, which are proprietary branded multivitamins that compete in the sodium fluoride category. This is these are products that are prescribed in areas that don’t fluoridate the water supply. And if you’ve paid attention to any of the news clippings recently, there’s an increasing number of municipalities that are opting to no longer fluoridate the municipal water supply. The entire state of Utah, in fact, Governor Cox just legislated or just signed legislation banning fluoride in the water supply in the state of Utah. So that represents a good opportunity for these products, as they are used to supplement patients that live in areas where they don’t put water in the or put fluoride in the water supply.

We’ve had consistent growth, particularly on the ADHD portfolio. The large line is the combined ADHD products. The darker teal is Adzenys and the green is Cotempla. Cotempla has just been a solid workhorse product for us. Competes in a more competitive category, so it’s really just been steady, consistent contributor kind of over the last several years.

Adzenys has been a nice growth product for us, and that’s important because Adzenys competes in the larger of the two markets. There are far more amphetamine prescriptions written than methylphenidate, and this competes very favorably with the likes of Adderall XR. You can see we had a nice little tick up in fiscal twenty twenty three, which would have been the twelve months ending of June of twenty twenty four. That was largely due to a pretty significant outage of Adderall XR generics. But it’s nice to see that we’re actually still growing out of despite the fact that the market has really kind of returned to supply steady state and there’s not really as many shortages.

And what patients will be found is many patients that got switched from, say, Adderall XR to a ZenasR product really liked it. Liked the fact that it’s kind of a smoother existence through the day. You don’t quite get the hammer that you do in the morning with Adderall XR. Sometimes patients get a real high and then it really drops off in the afternoon, such that they need a booster dose. With our product Adzenys, really is steady state, consistent and smooth throughout the full twelve hour day.

Our pediatric portfolio, you can see, really had significant growth. We did get we did experience a downdraft by virtue of one of the large payers in the tri state area ceasing payment and reimbursement for pediatric multivitamins, which is sort of a statement unto itself. That having been said, we’ve begun to put many pieces in place to really enable the pediatric portfolio to get back to growth. We had a really nice quarter. If you look at the December, that portfolio got back to about $2,500,000 in net sales.

That was up from the preceding quarter of under $1,000,000 So significant growth quarter to quarter. We haven’t yet posted our March numbers yet. We’ll release those here in the next couple of few weeks. And we’ll obviously share what we have there, but we’re confident that the pediatric products have kind of bottomed out. They’re now back to some level of growth and at least some level of stability such that all told now, you’ve got a portfolio, that’s contributing over $60,000,000 over the last, last twelve months.

And that’s an EBITDA that EBITDA number in the 6 plus million dollar range. But really, if you look at kind of the quarterly EBITDA numbers for the company over the last several quarters, it’s between a million on the low side and 3,000,000 to 4,000,000 a quarter on the high side. So blended, you know, we still are kind of in the $8,000,000 annualized EBITDA run rate. So not quite to the point of building cash, not quite cash flow breakeven, but we believe with continued growth and with the OpEx line coming in where it is now, which will show you significantly lower than where it had been, we think we’re positioned now to move into profitability. So as I mentioned, revenues in the $60 plus million range, the lion’s share of that, vast majority of that is, of course, the ADHD product lines, which is, again, Adzenys and Cotempla.

Smaller piece of that is the pediatric product lines. That 6,300,000 trailing 12 was a bit deceiving because the last quarter was north of $2,500,000 in net revenue. So we would suggest that 6,300,000.0 is something annualizing closer to $8,000,000 when you look at last quarter, and then we’re we’re looking forward to posting our our our results for the March here coming up in the May. I mentioned one of our hallmarks and one of our calling cards is a two Rx Connect. This is really a second to none patient access program that no other company does, and certainly doesn’t do it any way anywhere close to the way we do it.

We truly backstop these prescriptions and essentially service the underwriters such that patients that are prescribed our brands, and specifically at Zenith and Cotempla, we guarantee that if the physician sends it to a partner pharmacy and they attempt to run it through commercial insurance, those patients will never pay more than $50 for a monthly prescription, which in today’s environment is a very, very low copay, competitive with many generics, and way more cost effective than many brands. In some cases, patients in fact will pay $0 if their insurance plan covers it. So patients are guaranteed an out of pocket on a monthly basis of no more than $50 sometimes as low as $0 And our pharmacy partners are incentivized in many, many ways to ensure that they’re running the patient’s insurance correctly, that they’re giving the patient the best opportunity to get that that claim covered. They’re incentivized to do that, in in many ways, inclusive of, of course, the economics that they earn on their fill fees, and that’s all by design. Ultimately, this is supported by a network of about a thousand pharmacies that are all over the country, even in places where we don’t have sales reps present.

And the partner the partner pharmacies really act as our liaison between us, the company, our sales reps, and, and to the to the physician. The physician office enjoys working with these pharmacy partners because they know the patients are gonna get high level care. This is very high touch white glove service. These are not your neighborhood Walgreens. These are true neighborhood, family owned, independent pharmacies, small businesses operating in their communities, and they want to do the very best they can to retain these patients, give them the best service, ensure the lowest level of co pay, and fight fight against the PBMs to ensure that these patients are getting the, the the best, the best bang for their buck for the, for the insurance premiums they’re paying for.

We have sales sales reps that will go out to these physicians, ask the physicians to prescribe our medications, talk about this program. And so it’s a one two punch. The clinical benefits of these rapid act rapidly acting, quick dissolved medications last a full twelve hours, dissolve in the mouth. You don’t have to use worry about water. You can take it on the go.

But equal parts, you can get them at a guaranteed price not to exceed $50 per month. And in this category, that’s unheard of. And it’s one of the ways a small company like us has been able to compete in a very large, heavily genericized category. And we have all kinds of back end analytics, all kinds of ways to have great visibility into every prescription, such that we know how much the pharmacy is making. And by the way, we guarantee that the pharmacy never loses money anytime they transact one of our brands, and no other company does that.

So it it it engenders a great deal of loyalty from the physician because he or she is not getting the callbacks from the pharmacies saying that they don’t have it or the co pay is too high or it’s on back order. By the way, we’ve never had a back order in these products history. The pharmacies love it because they have guaranteed economics. They have economics that they know they’ll never be underwater. And they’re they’re variable such that their economics improve when the patient’s economics improve vis a vis a lower co pay.

And that’s all set up by design. And we often can step around the big three wholesalers, which tend to extract a fair amount of value from the value chain by taking fairly high fees from branded manufacturers. 85 plus percent of our prescriptions of our of our ADHD brands are dispensed from pharmacies that order from us directly. And so that means the lion’s share of those prescriptions that flow through our network are protected. The economic because the economics are protected across the across the supply chain, across the value chain, to speak, such that the pharmacists are incentivized.

They want to fill a brand. They want to fill these brands because they know, again, their economics are fixed. These brands are reliable. This manufacturer backstops it for the patients to ensure they’re not getting overburdened with the copay they can afford. This is what I was referring to earlier.

Eighty eighty five plus percent of our core brands, and really most notably our ADHD brands, are dispensed through a partner pharmacy, which again means this is not a pharmacy like a Walgreens where they don’t know a two Biopharma from Adam. They they would they would they would just as soon not do business with us. But when we’re dealing with the local pharmacy, whether it’s a regional a small pharmacy as we have several here in Las Vegas, we have several in Phoenix, we have several all over the West Coast, where frankly, we we don’t even have reps. But they love working with us because, again, they know the economics are there. They know that they’re gonna be taken care of from that perspective, and they know they’ve got they’ve got a company that’s standing behind it to ensure that these patients are getting the most affordable co pay.

But actually, while it might sound like our our economics would be worse orchestrating a program this way and essentially underwriting the prescriptions and discounting it, it’s actually just the opposite. While the patients do end up getting lower out of pocket costs, we actually see an increase in refills and actually our gross to nets in many cases are higher when they run through the network versus when, when I say gross to nets, that’s the that’s the net selling price after all the deductions from the, from the list price. So refills refills are increased. Patients out of pockets actually go go go below, go lower. Pharmacies actually benefit.

They actually make a higher margin. And of course we end up making a higher margin. So everybody wins and most importantly, the patient gets the branded prescription they were prescribed as opposed to something that was prescribed and then switched at the pharmacy level, which happens all day, every single day across The US. We’ve got a 45 40 plus person sales force that hovers between forty and forty five reps. We’re in most of the major markets.

We’re not in every state, as you can see, so there’s still room to grow up into the up into the Upper Midwest, up into the Northwest, Rocky Mountains, even up and further up into the up into portions of the Northeast. And these these reps are out there every single day interfacing with psychiatrists, pediatricians, primary care physicians, any any prescriber who sees a lot of ADHD patients. We’re in those offices, we’re selling them on equal parts the benefits of our drugs, along with the benefits of this really unique patient support program called a two RxConnect. And, I can’t emphasize enough. No one does does the program like we do it.

No one truly backstops their prescription and essentially steps in to take the responsibility on their old shoulders. And we’ll even, in the event that those prescriptions aren’t covered, we will eat that, and we will take it we will take that loss for the benefit of that patient getting on therapy and that physician continuing to prescribe our brands over and over and over again. That’s the name of the game for us. Get find loyal prescribers that like the products, like the program, like the company, and they’ll continue to write these products preferentially anytime they have an ADHD patient. As I mentioned, we’ve begun to expand outside The US.

We’ve just signed on, over the last year and a half, a couple of partners, one that has responsibility for Israel and the Palestinian Authority called Madomi Pharma. They’re working through the Israeli Ministry of Health to get the product registered. So no material sales there yet, but we would expect in the near term to start to see some some movement there. Lupin Pharma Canada, frankly, we’re really excited about this. The the Canadian market for ADHD is significant, well over a billion dollars Canadian, so that’s substantial.

Lupin’s fairly substantial as a branded manufacturer in Canada, and they have the exclusive license to take both of our products at Zenas and Cotempla into the Canadian marketplace. Relatively early stages there, just working through the early stages of the regulatory process. So this isn’t necessarily near term, but I’d say in the next twenty four months or so, both of these should start to pay some dividends and bear a little bit of fruit. So excited about those opportunities. So really for us, we’ve got a diversified approach here.

We’ve got obviously a very strong presence in The U. S. And we’re driving growth with our core brands, again, primarily the ADHD brands, but we are starting to see some pickup from the pediatric brands as well, Carbonyl and the multivitamins. We’ve just launched our first, what I’ll call non A2 product called Medidates CD. We’ve licensed this brand from a generic manufacturer and have just started to get this out into the marketplace, have put it into our RxConnect network, and it’s starting to show some early signs of growth, which, we’re excited about.

Very little rep support for that product, by the way. That’s largely an RxConnect play where we’re putting it into the channel. We’re optimizing the economics, and we’re ensuring that patients are getting a trusted brand into their hands at a price that they can afford. And so and with that, we’ve got a real asset. We’ve got a commercial infrastructure in The US that has access to a big network of pharmacies, has access to thousands and thousands of prescribers, mostly in the psychiatry space.

Again, we call in psychiatrists, but we also call on really anyone that sees a high volume of ADHD, patients. And so with that, we’re looking for bolt on acquisitions that we can acquire relatively inexpensively. Medidates CD, for example, we acquired for $0 upfront. We got it as just a license where we pay a royalty on sales, and we pay a transfer price to the manufacturer. So those are the types of deals that we think we can pull in, here in the relative near to midterm as we grow.

And obviously, as we get to higher levels of cash flow, true cash flow, we’ll be able to not just reinvest that in to the current business to grow our existing portfolio, but obviously we expect to be able to acquire additional bolt on assets that complement both of our RxConnect network and our capabilities there, as well as our footprint and our therapeutic call points, which is largely in the psychiatric space. And to find other assets in that psych space, we think could be important. And so for us, revenue has really been sort of solid and that it’s been growing. Some stabilization, you can see obviously a little bit of a downtick that’s almost entirely attributable to the pediatrics business. We do expect that business to come back to some degree.

And even with modest growth on the ADHD side, if we can just get the pediatric products to a third or halfway to where they had been at their peak, You know, this is a business that’s 75 plus million. What I’ll say, people have asked us kind of what’s our breakeven point? 16 ish million a quarter is kind of breakeven. So we’re we’re almost we’re almost there. We’re basically right at a breakeven level.

And if you if you look at our OpEx going forward, true OpEx from a cash perspective annualized is something like 40,000,000. And so and that’s not including D and A, so you need to add a little bit there. But realistically speaking, you know, with our margins of, call it, you know, low 70% range at, you know, just a little bit north of $60,000,000 annualized. You know, that’s that’s a business that’s beginning to cash flow. So we’re right there knocking at the door of that.

As I mentioned, OpEx has come down materially from where it had been. We cut out a lot of pieces of the business that was burning cash, cut out manufacturing, cut out r and d, sold out the consumer business such that now all in trailing twelve month OpEx is about $42,000,000. That number does include DNA, and so it’s actually even a little bit lower than that when you talk about true cash uses. So, again, call it a $40,000,000 spend rate on a trailing 12 basis. And again, you’d say low 70% margins, we’re essentially we’re essentially profitable at that level.

20,000,000 plus in cash at the December. When you look at shares real shares in terms of common shares, is a little bit less than this, but we have some prefunded warrants that takes really basically our I I would call it actualized or common share equivalents to something like 8,200,000.0 outstanding. We do have some warrants, many of which are out of the money that takes us fully diluted to about 12,300,000.0. And so other than that, pretty straightforward. We don’t have any don’t have any preferreds.

We don’t have any real significant bells and whistles, pretty regular way warrants. And, again, most of those are out of the money. So long story short, a lot has happened over the last few years to align us to get ourselves to profitability. We’ve grown the we’ve grown organically. We’ve had some benefits of market factors, but we’re back to really realizing growth from an organic perspective.

Pediatric portfolio is back to demonstrating growth. Strong cash position. We’re really we’re really not burning very much cash at all. And ultimately, we’re looking for additional assets to bolt on to the portfolio that fit within the RSConnect platform, as well as within our capabilities as a as an organization that calls on psychiatrists and ADHD specialists. So we’re always looking for for new assets.

Two two licensing deals with Lupin and Modomi outside The US to further bolster and diversify our revenue streams. And again, we’re focused on the Rx business having really shut down all those things that essentially were burning cash, we think probably not we’re not going to add value in the immediate term. So sorry, ran a little bit late there, but if there’s any questions, we can take those. Yeah.

Robert, Host, Planet Microcap: Just, talk a little bit about what type of an acquisition might make sense for you given the infrastructure that you’ve built, the RxConnect platform.

Josh Tisbro, Chief Executive Officer, Aytu BioPharma: Yeah. The the sweet spot, the real bull’s eye, I think, for us would be a psychiatric asset that is near to market or on market, something that we can walk into a psychiatrist’s office and have have sort of a multipart detail. I’m an old drug rep having called on physicians for the first years of my career. You typically have time for two or three conversations. So to be able to sell the ADHD meds and then to be able to talk about another another asset, something like an antidepressant, an antipsychotic, something for bipolar disorder, or another ADHD med, things like that would really be in the sweet spot.

But we could also look at non psych related assets if they fit within the RxConnect sort of algorithm. So branded medications that potentially compete in generic categories where pharmacists really want to dispense the brand. So we could go one of two ways, it gives us a relatively open mandate, but those are the two ways that we would look at.

Robert, Host, Planet Microcap: Maybe talk a little bit about the macro trends both on the the ADHD side as well as the fluoride. You mentioned some of the political factors at play, especially surrounding fluoride.

Josh Tisbro, Chief Executive Officer, Aytu BioPharma: Yes. So many of you have heard that RFK, in particular, is not a big fan of of fluoridation. So there’s been a big movement afoot for many years, but it this happened way before RFK even even became a thought of being secretary of HHS. There there has been movement for years around getting fluoride out of the municipal water supplies. If that happens and and by the way, as I mentioned, Utah just banned fluoride in the water supply.

If that happens, it only stands to benefit us and our fluoride franchise. So that actually could be a a benefit. Some people have asked about how how are your ADHD meds affected by virtue of any potential threat of tariffs? What I’ll say is de minimis. There’d be de minimis effect.

All of our products, by the way, are manufactured in The US. Very little input from Chinese API suppliers. Very little very little supply at all from overseas. All the all of our APIs for ADHD meds are 100 manufactured here, so minimal impact from any tariffs on from that perspective.

Robert, Host, Planet Microcap: Any additional questions?

Josh Tisbro, Chief Executive Officer, Aytu BioPharma: Great. Thank you very much, Josh. Thanks for your time.

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