Aytu Bioscience Inc (OTCMKTS:AYTU) has been a disappointment so far this year. After Ampio Biopharmaceuticals Inc (NYSEMKT:AMPE) distributed most of its 11,626,068 shares of Aytu to Ampio’s current shareholders, AYTU has been under pressure as these shares have been dumped onto the market. Adding to the downside was this month’s public offering of 18,750,000 shares of its common stock and warrants to purchase up to an aggregate of 20,799,250 shares of its common stock at a combined public offering price of $0.40 per share and related warrant. Now shareholders are hoping that the bottom is in and that shares will bounce.
Aytu Bioscience describes itself as “a commercial-stage specialty pharmaceutical company focused on global commercialization of novel products in the field of urology. The company currently markets two products: ProstaScint® (capromab pendetide), the only FDA-approved imaging agent specific to prostate cancer, and Primsol® (trimethoprim hydrochloride), the only FDA-approved trimethoprim-only oral solution for urinary tract infections. Aytu recently acquired exclusive U.S. rights to Natesto®, the first and only FDA-approved nasal formulation of testosterone for men with hypogonadism (low testosterone, or “Low T”), which the company plans to launch in July 2016. 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 conducting U.S.-based clinical trials in pursuit of 510k de novomedical device clearance by the FDA. Aytu’s strategy is to continue building its portfolio of revenue-generating urology products, leveraging its focused commercial team and expertise to build leading brands within well-established markets.”
With the recent capital raise, AYTU intends to use the net proceeds from the offering to fund the expansion of its commercial infrastructure for the planned launch of Natesto® and the planned expansion in the commercialization of ProstaScint® and Primsol®, to purchase complementary urology products and/or product candidates that will enhance its product portfolio and enable expansion of its commercial operations, fund the remaining clinical development activities for MiOXSYS™, to enable FDA clearance and working capital for general corporate and administrative expenses.
Just today, AYTU announced new clinical findings that further validate and expand the potential utility of its MiOXSYS System as an advanced tool for assessing oxidative stress in human semen, which is broadly implicated as a major cause of male infertility. The results demonstrated that the level of oxidative stress reported by MiOXSYS from semen samples that had been frozen and thawed did not differ significantly from readings taken before freezing. This is significant, as it eliminates the need for fresh sampling and enables MiOXSYS to be used by regional or national reference laboratories that can receive and store shipped frozen samples, in addition to rapid, on-site testing by local urologists’ offices, hospital, and fertility clinical laboratories.
In April, AYTU signed an exclusive license agreement for the U.S. commercial rights to Natesto® (testosterone) Nasal Gel. Natesto is the first and only nasal formulation of testosterone approved by the U.S. Food and Drug Administration (FDA) as a replacement therapy for men diagnosed with hypogonadism (low testosterone, or “Low T”). Aytu anticipates further expanding its current urology-centric sales force and initiating its promotion of Natesto into the $2 billion U.S. testosterone replacement market in July 2016.
The profile of Natesto is unique among currently marketed testosterone products, offering convenient and simple administration via a nasal gel applicator within seconds, but without the risk of testosterone transference associated with other topical products such as AndroGel® and Axiron®, which carry “black box” warnings on their product labels. Natesto was approved by the FDA in May 2014 and is protected by multiple Orange Book-listed patents.
Under the terms of the exclusive license, Aytu will pay Acerus Pharmaceuticals a total of $2 million upfront, and will additionally purchase of $2 million of Acerus common stock. Additional payments totaling an aggregate of $6 million payable in fiscal 2017 will also be made. Acerus will also receive a supply price to manufacture the product calculated as a percentage of the U.S. net sales of Natesto, throughout the term of the agreement, which will last until at least February 2024, with the maximum milestone payable upon achievement of $125 million in annual U.S. net sales.
AYTU is an an exciting story on the OTC markets. With the recent capital raise, the company remains well-funded to achieve its goals. We believe shares have been oversold and opportune investors need to take a closer look at AYTU. We will be updating Insider Financial as soon as we know more. For continuing coverage on AYTU, sign up for our free newsletter today and get our next hot stock pick!
Disclosure: We have no position in AYTU and have not been compensated for this article.