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Acquisitions

9 Months Ended

Mar. 31, 2022

3. Acquisitions

Neos Acquisition

On March 19, 2021, the Company acquired Neos, a commercial-stage pharmaceutical company. Neos merged into, a subsidiary of the Company with and all outstanding Neos common stock was exchanged for approximately 5,472,000 shares of the Company’s common stock (“the Neos Acquisition”). The Company incurred (i) approximately $2.9 million of acquisition related costs, recognized as part of operating expense, and (ii) $0.1 million of issuance costs, recognized as a component of stockholders’ equity.

The following table summarizes the fair value of assets acquired and liabilities assumed;


	March 19, 2021
	(In thousands, except share and per-share)
Considerations:
Fair Value of Aytu Common Stock
Total shares issued at close		5,471,804
Fair value per share of Aytu common stock	$	9.73
Fair value of equity consideration transferred	$	53,241
Cash		15,383
Estimated fair value of replacement equity awards		432
Total consideration transferred	$	69,056


	March 19, 2021
	(In thousands)
Total consideration transferred	$	69,056
Recognized amounts of identified assets acquired and liabilities assumed
Cash and cash equivalents	$	15,722
Accounts receivable		24,696
Inventory		10,984
Prepaid expenses and other current assets		2,929
Operating leases right-to-use assets		3,515
Property, plant and equipment		5,519
Intangible assets		56,530
Other long-term assets		149
Accounts payable and accrued expenses		(56,718)
Short-term line of credit		(10,707)
Long-term debt, including current portion		(17,678)
Operating lease liabilities		(3,515)
Other long-term liabilities		(82)
Total identifiable net assets		31,344
Goodwill	$	37,712

The fair value of the identifiable intangible assets acquired were as follows:


	March 19, 2021
	(In thousands)
Identified intangible assets acquired:
Developed technology right	$	30,200
Developed products technology		22,700
In-process R&D		2,600
RxConnect		630
Trade name		400
Total intangible assets acquired	$	56,530

The fair value of the Neos trade name, in-process R&D and developed product technology, which is the proprietary technology for the development of Adzenys XR-ODT, Adzenys ER, Cotempla XR-ODT and generic Tussionex, were determined using the relief from royalty method. The fair value of developed technology right, which is a proprietary modified-release drug delivery technology, was determined using multi-period excess earnings method. The fair value of RxConnect was determined using cost to recreate method. The finite-lived intangible assets are being amortized over a range of between 1 to 17 years.

Unaudited Pro Forma Information

The following supplemental unaudited proforma financial information presents the Company’s results as if the Neos Acquisition had occurred on July 1, 2020.

The unaudited pro forma results have been prepared based on estimates and assumptions, which management believes are reasonable; however, the results are not necessarily indicative of the consolidated results of operations had the acquisition occurred on July 1, 2020, or of future results of operations:


	Nine Months Ended
	March 31,
	2022		2021
			Pro forma
	Unaudited		Unaudited

	(In thousands)
Total revenues, net	$	69,221	$	74,582
Net loss	$	(92,472)	$	(55,712)

Rumpus Acquisition

On April 12, 2021, the Company entered into an asset purchase agreement with Rumpus VEDS, LLC, Rumpus Therapeutics, LLC, Rumpus Vascular, LLC (together “Rumpus”) pursuant to which the Company acquired commercial global licenses, relating primarily to the pediatric-onset rare disease development asset enzastaurin, or AR101. AR101 is initially being studied for the treatment of VEDS. This asset was acquired for an up-front fee of $1.5 million in cash and payment of aggregated fees of $0.6 million. Upon the achievement of certain regulatory and commercial milestones, the Company is obliged to pay up to $67.5 million in earn-out payments, which are payable in cash or shares of common stock, generally at the Company’s option. AR101 is an orally available investigational small molecule, serine/threonine kinase inhibitor of the PKC beta, PI3K and AKT pathways (see Note 13 – Commitments and Contingencies).