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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
November 11, 2024
Date of Report (Date of earliest event reported):
 
logo01.jpg
 
AYTU BIOPHARMA, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
001-38247
 
47-0883144
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
7900 East Union Avenue, Suite 920
Denver, CO 80237
(Address of principal executive offices, including Zip Code)
 
Registrant’s telephone number, including area code: (720) 437-6580
 
Not applicable 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
 
Trading Symbol(s)
 
Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per share
 
AYTU
 
The Nasdaq Capital Market
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐








 
Item 2.02 Results of Operations and Financial Condition.
 
On November 13, 2024, Aytu BioPharma, Inc. (the “Company” or “Aytu”) issued a press release announcing its fiscal 2025 first quarter operational and financial results. As indicated in the press release, the Company scheduled a conference call and live audio webcast for November 13, 2024, at 4:30 p.m. Eastern time to discuss the operational and financial results and to answer questions. The conference call is publicly accessible via webcast and telephone (available live and for replay), and the press release includes instructions for accessing the webcast via the Company’s website or dialing in to the call. A replay of the call will be made available after the call on the Company’s website and via a telephone replay. Availability of the call replay posted on the Company’s website and via the telephone replay is at the Company’s discretion and may be discontinued at any time. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
 
The information in the press release attached as Exhibit 99.1 hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
 
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
 
Termination and Separation Agreement with Former Chief Financial Officer
 
On November 11, 2024, Mark K. Oki was terminated as Chief Financial Officer of the Company. Mr. Oki will continue to consult for the Company through December 1, 2024, and, accordingly, Aytu and Mr. Oki have agreed to a form of separation and release agreement (the “Separation Agreement”), pursuant to which Mr. Oki will receive payment for accrued but unused personal time off, a separation payment of $499,590, to be paid out over twelve (12) months, COBRA coverage for up to 12 months, and acceleration of any unvested options or restricted stock held by Mr. Oki. The foregoing description of the Separation Agreement is not complete and is qualified in its entirety by reference to the full text of the form of Separation Agreement a copy of which will be filed in the Company’s Report on Form 10-Q for the quarter ending December 31, 2024.
 
Appointment of Chief Financial Officer
 
On November 11, 2024, the board of directors of the Company (the “Board”) appointed Ryan Selhorn as Chief Financial Officer, Corporate Secretary and Treasurer of the Company.
 
Mr. Selhorn, age 43, previously served as Aytu’s Executive Vice President, Finance and Business Optimization since November 2022. Prior to this, Mr. Selhorn was Aytu’s Senior Vice President, Finance and Operations, Consumer Healthcare Division from February 2022 to November 2022 and as Vice President, Finance, Consumer Healthcare Division from February 2020 to February 2022. Mr. Selhorn served as Vice President and Chief Financial Officer from April 2018 at Innovus Pharmaceuticals, Inc., a publicly held consumer healthcare company, until Aytu’s acquisition of Innovus in February 2020. From August 2013 to April 2018, Mr. Selhorn served as Chief Financial Officer and Chief Accounting Officer of Signature Analytics, a privately held fractional Chief Financial Officer and accounting firm, where he also served as Chief Financial Officer of Medicinova, Inc., a publicly held biotechnology company. Mr. Selhorn worked at Grant Thornton LLP, a public accounting firm, from October 2003 to July 2013, most recently in the role of Senior Manager, Transaction Advisory Services. Mr. Selhorn received his B.S./B.A., Accounting and Finance from Georgetown University and is a Certified Public Accountant (inactive).
 
Aytu and Mr. Selhorn entered into an amended and restated employment agreement, effective November 11, 2024 (the “Employment Agreement”). Pursuant to the Employment Agreement, Mr. Selhorn will receive:
 
 
An annual base salary of $400,000, and a target bonus of 40% of the base salary;
 
 
A restricted stock grant of 14,000 shares of Aytu’s common stock, subject to certain vesting provisions set forth therein;
 
 
Upon a termination without cause by the Company or for good reason, as those terms are defined in the Employment Agreement, by Mr. Selhorn, a severance payment equal to his base salary plus any earned incentive compensation, and a continuation of Aytu’s portion of COBRA payments for a period of up to 12 months; and
 
 
Upon a termination within 12 months of a change in control, as defined in the Employment Agreement, a payment equal to one times the base salary and the pro rata target annual incentive bonus compensation for the then-current year, up to 12 months of COBRA payments and accelerated vesting of all stock options or stock based awards.
 
The foregoing description of the Employment Agreement is not complete and is qualified in its entirety by reference to the full text of the form of Employment Agreement a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
 
Item 7.01 Regulation FD Disclosure.
 
The Company issued a press release on November 13, 2024, announcing its fiscal 2025 first quarter operational and financial results, which included the announcement of the termination of Mr. Oki and appointment of Mr. Selhorn, attached as Exhibit 99.1 to this report.
 
Item 8.01 Other Events.
 
On November 6, 2024, the Company’s Board determined to separate the roles of Chairman of the Board of Directors and Chief Executive Officer and appointed director John A. Donofrio, Jr. as Chairman of the Board of Directors of the Company, replacing Joshua R. Disbrow in the role.
 
Item 9.01 Financial Statements and Exhibits.
 
(d) Exhibits.
 
Exhibit Number
 
Exhibit Description
10.1   Amended and Restated Employment Agreement by and between Aytu BioPharma, Inc. and Ryan J. Selhorn dated November 11, 2024
99.1
 
104
 
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
 






 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
AYTU BIOPHARMA, INC.
   
   
Date: November 13, 2024
By:
/s/ Ryan J. Selhorn
   
Ryan J. Selhorn
   
Chief Financial Officer
 
 
EX-10.1 2 ex_745344.htm EXHIBIT 10.1 ex_745344.htm

Exhibit 10.1

 

AMENDED AND RE-STATED EMPLOYMENT AGREEMENT

 

This Amended and Re-stated Employment Agreement (the "Agreement"), is effective as of November 11, 2024 (the “Effective Date”), between Aytu BioPharma, Inc., a Delaware corporation headquartered at 7900 East Union Avenue, Suite 920, Denver, CO 80237 USA, (hereinafter referred to as the "Company"), and Ryan J. Selhorn (“Executive").

 

RECITALS

 

WHEREAS, the Company is a duly organized Delaware corporation, with its principal place of business within the State of Colorado, and is in the business of developing and marketing pharmaceuticals; and

 

WHEREAS, the Company desires Executive’s continued experience, skills, abilities, background, and knowledge, and is willing to engage Executive’s services on the terms and conditions set forth in this Agreement; and

 

WHEREAS, Executive desires to continue to be in the employ of the Company, and is willing to accept such employment on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.    Employment.

 

(a)    Term. The term of this Agreement shall commence on the Effective Date and continue until terminated in accordance with the provisions hereof (the “Term”).

 

(b)    Position and Duties. During the Term, the Executive shall serve as the Chief Financial Officer of the Company, and shall have supervision and control over and responsibility for the day-to-day business and affairs of the Company and shall have such other powers and duties as may from time to time be prescribed by the Chief Executive Officer (“CEO”) of the Company, provided that such duties are consistent with the Executive’s position or other positions that he may hold from time to time. The Executive shall devote his full working time and efforts to the business and affairs of the Company. So long as Executive is employed by the Company, Executive shall not, other than as listed in Exhibit A, and without the prior written consent of the Board, accept other employment or perform other services for compensation or that interfere with Executive’s employment with the Company; provided, however, that Executive may serve on other boards of directors, with the approval of the CEO, or may serve as an officer or director of or otherwise participate in purely educational, welfare, social, religious, and civic organizations so long as such activities are not in competition with the Company or do not interfere with Executive’s ability to carry out Executive’s duties under this Agreement. During the Term, Executive agrees not to acquire, assume or participate in, directly or indirectly, any position, investment or interest known by the Executive to be adverse or antagonistic to the Company, its business or prospects, its financial position, or otherwise or in any company, person or entity that is, directly or indirectly, in competition with the business of the Company or any of its affiliates. This provision shall encompass any advisory boards of which Executive is or becomes a member of during the term hereof. Executive shall provide written disclosure to the Compensation Committee (“Compensation Committee”) of the Company’s Board of Directors (the “Board”) as to all advisory boards on which Executive sits, and will provide the Company with written notice within 10 business days of Executive agreeing to sit on any additional advisory boards. On termination of Executive’s employment, regardless of the reason for such termination, Executive shall immediately (and with contemporaneous effect) resign any directorships, offices, or other positions that Executive may hold in the Company or any affiliate, unless otherwise agreed in writing by the parties.

 







 

2.    Compensation and Related Matters.

 

(a)    Base Salary. During the Term, the Executive’s initial annual base salary shall be four hundred thousand dollars ($400,000.00), less applicable deductions and withholdings. The Executive’s base salary shall be reviewed at least annually by the Compensation Committee or a majority of the independent members of the Board, and the base salary may be increased only by the Compensation Committee or a majority of the independent members of the Board. The base salary in effect at any given time is referred to herein as “Base Salary.” The Base Salary shall be payable in a manner that is consistent with the Company’s usual payroll practices for senior executives.

 

(b)    Bonus Compensation. The Executive shall be eligible for an annual discretionary bonus (hereinafter referred to as the “Bonus”) with a target amount of forty percent (40%) of the Base Salary, subject to standard deductions and withholdings, based on the Compensation Committee’s determination, in good faith, and based upon the Executive’s individual achievement and company performance objectives as set by the Board or the Compensation Committee, of whether the Executive has met such performance milestones as are established for the Executive by the Board or the Compensation Committee, in good faith, in consultation with the Executive (hereinafter referred to as the “Performance Milestones”). The Performance Milestones will be based on certain factors including, but not limited to, the Executive’s performance and the Company’s financial and operational performance. The Executive’s Bonus target will be reviewed annually and may be adjusted by the Board or the Compensation Committee in its discretion, provided however, that the Bonus target may only be reduced upon Executive’s written consent. The Executive must be employed on the date the Bonus is awarded to be eligible for the Bonus, subject to the termination provisions hereof. Bonuses shall be paid during the calendar quarter following the calendar quarter for which such Bonus was earned when Performance Milestones are met during a calendar quarter. Fourth quarter Bonuses and Bonuses calculated on the basis of partial Performance Milestone satisfaction shall be paid within 75 days of fiscal year-end.

 

(c)    Stock Grant. The Company shall grant to Executive a stock grant of 14,000 shares, which will vest over a (3) year period of employment with the Company beginning with one third (1/3) of the stock vesting on the one-year anniversary of the Effective Date of this Agreement, and the remaining stock vesting in equal quarterly tranches for two years.

 

(d)    Expenses. The Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by him during the Term in performing services hereunder, in accordance with the policies and procedures then in effect and established by the Company for its senior executive officers.

 







 

(e)    Other Benefits. During the Term, the Executive shall be eligible to participate in or receive benefits under the Company’s employee benefit plans in effect from time to time, subject to the terms of such plans.

 

(f)    Vacations. For the term of this Agreement, Executive shall be entitled to paid time off at the rate of twenty-five (25) days per annum. Unused paid time off will accrue up to a maximum accrual of 240 hours, which is considered the maximum accrual amount.. The Executive shall also be entitled to all paid holidays given by the Company to its executives.

 

3.    Termination. During the Term, the Executive’s employment hereunder may be terminated without any breach of this Agreement under the following circumstances:

 

(a)    Death. The Executive’s employment hereunder shall terminate upon his death.

 

(b)    Disability. The Company may terminate the Executive’s employment if he is disabled and unable to perform the essential functions of the Executive’s then existing position or positions under this Agreement with or without reasonable accommodation for a period of 180 days (which need not be consecutive) in any 12-month period. If any question shall arise as to whether during any period the Executive is disabled so as to be unable to perform the essential functions of the Executive’s then existing position or positions with or without reasonable accommodation, the Executive may, and at the request of the Company shall, submit to the Company a certification in reasonable detail by a physician selected by the Company to whom the Executive or the Executive’s guardian has no reasonable objection as to whether the Executive is so disabled or how long such disability is expected to continue, and such certification shall for the purposes of this Agreement be conclusive of the issue. The Executive shall cooperate with any reasonable request of the physician in connection with such certification. If such question shall arise and the Executive shall fail to submit such certification, the Company’s determination of such issue shall be binding on the Executive. Nothing in this Section 3(b) shall be construed to waive the Executive’s rights, if any, under existing law including, without limitation, the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq. and the Americans with Disabilities Act, 42 U.S.C. §12101 et seq.

 

(c)    Termination by Company for Cause. The Company may terminate the Executive’s employment hereunder for Cause. For purposes of this Agreement, “Cause” shall mean any of the following: (i) the Executive’s willful and deliberate breach of any agreement with the Company, including the Confidentiality and Intellectual Property Agreement, dated October 4, 2021 (the “Confidentiality Agreement”), the provisions of Section 8 of this Agreement, the Code of Conduct or any other material policy that may result in material injury to the Company, including Executive’s unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party as to which the Employee owes an obligation of nondisclosure as a result of the Employee’s relationship with the Company; (ii) the Executive’s conviction of, or entry of a plea of guilty to, or entry of a plea of nolo contendere with respect to, any crime other than a traffic violation or infraction which is a misdemeanor; (iii) the Executive’s act of fraud or intentional misrepresentation in connection with the Executive’s duties or otherwise in connection with the business of the Company, that may result in material injury to the Company; (iv) the Executive’s unintended but material breach in the performance of duties under this Agreement, including insubordination or failure to implement or follow a lawful policy or directive of the Company, provided that if such failure is curable, it is not cured within 30 days following written notice thereof from the Board; or (v) the Executive’s willful malfeasance or willful misconduct in the performance of the Executive’s employment.

 







 

(d)    Termination Without Cause. The Company may terminate the Executive’s employment hereunder at any time without Cause. Any termination by the Company of the Executive’s employment under this Agreement which does not constitute a termination for Cause under Section 3(c) and does not result from the death or disability of the Executive under Section 3(a) or (b) shall be deemed a termination without Cause.

 

(e)    Termination by the Executive. The Executive may terminate his employment hereunder at any time for any reason, including but not limited to Good Reason. For purposes of this Agreement, “Good Reason” shall mean, without the Executive’s consent, the occurrence of any of the following: (i) the Company materially breaches any term of this Agreement, and such breach causes or is likely to cause material harm to the Executive; (ii) there is a change in the Executive’s responsibilities that represents a material and adverse change from the Executive’s overall responsibilities, taken as a whole; (iii) there is a Change in Control that results in a change in the Executive’s responsibilities that represents a material and adverse change from the Executive’s overall responsibilities, taken as a whole; (iv) the Executive’s Base Salary is substantially reduced or diminished; or (v) the Executive’s place of employment is relocated by the Company more than a 50-mile radius from San Diego, CA (it being understood and agreed that the Executive may be required to travel in connection with Company business and none of such travel shall constitute or give rise to “Good Reason”). The Executive’s voluntary termination shall be deemed to have occurred for Good Reason for purposes of this Agreement only if (x) the Executive provides written notice to the Company within 30 days after the Executive becomes aware of circumstances giving rise to Good Reason, (y) the Company fails to correct the circumstances giving rise to Good Reason within 30 days following the receipt of such notice (the “Cure Period”) and (z) the Executive resigns within 30 days following the end of the Cure Period. If the Company cures the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

 

(f)    Notice of Termination. Except for termination as specified in Section 3(a), any termination of the Executive’s employment by the Company or any such termination by the Executive shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

 







 

(g)    Date of Termination. “Date of Termination” shall mean: (i) if the Executive’s employment is terminated by his death, the date of his death; (ii) if the Executive’s employment is terminated on account of disability under Section 3(b) or by the Company for Cause under Section 3(c), the date on which Notice of Termination is given; (iii) if the Executive’s employment is terminated by the Company under Section 3(d), the date on which a Notice of Termination is given; (iv) if the Executive’s employment is terminated by the Executive under Section 3(e) without Good Reason, 30 days after the date on which a Notice of Termination is given, and (v) if the Executive’s employment is terminated by the Executive under Section 3(e) with Good Reason, the date on which a Notice of Termination is given after the end of the Cure Period, 30 days after the date on which a Notice of Termination is given. Notwithstanding the foregoing, in the event that the Executive gives a Notice of Termination to the Company, the Company may unilaterally accelerate the Date of Termination and such acceleration shall not result in a termination by the Company for purposes of this Agreement.

 

4.    Compensation Upon Termination.

 

(a)    Termination Generally. If the Executive’s employment with the Company is terminated for any reason, the Company shall pay or provide to the Executive (or to his authorized representative or estate) (i) any Base Salary earned through the Date of Termination, unpaid expense reimbursements (subject to, and in accordance with, Section 2(c) of this Agreement) and unused vacation that accrued through the Date of Termination on or before the time required by law but in no event more than 30 days after the Executive’s Date of Termination; and (ii) any vested benefits the Executive may have under any employee benefit plan of the Company through the Date of Termination, which vested benefits shall be paid and/or provided in accordance with the terms of such employee benefit plans (collectively, the “Accrued Benefit”).

 

(b)    Termination by the Company Without Cause, by the Executive with Good Reason. During the Term, if the Executive’s employment is terminated by the Company without Cause as provided in Section 3(d), or the Executive terminates his employment for Good Reason as provided in Section 3(e), then the Company shall pay the Executive his Accrued Benefit. In addition, subject to the Executive signing a separation agreement containing, among other provisions, a general release of claims in favor of the Company and related persons and entities, confidentiality, return of property and non-disparagement, in a form and manner satisfactory to the Company (the “Separation Agreement and Release”) and the Separation Agreement and Release becoming fully effective, all within the time frame set forth in the Separation Agreement and Release:

 

(i)    the Company shall pay the Executive an amount equal to the Executive’s annual Base Salary plus any pro-rated incentive compensation earned (as determined by the Board or the Compensation Committee) but unpaid as of the Date of Termination (the “Severance Amount”). Notwithstanding the foregoing, if the Executive breaches any of the provisions of the Confidentiality Agreement, or Section 8 of this Agreement, all payments of the Severance Amount shall immediately cease; and

 

(ii)    Notwithstanding anything to the contrary in the applicable stock-based award agreement, the underlying shares of the stock-based award will immediately vest following the expiration of the revocation period as set forth in Separation Agreement and Release; and

 







 

(iii)    if the Executive was participating in the Company’s group health plan immediately prior to the Date of Termination and elects COBRA health continuation, then the Company shall pay to the Executive a monthly cash payment for 12 months or the Executive’s COBRA health continuation period, whichever ends earlier, in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to the Executive if the Executive had remained employed by the Company; and

 

(iv)    the amounts payable under this Section 4(b) shall be paid out in substantially equal installments in accordance with the Company’s payroll practice over 12 months commencing within 60 days after the Date of Termination; provided, however, that if the 60- day period begins in one calendar year and ends in a second calendar year, the Severance Amount shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Date of Termination. Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2).

 

5.    Change in Control Payment. The provisions of this Section 5 set forth certain terms of an agreement reached between the Executive and the Company regarding the Executive’s rights and obligations upon the occurrence of a Change in Control of the Company. These provisions are intended to assure and encourage in advance the Executive’s continued attention and dedication to his assigned duties and his objectivity during the pendency and after the occurrence of any such event. These provisions shall apply in lieu of, and expressly supersede, the provisions of Section 4(b) regarding severance pay and benefits upon a termination of employment if such termination of employment occurs within 12 months after the occurrence of the first event constituting a Change in Control. These provisions shall terminate and be of no further force or effect beginning 12 months after the occurrence of a Change in Control.

 

(a)    Change in Control. During the Term, if within 12 months after a Change in Control, the Executive’s employment is terminated by the Company without Cause as provided in Section 3(d) or the Executive terminates his employment for Good Reason as provided in Section 3(e), then, subject to the signing of the Separation Agreement and Release by the Executive and the Separation Agreement and Release effective all within the time frame set forth in the Separation Agreement and Release,

 

(i)    the Company shall pay the Executive a lump sum in cash in an amount equal to one times the sum of (A) the Executive’s then current Base Salary (or the Executive’s Base Salary in effect immediately prior to the Change in Control, if higher) plus (B) the Executive’s target annual incentive compensation for the then-current year; and

 

(ii)    Notwithstanding anything to the contrary in any applicable option agreement or stock-based award agreement, all stock options, restricted stock and other stock-based grants to Executive by the Company or that may be granted in the future shall, irrespective of any provisions of his award agreements, immediately and irrevocably vest and become exercisable or non-forfeitable and any restrictions thereon shall lapse. All stock options shall remain exercisable from the date of termination until the expiration of the term of such stock options; and

 







 

(iii)    if the Executive was participating in the Company’s group health plan immediately prior to the Date of Termination and elects COBRA health continuation, then the Company shall pay to the Executive a monthly cash payment for 12 months or the Executive’s COBRA health continuation period, whichever ends earlier, in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to the Executive if the Executive had remained employed by the Company; and

 

(iv)    the amounts payable under this Section 5(a) shall be paid or commence to be paid within 60 days after the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, such payment shall be paid or commence to be paid in the second calendar year by the last day of such 60-day period.

 

For the avoidance of doubt, all stock options and other stock-based awards held by the Executive as of the Effective Date shall be treated as indicated in the applicable award agreements.

 

(b)    Additional Limitation.

 

(i)    Anything in this Agreement to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, calculated in a manner consistent with Section 280G of the Code and the applicable regulations thereunder (the “Aggregate Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, then the Aggregate Payments shall be reduced (but not below zero) so that the sum of all of the Aggregate Payments shall be $1.00 less than the amount at which the Executive becomes subject to the excise tax imposed by Section 4999 of the Code; provided that such reduction shall only occur if it would result in the Executive receiving a higher After Tax Amount (as defined below) than the Executive would receive if the Aggregate Payments were not subject to such reduction. In such event, the Aggregate Payments shall be reduced in the following order, in each case, in reverse chronological order beginning with the Aggregate Payments that are to be paid the furthest in time from consummation of the transaction that is subject to Section 280G of the Code: (1) cash payments not subject to Section 409A of the Code; (2) cash payments subject to Section 409A of the Code; (3) equity-based payments and acceleration; and (4) non-cash forms of benefits; provided that in the case of all the foregoing Aggregate Payments all amounts or payments that are not subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c) shall be reduced before any amounts that are subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c).

 







 

(ii)    For purposes of this Section 5(b), the “After Tax Amount” means the amount of the Aggregate Payments less all federal, state, and local income, excise and employment taxes imposed on the Executive as a result of the Executive’s receipt of the Aggregate Payments. For purposes of determining the After Tax Amount, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in each applicable state and locality, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

 

(iii)    The determination as to whether a reduction in the Aggregate Payments shall be made pursuant to Section 5(b)(i) shall be made by a nationally recognized accounting firm selected by the Company (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Company or the Executive. Any determination by the Accounting Firm shall be binding upon the Company and the Executive.

 

(c)    Definitions. For purposes of this Section 5, the following terms shall have the following meanings:

 

“Change in Control” shall mean the consummation of any of the following:

 

(i)    A sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity; or

 

(ii)    A merger, reorganization, or consolidation in which the outstanding shares of common stock of the Company are converted into or exchanged for shares of the successor entity and the holders of the Company’s outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the surviving entity immediately upon the completion of such transaction; or

 

(iii)    The sale of all or a majority of the common stock of the Company to an unrelated person or entity; or

 

(iv)    Any other transaction in which the holders of the Company’s outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the surviving entity in the transaction immediately upon the completion of such transaction.

 

6.    Section 409A.

 

(a)    Anything in this Agreement to the contrary notwithstanding, if at the time of the Executive’s separation from service within the meaning of Section 409A of the Code, the Company determines that the Executive is a “specified employee” within the meaning of Section 409A(a) (2)(B)(i) of the Code, then to the extent any payment or benefit that the Executive becomes entitled to under this Agreement on account of the Executive’s separation from service would be considered deferred compensation otherwise subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after the Executive’s separation from service, or the Executive’s death. If any such delayed cash payment is otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six-month period but for the application of this provision, and the balance of the installments shall be payable in accordance with their original schedule.

 







 

(b)    All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by the Executive during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year (except for any lifetime or other aggregate limitation applicable to medical expenses). Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

(c)    To the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Executive’s termination of employment, then such payments or benefits shall be payable only upon the Executive’s “separation from service.” The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h).

 

(d)    The parties intend that this Agreement will be administered in accordance with Section 409A of the Code. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A of the Code. Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2). The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

 

(e)    The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.

 

7.    Intellectual Property. The Executive acknowledges that all discoveries, concepts, ideas, inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports, patent applications, copyrightable work and mask work (whether or not including any confidential information) and all registrations or applications related thereto, all other proprietary information and all similar or related information (whether or not patentable) which relate to the Company’s or any of its affiliates’ actual or anticipated business, research and development or existing or future products or services and which are conceived, developed or made by the Executive (whether alone or jointly with others) while employed by the Company and its affiliates, whether before or after the date of this Agreement (collectively referred to as “Work Product”), are the property of the Company or such affiliated companies. The Executive shall promptly disclose such Work Product to the Board and, at the Company’s expense, perform all actions reasonably requested by the Board (whether during or after the period of employment) to establish and confirm such ownership (including, without limitation, executing and delivering assignments, consents, powers of attorney and other instruments). The Executive acknowledges that all Work Product shall be deemed to constitute “works made for hire” under the U.S. Copyright Act of 1976, as amended.

 







 

8.    Confidential Information and Cooperation. The Executive agrees that he continues to be bound by the terms of the Confidentiality Agreement.

 

(a)    The Executive agrees that all property (including, without limitation, all equipment, tangible proprietary information, documents, records, notes, contracts, and computer-generated materials) furnished to or created or prepared by the Executive incident to the Executive’s employment belongs to the Company and shall be promptly returned to the Company upon termination of the Executive’s employment.

 

(b)    Upon termination of the Executive’s employment, the Executive shall be deemed to have resigned from any and all offices and directorships then held with the Company and its affiliates. Following any termination of employment, the Executive shall reasonably cooperate with the Company (i) in the winding up of pending work on behalf of the Company and the orderly transfer of work to other employees, and (ii) in the defense of any action brought by any third party against the Company that relates to the Executive’s employment by the Company; provided, that in each case the Company shall reimburse the Executive for any reasonable and documented out-of-pocket fees and expenses incurred by the Executive in connection with such cooperation.

 

(c)    The Executive acknowledges that in the course of the Executive's employment with the Company, the Executive will become familiar with the Company's and its affiliates' trade secrets and with other confidential and proprietary information and that the Executive's services will be of special, unique and extraordinary value to the Company and its affiliates. Therefore, the Executive agrees that the Executive shall not, during the Term and for a period of one (1) year thereafter, directly or indirectly, either for himself or for any other person or entity or otherwise, (i) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or any of its subsidiaries to cease doing business with the Company or any such subsidiary or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and the Company and any such subsidiary; or (ii) induce or attempt to induce any employee of the Company or its affiliates to leave the employ of the Company or any such affiliated company, or in any way interfere with the relationship between the Company and any of its affiliates and any employee thereof, or hire or otherwise engage any person who was an employee of the Company or any of its affiliated companies within one year before any such hiring would take place.

 







 

(d)    The Executive agrees that he will not directly or indirectly, individually or in concert with others, make any statement calculated or likely to have the effect of undermining or disparaging the business or the business reputation of the Company or its affiliates or their respective employees, officers, directors, customers, suppliers, successors and assigns, including, without limitation, negative comments about any such person or company, its management methods, policies and/or practices. Notwithstanding the foregoing, nothing herein shall prohibit the Executive from responding accurately and fully to any question, inquiry or request made in connection with any governmental inquiry, investigation, review, audit or proceeding, any legal proceeding or claim (whether in court, arbitration or otherwise) of any nature, or as otherwise required by law.

 

(e)    If, at the time of enforcement of this Section 8, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum duration, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum duration, scope and area permitted by law. Because the Executive’s services are unique and because the Executive has access to confidential and proprietary information of the Company and its business, the parties hereto agree that money damages would not be an adequate remedy for any breach of Section 8 of this Agreement. Therefore, in the event of a breach or threatened breach of Section 8 of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor and notwithstanding anything herein to the contrary, apply to any court of competent jurisdiction for specific performance and/or injunctive or other equitable relief in order to enforce or prevent any violations of, the provisions hereof (without posting a bond or other security).

 

(f)    The Executive acknowledges that the provisions of this Section 8 are in consideration of the Executive’s employment with the Company and additional good and valuable consideration as set forth in this Agreement. The Executive agrees and acknowledges that the restrictions contained in Section 8 do not preclude the Executive from earning a livelihood, nor do they unreasonably impose limitations on the Executive’s ability to earn a living. The Executive acknowledges (i) that the business of the Company and its affiliates will be conducted throughout the Restricted Territory, (ii) notwithstanding the state of formation or principal office of the Company and its affiliates, or any of their respective executives or employees (including the Executive), it is expected that the Company will have business activities and have valuable business relationships within its industry throughout the Restricted Territory, and (iii) as part of the Executive’s responsibilities, the Executive may be traveling throughout the Restricted Territory in furtherance of the Company’s and its affiliates’ business and its relationships. The Executive acknowledges that the potential harm to the Company of the non-enforcement of Section 8 outweighs any potential harm to the Executive of its enforcement by injunction or otherwise. The Executive acknowledges that the Executive has carefully read this Agreement and has given careful consideration to the restraints imposed upon the Executive by this Agreement and is in full accord as to their necessity for the reasonable and proper protection of confidential and proprietary information of the Company and its subsidiaries now existing or to be developed in the future. The Executive acknowledges that each and every restraint imposed by this Agreement is reasonable with respect to scope, duration, and geographical area.

 







 

9.    Arbitration of Disputes. Any controversy or claim arising out of or relating to this Agreement or the breach thereof or otherwise arising out of the Executive’s employment or the termination of that employment (including, without limitation, any claims of unlawful employment discrimination whether based on age or otherwise) shall, to the fullest extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties or, in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators. In the event that any person or entity other than the Executive or the Company may be a party with regard to any such controversy or claim, such controversy or claim shall be submitted to arbitration subject to such other person or entity’s agreement. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. This Section 9 shall be specifically enforceable. Notwithstanding the foregoing, this Section 9 shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this Section 9.

 

10.    Consent to Jurisdiction. To the extent that any court action is permitted consistent with or to enforce Section 9 of this Agreement, the parties hereby consent to the jurisdiction of the District Court of Denver County, Colorado, and the United States District Court for the District of Colorado. Accordingly, with respect to any such court action, the Executive (a) submits to the personal jurisdiction of such courts; (b) consents to service of process; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.

 

11.    Integration. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements between the parties concerning such subject matter, provided that the Confidentiality Agreement remains in full force and effect.

 

12.    Withholding. All payments made by the Company to the Executive under this Agreement shall be net of any tax or other amounts required to be withheld by the Company under applicable law.

 

13.    Successor to the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal representatives, executors, administrators, heirs, distributees, devisees, and legatees. In the event of the Executive’s death after his termination of employment but prior to the completion by the Company of all payments due him under this Agreement, the Company shall continue such payments to the Executive’s beneficiary designated in writing to the Company prior to his death (or to his estate, if the Executive fails to make such designation).

 

14.    Enforceability. If any portion or provision of this Agreement (including, without limitation, any portion or provision of any section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

 







 

15.    Survival. The provisions of this Agreement shall survive the termination of this Agreement and/or the termination of the Executive’s employment to the extent necessary to effectuate the terms contained herein.

 

16.    Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

 

17.    Notices. Any notice to be given under this Agreement shall be in writing and delivered personally or sent by overnight courier or registered or certified mail, postage prepaid, return receipt requested, addressed to the party concerned at the address indicated below, or to such other address of which such party subsequently may give notice in writing:

 

If to Executive:           To the address specified in the payroll records of the Company.

 

If to the Company:      Aytu BioPharma, Inc., 7900 East Union Avenue, Suite 920, Denver, Colorado 80237

 

Any notice delivered personally or by overnight courier shall be deemed given on the date delivered and any notice sent by registered or certified mail, postage prepaid, return receipt requested, shall be deemed given on the date mailed.

 

18.    Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Company.

 

19.    Governing Law. This is a Colorado contract and shall be construed under and be governed in all respects by the laws of the State of Colorado, without giving effect to the conflict of laws principles of such State. With respect to any disputes concerning federal law, such disputes shall be determined in accordance with the law as it would be interpreted and applied by the United States Court of Appeals for the District of Colorado.

 

20.    Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.

 

21.    Successor to Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement to the same extent that the Company would be required to perform it if no succession had taken place. Failure of the Company to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a material breach of this Agreement.

 

22.    Gender Neutral. Wherever used herein, a pronoun in the masculine gender shall be considered as including the feminine gender unless the context clearly indicates otherwise.

 







 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

AYTU BIOPHARMA, INC.

 

 

By: /s/ Vivian Liu_________________________

Name: VIVIAN LIU

Chairwoman of the Compensation Committee Board of Directors

EXECUTIVE

 

 

/s/ Ryan J. Selhorn______________________________

Name: RYAN J. SELHORN

Chief Financial Officer

 







 

Exhibit A

 

[REDACTED]

 

[REDACTED]

 
EX-99.1 3 ex_722664.htm EXHIBIT 99.1 ex_722664.htm

Exhibit 99.1

 

logo.jpg

 

Aytu BioPharma Reports Fiscal 2025 First Quarter Operational and Financial Results

 

Net income of $1.5 million

 

Adjusted EBITDA1 of $1.9 million

 

ADHD Portfolio net revenue up 1% to $15.3 million

 

Pediatric Portfolio net revenue up 54% sequentially

 

$20.1 million cash balance at September 30, 2024

 

Organizational changes and operating optimization plan implemented to further streamline operations, reduce expenses, and accelerate path to consistent cash flow

 

Ryan Selhorn promoted to Chief Financial Officer

 

Company to host conference call and webcast today, November 13, 2024, at 4:30 p.m. Eastern time

 

DENVER, CO / November 13, 2024 / Aytu BioPharma, Inc. (the “Company” or “Aytu”) (Nasdaq:AYTU), a pharmaceutical company focused on commercializing novel therapeutics, today announced operational and financial results for the fiscal 2025 first quarter.

 ​

Q1 2025 Highlights

 

 

ADHD Portfolio (Adzenys XR-ODT® and Cotempla XR-ODT®) net revenue increased 1% to $15.3 million versus $15.1 million in Q1 fiscal 2024.

 

Pediatric Portfolio (Karbinal® ER, Poly-Vi-Flor® and Tri-Vi-Flor®) net revenue increased 54% sequentially to $1.3 million, reflecting positive effects from recently implemented return-to-growth plan for the pediatric product line.
  Net revenue was $16.6 million versus $17.8 million in the prior year period with the decrease primarily related to a change in payor coverage last year, which impacted the Pediatric Portfolio.
 

Gross profit percentage was 72% in Q1 fiscal 2025 compared to 73% in Q1 fiscal 2024.
 

Net income for Q1 fiscal 2025 was $1.5 million, or $0.24 net income per share basic and $0.15 net loss per share diluted, compared to a net loss of $8.1 million, or $1.48 net loss per share for both basic and diluted in Q1 fiscal 2024.
 

Adjusted EBITDA was $1.9 million in Q1 fiscal 2025 compared to $2.4 million in Q1 fiscal 2024.
 

Cash and cash equivalents were $20.1 million at September 30, 2024, compared to $20.0 million at June 30, 2024.

 







 

Management Discussion

 

“The initiatives we undertook two years ago to reposition Aytu as a growing specialty pharmaceutical company focused on commercializing novel prescription therapeutics were done with an aim towards driving consistent operating cash flow. The results of the first quarter continue to showcase the positive impact from these initiatives as we reported our sixth consecutive quarter of positive adjusted EBITDA and posted positive net income for the first time in the Company’s history," commented Josh Disbrow, Chief Executive Officer of Aytu. “Looking forward, we expect to further accelerate our profitability goals through continued revenue growth across our product portfolio by leveraging the unique capabilities of our commercial platform, including Aytu RxConnect, as well as through continued optimization of our organizational processes with an expectation of reducing our operating expenses by at least $2.0 million annually. We remain steadfast in our pursuit to drive stockholder value in Aytu.”

 

“During the first quarter, we experienced continued year-over-year and sequential net revenue growth of our ADHD Portfolio primarily due to an improvement in our gross-to-nets. The ADHD market returned to a more normalized status following the competitor stimulant shortages over the past 18 months, which helped to temporarily bolster Adzenys and Cotempla scripts. I am pleased that we exited this period with our prescriptions well above the historical trends. During the first quarter of fiscal 2025, there were approximately 99,000 ADHD prescriptions written compared to 91,000 in Q1 2022 and 90,000 in Q1 2023. We have successfully reset the baseline as prescribers and patients have recognized the benefits that both our products and dynamic RxConnect program provide.”

 

“Pediatric Portfolio net revenue increased 54% quarter over quarter. This is the first sequential revenue growth we have reported in the last five quarters and is directly attributable to the initiatives we put in place to counteract the payor changes experienced last year. These programs included improving coverage, increasing promotional emphasis and repositioning our products in the marketplace. I am pleased with the momentum we continue to see in both our ADHD and pediatric portfolios.”

 

Organizational Changes and Operating Optimization Plan

 

Aytu successfully repositioned itself as a growing specialty pharmaceutical company focused on commercializing novel prescription therapeutics. During the past year, the Company wound down and sold its Consumer Health business. Prior to that, the Company announced the indefinite suspension of all pipeline clinical development programs. The Company also spent over two years working on manufacturing, operational, and regulatory initiatives to outsource the contract manufacturing of its ADHD products with the Grand Prairie, Texas facility set to be returned to the landlord at the end of calendar 2024. Recently, the Company implemented a new series of organizational changes focused on optimizing operations and driving near-term cash flow. These new optimization efforts are expected to further reduce operating expenses by at least $2.0 million annually.

 

Key optimization efforts include:

 

 

The promotion of Ryan Selhorn, current Executive Vice President of Finance and Business Optimization, to the role of Chief Financial Officer, replacing Mark Oki, who will depart the Company;

 

The elimination of the role of Senior Vice President of Research and Development; current Senior Vice President of Research and Development, Russ McMahen, will leave the company and is expected to transition to a consulting role; and

 

Elimination of several general and administrative positions primarily within accounting and other corporate functions.

 

Mr. Disbrow commented, “By virtue of implementing these optimization strategies, we say goodbye to two highly experienced executives to whom we are very grateful, Mark Oki and Russ McMahen, along with additional members of our team. Mark led the accounting and finance functions through an important time of growth, consolidation and process improvement, and has positioned us well as we move into this next phase of growth. Mark was instrumental in leading multiple key aspects of the Company’s transformation over the last two-plus years, and we wish him well in his future endeavors and thank him for his steadfast leadership at Aytu.”

 

“Russ has been an instrumental member of the Aytu management team since the Neos Therapeutics acquisition in 2021 and was a pivotal member of the team responsible for bringing Adzenys and Cotempla through the development process and to market. Russ has been the consummate professional through this time of transition, and now that we have fully transitioned out of the Texas facility, wish him well and thank him for continuing to assist the Company in his planned consulting role going forward.”

 







 

“Aytu is in great hands with Ryan leading the accounting and finance functions for the team going forward. Ryan joined Aytu in 2020 and has over 21 years of experience across finance, accounting, business development, business integrations and operations and has served as a public company Chief Financial Officer at numerous life sciences companies. I look forward to his leadership moving forward,” Mr. Disbrow concluded.

 

Prior to Ryan’s appointment as Chief Financial Officer, he served as Aytu’s Executive Vice President, Finance and Business Optimization since November 2022. Prior to this, Ryan was Aytu’s Senior Vice President, Finance and Operations, Consumer Healthcare Division from February 2022 to November 2022 and as Vice President, Finance, Consumer Healthcare Division from February 2020 to February 2022. Ryan served as Vice President and Chief Financial Officer from April 2018 at Innovus Pharmaceuticals, Inc., a publicly held consumer healthcare company, until Aytu’s acquisition of Innovus in February 2020. From August 2013 to April 2018, Ryan served as Chief Financial Officer and Chief Accounting Officer of Signature Analytics, a privately held fractional Chief Financial Officer and accounting firm, where he also served as Chief Financial Officer of Medicinova, Inc., a publicly held biotechnology company. Ryan worked at Grant Thornton LLP, a public accounting firm, from October 2003 to July 2013, most recently in the role of Senior Manager, Transaction Advisory Services. Ryan received his B.S./B.A., Accounting and Finance from Georgetown University and is a Certified Public Accountant (inactive).

 

Consumer Health – Discontinued Operations

 

In June 2023, the Company announced that it had instituted a strategic mandate focusing its business solely on its Rx business. Following the successful completion of the wind down and divestiture of the Consumer Health business in the first quarter of fiscal 2025, this marked the completion of the Company’s restructuring efforts, which also included the suspension of all pipeline clinical development programs and the transfer of the manufacturing of certain of the Company’s products to a United States-based third-party manufacturer and the related closure of its manufacturing facility in Grand Prairie, Texas. The Company expects the savings realized from these strategic shifts to significantly enhance its operating results and drive stockholder value.

 

The accounting requirements for reporting the Consumer Health business divestiture as a discontinued operation were met when the wind down and divestiture was completed on July 31, 2024. Accordingly, the Company's unaudited consolidated financial statements for all periods presented reflect the Consumer Health business as a discontinued operation. In addition, the Company’s fiscal 2024 quarterly results classify the Consumer Health business as a discontinued operation.

 

Net Revenue by Portfolio

 

Three Months Ended

 

 

September 30,

 

 

2024

   

2023

 

 

(in thousands)

 

ADHD Portfolio

  $ 15,264     $ 15,128  

Pediatric Portfolio

    1,293       2,565  

Other*

    17       124  

Total net revenue

  $ 16,574     $ 17,817  

*Other includes discontinued or deprioritized products.

 







 

Q1 2025 Financial Results

 

Net revenue for the first quarter of fiscal 2025 was $16.6 million, compared to $17.8 million for the prior year period. The decrease was primarily due to a decrease in net revenue from the Pediatric Portfolio driven by payer changes that negatively affected prescription coverage. In the first quarter of 2025, we reduced an accrued rebate liability related to the ADHD Portfolio by $3.3 million resulting in an increase in net revenue of $3.3 million.

 

The ADHD Portfolio (Adzenys XR-ODT® and Cotempla XR-ODT®) experienced a 1% increase in net revenue to $15.3 million in the first quarter of fiscal 2025, compared to the prior year period. The Pediatric Portfolio (Karbinal® ER, Poly-Vi-Flor® and Tri-Vi-Flor®) net revenue decreased to $1.3 million primarily related to a change in payor coverage last year that impacted prescriptions. Pediatric Portfolio revenue increased 54% sequentially.

 

Gross profit was $12.0 million, or 72% of net revenue, in the first quarter of fiscal 2025, compared to $13.0 million, or 73% of net revenue, in the same quarter last year.

 

Operating expenses, excluding amortization of intangible assets and restructurings costs, were $11.2 million in the first quarter of fiscal 2025 compared to $13.0 million in the prior year period. The decrease was a result of continued cost reduction efforts and improved operational efficiencies.

 

Loss from operations was $0.9 million for both the first quarter of fiscal 2025 and the prior year period.

 

Net income during the first quarter of fiscal 2025 was $1.5 million, or $0.24 net income per share basic and $0.15 net loss per share diluted, compared to a $8.1 million net loss, or $1.48 net loss per share for both basic and diluted, in the prior year period. The fiscal 2025 first quarter results were impacted by $2.9 million of derivative warrant liabilities gain due primarily to the decrease in the Company’s stock price and $0.4 million of income tax expense.

 

Adjusted EBITDA was $1.9 million in the first quarter of fiscal 2025, compared to $2.4 million in the prior year period, a $0.5 million decrease resulting largely from the decrease in the Pediatric Portfolio net revenue, partially offset by decreased operating costs as a result of reduced spending and improved operational efficiencies.

 

Cash and cash equivalents at September 30, 2024, were $20.1 million compared to $20.0 million at June 30, 2024.

 

Conference Call Details

 

Date and Time: Wednesday, November 13, 2024, at 4:30 p.m. Eastern time.

 

Call-in Information: Interested parties can access the conference call by dialing (877) 545-0320 for United States callers or +1 (973) 528-0002 for international callers and using the participant access code 428941.

 

Webcast Information: The webcast will be accessible live and archived at https://www.webcaster4.com/Webcast/Page/2142/51583, and accessible on the Investors section of the Company’s website at https://investors.aytubio.com/ under Events & Presentations.

 

Replay: A teleconference replay of the call will be available until Wednesday, November 27, 2024, at (877) 481-4010 for United States callers or +1 (919) 882-2331 for international callers and using replay access code 51583.

 

About Aytu BioPharma, Inc.

 

Aytu is a pharmaceutical company focused on commercializing novel therapeutics. The Company's prescription products include Adzenys XR-ODT® (amphetamine) extended-release orally disintegrating tablets (see Full Prescribing Information, including Boxed WARNING) and Cotempla XR-ODT® (methylphenidate) extended-release orally disintegrating tablets (see Full Prescribing Information, including Boxed WARNING) for the treatment of attention deficit hyperactivity disorder (ADHD), Karbinal® ER (carbinoxamine maleate), an extended-release antihistamine suspension indicated to treat numerous allergic conditions, and Poly-Vi-Flor® and Tri-Vi-Flor®, two complementary fluoride-based prescription vitamin product lines available in various formulations for infants and children with fluoride deficiency. To learn more, please visit aytubio.com.

 







 

Forward-Looking Statements

 

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). All statements other than statements of historical facts contained in this press release, are forward-looking statements. Forward-looking statements are generally written in the future tense and/or are preceded by words such as “may,” “will,” “should,” “forecast,” “could,” “expect,” “suggest,” “believe,” “estimate,” “continue,” “anticipate,” “intend,” “plan,” or similar words, or the negatives of such terms or other variations on such terms or comparable terminology. All statements other than statements of historical facts contained in this presentation, are forward-looking statements. These statements are predictions and are subject to risks and uncertainties that could cause the actual events or results to differ materially. These risks and uncertainties include, among others, risks associated with: the Company’s overall financial and operational performance, potential adverse changes to the Company’s financial position or our business, the results of operations, strategy and plans, changes in capital markets and the ability of the Company to finance operations in the manner expected, risks relating to gaining market acceptance of our products, our partners performing their required activities, our anticipated future cash position, regulatory and compliance challenges and future events under current and potential future collaborations. We also refer you to (i) the risks described in “Risk Factors” in Part I, Item 1A of our most recent Annual Report on Form 10‑K and in the other reports and documents it files with the United States Securities and Exchange Commission.​

 

Footnote 1

 

Aytu uses the term adjusted EBITDA, which is a term not defined under United States generally accepted accounting principles (“U.S. GAAP”). The Company uses this term because it is a widely accepted financial indicator utilized to analyze and compare companies on the basis of operating performance. The Company believes that presenting adjusted EBITDA by certain categories allows investors to evaluate the various performance of these categories. The Company's method of computation of adjusted EBITDA may or may not be comparable to other similarly titled measures used by other companies. We believe that net income (loss) is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted EBITDA. See below for a reconciliation of net income (loss) to adjusted EBITDA.

 

Contacts for Investors

 

Ryan Selhorn, Chief Financial Officer

Aytu BioPharma, Inc.

rselhorn@aytubio.com

 

Robert Blum or Roger Weiss

Lytham Partners

aytu@lythampartners.com

 







 

Aytu BioPharma, Inc.

Unaudited Consolidated Statements of Operations

(in thousands, except share and per share data)

 

 

Three Months Ended

 

 

September 30,

 

 

2024

   

2023

 

Net revenue

  $ 16,574     $ 17,817  

Cost of sales

    4,589       4,779  

Gross profit

    11,985       13,038  

 

   

 

Operating expenses:

               

Selling and marketing

    5,659       6,091  

General and administrative

    5,125       6,295  

Research and development

    426       595  

Amortization of intangible assets

    921       924  

Restructuring costs

    784        

Total operating expenses

    12,915       13,905  

Loss from operations

    (930 )     (867 )

Other income, net

    542       584  

Interest expense

    (994 )     (1,283 )

Derivative warrant liabilities gain (loss)

    2,880       (5,907 )

Income (loss) from continuing operations before income tax expense

    1,498       (7,473 )

Income tax expense

    (405 )      

Net income (loss) from continuing operations

    1,093       (7,473 )

Net income (loss) from discontinued operations, net of tax

    381       (647 )

Net income (loss)

  $ 1,474     $ (8,120 )

 

   

 

Basic weighted-average common shares outstanding

    6,068,019       5,482,037  

Diluted weighted-average common shares outstanding

    9,099,601       5,482,037  
                 

Net income (loss) per share:

               

Basic - continuing operations

  $ 0.18     $ (1.36 )

Diluted - continuing operations

  $ (0.20 )   $ (1.36 )

Basic - discontinued operations, net of tax

  $ 0.06     $ (0.12 )

Diluted - discontinued operations, net of tax

  $ 0.04     $ (0.12 )

Basic - net income (loss)

  $ 0.24     $ (1.48 )

Diluted - net loss

  $ (0.15 )   $ (1.48 )

 







 

Aytu BioPharma, Inc.

Unaudited Consolidated Balance Sheets

(in thousands, except share data)

 

 

September 30,

   

June 30,

 

 

2024

   

2024

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 20,108     $ 20,006  

Accounts receivable, net

    23,159       23,526  

Inventories

    11,739       12,141  

Prepaid expenses and other current assets

    5,732       5,097  

Current assets of discontinued operations

          1,121  

Total current assets

    60,738       61,891  

Non-current assets:

 

   

 

Property and equipment, net

    692       693  

Operating lease right-of-use assets

    1,225       829  

Intangible assets, net

    51,205       52,453  

Other non-current assets

    1,971       2,185  

Non-current assets of discontinued operations

          44  

Total non-current assets

    55,093       56,204  

Total assets

  $ 115,831     $ 118,095  

 

   

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Current liabilities:

               

Accounts payable

  $ 13,513     $ 10,314  

Accrued liabilities

    33,723       38,143  

Revolving credit facility

    4,270       2,395  

Current portion of debt

    1,857       1,857  

Other current liabilities

    7,889       8,962  

Current liabilities of discontinued operations

          557  

Total current liabilities

    61,252       62,228  

Non-current liabilities:

               

Debt, net of current portion

    10,430       10,877  

Derivative warrant liabilities

    9,402       12,745  

Other non-current liabilities

    4,921       4,529  

Total non-current liabilities

    24,753       28,151  

Stockholders’ equity:

               

Preferred stock, par value $.0001; 50,000,000 shares authorized; no shares issued or outstanding

           

Common stock, par value $.0001; 200,000,000 shares authorized; 6,149,202, and 5,972,638 shares issued and outstanding, respectively

    1       1  

Additional paid-in capital

    348,324       347,688  

Accumulated deficit

    (318,499 )     (319,973 )

Total stockholders’ equity

    29,826       27,716  

Total liabilities and stockholders’ equity

  $ 115,831     $ 118,095  

 







 

Aytu BioPharma, Inc.

Unaudited Reconciliation of Net Income (Loss) to Adjusted EBITDA  

(in thousands)

 

 

Three Months Ended

 
   

September 30,

 
   

2024

   

2023

 

Net income (loss) - GAAP

  $ 1,474     $ (8,120 )

Interest expense

    994       1,283  

Income tax expense

    405        

Depreciation and amortization

    1,334       1,554  

Stock-based compensation expense

    173       725  

Other income, net

    (542 )     (584 )

Derivative warrant liabilities (gain) loss

    (2,880 )     5,907  

One-time transactions

          851  

Non-recurring legal fees

    402        

Restructuring costs

    784        

Pipeline research and development costs

    168       152  

Net (income) loss from discontinued operations, net of tax

    (381 )     647  

Adjusted EBITDA - non-GAAP

  $ 1,931     $ 2,415  

 







 

Aytu BioPharma, Inc.

Unaudited Fiscal 2024 Quarterly and Full Year Consolidated Statements of Operations Adjusted for Discontinued Operations

(in thousands)

 

   

Three Months Ended

   

Twelve Months Ended

 
   

June 30, 2024

   

March 31, 2024

   

December 31, 2023

   

September 30, 2023

   

June 30, 2024

 
   

(as adjusted)

 

Net revenue

  $ 14,593     $ 14,025     $ 18,748     $ 17,817     $ 65,183  

Cost of sales

    3,541       3,664       4,145       4,779       16,129  

Gross profit

    11,052       10,361       14,603       13,038       49,054  

                                 

 

Operating expenses:

                                       

Selling and marketing

    5,422       5,352       5,218       6,091       22,083  

General and administrative

    4,028       4,831       4,800       6,295       19,954  

Research and development

    1,042       611       521       595       2,769  

Amortization of intangible assets

    921       920       918       924       3,683  

Restructuring costs

    1,912       244                   2,156  

Total operating expenses

    13,325       11,958       11,457       13,905       50,645  

(Loss) income from operations

    (2,273 )     (1,597 )     3,146       (867 )     (1,591 )

Other income, net

    120       70       96       584       870  

Interest expense

    (1,253 )     (1,257 )     (1,266 )     (1,283 )     (5,059 )

Derivative warrant liabilities gain (loss)

    1,463       1,017       (577 )     (5,907 )     (4,004 )

Loss on debt extinguishment

    (594 )                       (594 )

(Loss) income from continuing operations before income tax expense

    (2,537 )     (1,767 )     1,399       (7,473 )     (10,378 )

Income tax expense

    (695 )     (245 )     (828 )           (1,768 )

Net (loss) income from continuing operations

    (3,232 )     (2,012 )     571       (7,473 )     (12,146 )

Net loss from discontinued operations, net of tax

    (1,385 )     (875 )     (791 )     (647 )     (3,698 )

Net loss

  $ (4,617 )   $ (2,887 )   $ (220 )   $ (8,120 )   $ (15,844 )

 







 

Aytu BioPharma, Inc.

Unaudited Fiscal 2024 Reconciliation of Net Loss Adjusted for Discontinued Operations to Adjusted EBITDA

(in thousands)

 

   

Three Months Ended

   

Twelve Months Ended

 
   

June 30, 2024

   

March 31, 2024

   

December 31, 2023

   

September 30, 2023

   

June 30, 2024

 
   

(as adjusted)

 

Net loss - GAAP

  $ (4,617 )   $ (2,887 )   $ (220 )   $ (8,120 )   $ (15,844 )

Interest expense

    1,253       1,257       1,266       1,283       5,059  

Income tax expense

    695       245       828             1,768  

Depreciation and amortization

    1,398       1,449       1,510       1,553       5,910  

Stock-based compensation expense

    243       699       707       725       2,374  

Other income, net

    (120 )     (70 )     (96 )     (584 )     (870 )

Derivative warrant liabilities (gain) loss

    (1,463 )     (1,017 )     577       5,907       4,004  

One-time transactions

    150                   851       1,001  

Restructuring costs

    1,912       244                   2,156  

Loss on extinguishment of debt

    594                         594  

Pipeline research and development costs

    599       136       96       152       983  

Net loss from discontinued operations, net of tax

    1,385       875       791       647       3,698  

Adjusted EBITDA - non-GAAP

  $ 2,029     $ 931     $ 5,459     $ 2,414     $ 10,833