Aytu BioPharma's 2026Q1 Earnings Call: Contradictions Emerge on Payer Strategy, EXXUA Launch, and Sales Growth Expectations

Date of Call: November 13, 2025

Financials Results

• Revenue: $13.9M, compared to $16.6M in the prior year; prior year included a one-time $3.3M accrued rebate—excluding that rebate, net revenue would have increased ~5% YOY. ADHD portfolio $13.2M vs $15.3M prior year; excluding the rebate prior ADHD would have been $11.9M (ADHD up ~10% YOY).
• EPS: $0.21 basic net income per share, compared to $0.24 in the prior year (net income $2.0M vs $1.5M prior year).
• Gross Margin: 66%, compared to 72% in the prior year; excluding the prior-year $3.3M rebate the comparable prior margin would have been 65% (so 66% vs 65% on an apples-to-apples basis).

Guidance:

• EXXUA launch on track: initial shipments expected December 2025; formal commercial launch meeting January 2026; minimal revenue expected in Dec quarter, initial ramp in March 2026 and material ramp in June 2026 and beyond.
• Fiscal 2026 EXXUA investment ~ $10M (≈ $6M one-time items); baseline OpEx ≈ $10M/quarter; exiting run-rate ≈ $11.4M/quarter (≈ $0.5M noncash).
• EXXUA economics: ~31% COGS (incl. 28% royalty) → ~69% gross contribution margin; royalty drops to 24% after ~$1.3B sales.
• Breakeven: assuming mid–high 60% gross margins, cash breakeven ≈ $16.6M/quarter; all-in breakeven ≈ $17.3M/quarter.
• Will use RxConnect to monitor coverage and be judicious on commercial contracting to protect government best-price.

Business Commentary:

* Revenue and ADHD Portfolio Performance: - Aytu Biopharma reported net revenue of $13.9 million for Q1 fiscal 2026, above expectations, driven by the ADHD portfolio with a 10% increase in net revenue compared to the prior year (excluding a one-time rebate benefit). - This growth is attributed to the stickiness of the Aytu RxConnect platform and the positive economic benefits it provides, as well as the company's strategic focus on the ADHD market despite the threat of a generic launch.

• EXXUA Launch Preparations:
• The EXXUA launch is on track for completion by the end of calendar 2025, with significant advancements in KOL engagement, sales force training, product positioning, and pricing.

• The successful execution of these initiatives is expected to enhance the launch's impact and significantly benefit Aytu's financial performance.

• ADHDB Product Strategy:

• With the recent launch of an authorized generic (AG) of Adzenys, the company aims to maintain a material share of the Adzenys market despite potential generic entry by Teva.

• The introduction of the AG is seen as a defensive strategy to counter a generic attack, leveraging the existing patient base and market dynamics to mitigate revenue loss.

• Financial Health and OpEx Management:

• Cash and cash equivalents increased to $32.6 million as of September 30, 2025, reflecting effective management of operational expenses.
• The company plans to invest approximately $10 million in the EXXUA launch during fiscal 2026, with the majority being one-time expenses, aiming to achieve a sustainable revenue breakeven point.

Sentiment Analysis:

Overall Tone: Positive

• Management described Q1 as "very positive and highly productive," said net revenue was "above our expectations," repeatedly called the EXXUA launch "on track" and labeled EXXUA a "game-changing opportunity" while emphasizing being "laser-focused" on execution.

Q&A:

• Question from Thomas Flaten (Lake Street Capital Markets, LLC, Research Division): Congrats on the quarter. Josh, I was wondering if you could comment on how significant or maybe how many territories were affected by the realignment? And then part 2 of that question is, how are you thinking about the incentive comp plan post EXXUA launch?
  Response: About one-third of territories were reshaped (some modest, some material); incentive comp will be finalized but will heavily reward EXXUA activation of psychiatrists and deeper repeat prescribing, focusing on psychiatry offices and NPs/PAs.

• Question from Thomas Flaten (Lake Street Capital Markets, LLC, Research Division): What have you been doing prelaunch with respect to payer engagement? Is that something you've been doing? And what expectations do you have for coverage improving beyond the kind of protected Medicare component of it?
  Response: Only light payer engagement so far; will be judicious to avoid resetting government best price; expect strong mandated government coverage (30–40% of lives) and meaningful commercial coverage (benchmarking to products like Auvelity ~70% commercial), using RxConnect to assess before contracting.

• Question from Nazibur Rahman (Maxim Group LLC, Research Division): I understand you haven't initiated the full launch yet. But thus far, how much of your target prescriber market have you reached out to? And what kind of feedback have you gotten from that prescriber market thus far?
  Response: Reached a relatively small, highly targeted subset—psychiatrists already familiar with Aytu and RxConnect—and feedback has been nearly universally positive from those high-priority prescribers.

• Question from Nazibur Rahman (Maxim Group LLC, Research Division): Based on the feedback you have gotten thus far from limited physicians. Have you been able to build out what a target patient profile might look like or what kind of patients that these physicians might initially treat or attempt to treat with EXXUA?
  Response: Targeting patients ~18–50 who are dissatisfied with SSRI/SNRI side effects (sexual dysfunction, weight gain)—primarily switch candidates after prior therapies, including later-line patients.

• Question from Edward Woo (Ascendiant Capital Markets LLC, Research Division): How quickly and flexible are you to ramp up if demand is greater than you expect? And what is your leverage opportunity -- margin opportunity to get if you do get to a certain scale in terms of your margin expansion?
  Response: Adequate bulk supply and API on hand to scale well beyond initial forecasts; economics show a 28% royalty (drops to 24% after ~$1.3B), low manufacturing cost (~2% of net revenue) and ~69% gross contribution margin, with limited incremental margin gains from scale.

Contradiction Point 1

Payer Engagement and Contracting Strategy

It highlights a shift in the company's strategic approach to payer contracting, which can impact revenue projections and market penetration.

What are your pre-launch payer engagement efforts? What expectations do you have for coverage expansion beyond Medicare? - [Thomas Flaten](Lake Street Capital Markets, LLC, Research Division)

2026Q1: For commercial payers, our approach is to wait and see, focusing more on the government side, which mandates antidepressant coverage. - [Joshua Disbrow](CEO)

Will Aytu have pre-launch payer discussions on a case-by-case basis? - [Thomas Flaten](Lake Street Capital Markets, LLC, Research Division)

2025Q4: Aytu will be selective in payer contracting, ensuring they get what they're paying for in terms of plan pull-through. - [Joshua Disbrow](CEO)

Contradiction Point 2

EXXUA Launch Timeline and Market Access

It involves differing expectations for the market access timeline and the level of support the company expects to receive, which impacts market penetration and sales projections.

What steps have you taken to engage payers ahead of product launch? What are your expectations for coverage expansion beyond the Medicare-protected component? - [Thomas Flaten](Lake Street Capital Markets, LLC, Research Division)

2026Q1: We expect better coverage for EXXUA than for ADHD medications, aiming for higher net pricing due to increased coverage. EXXUA is anticipated to have 100% coverage on the government side and around 70% on the commercial side. - [Joshua Disbrow](CEO)

Will Aytu engage in prelaunch discussions with payers on a case-by-case basis? - [Thomas Flaten](Lake Street Capital Markets, LLC, Research Division)

2025Q4: Given government pay is near universal, Aytu aims to avoid proactively contracting commercially to preserve margins and avoid impacting the flat 23.1% rebate. - [Joshua Disbrow](CEO)

Contradiction Point 3

EXXUA's Patient Profile Focus

It highlights a change in the company's focus for the target patient profile, which can impact marketing strategies and market penetration.

Have you defined a target patient profile for EXXUA? - [Nazibur Rahman](Maxim Group LLC, Research Division)

2026Q1: We target younger patients, ages 18 to 50, seeking treatment with minimal side effects, specifically regarding sexual dysfunction and weight gain. These patients are often dissatisfied with existing treatments and would benefit from EXXUA's side effect profile. - [Joshua Disbrow](CEO)

How will the ADHD and pediatric franchises contribute to annual sales and cash flow with EXXUA as the focus? - [Nazibur Rahman](Maxim Group LLC, Research Division)

2025Q4: ADHD and pediatric portfolios will remain sticky with some volume, expected to be breakeven or cash flow positive. - [Joshua Disbrow](CEO)

Contradiction Point 4

Sales Growth Expectations

It involves differing perspectives on the company's sales growth potential and the expectation of maintaining these levels, which is crucial for investor expectations and financial planning.

How significant were territory changes from realignment? How are you adjusting incentive compensation post-EXXUA launch? - [Thomas Flaten](Lake Street Capital Markets, LLC, Research Division)

2026Q1: We actually see the ADHD side growing at kind of a mid-teens growth rate this year, and certainly the opportunity to grow in the out years. - [Joshua Disbrow](CEO)

Do you expect these levels to continue growing, and what growth are you seeing in the current quarter? - [Naz Rahman](Maxim Group)

2025Q3: Yes, we do certainly expect growth going forward. And yes, I appreciate you acknowledging that we're sort of back to historically high levels, following just some optimization efforts that have happened along the way. - [Josh Disbrow](CEO)

Contradiction Point 5

Target Prescriber Market and Feedback

It involves differing statements about the target prescriber market and the feedback received from them, which can impact market strategy and product adoption.

How much of your target prescriber market have you engaged? What feedback have you received from the prescriber market to date? - [Nazibur Rahman](Maxim Group LLC, Research Division)

2026Q1: We've focused on a smaller segment of the market, specifically psychiatrists familiar with our products and RxConnect, resulting in overwhelmingly positive feedback. - [Joshua Disbrow](CEO)

What were the key components of the return to growth plan for the pediatrics business? How much did you restructure the commercial team to restore product growth? - [Robert Blum](Robert Blum)

2025Q3: We deployed the salesforce against more pediatric targets, specifically antihistamine allergy targets. We expanded the footprint, having dual responsibilities for both ADHD and Karbinal products. - [Josh Disbrow](CEO)