Aytu BioScience Provides Fiscal Fourth Quarter and Year-End 2017 Business Update

ENGLEWOOD, Colo., Aug. 31, 2017 /PRNewswire/ -- Aytu BioScience, Inc. (OTCQX: AYTUD), a specialty life sciences company focused on global commercialization of novel products in the field of urology, today provided an overview of its business, including the Company's operational and financial accomplishments for its 2017 fiscal year. The Company will host a live conference call and webcast today at 10:30 a.m. ET. Details are provided at the end of this press release.

Fiscal 2017 Corporate Highlights:

    --  Continued to execute on the strategy of building a commercial-stage
        company focused on acquiring and growing unique, revenue-generating
        urology products
        --  Prescriptions of its lead product, Natesto®, the only
            intranasally-administered testosterone, have grown to over 150
            prescriptions per week
        --  Total Natesto prescriptions have grown 40%, on average, per month
            from April through June 2017, and grew 98% from the previous quarter
    --  Expanded its commercialization of MiOXSYS®, the Company's proprietary
        CE marked device for the rapid assessment of male infertility, outside
        of the U.S., by increasing disposable sensor revenues via existing
        customers, and expanding instrument placements through its international
        distributor network
    --  Divested a non-core asset, Primsol® (trimethoprim) Solution, in order
        to focus commercial efforts on Natesto, MiOXSYS, and newly acquired
        Fiera®
    --  Acquired the novel female personal care device, Fiera, via the
        acquisition of female wellness company Nuelle, Inc. and expanded into
        the women's female sexual wellness market
    --  Re-capitalized the Company via a $11.8M private placement in August
        2017, primarily with institutional investors, which the Company believes
        will enable Aytu to operate into the middle of fiscal 2019 and achieve
        cashflow breakeven

Fiscal 2017 Financial Highlights:

    --  Company annual net product revenue increased to $3.2 million, which is
        up approximately 57% over the same period last year and only includes
        revenues from Primsol through March, as it was divested in April
    --  Generated net product revenue of $836,000 in the fourth quarter,
        representing 71% growth over the same quarter last fiscal year
    --  Increased factory unit sales of Natesto from 1,800 in Q3 to 4,200 in Q4,
        delivering $1 million in gross factory sales - more than a three-fold
        increase over Q2
        --  Natesto gross factory sales are on an annual run rate of nearly $7.0
            million over the last four weeks
    --  Reduced cash used in operations by 31% from the first half to the second
        half of fiscal 2017

"Fiscal 2017 was a fundamentally strong year for Aytu as we have begun to establish ourselves as a leading commercial-stage urology company," stated Josh Disbrow, Chairman and Chief Executive Officer of Aytu. "The addition of Natesto in early fiscal 2017 to the Aytu portfolio has transformed the Company as Natesto has the potential to become a significant product in the $2 billion testosterone replacement therapy (TRT) market. Natesto is highly differentiated from other TRTs given its unique delivery, established efficacy, and improved safety profile, and we believe we are beginning to realize Natesto's substantial commercial potential. Our sales force is still in the early stages of establishing Natesto with their physician customers, and now, having consistently eclipsed 150 prescriptions per week, we believe that the recent prescription trend is just the beginning of establishing Natesto as the new standard for the millions of men with hypogonadism. Over the past year since acquiring and re-launching Natesto in the U.S. we have successfully rolled out our nationwide sales force targeting the highest prescribing physicians of testosterone replacement therapies. Prescriptions have grown 98% since last quarter and have achieved an average monthly growth rate of 40% over the fourth quarter. Additionally, MiOXSYS and Fiera are becoming meaningful products for the Company as we continue our rollout of MiOXSYS outside the U.S., and have begun the process of integrating Fiera into our portfolio. MiOXSYS instrument placements more than doubled from the first half to the second half of fiscal 2017 overseas, and we have now placed MiOXSYS in 20 countries around the world. Given these commercial developments, we are now well positioned going forward, and expect to be at a revenue run-rate to achieve profitability in the next twelve months. Additionally, with the closing of our recent $11.8M private placement, we believe we have adequate cash to operate into the middle of fiscal 2019 and to achieve cashflow breakeven. The Company is well capitalized with substantial cash on the balance sheet, has demonstrated consistent month to month prescription and factory sales growth of Natesto, and has demonstrated that both MiOXSYS and Fiera stand to become meaningful revenue-generating products for the Company as part of our unique, commercial-stage urology portfolio."

Natesto is the only FDA-approved nasally-delivered TRT, and Aytu has the exclusive U.S. license to Natesto through the term of the product's extensive patent portfolio. Due to its unique intranasal delivery, Natesto has an efficacy and safety profile that is fundamentally different than all other TRTs. The Company and its licensing partner, Acerus Pharmaceuticals, have presented new data in the last year that is helping to establish Natesto as an important new treatment option for the 13 million American men that are diagnosed with low testosterone.

While Natesto is the Company's lead product, Aytu remains committed to establishing MiOXSYS as novel and important diagnostic for the millions of men worldwide faced with male factor infertility. In the past year Aytu, along with the Company's clinical collaborators, has published and presented compelling new clinical data to strengthen the body of evidence supporting the important role of MiOXSYS in the diagnosis and management of infertility. In fiscal 2017 the Company's collaborators published two peer-reviewed articles and made twelve presentations at major scientific conferences around the world. Additionally, in fiscal 2017 the Company added nine new distributors for MiOXSYS bringing the Company's international distribution network to 19 companies, achieving instrument sales in 20 countries.

On May 9(th,) the Company announced the acquisition of Nuelle, Inc. in an all-stock transaction. The acquisition of Nuelle and the on-market product, Fiera, enables Aytu to expand into an adjacent and complementary therapeutic area in female sexual wellness. Additionally, the Company believes Fiera serves to complement our Natesto efforts while adding another unique product that can be efficiently commercialized through our established U.S. sales force. Fiera serves a large and growing need in female sexual health and is positioned to help many of the 44% of women worldwide who report a sexual problem. With this transaction, Aytu also received approximately $600,000 in cash, $1 million in inventory, and several prominent healthcare institutional investors, inclusive of venture capital firm New Enterprise Associates.

ProstaScint® remains an important portfolio product for the Company given its revenue contribution and its role in the screening and staging of prostate cancer, despite the fact that minimal promotional effort is expended on this product.

On April 3(rd,) the Company announced that it had entered into an agreement with Allegis Holdings to divest Primsol® (trimethoprim) Solution. This was a strategic transaction given that Primsol was not a core promotional product, and that the transaction provided non-dilutive capital that has been deployed toward the commercialization of the Company's core products.

Net product revenue for fiscal 2017 was $3.2 million, which was related to sales of ProstaScint, Primsol (through March), sales of MiOXSYS and minimal initial wholesaler sales of Natesto. This represents a product revenue growth rate of 57% over fiscal 2016. Fiera contributed minimally to fiscal 2017 revenue but is expected to contribute meaningful revenue in fiscal 2018. We expect the majority of 2018 revenue to be driven from Natesto sales with revenue contributions from sales of MiOXSYS (outside of the U.S.) and revenues from Fiera sales. Revenues will be generated from ProstaScint sales, but the Company expects ProstaScint proportional sales contributions to diminish over the next 12 to 18 months.

On August 15(th,) the Company announced the closing of a private placement of equity units, which resulted in gross proceeds of $11.8 million, before deducting fees. With this infusion of capital, the Company believes that it has adequate financial resources to adequately fund operations through the middle of fiscal 2019 and enables the Company to achieve cashflow breakeven.

On August 25(th,) the Company announced that a previously approved 1-for-20 reverse split of its outstanding shares of common stock was effected, and trading commenced on a post-split basis on Tuesday, August 29(th). The stock split is intended to increase the per share trading price of the Company's common stock to enable the Company to satisfy the minimum bid price requirement for a planned listing on a senior exchange. The Company's trading symbol is temporarily changed to "AYTUD" for a period of twenty business days, which began on August 29(th). After this period the symbol will revert to the original symbol of "AYTU."

Conference Call Information:

The live conference call and webcast will begin today 10:30 a.m. Eastern Time. 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, http://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 10111805.

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 has a wholly-owned subsidiary Aytu Women's Health (formerly Nuelle, Inc.), a personal health and wellness company focused on women's sexual wellbeing and intimacy. Aytu Women's Health 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.

Forward-Looking Statements

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," "would," "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: the company's ability to increase Natesto prescriptions, and product sales of MiOXSYS and Fiera, the company's ability to fund operations into the middle of fiscal 2019, and the company's ability to further reduce cash used in operations through fiscal 2018. 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.

Investor contact:

Amato and Partners, LLC

Investor Relations Counsel

admin@amatoandpartners.com


    Aytu BioScience, Inc.
    Balance Sheets
    Unaudited


                                                                              June 30,
                                                                              --------

                                                                                2017            2016
                                                                                ----            ----


                                                Assets

     Current assets

     Cash and cash equivalents                                              $802,328      $8,054,190

     Restricted cash                                                          75,214               -

     Accounts receivable, net                                                528,039         162,427

     Inventory, net                                                        1,312,221         524,707

     Prepaid expenses and
      other                                                                  310,760         215,558

     Prepaid research and
      development -related
      party                                                                        -        121,983

     Investment in Acerus                                                          -      1,041,362

     Total current assets                                                  3,028,562      10,120,227
                                                                           ---------      ----------



     Fixed assets, net                                                       647,254         231,430

     Developed technology, net                                             1,337,333       1,159,736

     Customer contracts, net                                                  77,667       1,353,375

     Trade names, net                                                        164,037         194,472

     Natesto asset                                                         9,231,072      10,549,797

     Goodwill                                                                238,426         221,000

     Patents, net                                                            271,278         296,611

     Long-term portion of
      prepaid research and
      development - related
      party                                                                        -        213,471

     Deposits                                                                  2,888           2,888
                                                                               -----

     Total long-term assets                                               11,969,955      14,222,780
                                                                          ----------      ----------


     Total assets                                                        $14,998,517     $24,343,007
                                                                         ===========     ===========


                                 Liabilities and Stockholders' Equity

     Current liabilities

     Accounts payable and
      other                                                               $2,220,400      $2,322,605

     Accrued liabilities                                                     782,536       1,197,106

     Natesto payable                                                               -      5,379,675

     Accrued compensation                                                    339,704       1,200,930

     Deferred rent                                                             6,673           4,109

     Current contingent
      consideration                                                          261,155               -

     Total current liabilities                                             3,610,468      10,104,425


     Contingent consideration                                              7,386,782       3,869,122

     Deferred rent                                                             1,451           8,215

     Warrant derivative
      liability                                                                    -        275,992

     Total liabilities                                                    10,998,701      14,257,754
                                                                          ----------      ----------


     Commitments and contingencies


     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 824,831 in 2017 and 187,098 in 2016

                                                                     82           19

     Additional paid-in
      capital                                                             73,069,463      56,646,659

     Ampio stock subscription                                                      -              -

     Accumulated deficit                                                (69,069,729)   (46,561,425)
                                                                         -----------

     Total stockholders'
      equity                                                               3,999,816      10,085,253
                                                                           ---------      ----------


     Total liabilities and
      stockholders' equity                                               $14,998,517     $24,343,007
                                                                         ===========     ===========


    Aytu BioScience, Inc.
    Statements of Operations
    Unaudited


                                     Three Months Ended June 30,                             Year Ended June 30,

                                             2017                            2016                         2017                            2016
                                             ----                            ----                         ----                            ----



     Revenue

     Product and service
      revenue                            $835,889                        $489,984                   $3,221,590                      $2,050,838

     License revenue                            -                        447,321                            -                        511,607

     Total revenue                        835,889                         937,305                    3,221,590                       2,562,445
                                          -------                         -------                    ---------                       ---------


     Operating expenses

      Cost of sales                       349,702                         334,854                    1,417,355                         957,076

     Research and
      development                         185,331                       2,819,763                      959,857                       6,127,772

     Research and
      development -related
      party                                     -                         47,997                      387,960                         191,991

     Sales, general and
      administrative                            -                      3,101,554                   17,442,627                       8,517,592

     Sales, general and
      administrative -
      related party                        27,820                          53,024                      165,131                         307,704

      Impairment of
       intangible assets                1,265,125                       7,500,000                    1,265,125                       7,500,000

     Amortization of
      intangible assets                   397,728                         380,074                    1,708,771                         664,707

     Total operating
      expenses                          2,225,706                      14,237,266                   23,346,826                      24,266,842
                                        ---------                      ----------                   ----------                      ----------


     Loss from operations             (1,389,817)                   (13,299,961)                (20,125,236)                   (21,704,397)
                                       ----------                     -----------                  -----------                     -----------


     Other (expense)

     Interest (expense)               (1,650,172)                    (1,063,351)                 (2,534,358)                    (5,491,486)

     (Loss) on investment                       -                      (971,629)                    (61,519)                      (971,629)

     Derivative income
      (expense)                                 -                         37,483                      212,809                        (12,572)

     Total other (expense)            (1,650,172)                    (1,997,497)                 (2,383,068)                    (6,475,687)
                                       ----------                      ----------                   ----------                      ----------


     Net loss                        $(3,039,989)                  $(15,297,458)               $(22,508,304)                  $(28,180,084)
                                      ===========                    ============                 ============                    ============


     Weighted average
      number of Aytu common
      shares outstanding

                             731,620                       150,148                   466,024                           87,057
                             =======                       =======                   =======                           ======


     Basic and diluted Aytu
      net loss per common
      share

                             $(4.16)                    $(101.88)                 $(48.30)                       $(323.70)
                              ======                      ========                   =======                         ========


    Aytu BioScience, Inc.
    Statements of Cash Flows
    Unaudited


                              Year Ended June 30,
                             -------------------

                                                         2017             2016
                                                         ----             ----


    Cash flows
     from
     operating
     activities:

    Net loss                                    $(22,508,304)   $(28,180,084)

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

    Depreciation,
     amortization
     and accretion                                  4,364,680          874,789

    Asset
     impairment                                     1,265,125        7,500,000

    Stock-based
     compensation
     expense                                        2,502,092          902,946

    Issuance of
     restricted
     stock                                            724,613                -

    Amortization
     of debt
     issuance
     costs                                                  -         182,759

    Amortization
     of beneficial
     conversion
     feature                                                -       4,943,073

    Noncash
     interest
     expense                                                -         221,024

    Derivative
     (income)
     expense                                        (212,809)          12,572

    Amortization
     of prepaid
     research and
     development -
     related party                                    335,454          121,983

    Loss on
     investment                                        61,519          971,629

    Common stock
     issued to
     executives                                       509,996                -

    Issuance of
     warrants to
     initial
     investors                                        596,434                -

    Gain on sale
     of asset                                       (428,374)               -

    Warrant
     amendment                                          1,507                -

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

       (Increase) in
        accounts
        receivable                                  (355,031)         (5,369)

       Decrease
        (increase) in
        inventory                                     195,427        (485,265)

       (Increase)
        decrease in
        prepaid
        expenses and
        other                                        (95,202)         155,330

       Increase in
        accounts
        payable and
        other                                         493,217          698,237

       (Decrease)
        increase in
        accrued
        liabilities                                 (414,570)         925,232

       (Decrease)
        increase in
        accrued
        compensation                                (861,226)       1,004,427

       (Decrease)
        increase in
        deferred rent                                 (4,200)          10,875

       (Decrease) in
        deferred
        revenue                                             -       (511,607)

    Net cash used
     in operating
     activities                                  (13,829,652)    (10,657,449)
                                                  -----------      -----------


    Cash flows
     used in
     investing
     activities:

    Purchases of
     fixed assets                                   (111,608)       (252,932)

    Purchase of
     Natesto
     assets                                       (6,000,000)     (2,000,000)

    Investment in
     Acerus                                         1,071,707      (2,012,991)

    Sale of
     investment in
     Acerus cost                                     (91,864)               -

    Sales of
     Primsol
     assets                                         1,750,000                -

    Purchase of
     Primsol asset                                  (750,000)     (1,040,000)

    Cash proceed
     from Nuelle                                      613,309                -

    Cost related
     to Nuelle
     acquisition                                     (16,082)               -

    Deposits                                                -           1,998

    Net cash used
     in investing
     activities                                   (3,534,538)     (5,303,925)
                                                   ----------       ----------


    Cash flows
     from
     financing
     activities:

    Issuance of
     common stock
     to Lincoln
     Park                                             739,857                -

    Costs related
     to the sale
     of common
     stock                                           (90,924)               -

    Warrant tender
     offer                                          2,243,282                -

    Warrant tender
     offer cost                                     (312,159)               -

    Proceeds from
     convertible
     promissory
     notes, net                                             -       5,175,000

    Debt issuance
     costs                                                  -       (298,322)

    Costs related
     to the
     conversion of
     the
     convertible
     promissory
     notes to
     equity                                                 -        (29,754)

    Ampio stock
     subscription
     payment                                                -       5,000,000

    Registered
     offering                                       8,602,499        7,520,493

    Registered
     offering
     costs                                          (997,865)       (904,914)

    Over-
     allotment
     warrants
     purchased by
     placement
     agents                                             2,852                -

    Sale of stock
     subscription                                           -         200,000

    Net cash
     provided by
     financing
     activities                                    10,187,542       16,662,503
                                                   ----------       ----------


    Net change in
     cash and cash
     equivalents                                  (7,176,648)         701,129

    Cash and cash
     equivalents
     at beginning
     of period                                      8,054,190        7,353,061

    Cash and cash
     equivalents
     at end of
     period                                          $877,542       $8,054,190
                                                     ========       ==========


    Non-cash
     transactions:

     Issuance of
      common stock
      to Nuelle
      share holders                                $1,837,500 $              -

    Fixed assets
     included in
     accounts
     payable                                          $10,789 $              -

    Warrants
     issued in
     connection
     with the
     equity
     financing to
     the placement
     agents                                          $292,630 $              -

    Warrants
     amended in
     connection
     with warrant
     tender offer                                     $63,182 $              -

    Warrant
     derivative
     liability
     related to
     the issuance
     of the
     convertible
     promissory
     notes                         $                        -        $102,931

    Primsol asset
     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
     $221,000 to
     common stock                  $                        -      $5,396,024

    Natesto asset
     purchase
     included in
     Natesto
     payable,
     $6,000,000
     less future
     accretion of
     $620,325                      $                        -      $5,379,675

    Warrant
     derivative
     liability
     related to
     the issuance
     of the
     registered
     offering
     placement
     agent
     warrants                      $                        -        $297,317

     Reclassification
     of liability
     based
     warrants to
     equity
     presentation
     related to
     the
     convertible
     promissory
     notes                         $                        -        $136,828

    Beneficial
     conversion
     feature
     related to
     convertible
     promissory
     notes                         $                        -      $4,943,073

    Debt issuance
     costs related
     to notes that
     converted to
     equity                        $                        -      $(218,494)

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SOURCE Aytu BioScience, Inc.