Nature of Business, Financial Condition, Basis of Presentation	3 Months Ended
Sep. 30, 2021
Nature of Business, Financial Condition, Basis of Presentation
Nature of Business, Financial Condition, Basis of Presentation	1. Nature of Business, Financial Condition, Basis of Presentation Aytu BioPharma, Inc. (“Aytu”, the “Company” or “we”), is a commercial-stage specialty pharmaceutical company focused on commercializing novel therapeutics and consumer healthcare products. The Company currently operates the Aytu BioPharma business, consisting of the Company’s prescription pharmaceutical products (the “Rx Portfolio”), and the Aytu consumer healthcare products business (the “Consumer Health Portfolio”). The Rx Portfolio consists of commercialized prescription pharmaceutical products for the treatment of attention deficit hyperactivity disorder ("ADHD"), allergies, insomnia and various pediatric conditions. The Aytu consumer health business is focused on commercializing consumer healthcare products. The Company was incorporated as Rosewind Corporation on August 9, 2002 in the State of Colorado and was re-incorporated in the state of Delaware on June 8, 2015. The Rx Portfolio consists of (i) Adzenys XR-ODT (amphetamine) extended-release orally disintegrating tablets, Cotempla XR-ODT (methylphenidate) extended-release orally disintegrating tablets and Adzenys ER (amphetamine) extended-release oral suspension for the treatment of ADHD, (ii) Poly-Vi-Flor and Tri-Vi-Flor, two complementary prescription fluoride-based supplement product lines containing combinations of fluoride and vitamins in various formulations for infants and children with fluoride deficiency, (iii) Karbinal ER, an extended-release carbinoxamine (antihistamine) suspension indicated to treat numerous allergic conditions, (iv) ZolpiMist, the only FDA-approved oral spray prescription sleep aid, (v) Tuzistra XR, the only FDA-approved 12-hour codeine-based antitussive syrup and (vi) a generic Tussionex (hydrocodone and chlorpheniramine) (“generic Tussionex”), extended-release oral suspension for the treatment of cough and upper respiratory symptoms of a cold. Adzenys ER was discontinued as of September 30, 2021. The Consumer Health Portfolio consists of over thirty consumer health products competing in large healthcare categories, including diabetes management (with a concentration on neuropathy), pain management, digestive health, sexual and urological health and general wellness, commercialized through direct-to-consumer marketing channels utilizing the Company's proprietary Beyond Human marketing and sales platform and on e-commerce platforms. On July 1, 2021, the Company and Avrio Genetics, LLC (“Avrio”) mutually agreed to terminate the exclusive license agreement to license the intellectual property surrounding the use and commercialization of the MiOXSYS commercial system to Avrio, effective as of June 29, 2021. In connection with the termination of the agreement, the Company entered into a termination agreement with Avrio. Pursuant to the terms of this termination agreement, the original Avrio agreement and its amendments are terminated in their entirety, except for certain provisions that survive the termination as specified in such agreement. Subsequent to the Avrio termination, on July 1, 2021, the Company signed an Asset Purchase Agreement (the “UAB APA”) with UAB “Caerus Biotechnologies” (“UAB”). Pursuant to the terms and conditions of the agreement, UAB will acquire all existing intellectual property rights, technical information and know-how related to MiOXSYS as well as all existing inventory and all rights attached and related to the product and manufacturing thereof. As consideration, UAB agreed to pay the Company approximately $0.5 million and make royalty payments to the Company of five percent of global net revenue of MiOXSYS for five years from the closing date of the transactions contemplated in the UAB APA. On September 29, 2021, the Company and UAB entered into an amendment to the UAB APA, pursuant to which, (i) September 30, 2021 was established as the closing date, (ii) UAB was provided with termination right in the event that the Company is unable to complete the transfer of intellectual property assets to UAB by May 31, 2022 (“Termination Rights”), provided that the delay is not due to IP offices, foreign or domestic and (iii) the Company is required to pay 5% of the deal purchase price in the event UAB terminated the agreement as provided in the Termination Rights. As of September 30, 2021, the Company deferred recognition of $0.1 million payments received from UAB as income until it satisfies the provisions in the Termination Rights, which was included in accrued liabilities in the consolidated balance sheet. The Company’s strategy is to continue building its portfolio of revenue-generating products, leveraging its commercial team’s expertise to build leading brands within large therapeutic markets, while also developing a de-risked, late-stage pipeline focused on pediatric-onset conditions and difficult-to-treat diseases. As of September 30, 2021, the Company had approximately $40.6 million of cash, cash equivalents and restricted cash. The Company’s operations have historically consumed cash and are expected to continue to consume cash. The Company incurred a net loss of approximately $27.9 million and $4.3 million during the three months ended September 30, 2021 and 2020, respectively. The Company had an accumulated deficit of approximately $206.2 million and $178.3 million as of September 30, 2021 and June 30, 2021, respectively. Cash used in operations was approximately $3.8 million and $8.0 million during the three months ended September 30, 2021 and 2020, respectively. Management plans to focus on executing on its business plan or otherwise reducing its expenses, renegotiating its debt facilities, or raising additional capital in order to meet its obligations. Management believes that the Company has access to capital resources through possible public or private equity offerings, debt financings, or other means; however, the Company cannot provide any assurance that it will be able to raise additional capital or obtain new financing on commercially acceptable terms. If the Company is unable to secure additional capital, it may be required to curtail its operations or delay the execution of its business plan. As of the date of this Report, the Company expects its costs for operations to increase as the Company integrates the Neos acquisition, invests in new product development, continues to focus on revenue growth through increasing product sales and making additional acquisitions. The Company’s current assets totaling approximately $89.0 million as of September 30, 2021 and the proceeds expected from ongoing product sales will be used to fund existing operations. The Company may continue to access the capital markets from time-to-time when market conditions are favorable. The timing and amount of capital that may be raised is dependent on the terms and conditions upon which investors would require to provide such capital. There is no guarantee that capital will be available on terms favorable to the Company and its stockholders, or at all. Since the Company has sufficient cash on-hand as of September 30, 2021 to cover potential net cash outflows for the twelve months following the filing date of this Annual Report, the Company reports that there exists no substantial doubt about its ability to continue as a going concern. If the Company is unable to raise adequate capital in the future when it is required, the Company's management can adjust its operating plans to reduce the magnitude of the Company's capital need under its existing operating plan. Some of the adjustments that could be made include delays of and reductions to commercial programs, reductions in headcount, narrowing the scope of the Company’s commercial plans or reductions or delays to its research and development programs. Without sufficient operating capital, the Company could be required to relinquish rights to products or renegotiate to maintain such rights on less favorable terms than it would otherwise choose. This may lead to impairment or other charges, which could materially affect the Company’s balance sheet and operating results. Basis of Presentation. The unaudited condensed consolidated financial statements contained in this report represent the financial statements of the Company and its wholly owned subsidiaries, Innovus Pharmaceuticals, Inc., Aytu Therapeutics, LLC and Neos Therapeutics, Inc. The unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2021, which included all disclosures required by generally accepted accounting principles in the United States (“GAAP”). In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company and the results of operations and cash flows for the interim periods presented. The results of operations for the period ended September 30, 2021 are not necessarily indicative of expected operating results for the full year. The information presented throughout this report, as of September 30, 2021 and for the three months ended September 30, 2021, and 2020, is unaudited.

Nature of Business, Financial Condition, Basis of Presentation

3 Months Ended

Sep. 30, 2021

Nature of Business, Financial Condition, Basis of Presentation

Nature of Business, Financial Condition, Basis of Presentation

1. Nature of Business, Financial Condition, Basis of Presentation

Aytu BioPharma, Inc. (“Aytu”, the “Company” or “we”), is a commercial-stage specialty pharmaceutical company focused on commercializing novel therapeutics and consumer healthcare products. The Company currently operates the Aytu BioPharma business, consisting of the Company’s prescription pharmaceutical products (the “Rx Portfolio”), and the Aytu consumer healthcare products business (the “Consumer Health Portfolio”). The Rx Portfolio consists of commercialized prescription pharmaceutical products for the treatment of attention deficit hyperactivity disorder ("ADHD"), allergies, insomnia and various pediatric conditions. The Aytu consumer health business is focused on commercializing consumer healthcare products. The Company was incorporated as Rosewind Corporation on August 9, 2002 in the State of Colorado and was re-incorporated in the state of Delaware on June 8, 2015.

The Rx Portfolio consists of (i) Adzenys XR-ODT (amphetamine) extended-release orally disintegrating tablets, Cotempla XR-ODT (methylphenidate) extended-release orally disintegrating tablets and Adzenys ER (amphetamine) extended-release oral suspension for the treatment of ADHD, (ii) Poly-Vi-Flor and Tri-Vi-Flor, two complementary prescription fluoride-based supplement product lines containing combinations of fluoride and vitamins in various formulations for infants and children with fluoride deficiency, (iii) Karbinal ER, an extended-release carbinoxamine (antihistamine) suspension indicated to treat numerous allergic conditions, (iv) ZolpiMist, the only FDA-approved oral spray prescription sleep aid, (v) Tuzistra XR, the only FDA-approved 12-hour codeine-based antitussive syrup and (vi) a generic Tussionex (hydrocodone and chlorpheniramine) (“generic Tussionex”), extended-release oral suspension for the treatment of cough and upper respiratory symptoms of a cold. Adzenys ER was discontinued as of September 30, 2021.

The Consumer Health Portfolio consists of over thirty consumer health products competing in large healthcare categories, including diabetes management (with a concentration on neuropathy), pain management, digestive health, sexual and urological health and general wellness, commercialized through direct-to-consumer marketing channels utilizing the Company's proprietary Beyond Human marketing and sales platform and on e-commerce platforms.

On July 1, 2021, the Company and Avrio Genetics, LLC (“Avrio”) mutually agreed to terminate the exclusive license agreement to license the intellectual property surrounding the use and commercialization of the MiOXSYS commercial system to Avrio, effective as of June 29, 2021. In connection with the termination of the agreement, the Company entered into a termination agreement with Avrio. Pursuant to the terms of this termination agreement, the original Avrio agreement and its amendments are terminated in their entirety, except for certain provisions that survive the termination as specified in such agreement.

Subsequent to the Avrio termination, on July 1, 2021, the Company signed an Asset Purchase Agreement (the “UAB APA”) with UAB “Caerus Biotechnologies” (“UAB”). Pursuant to the terms and conditions of the agreement, UAB will acquire all existing intellectual property rights, technical information and know-how related to MiOXSYS as well as all existing inventory and all rights attached and related to the product and manufacturing thereof. As consideration, UAB agreed to pay the Company approximately $0.5 million and make royalty payments to the Company of five percent of global net revenue of MiOXSYS for five years from the closing date of the transactions contemplated in the UAB APA.

On September 29, 2021, the Company and UAB entered into an amendment to the UAB APA, pursuant to which, (i) September 30, 2021 was established as the closing date, (ii) UAB was provided with termination right in the event that the Company is unable to complete the transfer of intellectual property assets to UAB by May 31, 2022 (“Termination Rights”), provided that the delay is not due to IP offices, foreign or domestic and (iii) the Company is required to pay 5% of the deal purchase price in the event UAB terminated the agreement as provided in the Termination Rights. As of September 30, 2021, the Company deferred recognition of $0.1 million payments received from UAB as income until it satisfies the provisions in the Termination Rights, which was included in accrued liabilities in the consolidated balance sheet.

The Company’s strategy is to continue building its portfolio of revenue-generating products, leveraging its commercial team’s expertise to build leading brands within large therapeutic markets, while also developing a de-risked, late-stage pipeline focused on pediatric-onset conditions and difficult-to-treat diseases.

As of September 30, 2021, the Company had approximately $40.6 million of cash, cash equivalents and restricted cash. The Company’s operations have historically consumed cash and are expected to continue to consume cash. The Company incurred a net loss of approximately $27.9 million and $4.3 million during the three months ended September 30, 2021 and 2020, respectively. The Company had an accumulated deficit of approximately $206.2 million and $178.3 million as of September 30, 2021 and June 30, 2021, respectively. Cash used in operations was approximately $3.8 million and $8.0 million during the three months ended September 30, 2021 and 2020, respectively.

Management plans to focus on executing on its business plan or otherwise reducing its expenses, renegotiating its debt facilities, or raising additional capital in order to meet its obligations. Management believes that the Company has access to capital resources through possible public or private equity offerings, debt financings, or other means; however, the Company cannot provide any assurance that it will be able to raise additional capital or obtain new financing on commercially acceptable terms. If the Company is unable to secure additional capital, it may be required to curtail its operations or delay the execution of its business plan.

As of the date of this Report, the Company expects its costs for operations to increase as the Company integrates the Neos acquisition, invests in new product development, continues to focus on revenue growth through increasing product sales and making additional acquisitions. The Company’s current assets totaling approximately $89.0 million as of September 30, 2021 and the proceeds expected from ongoing product sales will be used to fund existing operations. The Company may continue to access the capital markets from time-to-time when market conditions are favorable. The timing and amount of capital that may be raised is dependent on the terms and conditions upon which investors would require to provide such capital. There is no guarantee that capital will be available on terms favorable to the Company and its stockholders, or at all.

Since the Company has sufficient cash on-hand as of September 30, 2021 to cover potential net cash outflows for the twelve months following the filing date of this Annual Report, the Company reports that there exists no substantial doubt about its ability to continue as a going concern.

If the Company is unable to raise adequate capital in the future when it is required, the Company's management can adjust its operating plans to reduce the magnitude of the Company's capital need under its existing operating plan. Some of the adjustments that could be made include delays of and reductions to commercial programs, reductions in headcount, narrowing the scope of the Company’s commercial plans or reductions or delays to its research and development programs. Without sufficient operating capital, the Company could be required to relinquish rights to products or renegotiate to maintain such rights on less favorable terms than it would otherwise choose. This may lead to impairment or other charges, which could materially affect the Company’s balance sheet and operating results.

Basis of Presentation. The unaudited condensed consolidated financial statements contained in this report represent the financial statements of the Company and its wholly owned subsidiaries, Innovus Pharmaceuticals, Inc., Aytu Therapeutics, LLC and Neos Therapeutics, Inc. The unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2021, which included all disclosures required by generally accepted accounting principles in the United States (“GAAP”). In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company and the results of operations and cash flows for the interim periods presented. The results of operations for the period ended September 30, 2021 are not necessarily indicative of expected operating results for the full year. The information presented throughout this report, as of September 30, 2021 and for the three months ended September 30, 2021, and 2020, is unaudited.