AYTU BIOPHARMA, INC Q1 FY2025 earnings call

• The company achieved positive net income for the first time in its history and sixth consecutive quarter of positive adjusted EBITDA. - ADHD script levels are well - above the normalized trend lines prior to supply shortages. - Pediatric portfolio saw first sequential revenue growth in the last five quarters due to initiatives to improve coverage, redirect promotional resources, etc. - Consumer Health business sale completed, with historical impact classified as discontinued operations. Implemented new organizational changes to optimize operations and drive near - term cash - flow, expected to further reduce operating expenses by at least $2 million annually. - Resolved multi - year rebate dispute with payer for ADHD portfolio, increasing net revenue by $3.3 million and reducing related liability. - In Pediatric side, increased covered lives, had payer wins, and saw good early traction in customer ordering, physician prescribing, and pharmacy dispensing.

In Q1, net revenue was $16.6 million. ADHD revenue was $15.3 million (compared to $15.1 million in the year - ago first - quarter), accounting for approximately 92.2% of the total net revenue. Pediatric revenue was $1.3 million (versus $2.6 million in the year - ago first - quarter, but up sequentially from $0.8 million in Q4 of fiscal 2024), accounting for approximately 7.8% of the total net revenue. ADHD net revenue was up 11% sequentially and 1% compared to the prior year period. Pediatric portfolio saw 54% sequential revenue growth.

• Expect expenses to continue to drop further in the quarters to come. - Balance sheet has $20.1 million in cash at the end of September, putting the company in a strong position for fiscal 2025. - With ADHD and Pediatric portfolios trending positively, top - line progress will be coupled with a lower operating cost base, and the company believes it will see continued positive results throughout fiscal 2025.

• Uncertainties related to market - wide supply shortages and their impact on product availability and revenue. - Risks associated with the implementation of organizational changes and potential challenges in achieving the expected cost reductions. - Fluctuations in payer coverage and reimbursement which could affect revenue from Pediatric products.

Q: On the ADHC franchise, do you think there is a strategic opportunity to broaden promotional and extend your geographic reach for the franchise?

A: Yes, we've already begun to do that in multiple ways. We have our direct sales force and evaluate territories for expansion. We've aligned with unique distributors and use RxConnect network pharmacies. We also use non - personal promotion and other tactics.

Q: Can you provide additional color on how scripts have been seen the most growth on the Pediatric front and comment on gross to nets and pricing for the products since the summer?

A: Gross to nets have been steady and stabilizing with a seasonal effect. On the Pediatric script front, we've seen 54% sequential revenue growth. Gross to nets generally improve throughout the year as deductibles are met earlier. Scripts in Pediatrics are up another 16% from September to October.

Q: When do you think the noise in the gross margin numbers will be gone?

A: Of the $12.1 million of inventory held at June 30th, about $11.5 million includes indirect costs that starting in Q1 of 2025 will be expensed as incurred. Currently, we anticipate that Q2 and Q3 will incur these lower margins with Q4 starting to see some improvement with a fully normalized margin by Q1 of fiscal 2026.

Q: Can you expand on various product licensing opportunities, both from an out - licensing perspective as well as an in - licensing perspective?

A: On out - licensing, we've announced deals to license our ADHD brands in Israel (with Medomi Pharma) and Canada (with Lupin). We expect to see royalties come in from these deals in 18 to 24 months. On in - licensing, we're actively pursuing commercial - stage assets that fit our call points and RxConnect infrastructure, including psychiatric and Pediatric assets that may fit well with our platform.