Aytu BioPharma, Inc.

The substantial increase is largely due to the recognition of the fair value of the acquired assets, including the associated goodwill. Other key items driven by the asset purchase include a higher AR balance, which reflects increased sales and some changes to the administrative processes related to AR collections. Inventory and prepaid asset balances each increased due to the asset purchase, and a new asset, other current assets, was recognized for amounts owed to the company by third parties for certain reimbursable operating costs. Our Q2 ending cash balance totaled $5.5 million. and the liability side, our accounts payable increased by approximately $7.3 million as a result of assuming $4.1 million of liabilities related to the asset acquisition, increased operating expense associated with absorbing the former Seracor commercial team and transaction costs. Accrued liabilities increased approximately $1 million due primarily to the assumption of new royalty and other product-related fees tied to the asset purchase. Our long-term liabilities now include fixed payment obligations in the stated amount of approximately $26 million, which were assumed with the asset purchase. One portion of the fixed payment obligations matures in January of 2021, requiring a payment of approximately $15 million. So in summary, we have a much larger balance sheet as a result of the asset purchase and have assumed certain fixed liabilities and other obligations. Looking ahead. We expect top-line growth to continue with the addition of the acquired product portfolio and the burn rate to decline as revenue grows and we shed overlapping costs that resulted from the asset purchase over the next two to three quarters. And with that, I'll turn the call back over to Josh.

Thank you, Dave. Again, it was an extremely busy and transformational quarter, particularly on the corporate and also on the scientific development front. Natesto had a breakout quarter with respect to its clinical story. On October 17th, the company announced positive results from the Natesto's spermatogenesis study, which were presented at the annual meeting of the American Society for Reproductive Medicine. Dr. Ranjith Ramasamy, the study's principal investigator and director of reproductive urology at the University of Miami, presented that over the course of a six-month treatment period with Natesto, hypogonadal men increased their serum testosterone levels while maintaining normal sperm concentration, sperm motility, and total modal sperm count. This data readout convincingly separates Natesto from other low-T treatments in that men maintain their fertility while taking Natesto, something no other testosterone replacement therapy has demonstrated. We're excited about getting these data into the scientific domain, and following that, we'll look to begin discussions on potential label modification for Natesta. We'll work in concert with our partners at Aceris to move that initiative forward. Now on to our corporate transformation. In Q2, again, we closed that SeraCore asset purchase of the commercial RX portfolio. This commercial portfolio generated $12.7 million in revenue for the 12 months into 1231, and consists of five novel and differentiated therapeutics. Following the asset purchase, we moved immediately to bring over much of the former Cerakor commercial group and their leader, Matt Phillips. In conjunction with that move, we rationalized multiple low-performing or overlapping legacy sales territories and kept the highest performers across both legacy organizations. With the acquisition of the commercial portfolio, we've increased RX portfolio revenues to $20 million on an annual basis, and we believe more growth is in store. The sales teams have come together as one as we've just concluded our first national sales meeting a few weeks ago. At that meeting, we conducted extensive cross-training on the testo such that all former Seracor reps are now out there promoting the testo alongside the Aytu legacy reps. We'll continue to evaluate and implement cross-selling opportunities across the product line and put the best resources to work for our portfolio. Now for the most recent component of our transformation, a pending acquisition of an office. Just this morning, both companies held their special shareholder meetings with the merger that was approved. With this approval, we expect to close the transaction in general.

Aytu Bioscience issued a press release earlier this afternoon with details of the company's operational and financial results for this third quarter. The company of the press release is available on the news page of the company's website at AytuBio.com.