Aytu BioScience Q4 2025: Contradictions in Exua Launch Timing, Payer Contracting, and ADHD Revenue Outlook

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 23, 2025

Financials Results

• Revenue: $66.4M, up 1.8% YOY (vs $65.2M prior year)
• Gross Margin: 69%, compared to 75% in the prior year (down ~600 bps YOY)

Guidance:

• Exua U.S. launch targeted for Q4 calendar 2025 (FY26 Q2); minimal revenue at launch.
• Initial revenue ramp expected in March 2026 quarter; more meaningful ramp in June 2026 and beyond.
• Approximately $10M in FY26 OpEx for Exua launch (about 50% in Dec quarter; remainder in Mar/Jun).
• Exua economics: ~28% royalty; ~31% COGS (~69% gross contribution), plus some fixed COGS post-launch.
• Company gross margin expected to improve as high-cost ADHD inventory is liquidated; PDUFA fee ceased post-Sep 2025.
• Interest expense expected to decline by nearly $1.5M in FY26.
• Base ADHD/Peds business break-even at roughly $13.2M revenue per quarter.

Business Commentary:

* Financial Performance and Growth: - Aytu BioPharma reported net revenue of $66.4 million for fiscal 2025, a slight increase from the previous year. - The company achieved three consecutive years of positive adjusted EBITDA, with $9.2 million in fiscal 2025. - This performance was driven by operational efficiencies, focus on a prescription pharmaceutical business, and successful cost reduction efforts.

• Exua Launch and Market Opportunity:
• The company signed an exclusive agreement to commercialize Exua in the U.S., a novel treatment for major depressive disorder with an estimated market size of over $2 billion.
• Exua's unique mechanism of action, as a 5-HT1A receptor partial agonist, differentiates it from conventional treatments like SSRIs and SNRIs.

• The Exua launch is expected to transform Aytu BioPharma, given its potential to address the market need for targeted therapies with minimal off-target effects and adverse events.

• ADHD Portfolio Stability:

• The ADHD portfolio reported net revenue of $57.6 million, similar to the previous year, despite script volume decreases.
• The stability is attributed to strong control over dispensing through the Aytu RxConnect platform, which allows for price matching and reduced substitution impact.

• The company's strategy includes launching an authorized generic of Adzenys to maintain market share in the face of potential Teva competition.

• Cost Reduction and Operational Efficiency:

• Operating expenses excluding amortization and restructuring costs were $39.6 million in the full year fiscal 2025, down from $44.8 million the previous year.
• This reduction was the result of continued cost reduction efforts, shutdown of the Grand Prairie manufacturing facility, and divestiture of the consumer health business.
• The new cost structure positions the company to achieve break-even levels with its current base business, facilitating investments in the Exua launch.

Sentiment Analysis:

• Management highlighted a ninth consecutive quarter and third consecutive year of positive adjusted EBITDA, slight revenue growth to $66.4M, and described Exua as “transformational.” They expect gross margins to improve as high-cost inventory is worked down, plan a disciplined Exua launch with ~69% gross contribution margin, and reported $31M cash post-financing. They guided to reduced interest expense in FY26 and emphasized confidence in payer access via RxConnect and government coverage.

Q&A:

• Question from Thomas Flaten (Lake Street Capital Markets): With channel load-in in Q4 2025, will the national sales meeting and full launch occur in early Q1 2026?
  Response: Yes—load-in by year-end 2025, sales meeting then, and initial detailing in Q1 2026.

• Question from Thomas Flaten (Lake Street Capital Markets): Given recent FDA warning letters, will you pre-clear promotional materials for Exua?
  Response: No—materials won’t be pre-cleared; they’ll be submitted via 2253, with confidence in compliance to avoid delays.

• Question from Thomas Flaten (Lake Street Capital Markets): How will you approach payer contracting—any pre-launch discussions and what triggers case-by-case deals?
  Response: Selective, case-by-case contracting prioritizing government coverage and margin preservation; avoid best-price resets and leverage RxConnect for pull-through.

• Question from Naz Rahman (Maxim Group): Where do ADHD and pediatric portfolios level as resources shift to Exua?
  Response: Expect some volume drift but margin-positive base business as costs shift; break-even at ~$13.2M quarterly revenue.

• Question from Naz Rahman (Maxim Group): What are the medical affairs plans for Exua (conferences, education, publications)?
  Response: A targeted MA program led by Dr. Westfield: KOL engagement, focused conferences, education, publications, and potential IITs.

• Question from Ed Wu (Ascendiant Capital): Clarify pro forma OpEx and timing of the ~$10M Exua launch spend.
  Response: Pro forma annual expense ~$36.3M; ~50% of the $10M launch spend in the Dec quarter, remainder in Mar/Jun, focused on reps and marketing.