Aytu BioPharma Q3 2026 Earnings Report

Aytu BioPharma EPS Results

• Actual EPS: -$0.53
• Consensus EPS: -$0.44
• Beat/Miss: Missed by -$0.09
• One Year Ago EPS: N/A

Aytu BioPharma Revenue Results

• Actual Revenue: $12.41 million
• Expected Revenue: $12.05 million
• Beat/Miss: Beat by +$358.00 thousand
• YoY Revenue Growth: N/A

Aytu BioPharma Announcement Details

• Quarter: Q3 2026
• Date: 5/13/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, May 13, 2026
• Conference Call Time: 4:30PM ET

Aytu BioPharma (NASDAQ:AYTU), Inc. is a specialty pharmaceutical company focused on the development, licensing and commercialization of novel therapeutics to address underserved medical needs. Headquartered in Englewood, Colorado, Aytu pursues a strategy of acquiring late-stage or approved products in areas such as urology, endocrinology, women’s health, pediatric care and supportive therapies. The company leverages in-house commercialization capabilities and targeted business development to build a diversified portfolio of prescription medicines and diagnostics.

Aytu’s marketed portfolio includes Natesto, a nasal testosterone gel for treatment of male hypogonadism; ZolpiMist, a zolpidem tartrate lingual spray for the short-term treatment of insomnia; and Tuzistra XR, an extended-release cough syrup formulation indicated for relief of cough and upper respiratory symptoms. The company also offers NeoProfen (ibuprofen lysine injection) for the closure of patent ductus arteriosus in premature infants and markets an FDA-authorized rapid antigen COVID-19 self-test under license. Aytu’s products are generally distributed through specialty pharmacies, hospital networks and national wholesale distributors across the United States.

Under the leadership of President and Chief Executive Officer Josh Disbrow, Aytu continues to explore licensing partnerships and in-licensing opportunities to expand its pipeline. In addition to its commercial business, the company holds exclusive rights to clinical-stage candidates addressing chronic kidney disease and other orphan indications. Aytu’s management team brings experience in life sciences finance, regulatory affairs and commercial operations as it seeks to grow both its therapeutic and diagnostic offerings and extend its reach through strategic collaborations.

Aytu BioPharma Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: EXXUA’s launch is gaining early traction, with more than 1,300 prescriptions in the quarter, over 450 unique prescribers, and April prescriptions rising to more than 920. Management said the launch was still only in a partial sales-force deployment, suggesting further room for growth.
• Positive Sentiment: Management highlighted encouraging early adoption and refill activity, saying patients are starting and staying on therapy and that refill trends are beginning to emerge. The company believes this is an early sign EXXUA is establishing a role in MDD treatment.
• Positive Sentiment: The company said reimbursement and access are improving, with commercial and government payer coverage progressing better than expected. Aytu reported over 70% prior-authorization approval rates within its RxConnect network and noted that early net selling prices are running above initial assumptions.
• Negative Sentiment: Legacy portfolio revenue declined sharply as Aytu shifted commercial focus toward EXXUA and faced generic competition in ADHD plus payer pressure in pediatrics. ADHD revenue fell to $9.1 million from $15.4 million a year ago, while pediatric revenue dropped to $0.9 million from $3.1 million.
• Neutral Sentiment: The quarter showed a weaker reported bottom line and lower cash, with net loss of $5.6 million, adjusted EBITDA of negative $2.8 million, and cash of $26.7 million. Management said launch investments drove higher operating expense, but it also expects the balance sheet to benefit from recent warrant amendments that reduced liability volatility.

Presentation

[Operator]

Today, welcome to the Aytu Biopharma fiscal 2026 Q3 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Robert Blum, Investor Relations. You may begin.

[Robert Blum, Managing Partner at Lytham Partners]

Great. Thank you very much. Good afternoon, everyone. As the operator indicated, during today's call, we will be discussing Aytu BioPharma's fiscal 2026 Q3 operational and financial results for the period ended March 31, 2026. Joining us on today's call is Aytu's Chief Executive Officer, Josh Disbrow, and Ryan Selhorn, the company's Chief Financial Officer. At the conclusion of today's prepared remarks, we'll open the call for a question and answer session.

[Robert Blum, Managing Partner at Lytham Partners]

I'd like to remind everyone that today's call is being recorded. A replay of today's call will be available by using the telephone numbers and conference ID provided in the press release issued earlier today or by utilizing the link on the company's website under Events and Presentations. I'd also like to call to your attention the customary safe harbor disclosure regarding forward-looking information.

[Robert Blum, Managing Partner at Lytham Partners]

The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations, and future potential operating results of Aytu Biopharma. Although management believes these statements are reasonable, based on estimates, assumptions, and projections as of today, these statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay.

[Robert Blum, Managing Partner at Lytham Partners]

Actual results may differ materially as a result of risks, uncertainties, and other factors, including, but not limited to, the factors set forth in the company's filings with the SEC. Aytu undertakes no obligation to update or revise any of these forward-looking statements except as required by law. With that said, let me turn the call over to Josh Disbrow, Chief Executive Officer of Aytu Biopharma. Josh, please proceed.

[Josh Disbrow, CEO at Aytu Biopharma]

Thanks, Robert, welcome everyone. I'm very pleased to be speaking with you today following what has been an exciting first partial quarter of commercial launch activity for EXXUA. As we've discussed, EXXUA represents a significant new opportunity for Aytu. It's the first and only selective serotonin 5-HT1A receptor agonist ever approved by the FDA for the treatment of major depressive disorder in adults. EXXUA is already demonstrating very solid growth trajectory within the MDD category.

[Josh Disbrow, CEO at Aytu Biopharma]

During our last call and during our investor day back in January, we spent meaningful time in the market opportunity, the clinical rationale, the unmet need in MDD, and the strategy behind our commercial launch. Today, I want to focus more directly on execution and some of the things we're seeing with respect to early adoption.

[Josh Disbrow, CEO at Aytu Biopharma]

Simply said, while we were still very early in the launch, the fundamentals we are seeing are highly encouraging and the launch is progressing very well. Let's dive in. As most of you are aware, we moved from initial commercial availability in our second fiscal quarter in December into a more formalized launch phase during our third fiscal quarter. EXXUA was made commercially available back in mid-December.

[Josh Disbrow, CEO at Aytu Biopharma]

The initial tranche of the sales organization completed training in January, while broader field deployment of the full 40+ sales representatives didn't actually begin until late February, early March. That timing's important. While Q3 was our first meaningful commercial quarter, it was still only a partial quarter of full sales support and commercial deployment, with roughly one-third of the sales force only getting into the field in March. We're just getting started.

[Josh Disbrow, CEO at Aytu Biopharma]

The most important point here, though, is that physicians are already writing EXXUA. Patients are beginning therapy and very early refill activity is already becoming evident. In Q3, more than 1,300 prescriptions were written for EXXUA. The monthly progression is particularly encouraging, with prescriptions increasing from about 200 in January to about 400 in February to over 700 in March.

[Josh Disbrow, CEO at Aytu Biopharma]

That type of sequential growth is exactly what we'd hoped we would see in the early stage of a launch as awareness builds, our representatives increase their reach and frequency, and as physicians begin to identify patients who may be appropriate for EXXUA. Importantly, that momentum has continued. In April, we saw over 920 prescriptions written, up from the 700 in March. That's a 26% month-over-month sequential growth rate.

[Josh Disbrow, CEO at Aytu Biopharma]

Further, we shipped over 1,300 units shipped in April, which is 51% sequential growth, and that's more than the prescriptions generated in the entire Q1. While it's early, and we will avoid over-extrapolating from any short period term of data, that continued month-over-month acceleration clearly demonstrates that physician interest is building and that the launch is getting traction. We're also encouraged by the breadth of early prescriber adoption.

[Josh Disbrow, CEO at Aytu Biopharma]

During the quarter, more than 450 unique prescribers wrote EXXUA prescriptions. That is meaningful because our initial focus call universe is approximately 3,500-4,000 highly targeted prescribers. At this very early stage, already 10%-13% of our target universe has written EXXUA. Yet again, we're just getting started in building a solid base of physician adoption.

[Josh Disbrow, CEO at Aytu Biopharma]

We believe this points to a substantial opportunity ahead as the sales force actively increases, as our access initiatives mature, and as peer-to-peer and rep-based education expands. As most of you know, unit sales and prescription counts are not the same measure. Units reflect product moving through the channel and into distribution networks and ultimately into pharmacies, while prescriptions reflect what physicians, rather, are writing for patients.

[Josh Disbrow, CEO at Aytu Biopharma]

In a launch, those numbers can move at different rates because of channel stocking, titration pack, and full prescription ordering, refill timing, et cetera. With that said, during Q3, gross unit sales were 3,335 units, consisting of 1,807 30-count units or full 30-day prescriptions and 1,500 titration units.

[Josh Disbrow, CEO at Aytu Biopharma]

Since launch, total gross unit sales are 3,881 units, consisting of just under 2,030 count bottles at 1,991 and 1,890 titration units. Again, highly encouraging numbers at this very early stage. When we look at the combined picture, we see a launch that is doing what we expected it to do. Physicians are beginning to prescribe, patients are starting and staying on therapy.

[Josh Disbrow, CEO at Aytu Biopharma]

Titration packs are being utilized, channel partners are ordering, and they're already reordering product. Very importantly, refills are beginning to come through, and we're seeing momentum build month-over-month-over-month. Taking a step back, a key reason we're encouraged by the launch is that the elements of our launch plan are now moving into the market and functioning as they had been designed.

[Josh Disbrow, CEO at Aytu Biopharma]

We built this launch to be disciplined, efficient, and scalable. Initially, we are not trying to outspend larger competitors. Instead, we're being very disciplined by focusing on the prescribers most likely to understand the unmet need, evaluate EXXUA's differentiated profile, value our access programs, and become early adopters. Our sales organization is specifically prioritizing high-value, high-prescribing psychiatry practices. Our customer targeting has been informed by market data, branded therapy adoption behavior, existing Aytu relationships, and insights gained from our RxConnect platform.

[Josh Disbrow, CEO at Aytu Biopharma]

We believe that this is the right approach for EXXUA at this stage. The product will not benefit from broad, unfocused promotion at this important time. Right now, it needs focused engagement with clinicians who treat high numbers of MDD patients every day and who understand the limitations of existing therapies and are looking for new treatment options.

[Josh Disbrow, CEO at Aytu Biopharma]

The phased deployment of the sales team has also been intentional. With only a partial quarter of full sales force support, the early prescription and prescriber numbers are even more encouraging. We believe there remains meaningful room for growth through increased reach and frequency and of course, execution against the target universe that's already been identified. Again, this is just the beginning without a full quarter of promotion even in the books yet. Aytu RxConnect has been and will continue to be a core pillar of the EXXUA launch.

[Josh Disbrow, CEO at Aytu Biopharma]

Our objective is to remove friction for both prescribers and patients, particularly in the early months when coverage policies and payer processes are still developing. Through RxConnect, commercially insured patients have a predictable and supported pathway to access EXXUA, including a no-cost 14-day titration pack and guaranteed access through the early treatment period for commercially insured patients specifically.

[Josh Disbrow, CEO at Aytu Biopharma]

That allows clinicians and patients to evaluate the medicine based on clinical response rather than on early administrative or payer-driven barriers. This is particularly important in major depressive disorder, where patients and physicians need confidence that therapy can be initiated and continued long enough to assess response and tolerability. By reducing uncertainty at the point of prescribing, RxConnect helps align our commercial model with real-world clinical needs. We're also seeing our channel partners execute well.

[Josh Disbrow, CEO at Aytu Biopharma]

The more than 3,300 units sold during the quarter demonstrates preparedness across the distribution network to support the current prescription demand along with the growth we're seeing. The early launch period is not only about demand generation, it is also about making sure that when a physician prescribes EXXUA and a patient is ready to begin therapy, that product is available and the process is smooth.

[Josh Disbrow, CEO at Aytu Biopharma]

The qualitative feedback from the field remains consistent with the launch thesis we had laid out previously. Physicians understand that many patients with MDD do not achieve adequate outcomes with existing therapies or struggle with tolerability issues that can affect adherence. EXXUA gives these patients and these clinicians a differentiated option with a novel mechanism of action. That message is clearly resonating.

[Josh Disbrow, CEO at Aytu Biopharma]

As it relates to physician adoption, that will build methodically as it always does. Physicians often start by identifying specific patient types where they believe EXXUA may be especially relevant, or in some cases, patients who have been through a long list of antidepressants already and they're simply searching for something new. Our job is to continue educating, supporting access, and building confidence through clinical experience.

[Josh Disbrow, CEO at Aytu Biopharma]

The fact that hundreds of prescribers have already written EXXUA gives us confidence that this process is working well and that even very challenging patients, in fact, are reporting positive results. We're also highly encouraged by the early refill activity. Refills are an important proof point because they demonstrate that initial prescriptions are progressing into continued therapy.

[Josh Disbrow, CEO at Aytu Biopharma]

The base of patients is still relatively small, but the presence of refill activity together with growth in titration utilization and sequential prescription increases clearly demonstrates that prescribing is picking up and that EXXUA is beginning to establish a role in the treatment of MDD. Most importantly, the patient feedback we're hearing through our prescribers is nothing short of outstanding. Phrases from even difficult patients like, quote, "life-changing," and a specific patient saying, quote, "He has never felt this good in his entire life," are coming through at this point almost daily.

[Josh Disbrow, CEO at Aytu Biopharma]

Yet again, we're just getting started. We're highly confident we'll continue to hear more and more of these patient success stories. As we move ahead, our priorities are clear. First, we will continue increasing prescriber calls within the initial target prescriber universe. We are only again at the beginning of that process, and our current prescriber base represents a small, a tiny fraction of the opportunity we have identified and an even smaller fraction of who will ultimately be prescribing EXXUA.

[Josh Disbrow, CEO at Aytu Biopharma]

Second, we will continue leveraging RxConnect to support access and reduce friction. We expect access, reimbursement, gross to net, and refill dynamics to all become clearer as the launch matures and will remain disciplined in adapting our approach based on the data. By the way, the early signs on both coverage and reimbursement rates are extremely positive across both commercial and government payer channels.

[Josh Disbrow, CEO at Aytu Biopharma]

We're seeing solid and increasingly good coverage of EXXUA among commercial plans, and Medicaid and Medicare scripts are making up an increasing portion of the overall script load. It remains early, but many of the positive payer dynamics we've spoken about pre-launch are in fact bearing out. Third, we will continue investing in scientific engagement, KOL development, peer-to-peer programs, and publication and medical congress activity.

[Josh Disbrow, CEO at Aytu Biopharma]

We believe EXXUA has a differentiated profile, and the more physicians understand where EXXUA fits into their prescribing, the more opportunity we have to grow. We had a significant presence at a major psychiatric conference last weekend, the NEI Spring Congress. As expected, interest and feedback and follow-up from the conference attendees was excellent.

[Josh Disbrow, CEO at Aytu Biopharma]

Finally, we'll maintain commercial discipline by aligning investment with performance and using cash flows from the legacy business to support the highest growth opportunity in the company, and that is clearly EXXUA. Turning now briefly to our legacy portfolios. ADHD net revenue was $9.1 million in the quarter compared to $15.4 million in the prior year period.

[Josh Disbrow, CEO at Aytu Biopharma]

As expected, the decrease was primarily driven by our strategic shift in sales force focus late last summer towards EXXUA and some impact from the introduction of generic competition for Adzenys as well. Despite the overall shift in promotional priorities, the ADHD portfolio remains a very important contributor to Aytu, and given the lack of commercial support currently behind the brands, we continue to view the portfolio as profitable and durable on a standalone basis.

[Josh Disbrow, CEO at Aytu Biopharma]

The uptake of the third-party generic against Adzenys has been quite low, which has been encouraging, with it only achieving about 14% market share through 4+ months of market availability. This tells us that the protective characteristics of the Aytu RxConnect program are proving protective, given relatively little erosion as a percentage of the overall scripts written within the Aytu RxConnect ecosystem.

[Josh Disbrow, CEO at Aytu Biopharma]

The vast majority of decline due to the generic is coming from outside the Aytu RxConnect ecosystem, things are working as we had expected and as we had designed. Our Pediatric Portfolio generated just under $1 million of net revenue in the quarter compared to $3.1 million in the prior-year period. We continue to efficiently service our pediatric products and believe that while small, these mature products will continue to be durable sources of profitable revenue.

[Josh Disbrow, CEO at Aytu Biopharma]

Overall, the legacy business continues to provide an important foundation as we transition the company towards the larger CNS opportunity, clearly represented by EXXUA. Our goal is to balance disciplined investment in EXXUA with continued cash generation from the existing business, and the existing base business does generate cash even at these levels and even at lower levels. In summary, we're very pleased with the first meaningful quarter of EXXUA launch activity.

[Josh Disbrow, CEO at Aytu Biopharma]

We generated $2.4 million of revenue for, specifically for EXXUA, saw more than 1,300 prescriptions written in the quarter, had more than 450 unique prescribers write the product, sold more than 3,300 units into the channel during the quarter, and saw great momentum and continued growth into April with almost 1,000 prescriptions generated.

[Josh Disbrow, CEO at Aytu Biopharma]

Importantly, this was achieved with only a partial quarter of full sales force support and with only a small percentage of our initial target universe writing prescriptions. We're still very early. I can't emphasize that enough. There will be normal launch variability as market, payer access, prescribing, and refill dynamics all settle out.

[Josh Disbrow, CEO at Aytu Biopharma]

The proof points we have in hand are encouraging, and they reinforce our conviction that EXXUA can become a significant treatment options for patients living with major depressive disorder and a very meaningful growth driver for Aytu. With that, let me turn the call over to Ryan to review the financials in more detail. Ryan?

[Ryan Selhorn, CFO at Aytu Biopharma]

Thank you, Josh. Let's jump right into it. Let's start on the revenue line. Net revenue for the Q3 of fiscal 2026 was $12.4 million compared to $18.5 million for the prior year period. That represents a decrease of $6 million or 33% year over year. Breaking net revenue down by portfolio, EXXUA contributed $2.4 million in the quarter.

[Ryan Selhorn, CFO at Aytu Biopharma]

As Josh mentioned, EXXUA was made commercially available in mid-December and more formally launched in mid-January after completion of Salesforce training, with full Salesforce deployment occurring late in February, early March. While we remain very early in the launch curve, we view the initial contribution as highly encouraging, particularly given that the quarter included only a partial period of full Salesforce support. Further, remember that net revenue is based on gross unit sales, not scripts.

[Ryan Selhorn, CFO at Aytu Biopharma]

During the quarter, there were 3,335 units consisting of 1,807 30-count units and 1,528 titration units sold. This equates to more than $700 per script. I want to caution that this is better than our initial expectations, and we will wait to see how the dust settles before making any changes to our long-term assumptions around net selling price of EXXUA. The ADHD portfolio generated net revenue of $9.1 million in the Q3 compared to $15.4 million in the prior year period.

[Ryan Selhorn, CFO at Aytu Biopharma]

The decrease is primarily attributable to lower total prescriptions as we have deliberately shifted commercial focus and sales force prioritization toward EXXUA, which is now the centerpiece of our commercial efforts, as well as the launch of a generic version of one of our ADHD products late in the Q2 of fiscal 2026. The Pediatric Portfolio generated net revenue of $0.9 million for the Q3 compared to $3.1 million in the prior year period.

[Ryan Selhorn, CFO at Aytu Biopharma]

The Pediatric Portfolio was negatively impacted during the quarter by payer mix, which resulted in higher rebates as well as an increase in returns. Overall, the revenue story this quarter is very much about transition. We are seeing the expected impact on the legacy portfolios as we navigate payer changes.

[Ryan Selhorn, CFO at Aytu Biopharma]

Again, I'll remind you that the legacy portfolios do generate cash even at these levels. Gross profit margin was 61% in the Q3 of fiscal 2026, compared to 69% in the same quarter last year. The decrease in gross profit percentage was impacted by a $700,000 inventory write-down recorded to cost of goods sold, primarily resulting from the shift from our Adzenys branded product to our Adzenys authorized generic.

[Ryan Selhorn, CFO at Aytu Biopharma]

Excluding that write-down, gross margin for the Q3 would have been approximately 67%. From an EXXUA perspective, the expected unit economics remain attractive. As discussed previously, EXXUA includes a 28% royalty in addition to a true-up on cost of goods sold. We continue to think about the product as having approximately 31% cost of goods sold or roughly a 69% gross contribution margin before certain fixed costs.

[Ryan Selhorn, CFO at Aytu Biopharma]

As EXXUA scales, we expect these economics to become increasingly important to the overall model. Turning to OpEx. Operating expenses, excluding amortization of intangible assets, were $10.9 million in the Q3 compared to $9.5 million in the prior year period. Total operating expenses were $11.7 million compared to $10.4 million last year. The increase is primarily a result of planned EXXUA launch investments, partially offset by improved operational efficiencies such as reduced facilities expense.

[Ryan Selhorn, CFO at Aytu Biopharma]

I'll touch more on the outlook in a moment. Interest expense decreased half a million dollars or 52% during the quarter and by $1.5 million for the year to date compared with the prior year, primarily due to the paydown of our fixed payment arrangements we've previously discussed.

[Ryan Selhorn, CFO at Aytu Biopharma]

For the quarter, we reported a net loss of $5.6 million or $0.53 net loss per share basic, compared to a net income of $4 million or $0.65 net income per share basic in the prior year period. The fiscal 2026 Q3 results included a $1.3 million non-cash derivative warrant liability loss, compared to a $2.3 million non-cash derivative warrant liability gain in the prior year period.

[Ryan Selhorn, CFO at Aytu Biopharma]

As a reminder, these changes in non-cash derivative warrant liabilities are primarily related to changes in the company's stock price. When our stock price increases, we generally incur a non-cash loss on those liabilities, and when the stock price decreases, we generally recognize a non-cash gain. The losses recognized during the Q3 were primarily driven by increases in our stock price.

[Ryan Selhorn, CFO at Aytu Biopharma]

On April 2, 2026, we filed a Form 8-K detailing warrant amendments that resolve the ambiguity of that previously required certain warrants to be classified as liabilities rather than equity. As a result, we reduced our warrant liability and increased stockholders' equity by $26.4 million on March 31st, 2026. We believe this should significantly reduce future non-cash earnings volatility associated with warrant liability gains and losses.

[Ryan Selhorn, CFO at Aytu Biopharma]

As of March 31st, 2026, stockholders' equity was $35.1 million compared to $14.2 million at December 31st, 2025. Finally, adjusted EBITDA was -$2.8 million for the third quarter of fiscal 2026 compared to a +$3.9 million in the year ago period.

[Ryan Selhorn, CFO at Aytu Biopharma]

The change primarily relates to the planned investments we've made towards the launch of EXXUA, combined with the broader de-emphasis in marketing toward the ADHD Portfolio and the impact of payer changes affecting the Pediatric Portfolio, both of which impacted net revenue and gross profit. Turning now to the balance sheet. Cash and cash equivalents were $26.7 million at March 31, 2026.

[Ryan Selhorn, CFO at Aytu Biopharma]

This compares to $30 million at December 31, 2025, and $31 million at June 30, 2025. The change in cash during the quarter primarily reflects the planned investments behind the EXXUA launch, along with normal working capital movements. As of March 31st, 2026, our revolving line of credit balance was $10.4 million, and total debt, including the current and non-current portions, was approximately $11.4 million.

[Ryan Selhorn, CFO at Aytu Biopharma]

As noted earlier, the warrant amendments completed at quarter-end also had a meaningful positive impact on the balance sheet presentation, reducing derivative warrant liabilities and increasing stockholders' equity. As of March 31st, 2026, combining both equity classified pre-funded warrants and issued and outstanding common shares, there were 19.5 million shares utilized for calculating the basic weighted average shares outstanding for earnings per share purposes.

[Ryan Selhorn, CFO at Aytu Biopharma]

Before I turn it back over to Josh, I want to spend a few minutes on how we are thinking about EXXUA from a financial perspective now that we have the 1st meaningful quarter of launch activity behind us. First, EXXUA net revenue of $2.4 million in the quarter was a strong initial result and ahead of our internal expectations.

[Ryan Selhorn, CFO at Aytu Biopharma]

This revenue reflects a combination of prescriptions written and filled during the quarter, as well as inventory channel stocking to meet prescription growth expectations from channel partners and pharmacies. Said differently, prescriptions are the closest, clearest measure of physician-written demand, while unit sales represent product moving into the channel. In the early stages of a launch, these two measures will not always move in lockstep, but both are important.

[Ryan Selhorn, CFO at Aytu Biopharma]

Second, gross-to-net dynamics are still settling. During the quarter, growth to net came in materially higher than our initial launch assumption, but again, it is still very early. We will continue to refine our assumptions as payer mix, RxConnect utilization, pharmacy ordering patterns, and patient access programs mature.

[Ryan Selhorn, CFO at Aytu Biopharma]

The first few months of any launch include noise, and that is especially true for a product like EXXUA, where our strategy is intentionally designed to remove early access barriers for patients and prescribers. As we discussed last quarter, through Aytu RxConnect, we have deliberately reduced early access friction by offering a no-cost 14-day titration pack.

[Ryan Selhorn, CFO at Aytu Biopharma]

For commercially insured patients, we are also guaranteeing coverage of both month 1 and month 2 of therapy, regardless of the insurance outcome, which is intended to ensure patients can remain on treatment through dose optimization without interruption. That strategy is important clinically and commercially, but it also means that scripts can grow ahead of net revenue in the early going.

[Ryan Selhorn, CFO at Aytu Biopharma]

As patients transition into month three refills and beyond, we expect the revenue model to begin normalizing more closely with ongoing utilization, although we will continue to see some variability as the launch matures. Third, the launch investment framework remains disciplined.

[Ryan Selhorn, CFO at Aytu Biopharma]

We made planned investments during the quarter across sales and marketing, service costs, and launch infrastructure, but we continue to manage those investments carefully and align the incremental spend with launch performance and cash flow. Our objective is to support the EXXUA opportunity appropriately without losing the operating discipline that has been central to the company's progress.

[Ryan Selhorn, CFO at Aytu Biopharma]

In the Q4 of this fiscal year, we are launching our online promotional campaigns, including paid search, programmatic displays, and social media advertising to drive awareness and incremental adoption and should result in an increase in overall sales and marketing spend by $1 million-$2 million, depending on their breadth and overall impact.

[Ryan Selhorn, CFO at Aytu Biopharma]

Additionally, we have increased our speaker program events spending, medical education content, and conferences involvement, which will likely increase our G&A spending by $200,000-$300,000 in the upcoming quarter. Depending on the success of these programs, we currently anticipate ongoing sales and marketing quarterly spend to range from $6 million-$7 million and G&A to range from $5 million-$5.3 million going forward. Finally, the financial model continues to be straightforward. We expect EXXUA to have attractive gross contribution margin.

[Ryan Selhorn, CFO at Aytu Biopharma]

We expect launch-related expenses to be managed against demand and return on investment, and we expect the legacy portfolios to continue to providing an important foundation as EXXUA scales. While we are not providing formal guidance today, the general framework we discussed previously remains the right way to think about the business.

[Ryan Selhorn, CFO at Aytu Biopharma]

Mid to high 60% gross margins over time, a disciplined operating expense base, and the near-term path to profitability as EXXUA revenue builds on top of the existing platform. As always, I'm happy to go over any details during Q&A. With that, let me turn it back over to you, Josh.

[Josh Disbrow, CEO at Aytu Biopharma]

Thanks, Ryan. As we look ahead, I want to reemphasize again what we're seeing with EXXUA. While we're still in the very early stages of product launch, the initial traction has been highly encouraging. With more than 1,300 prescriptions written during the quarter by over 450 unique prescribers and continued growth in titration packs and early refill activity, we believe prescribers are increasingly recognizing EXXUA's differentiated role in the treatment of major depressive disorder.

[Josh Disbrow, CEO at Aytu Biopharma]

Again, with April posting over 900 prescriptions and over 1,300 unit shipments, we're seeing continued month over month increases in prescription and unit demand. Importantly, this momentum was achieved with only a partial quarter of full sales for support, which reinforces our confidence in both the market opportunity and the disciplined, efficient commercial strategy we have put in place.

[Josh Disbrow, CEO at Aytu Biopharma]

EXXUA gives Aytu access to a very large MDD market with a meaningful unmet need, attractive unit economics, and a clear opportunity to build long-term value. We remain extremely excited about the path ahead and look forward to updating you as the launch continues to scale. As always, I want to thank everyone participating on today's call. We'll now be happy to answer any questions. Operator?

[Operator]

Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

[Operator]

Once again, that will be star one on your phone at this time if you wish to ask a question. One moment, please, while we pull for questions. First question today is coming from Thomas Flaten from Lake Street. Thomas, your line is live.

[Thomas Flaten, Analyst at Lake Street Capital Markets]

Hey, good afternoon, guys. Thanks for taking the question. Hey, Ryan, just doing some back of the envelope math, I kind of figured about a million and a half in quote-unquote stocking revenue in the EXXUA number for the quarter. Is that a reasonable assumption?

[Ryan Selhorn, CFO at Aytu Biopharma]

Sorry. Yeah, that is a pretty accurate calculation.

[Thomas Flaten, Analyst at Lake Street Capital Markets]

Okay. Josh, you mentioned some efficacy anecdotes in the prepared remarks, but I was curious what you've heard back specifically related to weight gain and sexual side effects if the physicians have provided you with any feedback on that.

[Josh Disbrow, CEO at Aytu Biopharma]

Yeah. I'll take weight gain first, which is that that'll always be quite a while before that develops just because of the time it takes for someone to gain weight. What I will say is, we're certainly not hearing anything unexpected there, but again, you wouldn't necessarily expect in the first few weeks much weight gain one way or the other. On the sexual side effects, I will say, that's where things like life-changing and never felt so good in my life, those anecdotes sort of come from.

[Josh Disbrow, CEO at Aytu Biopharma]

Even having heard from them personally from some select physicians in my area where I've had conversations. One gentleman who had been on quote, "Everything under the sun," was switched to EXXUA and immediately, restored his libido. We're hearing very, very good positive anecdotes, way more than just those handful.

[Josh Disbrow, CEO at Aytu Biopharma]

That's just a couple that I put into the prepared remarks, and again, one I experienced myself directly from a prescriber here in Colorado.

[Thomas Flaten, Analyst at Lake Street Capital Markets]

Just one last one, if I might. You mentioned something like 10-ish% of your customers had written EXXUA. What's been the writing activity of non-customers, so to speak, people that you haven't called on? Is there any of that?

[Josh Disbrow, CEO at Aytu Biopharma]

Yeah. Highly encouraging as well. You know, when you look at the amount of white space we have around the lower 48, it's fairly significant as any of those who follow us closely know. You know, we really cover the eastern seaboard, call it from Connecticut down to Miami, out to Florida, and then some dots kind of in flyover country. We have gotten significant prescribing from states where we have no physical presence. It's been extremely encouraging.

[Josh Disbrow, CEO at Aytu Biopharma]

Finding their ways to the product without any promotion. We've had inbound calls. We've had significant prescribing in places where, again, there's been no presence at all. It's been highly encouraging. I want to say we've had prescriptions in 42 or, yeah, 41 or 42 states at this point.

[Josh Disbrow, CEO at Aytu Biopharma]

Obviously we don't physically have presence in nearly that many, so it's been very encouraging.

[Thomas Flaten, Analyst at Lake Street Capital Markets]

Great. Appreciate that. Thank you.

[Josh Disbrow, CEO at Aytu Biopharma]

Thank you.

[Operator]

Thank you. The next question will be from Naz Rahman from Maxim Group. Naz, your line is live.

[Naz Rahman, Analyst at Maxim Group]

Hi, everyone. Congrats on the progress, and thanks for taking my questions. I only have two. The first one is on reimbursement. I understand it's very early in the launch process, but in terms of, like, those prior authorizations, could you provide some color on, I guess, how many of those or what % of those prior auths are getting approved on the first pass versus how many or what % you have to have, like, a back and forth through prior to getting reimbursed?

[Josh Disbrow, CEO at Aytu Biopharma]

Yeah, good question. I'll sort of separate it into commercial as well as CMS, Medicaid, Medicare. Medicaid, Medicare is highly variable, down to the individual patient, down to the individual state. What I'll say is what we're seeing early on is prescribing EXXUA fits well within what they currently do.

[Josh Disbrow, CEO at Aytu Biopharma]

Which is to say, in the state of Colorado, you need to demonstrate that you failed, two, quote, "preferred agents," which are really nothing more than just generic established therapies like SSRIs, and then the prior authorization goes through. We've seen that already in real time happening in numerous states, and so that's going through smoothly and as expected.

[Josh Disbrow, CEO at Aytu Biopharma]

In some places where there are mandates to allow for psychiatric prescribers specifically to essentially be waived of any PA requirement, that's happening also in the states that we expected it to. That's all encouraging. Medicare, relatively small numbers on Medicare. Those prescriptions are going through as well.

[Josh Disbrow, CEO at Aytu Biopharma]

Highly variable from plan to plan in terms of what is required. Most patients will have to meet a deductible. The benefit from their Medicare provider, for example, like AARP, will start to kick in. On the commercial side, because we've got this unique setup, I'll bifurcate that a bit as well, because we certainly have prescriptions going through the Aytu RxConnect network. That is the vast majority.

[Josh Disbrow, CEO at Aytu Biopharma]

To Thomas Flaten's previous question around prescriptions that are being dispensed and prescribers outside of our footprint, those two are going through. They're completing any prior authorizations, and we're actually seeing a relatively high rate of well-covered claims in places, again, where we have no coverage. Within the Aytu RxConnect network, we are seeing prior authorizations go through with good success.

[Josh Disbrow, CEO at Aytu Biopharma]

We're seeing of the numbers that we're doing, and it's still relatively small, over 70% of those are getting approved, and so we're seeing a very high rate. Obviously, approved claims means better for everyone, a lower copay for the patient and a higher net selling price to us, and so that's highly encouraging.

[Josh Disbrow, CEO at Aytu Biopharma]

Even, I'll remind you, even in cases when prior authorizations either aren't done or aren't going through, that in the initial going and for that first trial period, we're essentially covering those prescriptions for either $0 or potentially $50. I'll say just as an overarching statement as it relates to reimbursement and coverage, the approval rates continue to improve month-on-month, and the dollars in terms of net selling price when you aggregate government and commercial are materially higher than we initially budgeted.

[Josh Disbrow, CEO at Aytu Biopharma]

To reiterate what Ryan said, we'll caution of extrapolating that out too far because things are still settling out. I'm extremely pleased, and I think we all are collectively here on the team with what we're seeing with respect to reimbursement and frankly, the relative ease some of these prescriptions are going through with.

[Josh Disbrow, CEO at Aytu Biopharma]

Very pleased.

[Naz Rahman, Analyst at Maxim Group]

That was very helpful. Just kind of on that point, these patients, do you know, I guess, what line they are on by the time they get to EXXUA? It sounds like in Colorado, these are like 3rd line patients. Do you have an idea of like how many of these patients are like 2nd line versus 3rd or 4th?

[Josh Disbrow, CEO at Aytu Biopharma]

Yeah, that's a good question. It's still very early, and it's very heterogeneous. We have everything from 2nd line all the way to very late line, kind of tried everything, so to speak. What I'll say is we have good data that we know in the 60%+ range, those patients are being switched, which suggests minimally those patients have been on 1 therapy.

[Josh Disbrow, CEO at Aytu Biopharma]

Really, when you speak with doctors in real terms, these are patients that in the early goings have been on multiple. If I had to put a number, it's somewhere between probably 3rd and 5th line realistically. Very encouraging that you've got patients that are being prescribed 2nd line. I know of a specific patient.

[Josh Disbrow, CEO at Aytu Biopharma]

I don't know the anything other than the patient's demographics based on a prescription that was generated just last week. It was second line. It was a young patient. I believe the patient's 22 years of age, had been on a therapy and was experiencing sexual side effects and was immediately switched to EXXUA. Still very early to know how that patient's doing.

[Josh Disbrow, CEO at Aytu Biopharma]

I'll say generally speaking, I'm encouraged that we appear to be getting a little bit earlier in therapy, but certainly there are the, quote, "train wreck" patients that are being started. Very encouragingly, those patients in many cases are responding quite well when other things have failed. It's been quite encouraging.

[Naz Rahman, Analyst at Maxim Group]

That was very helpful. Thanks for taking my questions.

[Josh Disbrow, CEO at Aytu Biopharma]

Thank you.

[Operator]

Thank you. Once again, as a reminder, it'll be star one on your phone if you wish to ask a question on today's call. The next question is coming from Edward Woo from Ascendiant Capital. Edward, your line is live.

[Edward Woo, Analyst at Ascendiant Capital Markets]

Yeah, congratulations on all the progress. I just had a mechanical question. In terms of patient and prescriptions, is it normally prescribed for 30 days, and then after the 30 days, they would have to either go back to the physician or they will get automatic refills and it will show up as the refill count?

[Josh Disbrow, CEO at Aytu Biopharma]

Good question, Edward. We start patients off, in an optimal world, the prescriber would prescribe the 14-day titration pack. By definition, that's two weeks. That patient would then get moved to one of the top two doses in most cases, either the 54.5 mg or the 72.6 mg. Those, either of those, the 54.5 or the 72.6, would be prescribed for 30 days.

[Josh Disbrow, CEO at Aytu Biopharma]

Typically, they'll either be seen back to either stay optimized on the 54.5 or move up to the 72.6. From that point forward, they would probably get a prescription for something like three months or six months. In some cases, we already have pharmacies dispensing 90 days or three full months right after they get titrated to the 54.5.

[Josh Disbrow, CEO at Aytu Biopharma]

In some cases, doctors are more aggressive and will go to the 72.6. Again, they'll get the full 90-day. I say that all to say it's variable, but generally speaking, they're getting 30 days, and then they're typically gonna get moved to a every three-month check-in with a three-month prescription or a six-month check-in with a six-month prescription. We're just now at the very early stages of even starting some of those sort of, call that maintenance therapy on the 54.5 or the 72.6.

[Edward Woo, Analyst at Ascendiant Capital Markets]

Okay. It's not clearly 30 days, then you see the refill. You might actually, based on your data, without disclosing much information, you're happy with the refill rate so far that you're seeing this at this point in time?

[Josh Disbrow, CEO at Aytu Biopharma]

Very. When we look at patients, the percentage of patients that are moving just from titration to a full 30-day supply, which that demonstrates tolerability, it may not necessarily demonstrate that they're getting clinical benefit yet. Although I will say we're hearing very consistent anecdotes that patients are feeling better quickly.

[Josh Disbrow, CEO at Aytu Biopharma]

That having been said, we're still so early, we'd hesitate to put a number on what we would expect sort of conversion to be longer term. It's very, very solid, and we expect it to improve over time. Again, these numbers that we're posting are really without any material annuity value baked in in terms of repeat use and refills and so forth. Just getting started.

[Edward Woo, Analyst at Ascendiant Capital Markets]

That sounds good. My last question is just on geography. I know you mentioned that you guys are aiming for the coast, for the big markets. Is that your continued plan going forward is just to target the big metro markets first and then move to the smaller markets?

[Josh Disbrow, CEO at Aytu Biopharma]

You know, what I'll say already, Edward Woo, is we're actively contemplating, in select markets, moving into some of those, potentially a little bit quicker than we'd initially anticipated. We'll be judicious as Ryan Selhorn said. We'll certainly be cost-efficient.

[Josh Disbrow, CEO at Aytu Biopharma]

In areas where we've already identified sort of a groundswell of physicians that have found themselves prescribing the product or in places where we have access, whether that be from a commercial or government perspective, places that we think we can optimize. We are already looking. Certainly, you know, I mentioned a few dotted territories kind of in flyover country, so to speak.

[Josh Disbrow, CEO at Aytu Biopharma]

We are actively looking at north to south, east to west, and even. That's all that having been said, with the territories we have in place to have sort of this type of momentum already, understanding that a full third or more of our sales force just got out there, you know, call it the 1st full week of March. Of course, we all know it takes a while for anybody new in a geography and, of course, new physicians to start getting on board with anything that we would fully expect to expand into other markets and see that same type of uptake.

[Edward Woo, Analyst at Ascendiant Capital Markets]

Excellent. Well, thanks a lot for answering my questions, and I wish you guys good luck. Thank you.

[Josh Disbrow, CEO at Aytu Biopharma]

Thank you, Edward.

[Operator]

Thank you. There were no other questions at this time. I would now like to hand the call back to Josh Disbrow for closing remarks.

[Josh Disbrow, CEO at Aytu Biopharma]

Thank you, Paul. Again, thanks everyone. We could not be more excited with the progress that we're seeing in real time here. I've got the unique benefit of not just leading the team, but in some cases, having conversations of my own. The real-world feedback is really nothing short of amazing.

[Josh Disbrow, CEO at Aytu Biopharma]

We've continued to hear positive feedback across the board with patients that have tried a lot of therapies and in some cases, quote, "everything," according to the psychiatrist. To hear the feedback that's coming back is nothing short of inspiring. We'll continue to keep the pedal down and obviously drive higher and higher adoption.

[Josh Disbrow, CEO at Aytu Biopharma]

Until we report our fiscal Q4 and full years in September, we'll be sure to be present at conferences to make sure folks are aware of what's happening and continue to update prescription trends as we move along. Thanks for listening to today's call. Appreciate your support, and I wish you a good afternoon and good evening until next time. Thanks very much.

[Operator]

This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Analysts

• Edward Woo, Analyst at Ascendiant Capital Markets
• Josh Disbrow, CEO at Aytu Biopharma
• Naz Rahman, Analyst at Maxim Group
• Robert Blum, Managing Partner at Lytham Partners
• Ryan Selhorn, CFO at Aytu Biopharma
• Thomas Flaten, Analyst at Lake Street Capital Markets