Aytu BioScience again reported robust growth in new prescription rates for Natesto®, its FDA-approved treatment for men with low testosterone. New prescriptions jumped 23% over the previous quarter and by more than 317% compared to the same quarter of the prior fiscal year.
Josh Disbrow, CEO of Aytu BioScience (NASDAQ CM: AYTU), gave positive comments on the quarterly results by saying, “I am pleased to report Aytu’s second-quarter results, which reflect strong unit sales growth and cost management. Natesto® prescriptions increased 23% over our first quarter of this fiscal year to 2,501, which is up 317% over the same quarter last year, while at the same time we reduced our sequential quarter cash burn.”
He added, “While we are satisfied with Natesto® unit sales growth, and cash management, our dollar net sales figure is temporarily not at the same growth rate as unit sales. The reason for the temporary disparity is due to discounting and coupon incentives which are used to increase sales to first time Natesto® patients. However, we expect to be able to accelerate growth and reduce the level of discounting we have experienced with three targeted strategic actions. The first action is to roll out our recently piloted Natesto® Support Program, which allows us to capture more prescription reimbursement, yielding more revenue for each new prescription. The Natesto® Support Program is also expected to lead to a higher refill rate on new prescriptions. Second, we are pursuing third-party payers to more broadly cover Natesto®, and third, we are continuing to invest in increasing the body of clinical evidence supporting Natesto®’s distinct efficacy and safety profile.”
Highlights From The Second Quarter of 2018
Despite the shares giving back recent gains, the published results were quite strong and may present a buying opportunity at these levels. Investors also need to understand that the broader market declined significantly and that most micro and small-cap biotech companies tend to follow suit with an exaggerated beta. But, while AYTU may have followed the sector declines, the results were impressive. And, that is where investor attention should get placed.
- AYTU recognized $1.05 million in total revenue for the quarter, representing an increase of roughly 32% compared to the same quarter in 2017. The company also was moved to the NASDAQ Capital Markets which provides greater access to institutional interest and mainstream financing.
- Specific to Natesto®, prescription demand increased to 2,501 total prescriptions, representing a 317% increase over the same quarter in 2017 and also recorded unit growth to wholesalers to over 7,100 which represents a 397% increase over Q2 fiscal 2017 pull-through demand levels.
- MiOXSYS also contributed to AYTU’s growth with system placements increasing to 38 since the beginning of 2018. The total systems in use represent an increase of 73% over the same period last year mainly facilitated by AYTU’s global distribution partners.
- The company’s operating expenses remained constant at roughly $5.045 million for the quarter, but cash used in operations declined 26% to $3.1 million compared to Q1 of 2018. As of December 31, 2017, AYTU had approximate cash and cash equivalents of $4 million.
- Aytu BioScience further introduced David Green as Chief Financial Officer. Mr. Green has been in the life sciences industry for over twenty-five years in scientific, operating and financial advisory roles. Before joining Aytu BioScience, Mr. Green was the Chief Accounting Officer of Intarcia Therapeutics, a biopharmaceutical company engaged in late-stage clinical development, where he was involved in IPO readiness and some of the largest private financing transactions in history for a pre-commercial, venture-funded, life science company.
Growth In Place At AYTU
Additionally, three of the most promising new treatment candidates recently failed to meet the high bar of FDA approval scrutiny. Now, with Xyosted®, TLANDO®, and Jatenzo® tabled, Natesto® emerges as the most advanced low-T product on the market and may position Natesto® to be the eventual winner in the testosterone replacement therapy market. Importantly, Natesto® sits as the only currently available topical treatment not required to carry the severe FDA Black Box warning on its label.
For AYTU, the growth in Natesto® is not slowing. However, lacking the significant marketing budgets behind competing products like Androgel®, the pace of growth is enviable. Users are taking sight of Natesto®’s proven results, where clinical trials showed that both sexual function and overall mood of male patients using Natesto® had improved significantly in as little as 30 days. More impressive, after 90 days of Natesto® use, approximately 90% of users had returned to normal testosterone levels. Also significant is that the results indicate that Natesto® can potentially return low-T patients to normal levels in approximately ninety days, and it can do so with substantially fewer health risks than competing treatments in the market space.
Seeing The Future At AYTU
With Natesto® and MiOXSYS® proven to be best-in-class options in each of their respective markets, investors should stay focused on the trends in place at the company. Despite share price weakness after a 10% decline in the broader markets, a longer-term perspective for growth opportunity should be taken by AYTU investors. Very few small-cap biotechs enjoy a rocket shot to the moon, and most earn their way higher through the same course like the one at AYTU…consistent product growth enhanced by a management team that is well attuned to the sometimes turbulent and overzealous dynamics of the market.