Aytu BioPharma, Inc.

Good afternoon and thank you for joining us for the A2 Biopharma fourth quarter and full year fiscal 2021 financial results call. With me this afternoon are A2's Chairman and Chief Executive Officer Josh Disbro and Chief Financial Officer Richard Eisenstadt. A2 Biopharma issued a press release earlier today with the details of the company's operational and financial results for the fiscal fourth quarter and full year 2021. A copy of the press release is available on the news page of the company's website at A2Bio.com. I'd like to remind everyone that today's call is being recorded. A replay of today's call will be available by using the telephone numbers and conference ID provided in the earnings press release. In addition, a webcast will be accessible live and archived on A2's website within the Investors section under Events and Presentations at A2Bio.com. Finally, I'd like to call your attention to the customary safe harbor disclosure regarding forward-looking information. The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations, and future potential operating results of A2 Biopharma. Although management believes these statements are reasonable based on estimates, assumptions, and projections, as of today, September 27, 2021, these statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risks, uncertainties, and other factors, including but not limited to the factors set forth in the company's filings with the SEC. A2 undertakes no obligations to update or revise any of these forward-looking statements. I'd now like to turn the call over to A2's CEO, Josh Disbro. Sir, the floor is yours.

Thank you, Taryn. Good afternoon, everyone, and thanks for joining us today. Over the past year and a half, we embarked on a transformational journey to become a premier pediatric-focused specialty pharmaceutical company. We successfully executed on several key milestones, which I look forward to discussing in more detail on this call. We're excited about how A2 Biopharma is positioned today as we implement our growth plans and seek to drive future value with our growing prescription portfolio, a resized and integrated commercial infrastructure, a growing consumer health subsidiary, and an exciting late-stage therapeutics pipeline. We have the products, the people, and the pipeline in place, and we're prepared to execute. We are now operating as a fully integrated company following our merger with Neos Therapeutics, which closed just five months ago, as well as an additional three transactions, including the purchase of our pipeline asset, AR101, from Rumpus Therapeutics. Through both these strategic acquisitions and organic product growth, we have posted 138% year-over-year revenue growth, and we're now on a $90 million pro forma revenue run rate. Rich will discuss the financials in more detail shortly, But I wanted to quickly touch on revenues and our CAS position before turning to a review of our commercial business and product pipeline. This quarter, we posted revenue of $23.5 million, an all-time high for A2, up from $13.5 million last quarter and $14.9 million in the same quarter last year. Included with this revenue number, our Consumer Health Division posted another all-time high revenue quarter of $8.9 million. Our revenue growth was primarily driven by the addition of the NEOS Rx portfolio and the growth of our consumer health segment through our e-commerce and direct-to-consumer channels and new product introductions. We ended the quarter with approximately $50 million in cash. This cash gives us sufficient capital to reach operating break-even. Turning now to our commercial portfolio. Our prescription products compete in large therapeutic markets with approximately $24 billion in total addressable market across five therapeutic categories. We have built an RX and consumer health product portfolio consisting of five core prescription brands and over 20 consumer health brands. We operate an efficient commercial model. In this quarter, we successfully completed the resizing and integration of the A2 and Neo sales forces, resulting in 40 CNS-aligned sales specialists and 10 pediatric-aligned sales specialists. The CNS specialists are promoting Adzenis XR-ODT, Cotempla XR-ODT, and Zolpamist, while the pediatric-aligned sales specialists are primarily promoting polyviflor, triviflor, and carbonyl ER. This Salesforce integration represents a significant part of the $15 million in merger synergy savings we expect to realize in fiscal 22. Our prescription brands address large, growing markets, with a focus on the 70-plus million annual prescription ADHD markets. We expect at Zenith and contemplate to be the drivers of future growth for our focus portfolio while our prescription multivitamins poly by floor and try by floor are expected to be the primary growth drivers for the pediatric focus portfolio. The consumer health division contributes approximately a third of our revenue and posted thirty three million for the fiscal year. The Consumer Health Division markets OTC medicines, dietary supplements, and personal care products, and commercializes the product portfolio through an efficient combination of direct consumer outreach and e-commerce tactics. This is an efficient model operated by a small number of employees. A2 Consumer Health directly accesses millions of healthcare consumers to deliver a broad range of consumer health products in diverse categories. Consistent with the mindset of the Rx Division, The consumer health division also targets large and growing categories. On the Rx side, in the fourth quarter, we launched our newly rebranded A2 RxConnect pharmacy network and patient support program, which was formed through the consolidation of the NEOS and A2 patient access programs. We have added the A2 legacy products to the NEOS legacy program to now have all core brands on this growing nationwide pharmacy platform. This expansion enables substantial leverage to the program with our core Rx brands on board and over 1,200 pharmacies plugged into the RxConnect program. Through innovative design and favorable economics and delivery, RxConnect enables affordable, predictable patient access. When physicians prescribe A2 brands for any commercially covered patients, their hassles are dramatically reduced and their copays are known. This program gives us a unique advantage, and we have the ability to continue to expand our pharmacy network, bring on additional assets, and drive prescription refills at a higher rate than might ordinarily be achieved. RxConnect makes A2 unique and quite simply is a game changer that separates us from our competitors. RxConnect is a truly innovative way for patients and physicians to access our branded products, and we're pleased with the continued growth of this platform. Going forward, we expect to see increasing revenue across our prescription products and consumer health through organic sales growth and new product introductions, which we anticipate will be driven by the OTC medicines e-commerce business. Starting in the second half of this fiscal year, we anticipate launching various OTC medicines through a recently signed exclusive distribution agreement with an OTC manufacturer. Turning now to our development pipeline. Heal light is our first in class UVA light based endotracheal catheter initially targeting the treatment of severe respiratory infections and mechanically ventilated hospitalized patients. We acquired an exclusive global license to the technology from Cedar Sinai Medical Center for all respiratory applications. We recently announced the publication of data in two journals, which we believe points to the potentially groundbreaking efficacy of this platform. In July 2021, we announced the publication of a manuscript with data demonstrating UVA light reduces cellular cytokine release from human endotracheal cells infected with the coronavirus in the peer review journal photo diagnosis and photo dynamics therapy. In June, we announced the publication of clinical results from the hill light pilot study in the peer review journal advances in therapy. These data show that UVA light catheter therapy is associated with significant reduction in SARS-CoV-2 viral load and improvement in clinical outcomes for mechanically ventilated COVID-19 patients. These milestones continue to demonstrate the profound commercial opportunity for Heal Light with applications to disease areas outside of COVID, such as ventilator-associated pneumonia, severe influenza, and other difficult-to-treat infections. We are excited to continue exploring the depths of Heal Light's potential. Looking ahead, we expect to initiate a randomized sham-controlled study evaluating the safety and treatment effects of HealLite in patients with SARS-CoV-2 that have been newly intubated on mechanical ventilation. This study will be conducted at a leading academic hospital in Barcelona, Spain, and led by a globally recognized expert in pulmonary and critical care medicine. We expect to enroll 40 patients and are aiming to reach total enrollment early calendar 22. The primary endpoint of this study is the change in viral load in endotracheal tube aspirates between day zero and the last day of treatment between treated and untreated patients. Following the completion of enrollment, we expect to report top-line data in the first half of calendar 22. Our pipeline is also highlighted by AR101, or Enzastorin, a pivotal study-ready new chemical entity that targets the treatment of the pediatric-onset rare disease vascular Ehlers-Danlos syndrome, or VETS. VEDS is the vascular subtype of Ehlers-Danlos syndrome. Ehlers-Danlos syndrome is a group of inherited connective tissue disorders affecting a range of tissues from the skin to the vasculature. VEDS is the most severe subtype of EDS caused by a mutation of the COL3A1 gene. It's a devastating inherited disorder specifically affecting the vasculature and causing catastrophic aortic events. Approximately half of VEDS patients die before the age of 50. VEDS is relatively easily diagnosed with a genetic test confirming the COL3A1 mutation. Approximately 6,000 patients in the U.S. have VEDS, making the targeting of these patients straightforward as it relates to clinical trial enrollment, and if approved, ultimately identifying and treating these patients. As a reminder, we acquired AR101 through our acquisition of substantially all the assets of Rumpus Therapeutics, a privately held biopharmaceutical company focused on the treatment of pediatric-onset rare and orphan diseases. As part of that acquisition, Rumpus founders Topher Brook and Nate Massari joined the A2 management team. Earlier this month, we announced the formation of a scientific advisory board consisting of leading experts in rare genetic connective tissue disorders and chaired by Dr. Hal Dietz, who has conducted the groundbreaking research to date supporting AR101 in beds. With the formation of the SAB and the appointments of Topher and Nate, the company is now well positioned to execute on the development of AR101 for the patients that desperately need this treatment. There are no approved treatments for VEDS, so if approved, A2 would have the first such treatment. We are currently working to secure orphan drug designation for the FDA and plan to submit an IND application in the second half of this year to start a pivotal study of AR101 in VEDS, which we're referring to as the PREVENT trial. We plan to enroll approximately 260 COL3A1 positive VEDS patients and then randomize them one-to-one in a study studying VEDS-related events, arterial events including ruptures, dissections, pseudoaneurysms, whether or not they're fatal. We expect to study patients taking standard background meds such as beta blockers and ARBs with and without enzostorin and image patients every six months over an expected 30-month treatment period. We'll contemplate an interim analysis and also capture secondary endpoints inclusive of safety measures. We expect to start the study in early 22 and fully enroll the study by the end of 22. And with that, I'll now turn the call over to Rich for some additional financial highlights. Rich?

Yeah, thank you, Josh, and thanks, everybody, for joining us today. Net revenue for the full fiscal year ended June 30, 2021, with $60. compared to $27.6 million reported for the year ended June 30, 2020. Net revenue for the fourth quarter was at an all-time high of $23.5 million compared to $13.5 million reported last quarter and $14.9 million in the same quarter last year. Net revenue from the Consumer Health Division, as Josh mentioned, was at an all-time high of $8.9 million up from $6.9 million in the same quarter last year. Consumer health growth was driven by multiple product launches and growth of the e-commerce channel. Net revenue from the prescription division was $14.6 million as compared to $7.9 million in the same quarter last year. The fourth quarter was the first quarter that our results reflected a full three months of revenue from the products we acquired in the NEOS acquisition. including $10.6 million of ADHD net revenue. Gross margin for the three months ended June 30th, 2021 was $11.3 million versus $10 million in the same quarter one year ago. Gross margin was negatively impacted by a $2.1 million increase in cost of goods sold for the ADHD products, resulting from the full absorption of increased inventory cost of fair value at the Neos Therapeutics acquisition date. resulting in zero margin for those products in the fourth quarter of fiscal 2021. Our reported gross margin percentage for the quarter of 48% would have been a pro forma of 57% if the ADHD products hadn't costed out at manufacturing cost. The write-up and inventory values will not affect the financial statements in future periods. Research and development expense was $4.8 million for the three months ended June 30th, 2021, approximately $1.5 million versus $1.5 million from one year ago. The 2021 expenses included approximately $2.9 million in costs and fees associated with the acquisition of the AR-101 assets and licenses from the Rumpus transaction. They were all booked in the June quarter as required by GAAP. For the 2021 fiscal year, net loss was $58.3 million or a loss of $3.48 per share versus a loss of $13.6 million or $3.01 per share for the year ended June 30th, 2020. Net loss for the three months ended June 30th, 2021 was $19 million or $0.81 per share versus a loss of $3.1 million or $0.28 per share for the three months ended June 30th, 2020. For the quarter, the loss included one-time costs and fees totaling approximately $13.5 million, which includes $8.5 million in impairment loss related to write-off of a licensed asset, $2.9 million related to the Rumpus transaction, and a $2.1 million of inventory value write-off from the NEO's acquisition. We ended the quarter with $49.9 million in cash, cash equivalents, and restricted cash. Our normalized burn for the quarter once we back out one-time payments for deferred NEO's deal costs and severance and the Rompas transaction was approximately $3.2 million. In April 2021, we announced the divestment of Netesto rights to Osiris Pharmaceuticals to continue our focus on commercial efforts, the core pediatric-centric business. This transaction provided non-dilutive cash of $7.5 million to the company, in the form of $250,000 monthly payments over 30 months, which began this past April. We previously divested the rights of Myoxis, a product we were mostly selling outside the United States, to reduce regulatory, commercial, and headcount expenses associated with this product. COVID-19 antigen kits revenue was approximately $400,000 for the quarter, and we expected to continue to decline. We had previously in the quarter ended March 31st, 2021, written down all $7 million remaining inventory related to these test kits. Because of the testo divestiture and removal of COVID test kits and myoxins from our future plans, this puts our revenue run rate currently at approximately $90 million. In May 2021, we announced the planned closure of the NEOS Grand Prairie, Texas, manufacturing facility with the goal of improving gross profit margins and reducing manufacturing expenses associated with the ADHD products. It is anticipated that this transaction will occur over the next 18 months, and with the transition to outsourced manufacturing of these products is expected to result in 15 to 20 percent improvement in gross profit margins for the ADHD products and significant reduction of cash expenses and investment in inventory. In conjunction with the manufacturing transition, we will consolidate additional operational and administrative positions to further reduce headcount redundancies and associated expenses. I'll now turn the call back over to Josh for some additional commentary. Josh?