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Goodwill and Other Intangible Assets

12 Months Ended

Jun. 30, 2021

Goodwill and Other Intangible Assets

8. Goodwill and Other Intangible Assets

During the year ended June 30, 2021, the Company completed the Neos Merger, which resulted in goodwill of $37.7 million (see Note 4).

As of June 30, 2021, based on forecast models, there was no impairment of the Company’s net asset value. However, the Company’s market capitalization has been below the carrying value of its assets, which could be indicative of a future impairment of assets. Management will continue to assess those relative valuations.

The change in carrying amount of goodwill by reportable segment is as follows;.


	Aytu BioPharma		Aytu Consumer Health		Consolidated

	(In thousands)
Balance as of June 30, 2019	$	—	$	—	$	—
Goodwill acquired		19,453		8,637		28,090
Balance as of June 30, 2020		19,453		8,637		28,090
Goodwill acquired		37,712		—		37,712
Balance as of June 30, 2021	$	57,165	$	8,637	$	65,802

The Company currently holds the following intangible asset portfolios as of June 30, 2021: (i) Licensed asset, which consist of pharmaceutical product assets that were acquired prior to July 1, 2020; (ii) Product technology rights, acquired from the November 1, 2019 acquisition of the Pediatric Portfolio from Cerecor and the Neos Merger on March 19, 2021, (iii) Proprietary modified-release drug delivery technology right as a result of the Neos Merger, (iv) Acquired product distribution rights and commercial technology consisting of RxConnect and trade names as a result of the Neos

Merger, and patents, trade names and the acquired customer lists from the Innovus Merger, (v) Acquired in-process R&D from the Neos Merger related to the NT0502 product candidate for sialorrhea.

The following table provides the summary of the Company’s intangible assets as of June 30, 2021 and June 30, 2020, respectively.


	June 30, 2021
							Weighted-
							Average
	Gross						Remaining
	Carrying		Accumulated		Net Carrying		Life (in
	Amount		Amortization		Amount		years)

	(In thousands)
Licensed asset	$	3,246	$	(1,430)	$	1,816	3.92
Acquired product technology right		45,400		(4,160)		41,240	12.88
Acquired technology right		30,200		(501)		29,699	16.75
Acquired product distribution rights		11,354		(2,073)		9,281	8.57
Acquired in-process R&D		2,600		—		2,600	Indefinite-lived
Acquired commercial technology		630		(178)		452	0.75
Acquired trade name		400		(56)		344	1.75
Acquired customer lists		390		(358)		32	0.01
Total	$	94,220	$	(8,756)	$	85,464	13.47


	June 30, 2020
									Weighted-
									Average
	Gross								Remaining
	Carrying		Accumulated					Net Carrying	Life (in
	Amount		Amortization		Impairment		Amount		years)

	(In thousands)
Licensed assets	$	23,649	$	(7,062)	$	—	$	16,587	11.88
MiOXSYS Patent		380		(185)		(195)		—	—
Acquired product technology right		22,700		(1,513)		—		21,187	9.34
Acquired product distribution rights		11,354		(565)		—		10,789	7.78
Acquired customer lists		390		(98)		—		292	1.12
Total	$	58,473	$	(9,423)	$	(195)	$	48,855	9.11

The following table summarizes the estimated future amortization expense to be recognized over the next years and periods thereafter:




	June 30,
	(In thousands)
2022	$	8,038
2023		7,489
2024		7,333
2025		7,099
2026		6,331
Thereafter		46,574
Total future amortization expense	$	82,864

Certain of the Company’s amortizable intangible assets include renewal options, extending the expected life of the asset. The renewal periods range between approximately 1 to 20 years depending on the license, patent or other agreement. Renewals are accounted for when they are reasonably assured. Intangible assets are amortized using the straight-line method over the estimated useful lives. Amortization expense of intangible assets was $7.1 million and $4.5 million during the years ended June 30, 2021 and 2020, respectively.

On March 31, 2021, the Company terminated the Acerus agreement previously entered into on July 29, 2019. Pursuant to the Termination Agreement, the Company ceased all sales, marketing and promotions of Natesto, and Acerus agreed to pay the Company an aggregate amount of $7.5 million, payable in equal monthly installment payments for a period of 30 consecutive months. At the March 31, 2021 termination date, the Company determined that none of the $7.5 million future cash payments could be recognized as of that date, and therefore the remaining $4.3 million carrying value of the licensed intangible asset related to Natesto was impaired. There was no remaining value as of June 30, 2021.

On April 12, 2021, the Company acquired substantially all the assets of Rumpus Therapeutics, LLC through an asset purchase agreement with Rumpus VEDS, LLC, Rumpus Therapeutics, LLC, Rumpus Vascular, LLC (together with Rumpus VEDS, LLC and Rumpus Therapeutics LLC, “Rumpus”). This in-process research and development (IPR&D) asset was acquired for an up-front fee of $1.5 million in cash and payment of aggregated fees of $0.6 million. The Company determined that the IPR&D asset has no alternative future use at the time of purchase and was recorded as research and development expense in the statements of operations.

Licensed Assets

ZolpiMist. In June 2018, the Company signed an exclusive license agreement for ZolpiMist™ (zolpidem tartrate oral spray) from Magna Pharmaceuticals, Inc., (“Magna”). This agreement allows for the Company’s exclusive commercialization of ZolpiMist in the U.S. and Canada. The ZolpiMist license agreement was valued at $3.2 million and is being amortized on a straight-line over the life of the license agreement up to seven years.

Tuzistra XR. On November 2, 2018, the Company entered into a License, Development, Manufacturing and Supply Agreement (the “Tuzistra License Agreement”) with Tris Pharma, Inc. (“Tris”). Pursuant to the Tris License Agreement, Tris granted the Company an exclusive license in the United States to commercialize Tuzistra XR. On June 30, 2021, the Company recognized an impairment of approximately $8.5 million related to the remaining net carrying value of the licensed intangible asset related to Tuzistra as a result of the impact of COVID-19 and other factors negatively impacting product sales.

Product Technology Rights

The acquired Product technology rights are related to the rights to production, supply and distribution agreements of various products pursuant to the acquisitions of Pediatric Portfolio in November 2019 and the Neos Merger in March 2021. The aggregate acquisition date fair value of the acquired Product Technology Rights was $45.4 million and is being amortized on a straight-line over the lives of these rights.

Karbinal® ER. The Company acquired and assumed all rights and obligations pursuant to the Supply and Distribution Agreement, as Amended, with Tris for the exclusive rights to commercialize Karbinal® ER in the United States (the “Tris Karbinal Agreement”). The Tris Karbinal Agreement’s initial term terminates in August of 2033, with an optional initial 20-year extension.

Poly-Vi-Flor and Tri-Vi-Flor. The Company acquired and assumed all rights and obligations pursuant to a Supply and License Agreement and various assignment and release agreements, including a previously agreed to Settlement and License Agreements (the “Poly-Tri Agreements”) for the exclusive rights to commercialize Poly-Vi-Flor and Tri-Vi-Flor in the United States.

Cefaclor (cefaclor oral suspension). The Company acquired the License, Supply and Distribution Agreement for rights to promote and commercialize Cefaclor within the United States, but does not own or license any patents covering this product.

ADHD Portfolio. As part of the Neos Merger, the Company acquired developed product technology for the production and sale of Adzenys XR-ODT, Adzenys ER, Cotempla XR-ODT and generic Tussionex. The formulations for the ADHD products are protected by patented technology. The estimated economic life of these proprietary technologies is 17 years.

Developed Technology Right

TRRP Technology. As part of the Neos Merger, the Company acquired Time Release Resin Particle (“TRRP”) proprietary technology, which is a proprietary drug delivery technology protected by the Company as a trade secret that allows the Company to modify the drug release characteristics of each of its respective products. The TRRP technology underlines each of Neos’ core products and can potentially be used in future product development initiatives as well. The acquisition date fair value of the Developed Technology Right was $30.2 million and is being amortized on a straight-line over the estimated useful life of 17 years.

Product distribution rights and customer list

In connection with the Innovus Merger, the Company obtained 35 products with a combination of over 300 registered trademarks and/or patent rights and customer lists. The acquisition date fair values of these trademarks and/or patent rights was $11.4 million, which is being amortized, on a straight-line, over the estimated life ranging 3 to 10 years. The acquired customer list had an acquisition date fair value of $0.4 million, which is being amortized on a straight-line over the estimated useful life of 1.5 years.

In-Process R&D

IPR&D – NT0502. As part of the Neos Merger, the Company acquired in-process research and development associated with NT0502, a new chemical entity that is being developed by the Company for the treatment of sialorrhea, which is excessive salivation or drooling. The acquisition date fair value of the In-Process R&D was $2.6 million. As this is an indefinite-lived intangible asset, it is not subject to amortization at that time. If a product using this technology is eventually approved for commercial sale, at that time, the IPR&D will begin amortizing on a straight-line over the life of the product.

Commercial Technology and Tradename

RxConnect. As part of the Neos Merger, the Company acquired a commercial program, which is a Company-sponsored network of patient support program that offers affordable and predictable copays to all commercially insured patients. The acquisition date fair value was $0.6 million and is being amortized on a straight-line over the estimated useful life of 1 year. In addition, the Company acquired the Neos tradename with an acquisition date fair value of $0.4 million, and is being amortized on a straight-line over the estimated useful life of 2 years.