Q4 2026 Aytu BioPharma Inc Earnings Call

September 22, 2026

Speaker #1: Greetings. Welcome to the AYTU BioPharma, Inc. Fiscal 2026 Full-Year and Q4 Earnings Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation.

Speaker #1: If anyone should require operator assistance during the conference, please press star zero (*) on your telephone keypad. If you would like to ask a question, please press star one (*) on your telephone keypad.

Speaker #1: A confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue.

Speaker #1: Please note this conference is being recorded. I will now turn the conference over to your host, Robert Blum, with Litham Partners. You may begin.

Speaker #2: All right. Thank you. And good afternoon, everyone. As the operator indicated during today's call, we will be discussing A2 BIOPHARMA's fiscal 2026 fourth quarter and full-year operational and financial results.

Robert Blum: All right. Thank you, and good afternoon, everyone. As the operator indicated, during today's call, we will be discussing Aytu BioPharma's fiscal 2026 Q4 and full year operational and financial results for the period ended 30 June 2026. Joining us on today's call is Aytu's Chief Executive Officer, Josh Disbrow, and Ryan Selhorn, the company's Chief Financial Officer. At the conclusion of today's prepared remarks, we will open the call for a question and answer session. I would 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 press release issued earlier today, or by utilizing the link on the company's website under Events and Presentations. Finally, I would also like to call to your attention the customary safe harbor disclosure regarding forward-looking information.

Speaker #2: For the period ended June 30, 2026. Joining us on today's call are Aytu's Chief Executive Officer, Joshua Disbrow, and Ryan Selhorn, the company's Chief Financial Officer.

Speaker #2: At the conclusion of today's prepared remarks, we will open the call for a question-and-answer session. I'd like to remind everyone that today's call is being recorded.

Speaker #2: A replay of today's call will be available by using the telephone numbers and conference ID provided in the press release issued earlier today, or by utilizing the link on the company's website under Events and Presentations.

Speaker #2: Finally, I'd also 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 AYTU BioPharma.

Robert Blum: The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations, and future potential operating results of Aytu BioPharma. Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today, 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. Aytu undertakes no obligation to update or revise any of these forward-looking statements except as required by law. With that said, let me turn the call over to Josh Disbrow, Chief Executive Officer of Aytu BioPharma. Josh, please proceed.

Speaker #2: Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today, 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.

Speaker #2: 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 findings with the SEC.

Speaker #2: Aytu undertakes no obligation to update or revise any of these forward-looking statements, except as required by law. With that said, let me turn the call over to Joshua Disbrow, Chief Executive Officer of Aytu BioPharma.

Speaker #2: Josh, please proceed.

Speaker #3: Thanks, Robert. And welcome, everyone. I'm very excited about the progress we're making and the opportunity ahead for Aytu. We finished fiscal 2026 with an encouraging fourth quarter as actual continued to build.

Josh Disbrow: Thanks, Robert, and welcome everyone. I'm very excited about the progress we're making and the opportunity ahead for Aytu. We finished fiscal 2026 with an encouraging Q4 as EXXUA continued to build, our ADHD business performed better than anticipated, and Aytu returned to positive adjusted EBITDA. EXXUA gives us something special to build around. It's the first and only selective serotonin 5-HT1A receptor agonist approved by the FDA for the treatment of major depressive disorder in adults. Its novel mechanism and differentiated tolerability profile address an important need in a category where many patients struggle to find a treatment that works well for them and that they can stay on. As a reminder, the opportunity is substantial. An estimated 21 million Americans are affected by MDD, and the US prescription MDD market exceeds $22 billion.

Josh Disbrow: Thanks, Robert, and welcome everyone. I'm very excited about the progress we're making and the opportunity ahead for Aytu. We finished fiscal 2026 with an encouraging Q4 as EXXUA continued to build, our ADHD business performed better than anticipated, and Aytu returned to positive adjusted EBITDA. EXXUA gives us something special to build around. It's the first and only selective serotonin 5HT1A receptor agonist approved by the FDA for the treatment of major depressive disorder in adults. Its novel mechanism and differentiated tolerability profile address an important need in a category where many patients struggle to find a treatment that works well for them and that they can stay on. As a reminder, the opportunity is substantial. An estimated 21 million Americans are affected by MDD, and the US prescription MDD market exceeds $22 billion.

Speaker #3: Our ADHD business performed better than anticipated, and A2 returned to positive adjusted EBITDA. Actua gives us something special to build around. It's the first and only selective serotonin 5-HT1A receptor agonist approved by the FDA for the treatment of major depressive disorder in adults.

Speaker #3: Its novel mechanism and differentiated tolerability profile address an important need in a category where many patients struggle to find a treatment that works well for them and that they can stay on.

Speaker #3: As a reminder, the opportunity is substantial. An estimated 21 million Americans are affected by MDD, and the U.S. prescription MDD market exceeds $22 billion.

Speaker #3: Even a modest foothold in a market of that size would be meaningful for Aytu. We strongly believe Actua has the potential to become an important treatment option and a major growth driver for our company.

Josh Disbrow: Even a modest foothold in a market of that size would be meaningful for Aytu. We strongly believe EXXUA has the potential to become an important treatment option and a major growth driver for our company. It's one thing to have had excitement before a launch occurs, but what makes this especially exciting is that we are now seeing that opportunity begin to take shape in clinical practice. Physicians are gaining experience, patients are continuing treatment, and our prescription base is expanding. These early results reinforce our conviction in EXXUA and give us a strong reason to keep building with the same focus on execution and financial discipline. As we have discussed for some time, our approach to EXXUA is methodical. We are building the business with a clear focus on productivity, the return on our commercial investment, and preserving cash.

Speaker #3: It's one thing to have had excitement before a launch occurs, but what makes this especially exciting is that we are now seeing that opportunity begin to take shape in clinical practice.

Speaker #3: Physicians are gaining experience, patients are continuing treatment, and our prescription base is expanding. These early results reinforce our conviction in Actua and give us a strong reason to keep building with the same focus on execution and financial discipline.

Speaker #3: As we have discussed for some time, our approach to Actua is methodical. We are building the business with a clear focus on productivity, the return on our commercial investment, and preserving cash.

Speaker #3: As we have communicated, this was never going to be an oversized, "spend-at-all-costs boom or bust" type of launch. This quarter gives us meaningful evidence that our approach is working.

Josh Disbrow: As we have communicated, this was never going to be an oversized, quote, "spend at all costs, boom or bust" type of launch. This quarter gives us meaningful evidence that our approach is working. Today let me spend most of my prepared remarks discussing the EXXUA execution, including what we're seeing in the field and the decisions we are making as the launch develops. I'll also spend a little more time on ADHD because the notable durability of that business certainly deserves attention. Ryan will then cover our financial results and our fiscal 2027 outlook. EXXUA generated $3.9 million of net, excuse me, of net revenue in the Q4, up from $2.4 million in the Q3, bringing its fiscal 2026 contribution to $6.6 million. As a reminder, our formal launch only occurred at the beginning of January, and broader field deployment in late February and early March.

Speaker #3: Today, let me spend most of my prepared remarks discussing the Actua execution, including what we're seeing in the field and the decisions we are making as the launch develops.

Speaker #3: I'll also spend a little more time on ADHD, because the notable durability of that business certainly deserves attention. Ryan will then cover our financial results and our fiscal 2027 outlook.

Speaker #3: Actua generated 3.9 million dollars of net excuse me, of net revenue in the fourth quarter. Up from 2.4 million in the third quarter. Bringing its fiscal 26 contribution to 6.6 million dollars.

Speaker #3: As a reminder, our formal launch only occurred at the beginning of January, and broader field deployment happened in late February and early March. We remain early in building physician awareness and experience with Actua, having only just completed our first full quarter of launch.

Josh Disbrow: We remain early in building physician awareness and experience with EXXUA having only just completed our first full quarter of launch. During the June quarter, total prescriptions were 3,323 compared with 1,398 in the March quarter. The monthly progression was 973 prescriptions in April, 1,089 in May, and 1,261 in June. As we entered fiscal 2027, July increased further to 1,377. August was up at 1,408 prescriptions. Importantly, EXXUA grew from July to August despite the overall MDD market declining. That is meaningful progress as more physicians begin using EXXUA and patients move from initial treatment into refills. One item I think is important to understand as we look at the trajectory in the early going is that we have consistently said we would manage this launch methodically, and that includes expecting a high-performing sales organization and holding that sales organization accountable for performance.

Speaker #3: During the June quarter, total prescriptions were 3,323, compared with 1,398 in the March quarter. The monthly progression was 973 prescriptions in April, 1,089 in May, and 1,261 in June.

Speaker #3: As we entered fiscal '27, July increased further to 1,377; August was up at 1,408 prescriptions. Importantly, Actua grew from July to August, despite the overall MDD market declining.

Speaker #3: That is meaningful progress as more physicians begin using Actua and patients move from initial treatment into refills. One item I think is important to understand as we look at the trajectory in the early going is that we have consistently said we would manage this launch methodically, and that includes expecting a high-performing sales organization and holding that sales organization accountable for performance.

Speaker #3: Where representatives have not been performing at high levels or at the levels we need, we have made adjustments in real time. As a result, we have seen ebbs and flows in the number of sales individuals on a month-by-month basis.

Josh Disbrow: Where representatives have not been performing at high levels or at the high levels we need, we have made adjustments in real time. As a result, we have seen ebbs and flows in the number of sales individuals on a month-by-month basis. Importantly, several of those changes occurred during June and July, and our field force reached a low of 32 representatives in July. That was down from 43 reps at the end of March. This was intentional as we were demanding high performance across the sales organization. Standards have been set and will be upheld, and we will remain disciplined with our capital deployment throughout the launch. Those changes temporarily reduced our coverage while we worked to fill territories and optimize the profile of our sales specialist position. Since that low, we have brought the sales force back to approximately 42 representatives, and we continue to fill open positions.

Speaker #3: Importantly, several of those changes occurred during June and July, and our field force reached a low of 32 representatives in July. That was down from 43 reps at the end of March.

Speaker #3: This was intentional, as we were demanding high performance across the sales organization. Standards have been set and will be upheld. We will remain disciplined with our capital deployment throughout the launch.

Speaker #3: Those changes temporarily reduced our coverage while we worked to fill territories and optimize the profile of our sales specialist position. Since that low point, we brought the sales force back to approximately 42 representatives, and we continue to fill open positions.

Speaker #3: We're also adjusting territory coverage based on what we're learning, adding resources where the opportunity supports them, and combining sales specialist coverage where that makes better economic sense.

Josh Disbrow: We are also adjusting territory coverage based on what we are learning, adding resources where the opportunity supports them, and combining sales specialist coverage where that makes better economic sense. One of the key metrics we are watching is weekly and monthly prescriptions per sales rep. Using month-end field force headcount as a directional measure, in March, we had 761 prescriptions and 43 sales specialists, or about 18 prescriptions per sales rep per month. In July, we had 1,377 prescriptions and 32 representatives, or approximately 43 prescriptions per rep for the month. That is more than a twofold increase in prescriptions per rep, with total monthly prescriptions also increasing 81% over that period. We are continuing to be proactive in fine-tuning the team, but we view that as an encouraging measure of the productivity of our commercial effort.

Speaker #3: One of the key metrics we're watching is weekly and monthly prescriptions per sales rep. Using month-end sales field force headcount as a directional measure, in March, we had 761 prescriptions and 43 sales specialists, or about 18 prescriptions per sales rep per month.

Speaker #3: In July, we had 1,377 prescriptions across 32 representatives, or approximately 43 prescriptions per rep for the month. That's more than a twofold increase in prescriptions per rep, with total monthly prescriptions also increasing 81% over that period.

Speaker #3: We're continuing to be proactive and fine-tuning the team, but we view that as an encouraging measure of the productivity of our commercial effort. To add some additional color on rep performance, which is clearly going to be the key driver of our success with Actua, consider some other numbers.

Josh Disbrow: To add some additional color on rep performance, which is clearly going to be the key driver of our success with EXXUA, consider some other numbers. If you look at our current active sales specialists, the top 10 are averaging almost 15 prescriptions per week. The top five are averaging 18 and a half prescriptions per week. Importantly, as I share these numbers, I should note that we are not top-heavy with respect to the percentage of territories driving the majority of the EXXUA prescriptions. In fact, 24 territories, or approximately 60% of the current sales force, are driving 70% of the EXXUA prescriptions, demonstrating very good breadth across many geographies and across many sales specialists. That gives us great confidence in knowing that we have a product that is being and can be broadly adopted and broadly sold.

Speaker #3: If you look at our current active sales specialists, the top 10 are averaging almost 15 prescriptions per week. The top 5 are averaging 18.5 prescriptions per week.

Speaker #3: But importantly, as I share these numbers, I should note that we are not top-heavy with respect to the percentage of territories driving the majority of the Actua prescriptions.

Speaker #3: In fact, 24 territories, or approximately 60% of the current sales force, are driving 70% of the Actua prescriptions, demonstrating very good breadth across many geographies and across many sales specialists.

Speaker #3: So that gives us great confidence in knowing that we have a product that is being, and can be, broadly adopted and broadly sold. To see what Actua weekly scripts could be in the relatively near term, as some of our newer sales specialists we've onboarded come up the curve, consider what a weekly run rate looks like by simply having 45 territories at the weekly script rate of the top 5 or 10 territories.

Josh Disbrow: To see what EXXUA weekly scripts could be in the relative near term as some of our newer sales specialists we have on board have come up the curve, consider what a weekly run rate looks like by simply having 45 territories at the weekly script rate of the top five or 10 territories. By simply generating 15 prescriptions per rep per week, that gets us to 675 TRx per week. At the current selling price, that is already a $26 million annual run rate if you were to simply dollarize TRx for ease of math. Taking that weekly rep average to 20 TRx per week, which again, five territories are already averaging that, plus or minus. Then you are looking at 900 TRx weekly or about a $35 million run rate annually.

Speaker #3: By simply generating 15 prescriptions per rep per week, that gets us to 675 TRXs per week. And at the current selling price, that's already a $26 million annual run rate, if you were to simply dollarize TRXs for ease of math.

Speaker #3: Taking that weekly rep average to 20 TRXs per week—which, again, 5 territories are already averaging that, plus or minus—and then you're looking at, excuse me, 900 TRXs weekly, or about a $35 million dollar run rate annually.

Speaker #3: And then at 30 TRXs per rep per week—again, a weekly number achieved by multiple reps already—that takes the annual run rate to over $50 million, again, by simply dollarizing prescriptions.

Josh Disbrow: At 30 TRXs per rep per week, again, a weekly number achieved by multiple reps already, that takes the annual run rate to over $50 million, again, by simply dollarizing prescriptions. With a refined sales team that will be getting us to 40-plus and more likely closer to 45 territories, you can see why we are excited about a significant lift of script levels in the relative near term. Speaking of near term, and this is happening really before any of the newly hired reps are even up the curve, we are seeing EXXUA take that next leg up. For the week ending 4 September, just before Labor Day, we generated 394 prescriptions, a significant jump from July and August levels. When the newly onboarded folks get their feet under them, we are excited to see what the script trends look like.

Speaker #3: So, with the refined sales team that will be getting us to 40-plus, and more likely closer to 45 territories, you can see why we're excited about a significant lift of script levels in the relatively near term.

Speaker #3: And speaking of the near term—and this is happening really before any of the newly hired reps are even up the curve—we're seeing Actua take that next leg up.

Speaker #3: For the week ending September 4th, just before Labor Day, we generated 394 prescriptions—a significant jump from July and August levels. Again, when the newly onboarded folks get their feet under them, we're excited to see what the script trends look like.

Speaker #3: Growing refill activity is also part of the picture, alongside the work our representatives are doing to develop prescribing relationships. We look at this measure together with total prescriptions, new and repeat prescribers, and the economics of the business as we decide where to put the next dollar of investment.

Josh Disbrow: Growing refill activity is also part of the picture, alongside the work our representatives are doing to develop prescribing relationships. We look at this measure together with total prescriptions, new and repeat prescribers, and the economics of the business as we decide where to put the next dollar of investment. This is what we mean by a methodical launch. We are using the data to make staffing and spending decisions, learning from the territories that are performing well, and addressing the ones that need improvement. We believe that is how we build a commercial organization that can support EXXUA over time while maintaining the financial discipline we have worked hard to establish. Perhaps most importantly, the feedback from physicians who are gaining experience with EXXUA remains highly encouraging. In our latest launch to date update, nearly 1,200 unique prescribers had written EXXUA and nearly 2,500 unique patients had received it.

Speaker #3: This is what we mean by a methodical launch. We are using the data to make staffing and spending decisions, learning from the territories that are performing well, and addressing the ones that need improvement.

Speaker #3: We believe that's how we build a commercial organization that can support Actua over time, while maintaining the financial discipline we've worked hard to establish.

Speaker #3: Perhaps most importantly, the feedback from physicians who are gaining experience with Actua remains highly encouraging. In our latest launch-to-date update, nearly 1,200 unique prescribers had written Actua, and nearly 2,500 unique patients had received it.

Speaker #3: We're seeing repeat prescribing from physicians who are developing a broader base of experience with the product, along with encouraging feedback on patient response and tolerability.

Josh Disbrow: We are seeing repeat prescribing from physicians who are developing a broader base of experience with the product, along with encouraging feedback on patient response and on patient tolerability. At the same time, many physicians in that prescriber base have only used EXXUA with one or two patients. Of course, we know it takes time for a physician to identify appropriate patients and then assess their experience and then ultimately become comfortable using a new medicine more broadly. That process develops over time. Our opportunity is to deepen utilization among those early adopters while continuing to introduce EXXUA to additional prescribers. We remained very encouraged by the response from physicians who are moving beyond their first few patients and continuing to prescribe. It is precisely those prescribers who have written EXXUA for a handful or more patients that are most impressed with the results.

Speaker #3: At the same time, many physicians in that prescriber base have only used Actua with one or two patients. Of course, we know it takes time for a physician to identify appropriate patients, assess their experience, and ultimately become comfortable using a new medicine more broadly.

Speaker #3: That process develops over time. Our opportunity is to deepen utilization among those early adopters, while continuing to introduce Actua to additional prescribers. We remain very encouraged by the response from physicians who are moving beyond their first few patients and continuing to prescribe.

Speaker #3: And it's precisely those prescribers who have written Actua for a handful or more patients that are most impressed with the results. We continue to hear that across the country, and of course, that gives us great confidence in the product.

Josh Disbrow: We continue to hear that across the country, and of course, that gives us great confidence in the product. Access also continues to support the launch. Reimbursement approval rates remain encouraging, and we are seeing a growing contribution from Medicaid and Medicare alongside the commercial business. Aytu RxConnect remains an important part of helping patients initiate and continue treatment and helping prescribers and their practices navigate access. Ryan will touch upon this a bit, but gross to nets are significantly higher than our initial expectations. As we move into fiscal 2027, we will continue investing in EXXUA sales and marketing and in the medical and scientific education that supports physician understanding of the product. We will continue assessing the results and directing resources toward the activities that are producing the strongest return. Our Q4 results are an encouraging indication of what this model can deliver.

Speaker #3: Access also continues to support the launch. Reimbursement approval rates remain encouraging, and we are seeing a growing contribution from Medicaid and Medicare alongside the commercial business.

Speaker #3: RxConnect remains an important part of helping patients initiate and continue treatment, and helping prescribers and their practices navigate access. Ryan will touch on this a bit, but gross tenets are significantly higher than our initial expectations.

Speaker #3: As we move into fiscal 2027, we will continue investing in Actua sales and marketing, and in the medical and scientific education that supports physician understanding of the product.

Speaker #3: We will continue assessing the results and directing resources toward the activities that are producing the strongest return. Our fourth-quarter results are an encouraging indication of what this model can deliver.

Speaker #3: We grew Actua revenue, benefited from the continued contribution of our legacy products, and generated positive EBITDA at the company level, while keeping cash relatively stable.

Josh Disbrow: We grew EXXUA revenue, benefited from the continued contribution of our legacy products, and generated positive EBITDA at the company level while keeping cash relatively stable. Profitability and cash preservation remain central to how we are managing the launch. Of course, there will continue to be variability in quarterly results as we invest and as the business moves through its normal seasonal patterns. Ryan will walk through that in more detail. Our objective, however, remains to build a durable, profitable EXXUA business on the platform we already have with commercial spending tied to strong ROIs. Turning to ADHD, the portfolio performed better than anticipated in Q4. Net revenue was $10.4 million compared to $9.1 million in the March quarter and $13.1 million in the Q4 prior year.

Speaker #3: Profitability and cash preservation remain central to how we're managing the launch. Of course, there will continue to be variability in quarterly results as we invest, and as the business moves through its normal seasonal patterns.

Speaker #3: Again, Ryan will walk through that in more detail. Our objective, however, remains to build a durable, profitable Actua business on the platform we already have, with commercial spending tied to strong ROIs.

Speaker #3: Turning to ADHD, the portfolio performed better than anticipated in the fourth quarter. Net revenue was $10.4 million compared to $9.1 million in the March quarter, and $13.1 million in the fourth quarter.

Speaker #3: Prior year. For a Zenith, our brand and authorized generic together continued to retain approximately 80% of the prescriptions in the market for a Zenith and its generic equivalents.

Josh Disbrow: For ADZENYS, our brand and authorized generic together continued to retain approximately 80% of the prescriptions in the market for ADZENYS and its generic equivalents. We believe this speaks to the durability of the franchise and the value of the Aytu RxConnect model, even with substantially less commercial support behind the brand. We also have our COTEMPLA authorized generic in the market, and it is gaining prescriptions week over week. As of today, Teva has not yet launched its generic version of COTEMPLA following the 1 July date permitted under our settlement agreement with Teva, presenting potential upside to our base case assumptions around COTEMPLA's revenue run rate. As always, ADHD has normal seasonality, with the earlier part of H1 of our fiscal year typically softer due to kids being out of school. The Q4 performance, however, reinforces our confidence in the value this portfolio brings to Aytu.

Speaker #3: We believe this speaks to the durability of the franchise and the value of the RxConnect model, even with substantially less commercial support behind the brand.

Speaker #3: We also have our Quartempla authorized generic in the market, and it's gaining prescriptions week over week. As of today, Teva has not yet launched its generic version of Quartempla, following the July 1 date permitted under our settlement agreement with Teva.

Speaker #3: Presenting potential upside to our base case assumptions around Quartempla's revenue run rate. As always, ADHD has normal seasonality, with the earlier part of the first half of our fiscal year typically softer due to kids being out of school.

Speaker #3: The fourth quarter performance, however, reinforces our confidence in the value this portfolio brings to A2. It remains an important source of profit and cash support our investment in Actua.

Josh Disbrow: It remains an important source of profit and cash to support our investment in EXXUA. Rounding out the legacy business, our pediatric portfolio generated $1.8 million of net revenue in Q4, compared to $0.9 million in the March quarter and $2 million in the prior year quarter. These are mature products that we continue to service efficiently, and while smaller, pediatrics does remain a useful and durable contributor to the legacy business and the financial foundation supporting EXXUA. Overall, we are highly encouraged by the progress in EXXUA and the durability of our legacy business. Our focus remains on execution, profitability, and preserving cash. With that, let me turn the call over to Ryan for financial results and fiscal 2027 outlook. Ryan?

Speaker #3: Rounding out the legacy business, our pediatric portfolio generated $1.8 million of net revenue in the fourth quarter, compared to $0.9 million in the March quarter and $2 million in the prior year quarter.

Speaker #3: These are mature products that we continue to service efficiently, and while smaller, pediatrics does remain a useful and durable contributor to the legacy business and the financial foundation supporting Actua.

Speaker #3: Overall, we are highly encouraged by the progress in Actua and the durability of our legacy business. Our focus remains on execution, profitability, and preserving cash. With that, let me turn the call over to Ryan for financial results and our fiscal 2027 outlook.

Speaker #3: Ryan?

Speaker #2: Thank you, Josh. Let's jump right into it. We'll primarily cover our fourth quarter results and then spend a few minutes on our outlook and how we expect fiscal 2027 to unfold.

Ryan Selhorn: Thank you, Josh. Let's jump right into it. I will primarily cover our Q4 results and then spend a few minutes on our outlook and how we expect fiscal 2027 to unfold. Let's start on the revenue line. Net revenue for Q4 of fiscal 2026 was $16.1 million, compared to $15.1 million in the prior year period, an increase of 6%. Revenue also improved from $12.4 million in Q3, with sequential increases across all three portfolios. For fiscal 2026, net revenue was $57.6 million. Breaking that down, EXXUA contributed $3.9 million in Q4, compared to $2.4 million in Q3. We are encouraged by that progression as we build the prescriber base and expand our commercial activity. The recent prescription data Josh discussed show continued progress, with 3,300 scripts written during Q4.

Speaker #2: Let's start on the revenue line. Net revenue for the fourth quarter of fiscal 2026 was $16.1 million, compared to $15.1 million in the prior year period, an increase of 6%.

Speaker #2: Revenue also improved from $12.4 million in the third quarter, with sequential increases across all three portfolios. For fiscal 2026, net revenue was $57.6 million.

Speaker #2: Breaking that down, Actua contributed $3.9 million in the fourth quarter, compared to $2.4 million in the third quarter. We are encouraged by that progression as we build the prescriber base and expand our commercial activity.

Speaker #2: The recent prescription data Josh discussed show continued progress, with 3,300 scripts written during the fourth quarter. Remember, however, that prescriptions and unit shipments are different measures.

Ryan Selhorn: Remember, however, that prescriptions and unit shipments are different measures. During Q4, we shipped 4,599 units. Revenue reflects product sales into the channel, net of estimated rebates, discounts, and other adjustments, and will not necessarily move in lockstep with prescriptions in any given period. We continue to see favorable gross to nets for EXXUA relative to our initial launch assumptions. Payer mix, reimbursement, and the level of patient access support all influence these economics. It is still early, and we want to see how those factors develop over a longer period before assuming the current realization rates will hold. The ADHD portfolio generated $10.4 million in Q4 net revenue, compared to $13.1 million in the prior year period and $9.1 million in Q3. The sequential improvement benefited primarily from better growth to net realization.

Speaker #2: During the fourth quarter, we shipped 4,599 units. Revenue reflects product sales into the channel, net of estimated rebates, discounts, and other adjustments, and will not necessarily move in lockstep with prescriptions in any given period.

Speaker #2: We continue to see favorable gross and net figures for Actua relative to our initial launch assumptions. Payer mix, reimbursement, and the level of patient access support all influence these economics.

Speaker #2: It is still early, and we want to see how those factors develop over a longer period before assuming the current realization rates will hold.

Speaker #2: The ADHD portfolio generated $10.4 million in net revenue in the fourth quarter, compared to $13.1 million in the prior year period and $9.1 million in the third quarter.

Speaker #2: The sequential improvement benefited primarily from better gross-to-net realization. We continue to view this portfolio as an important source of cash flow, with limited promotional spending behind it.

Ryan Selhorn: We continue to view this portfolio as an important source of cash flow with limited promotional spending behind it. The pediatric portfolio generated $1.8 million in Q4 net revenue, compared to $2 million a year ago and $0.9 million in Q3. These are mature products and payer mix, returns, and ordering patterns can affect the quarterly results. However, they continue to contribute to the cash generation of the legacy business. Gross profit was $10.4 million in Q4, with a gross margin of approximately 65%, compared to $10.3 million and 68% in the prior year period. Sequentially, gross margin improved from 61% in Q3, which included a $0.7 million inventory write-down. For fiscal 2026, gross profit was $36.8 million, or 64%. EXXUA's underlying economics remain attractive.

Speaker #2: The pediatric portfolio generated $1.8 million in fourth-quarter net revenue, compared to $2 million a year ago and $0.9 million in the third quarter.

Speaker #2: These are mature products, and payer mix returns and ordering patterns can affect the quarterly results. However, they continue to contribute to the cash generation of the legacy business.

Speaker #2: Gross profit was $10.4 million in the fourth quarter, with a gross margin of approximately 65%, compared to $10.3 million and 68% in the prior year period.

Speaker #2: Sequentially, gross margin improved from 61% in the third quarter, which included a $0.7 million inventory write-down. For fiscal 2026, gross profit was $36.8 million, or 64%.

Speaker #2: Actua's underlying economics remain attractive. As we discussed last quarter, the royalty and product cost structure equates to approximately 31% of cost of goods sold, or roughly a 69% gross contribution margin before certain fixed costs.

Ryan Selhorn: As we discussed last quarter, the royalty and product cost structure equates to approximately 31% of cost of goods sold, or roughly a 69% gross contribution margin before certain fixed costs. Our consolidated reported margin also reflects those fixed costs, product mix, and inventory adjustments. I will come back to margin outlook in a moment. Turning to operating expenses. Total operating expenses were $11.2 million in Q4, compared to $17.9 million a year ago. The prior-year quarter included an $8.3 million impairment charge. So excluding impairment, restructuring costs, and intangible asset amortization from both periods, operating expenses were $10.4 million, compared to $8.7 million on an apples-to-apples basis. The year-over-year increase primarily reflects EXXUA commercialization costs, partially offset by continued cost discipline elsewhere in the organization.

Speaker #2: Our consolidated report margin also reflects those fixed costs, product mix, and inventory adjustments. I'll come back to the margin outlook in a moment. Turning to operating expenses.

Speaker #2: Total operating expenses were $11.2 million in the fourth quarter, compared to $17.9 million a year ago. The prior year quarter included an $8.3 million impairment charge, so excluding impairment, restructuring costs, and intangible asset amortization from both periods, operating expenses were $10.4 million compared to $8.7 million on an apples-to-apples basis.

Speaker #2: The year-over-year increase primarily reflects Actua commercialization costs, partially offset by continued cost discipline elsewhere in the organization. We spent less on certain commercial programs than originally planned during fiscal 2026, and some of that planned activity will shift into fiscal 2027.

Ryan Selhorn: We spent less on certain commercial programs than originally planned during fiscal 2026, and some of that planned activity will shift into fiscal 2027. As Josh mentioned, we want to make sure we have strong ROIs on all investments made. If we do not believe we can get the returns or need to adjust the plan to get it right, we will. Interest expense was $0.4 million in Q4, compared to $0.7 million a year ago. For the full year, interest expense declined to $1.9 million from $3.7 million, primarily due to the paydown of our fixed payment arrangements. Those arrangements had no remaining balance at 30 June. For Q4, we reported a net loss of $0.1 million. On a per-share basis, the loss rounded to $0.00 per share.

Speaker #2: As Josh mentioned, we want to make sure we have strong ROIs on all investments made. If we don't believe we can get the returns or need to adjust the plan to get it right, we will.

Speaker #2: Interest expense was $0.4 million in the fourth quarter, compared to $0.7 million a year ago. For the full year, interest expense declined to $1.9 million from $3.7 million, primarily due to the paydown of our fixed payment arrangements.

Speaker #2: Those arrangements had no remaining balance at June 30th. For the fourth quarter, we reported a net loss of $0.1 million. On a per share basis, the loss rounded to $0.00 per share. This is compared to a net loss of $19.8 million, or $2.92 per share in the prior year period.

Ryan Selhorn: This is compared to a net loss of $19.8 million, or $2.92 per share in the prior year period. For fiscal 2026, net loss was $14.3 million. The Q4 included a $1 million non-cash derivative warrant liability gain. The prior year Q4 included $18.1 million of combined impairment expense and derivative warrant liability loss. These items have a significant effect on the GAAP comparisons. Adjusted EBITDA was a positive $0.5 million for the Q4, compared to a positive $2 million a year ago and a negative $2.8 million in the Q3. For fiscal 2026, adjusted EBITDA was negative $3.7 million. The reconciliation of this non-GAAP measure to net loss is included in today's earnings release. Turning now to the balance sheet.

Speaker #2: For fiscal 2026, net loss was $14.3 million. The fourth quarter included a $1 million non-cash derivative warrant liability gain. The prior year fourth quarter included $18.1 million of combined impairment expense and derivative warrant liability loss.

Speaker #2: These items have a significant effect on the GAAP comparisons. Adjusted EBITDA was a positive $0.5 million for the fourth quarter, compared to a positive $2.0 million a year ago, and a negative $2.8 million in the third quarter.

Speaker #2: For fiscal 2026, adjusted EBITDA was negative $3.7 million. The reconciliation of this non-GAAP measure to net losses is included in today's earnings release. Turning now to the balance sheet.

Speaker #2: Cash and cash equivalents were $26.3 million at June 30th, compared to $26.7 million at March 31st, and $31 million at the end of fiscal 2025.

Ryan Selhorn: Cash and cash equivalents were $26.3 million at 30 June, compared to $26.7 million at 31 March and $31 million at the end of fiscal 2025. While cash was relatively stable during the quarter, we also reduced our revolving credit facility balance to $6.1 million, from $10.4 million at 31 March. Subsequent to year-end, we repaid the remaining revolver balance. Separately, the carrying value of our term debt, including the current and non-current portions, was approximately $11 million at 30 June. For fiscal 2026 as a whole, we generated $3.3 million of cash from operating activities, compared to using $1.9 million in fiscal 2025, an improvement of $5.2 million. Improved receivable collections and inventory turnover were meaningful contributors. We also used $7.9 million in financing activities, primarily to reduce our revolver term debt and fixed payment arrangements.

Speaker #2: While cash was relatively stable during the quarter, we also reduced our revolving credit facility balance to $6.1 million from $10.4 million at March 31st.

Speaker #2: Subsequent to year-end, we repaid the remaining revolver balance. Separately, the carrying value of our term debt, including the current and non-current portions, was approximately $11 million at June 30th.

Speaker #2: For fiscal 2026, as a whole, we generated $3.3 million of cash from operating activities, compared to using $1.9 million in fiscal 2025—an improvement of $5.2 million.

Speaker #2: Improved receivable collections and inventory turnover were meaningful contributors. We also used $7.9 million in financing activities, primarily to reduce our revolver term debt and fixed payment arrangements.

Speaker #2: Accordingly, the year-over-year reduction in cash reflects significant balance sheet deleveraging rather than operating cash burn. Stockholders' equity was $35.3 million at June 30, 2026, compared to $19 million a year earlier.

Ryan Selhorn: Accordingly, the year-over-year reduction in cash reflects significant balance sheet de-leveraging rather than operating cash burn. Stockholders' equity was $35.3 million at 30 June 2026, compared to $19 million a year earlier. As discussed last quarter, the March warrant amendments reclassified $26.4 million from warrant liabilities to equity. This was a non-cash reclassification that reduced our exposure to future earnings volatility associated with those warrants. Before I turn it back over to Josh, I want to walk through the financial framework for fiscal 2027. We are not providing revenue guidance, but we do want to give you a clear view of our planned expenses, margin expectations, and the expected progression of profitability and cash flow. Our current plan calls for approximately $49 to $54 million of operating expenses on a GAAP basis. Excluding non-cash expenses, total cash-based operating expenses are expected to be approximately $45 to $49 million.

Speaker #2: As discussed last quarter, the March warrant amendments reclassified $26.4 million from warrant liabilities to equity. This was a non-cash reclassification that reduced our exposure to future earnings volatility associated with those warrants.

Speaker #2: Before I turn it back over to Josh, I want to walk through the financial framework for fiscal 2027. We are not providing revenue guidance, but we do want to give you a clear view of our planned expenses, margin expectations, and the expected progression of profitability and cash flow.

Speaker #2: Our current plan calls for approximately $49 to $54 million of operating expenses on a GAAP basis. Excluding non-cash expenses, total cash-based operating expenses are expected to be approximately $45 to $49 million.

Speaker #2: The largest increase is in sales and marketing, where we expect to invest up to $6 million, now planned for fiscal 2027 rather than fiscal 2026.

Ryan Selhorn: The largest increase is in sales and marketing, where we expect to invest up to $6 million, now planned for fiscal 2027 rather than fiscal 2026. This was always part of the plan, but it has been deferred from fiscal 2026 to fiscal 2027. The increase will support salesforce coverage, marketing programs, and physician and patient education for EXXUA. We also expect a more modest increase in G&A, including medical affairs and support for the commercial organization. Research and development expense should remain minimal, and we expect interest expense to continue to decline steadily on a full-year basis. As we mentioned, we will manage spending against the results we are seeing. The budget gives us room to support the opportunity, and the timing and level of investment will depend on the prescription trends, access, commercial performance, and available liquidity.

Speaker #2: This was always part of the plan, but it has been deferred from fiscal 2026 to fiscal 2027. The increase will support Salesforce coverage, marketing programs, and physician and patient education for Actua.

Speaker #2: We also expect a more modest increase in G&A, including medical affairs, and support for the commercial organization. Research and development expense should remain minimal, and we expect interest expense to continue to decline steadily on a full-year basis.

Speaker #2: As we mentioned, we will manage spending against the results we are seeing. The budget gives us room to support the opportunity, and the timing and level of investment will depend on prescription trends, access, commercial performance, and available liquidity.

Speaker #2: We currently expect consolidated gross margin to be lowest in the first part of fiscal 2027, and to improve as the year progresses, driven principally by anticipated product mix as Actua continues to scale and the absorption of fixed manufacturing and supply chain costs.

Ryan Selhorn: We currently expect consolidated gross margin to be lowest in the first part of fiscal 2027 and to improve as the year progresses, driven principally by anticipated product mix as EXXUA continues to scale and the absorption of fixed manufacturing and supply chain costs. Our current expectation is to approach 66% to 67% gross margin in Q4 of fiscal 2027. The timing of the aforementioned investments, as well as the normal seasonality are important to understanding the year. We expect lower adjusted EBITDA and operating cash flow in H1 of fiscal 2027 than in H2. We will be making planned investments in EXXUA sales and marketing ahead of their full contribution, while the ADHD business is typically seasonally softer in Q1 to H1 of our fiscal year.

Speaker #2: Our current expectation is to approach 66% to 67% gross margin in the fourth quarter of fiscal 2027. The timing of the aforementioned investments, as well as the normal seasonality, are important to understanding the year.

Speaker #2: We expect lower adjusted EBITDA and operating cash flow in the first half of fiscal 2027 than in the second half. We will be making planned investments in Actua sales and marketing ahead of their full contribution, while the ADHD business is typically seasonally softer in the first quarter to half of our fiscal year.

Speaker #2: From a cash flow perspective, we also have our annual PDUFA fees that come out in the first half of the year. As we move into the second half, we expect that seasonal pressure to reverse and Actua to make a larger contribution as our commercial efforts build.

Ryan Selhorn: From a cash flow perspective, we also have our annual Purdue fees that come out in H1 of the year. As we move into H2, we expect that seasonal pressure to reverse and EXXUA to make a larger contribution as our commercial efforts build. Based on our current plans, taken together, we expect a six-month period ending 30 June 2027 to generate positive adjusted EBITDA. We also expect cash flow to improve in H2, although the timing of collections, working capital requirements, and payments will continue to affect cash balances. As always, I am happy to go over any details during Q&A. With that, Josh, let me turn it back over to you.

Speaker #2: Based on our current plans taken together, we expect the six-month period ending June 30, 2027, to generate positive adjusted EBITDA. We also expect cash flow to improve in the second half, although the timing of collections, working capital requirements, and payments will continue to affect cash balances.

Speaker #2: As always, I'm happy to go over any details during Q&A. With that, Josh, let me turn it back over to you.

Speaker #1: Thank you, Ryan. As we look ahead, our conviction in the Actua opportunity remains extremely strong. We're seeing physicians gain experience with the product, a growing patient base, and improving prescriptions-per-sales-specialist rate.

Josh Disbrow: Thank you, Ryan. As we look ahead, our conviction in the EXXUA opportunity remains extremely strong. We are seeing physicians gain experience with the product, a growing patient base, and improving prescriptions per sales specialist rate. We are also taking action where execution needs to improve. This is consistent with the approach we have described from the outset. Overall, we are extremely pleased with the progress this quarter and remain excited about the path ahead. As always, I want to thank our entire team for their work and everyone participating on today's call. We will now be happy to answer any questions. Operator?

Speaker #1: We're also taking action. Our execution needs to improve. This is consistent with the approach we've described from the outset. Overall, we're extremely pleased with the progress this quarter and remain excited about the path ahead.

Speaker #1: As always, I want to thank our entire team for their work and everyone participating on today's call. We'll now be happy to answer any questions.

Speaker #1: Operator?

Speaker #3: Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad.

Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, please press star one if you have a question or comment. The first question comes from Thomas Clayton with Lake Street Capital. Please proceed.

Speaker #3: A confirmation "10" will indicate your line is in the question queue. You may press "star 2" if you would like to remove your question from the queue.

Speaker #3: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.

Speaker #3: Once again, please press star 1 if you have a question or comment. The first question comes from Thomas Flayton with Lake Street Capital. Please proceed.

Speaker #4: Yeah. Hey, guys, appreciate you taking the question. Just to start off, Ryan—well, both of you mentioned that the GTN discount was more favorable than you had expected, and it looks like it's more favorable than our model.

Thomas Clayton: Yeah. Hey, guys. Appreciate you taking the question. Just to start off, Ryan, well, both of you mentioned that the GTN discount was more favorable than you had expected, and it looks like it is more favorable than our model. Can you talk a little bit about the puts and takes that made that more favorable?

Thomas Flaten: Yeah. Hey, guys. Appreciate you taking the question. Just to start off, Ryan, well, both of you mentioned that the GTN discount was more favorable than you had expected, and it looks like it is more favorable than our model. Can you talk a little bit about the puts and takes that made that more favorable?

Speaker #4: Can you talk a little bit about the puts and takes that made that more favorable?

Speaker #1: I could take that to start, and then Ryan, feel free to fill in. And thanks, Thomas, for the question. In short, it's just a higher-than-anticipated approval rate, really, across commercial payers.

Josh Disbrow: I can take that to start, and then Ryan, feel free to fill in. Thanks, Thomas, for the question. In short, it is just a higher than anticipated approval rate, really across commercial payers. That is the simple answer. We are seeing it consistent. We are seeing it hang on really month to month. It is lower for the titration pack, but frankly, that has come in materially higher than we modeled initially. The 30 count sort of regular way prescriptions are coming in at a higher approval rate as well. So that is the key piece. They are holding on and I think, I do not want to suggest have the potential for improvement, but as we build a higher percentage of government business, as you probably know, that is an even higher, or, yeah, better GTN, I should say. That is representing well north of 20%, 25% of the business.

Speaker #1: That's the simple answer. We're seeing it consistently. We're seeing it hang on, really, month to month. It is lower for the titration pack, but frankly, that's come in materially higher than we modeled initially.

Speaker #1: And the 30-count, sort of regular way prescriptions, are coming in at a higher approval rate as well. So that's the key piece.

Speaker #1: And they're holding on, and I think—I don't want to suggest we have the potential for improvement—but as we build a higher percentage of government business, as you probably know, that's an even higher... excuse me.

Speaker #1: An even higher or yeah, better GTN, I should say. So that's and that is representing well north of 2025 percent of the business. If you look at analog products in the category, some have achieved upwards of 35 to 40 percent of the business coming from Medicare and Medicaid.

Josh Disbrow: If you look at analog products in the category, some have achieved upwards of 35% to 40% of the business coming from Medicare and Medicaid. So it is a combination of that portion of the business growing and then just overall improvements, overall approval rates better than, again, we had initially modeled and initially anticipated. This all reminds you is all without any commercial contracts, and we have no supplemental Medicaid or Medicare rebates.

Speaker #1: And so it's a combination of that portion of the business growing, and then just overall improvements—overall approval rates are better than, again, we had initially modeled and initially anticipated.

Speaker #1: And this, all reminds you, is all without any commercial contracts, and we have no supplemental Medicaid or Medicare rebates.

Speaker #4: And then, can you talk a little bit about your utilization of RxConnect for Actua? I know it represented a significant chunk of your ADHD portfolio, but maybe some commentary around that would be great.

Thomas Clayton: Can you talk a little bit about your utilization of Aytu RxConnect for EXXUA? I know it represented a significant chunk of your ADHD portfolio, but maybe some commentary around that would be great.

Thomas Flaten: Can you talk a little bit about your utilization of Aytu RxConnect for EXXUA? I know it represented a significant chunk of your ADHD portfolio, but maybe some commentary around that would be great.

Speaker #1: Yeah, it is—you know, when we look at shipments into RxConnect partner pharmacies, and then we look at dispense claims, I'm most interested in dispense claims because ultimately that's where the rubber meets the road, and that's where the patient obviously gets the prescription.

Josh Disbrow: Yeah. We look at shipments into Aytu RxConnect partner pharmacies, and then we look at dispense claims. I am most interested in dispense claims because ultimately that is where the rubber meets the road and that is where the patient obviously gets the prescription. It is lower than the current percentage of ADHD, but certainly we would expect it to grow over time. When you look at sort of dispense claims for ADHD any given month, upwards of 80% of our total prescriptions are dispensed through an Aytu RxConnect partner pharmacy or as part of the program. It is not to that level, but it is growing because we do have quite a few prescriptions coming from whitespace and from areas where we do not have rep coverage. We do have some, what we call free range prescriptions, and we also are going to build a materially higher base of government business.

Speaker #1: It is lower than the current percentage of ADHD, but certainly we would expect it to grow over time. You know, when you look at sort of dispense claims for ADHD, in any given month upwards of 80 percent of our total prescriptions are dispensed through an RxConnect partner pharmacy or as part of the program.

Speaker #1: It's not to that level, but it is growing. Because we do have, you know, quite a few prescriptions coming from white space and from areas where we don't have rep coverage, we do have some what we call free-range prescriptions.

Speaker #1: And we also are going to build a materially higher base of government business. Some of those we don't track at the moment. While those can and are filled at RxConnect partner pharmacies, in many cases, those are just filled at a pharmacy outside the network.

Josh Disbrow: Some of those we do not track at the moment. While those can and are filled at Aytu RxConnect partner pharmacies, in many cases, those are just filled at a pharmacy outside of the network. That having been said, we would expect over time to continue to drive more and more prescribing to the Aytu RxConnect pharmacies, just given the moat that that represents and what we think can really prove out to be an elongated tail, even post loss of exclusivity. Obviously we have got some time before we get there.

Speaker #1: And so, that having been said, we would expect, over time, to continue to drive more and more prescribing to the RxConnect pharmacies, just given the moat that that represents and what we think can really prove out to be an elongated tail, even post loss of exclusivity. But obviously, we've got some time before we get there.

Speaker #4: And then, the final one for me—speaking of which, you obviously had a nice sequential uptick on the ADHD portfolio. And I realize that, you know, the Catempla generic didn't come to market.

Thomas Clayton: Final one for me, speaking of which, you obviously had a nice sequential uptick on the ADHD portfolio. I realize that the COTEMPLA generic did not come to market. Can you talk a little bit about how you have been able to not only maintain, but then grow sequentially the ADHD portfolio with limited coverage? Is it just one of those things that happened, or was there something proactive that you did?

Thomas Flaten: Final one for me, speaking of which, you obviously had a nice sequential uptick on the ADHD portfolio. I realize that the COTEMPLA generic did not come to market. Can you talk a little bit about how you have been able to not only maintain, but then grow sequentially the ADHD portfolio with limited coverage? Is it just one of those things that happened, or was there something proactive that you did?

Speaker #4: But can you talk a little bit about how you've been able to not only maintain, but then grow sequentially the ADHD portfolio with limited coverage?

Speaker #4: Is it just one of those things that happened, or was there something proactive that you did?

Speaker #1: Well, we're always we're always monitoring the base business as it relates to gross to nets, reimbursement rates, pharmacy reimbursement in particular. And there certainly is real-time adjustments going on to ensure that we're optimizing sort of the payer sort of the mix there as it relates to dispensing and filled prescriptions and claims.

Josh Disbrow: Well, we are always monitoring the base business as it relates to gross to nets reimbursement rates, pharmacy reimbursement in particular. There certainly is real-time adjustments going on to ensure that we are optimizing the payer, the mix there as it relates to dispensing and filled prescriptions and claims. So that is a piece of it. Certainly, there is an element of being proactive. I would say GTNs had some improvement and some uptick. I mean, that is the bulk of it, really. So, yeah, I would say that has been actively managed, and that is something that could be managed with relatively few resources. We have, of course, internal resources dedicated to that, and so it largely has just been optimizing GTNs and ensuring that the pharmacies are in adequate shape with respect to the AG and the brand.

Speaker #1: So that's a piece of it. So certainly, there's an element of being proactive. I would say GTNs had some improvement and some uptick.

Speaker #1: There was and that's I mean, that's the bulk of it, really. So yeah, I would say that's that has been actively managed, and that's something that could be managed you know, with relatively few resources.

Speaker #1: We have, of course, internal resources dedicated to that. And so that has largely just been optimizing GTNs and ensuring that the pharmacies are in adequate shape with respect to the AG and the brand.

Speaker #1: And of course, we're able to seamlessly toggle—or they're able to seamlessly toggle—between the brand and the AG. And again, I'll remind you that, you know, the ANDA has really been slow.

Josh Disbrow: And of course, we are able to seamlessly toggle, or they are able to seamlessly toggle between the brand and the AG. Again, I will remind you that the ANDA has really been slow. The Teva product has hardly scratched 20% when you look at the overall available market of prescriptions. While prescriptions have come down year-on-year, that is largely attributable to just the pull promotion that we pulled over a year ago.

Speaker #1: The Teva product has kind of hardly scratched 20 percent when you look at the overall available market of prescriptions. And while prescriptions have come down year on year, that's largely attributable to just the pull promotion that we pulled over a year ago.

Speaker #4: That's awesome. Thanks for the questions, and congratulations on the quarter.

Thomas Clayton: That is awesome. Thanks for the questions. Congrats on the quarter.

Thomas Flaten: That is awesome. Thanks for the questions. Congrats on the quarter.

Speaker #1: Thank you, Thomas.

Josh Disbrow: Thank you, Thomas.

Speaker #3: The next question is from Naz Rahman with Maxim Group. Please proceed.

Operator: The next question is from Naz Rahman with Maxim Group. Please proceed.

Speaker #4: Hi everyone. Congrats on the progress, and thanks for taking our questions. Just a couple. So first, in terms of the prior audits, could you provide some color on, I guess, how the prior audits are evolving?

Naz Rahman: Hi, everyone. Congrats on the progress and thanks for taking our questions. Just a couple. First, in terms of the prior auths, could you provide some color on, I guess, how the prior auths are evolving? What I mean by that is, are you seeing the prior auths get approved first pass more frequently, or do you know what percentage of the prior auths get approved in the first pass versus how many are requiring multiple back and forths? I have a follow-up after that.

Speaker #4: And what I mean by that is: are you seeing the prior audits get approved on the first pass more frequently, or do you know what percentage of the prior audits get approved in the first pass?

Speaker #4: And versus how many are requiring multiple back-and-forths? And I have a follow-up after that.

Speaker #1: Yeah, thanks for the question, Naz. In terms of prior audits, it's still a relatively early stage. What I'll say is, because of the nature of this patient with multiple failures, we absolutely are having success from a prior authorization perspective.

Josh Disbrow: Yeah. Thanks for the question, Naz. In terms of prior auths, it is still a relatively early stage and what I will say is because of the nature of this patient with multiple failures, we absolutely are having success from a prior authorization perspective. Obviously, we are not doing them. We cannot do them on behalf of the customers. It is the prescribers that ultimately complete the paperwork. But we have made it very simple for them. It is a really straightforward process. Physicians are increasingly utilizing the service. They have to engage with a specific vendor to get signed up and so forth, and they log in and essentially do a very, very simple process. The approval rates for prior authorizations are quite high. If you look at the success we are having with claims that are submitted through the program, it is in the neighborhood of 70%.

Speaker #1: So obviously, we're not doing them. We can't do them on behalf of the customers. The prescribers ultimately complete the paperwork, but we've made it very simple for them.

Speaker #1: It's a really straightforward process. Physicians are increasingly utilizing the service. They have to engage with a specific vendor to get signed up, and so forth, and they log in and essentially do a very, very simple process.

Speaker #1: And the, you know, the approval rates for prior authorizations are quite high. If you look at the success we're having with claims that are submitted sort of through the program, it's in the neighborhood of 70%.

Speaker #1: So it's we're having quite quite quite a lot of success. That's materially higher than most categories. And I think it's because of the ease of the ease of use of the program that we've implemented.

Josh Disbrow: We are having quite a lot of success. That is materially higher than most categories, and I think it is because of the ease of use of the program that we have implemented, also the class and the patient type. Again, this is going to be a patient that has often been on multiple medications. So it has been very encouraging in the early stages of this.

Speaker #1: Also, the class and the patient type, again, this is a this is going to be a patient that's often been on multiple medications. So you know, it's it's been very, very encouraging in the early stages of this.

Speaker #4: Got it. That was helpful. And one last question—in terms of coverage and reimbursement, I mean, previously you talked a lot about the importance of government payers.

Naz Rahman: Got it. That was helpful. One last question. In terms of coverage and reimbursement, previously you talked a lot about the importance of government payers. At this point, when can we expect, I guess, the next large bolus of payments in terms of both commercial and government payers, and what would you expect first?

Speaker #4: At this point, when can we expect, I guess, the next large bolus of payments in terms of both commercial and government payers? And what would you expect first?

Speaker #1: You know, that's a good question, Naz. We don't really think of it as bringing on any sort of one big lever. We think it'll sort of organically evolve.

Josh Disbrow: Yeah, that's a good question, Naz. We don't really think of it as bringing on any sort of one big lever. We think it'll organically evolve. Frankly, if these GTN levels just maintained with the coverage we have today without any contracts, that would be a really good situation, a really good story. We continue to really scrutinize the need to contract proactively. In fact, I think we're at the point of not proactively contracting, same on both sides, government and commercial. Doesn't do us any good to contract on the government side and pay large supplemental rebates when states, in one way, shape, or form, will cover this. They might require prior authorization, but as I just described, those are not exceedingly difficult to get. On the commercial side, we're seeing good approval rates without any active contracts in place.

Speaker #1: You know, frankly, if these GTN levels just maintained with the coverage we have today without any contracts, that would be a really, really good situation.

Speaker #1: A really good story. So we continue to really scrutinize the need to contract proactively. In fact, I think we're at the point of not—not proactively contracting.

Speaker #1: It's the same on both sides—government and commercial. It doesn't do us any good to contract on the government side and pay large supplemental rebates when states, in one way, shape, or form, will cover this.

Speaker #1: They might require a prior authorization, but as I just described, those are not exceedingly difficult to get. And on the commercial side, we're seeing good approval rates without any active contracts in place.

Speaker #1: Again, understanding the placement of this product is not first line, and so the ability to get claims approved—understanding that this is often for patients who've been on two or three, or maybe more medications.

Josh Disbrow: Again, understanding the placement of this product is not first line, and so the ability to get claims approved, understanding that this is often for patients that's been on two or three or maybe more medications. We'll, of course, continue to keep ourselves open to contracting, but we don't think of it as necessarily saying, "Okay, we're going to have a step function." Because one of the things that we know is payer contracts don't drive demand. If you sign an agreement with a large PBM, you don't automatically get a step function in your demand. It still comes down to prescribers sending prescriptions to pharmacies, and that's, of course, driven by us.

Speaker #1: So we'll, of course, continue to keep ourselves open to contracting, but we don't think of it as necessarily saying, okay, we're going to have a step function. Because one of the things that we know is payer contracts don't drive demand.

Speaker #1: So, if you sign an agreement with a large PBM, you don't automatically get a step function in your demand. It still comes down to prescribers sending prescriptions to pharmacies, and that's, of course, driven by us.

Speaker #1: And so what you can do from a payer perspective is you can optimize and tweak sort of GTNs and pricing, but you don't necessarily think of those as just because you have a contract with one of the big three PBMs, it doesn't mean a physician will automatically prescribe.

Josh Disbrow: What you can do from a payer perspective is you can optimize and tweak GTNs and pricing, but you don't necessarily think of those as just because you have a contract with one of the big three PBMs doesn't mean a physician will automatically prescribe. Really, it's the contrary. Because we have Aytu RxConnect set up and to some degree, we serve as the backstop, if you will, to guarantee that that patient never pays more than $50 on a commercial claim. We don't really have a need to go out and shout from the rooftops that we have a contract with a large PBM. Doesn't preclude the possibility that we would engage with one, but it has to be on the terms that make sense for us economically.

Speaker #1: Really, it's the contrary. Because we have RxConnect set up, and to some degree we serve as the backstop, if you will, to guarantee that the patient never pays more than $50 on a commercial claim, we don't really have a need to go out and shout from the rooftops that we have a contract with a large PBM.

Speaker #1: It doesn't preclude the possibility that we would engage with one, but it has to be on terms that make sense for us economically. And, you know, we're generating enough demand to start to generate some interest.

Josh Disbrow: We're generating enough demand to start to generate some interest and some inbound conversations, but time will tell as to really how valuable those conversations turn out to be. We're really in a good spot based on the GTNs today. Again, don't feel a need to proactively contract on either side of the ledger, commercial or government.

Speaker #1: And some inbound conversations. But time will tell as to really how valuable those conversations turn out to be, and we're really, really in a good spot based on the GTNs today.

Speaker #1: And again, don't feel a need to proactively contract on either side of the ledger, commercial or government.

Speaker #4: Got it. That was helpful. Thanks for taking my questions.

Naz Rahman: Got it. That was helpful. Thanks for taking my questions.

Speaker #1: Thank you.

Josh Disbrow: Thank you.

Speaker #3: Once again, if you have a question or a comment, please indicate so by pressing star one. The next question is from Ed Wu with Ascendiant Capital.

Operator: Once again, if you have a question or a comment, please indicate so by pressing star one. The next question is from Ed Wu with Ascendiant Capital Markets. Please proceed.

Speaker #3: Please proceed.

Speaker #4: Yeah, congratulations on all the progress. My question is about the sales reps. You mentioned that you were at 43 in March, 32 in July, and 42 now.

Ed Wu: Yeah. Congratulations on all the progress. My question is on the sales rep. You mentioned that you were at 43 in March, 32 in July, 42 now. Do you have a goal in mind of where you think you want to be maybe in 6 months? I know you mentioned that these reps get up to speed pretty fast. Is it within 3 months that you feel that they are able to hit their stride?

Ed Woo: Yeah. Congratulations on all the progress. My question is on the sales rep. You mentioned that you were at 43 in March, 32 in July, 42 now. Do you have a goal in mind of where you think you want to be maybe in 6 months? I know you mentioned that these reps get up to speed pretty fast. Is it within 3 months that you feel that they are able to hit their stride?

Speaker #4: Have is do you have a goal in mind of where you think you want to be maybe in six months? And I know you mentioned that, you know, these reps get up to speed pretty fast.

Speaker #4: Is it within three months that you feel they are able to hit their stride?

Speaker #1: Yeah, good question, Ed. Thanks for that. You know, the goal will be dictated, obviously, by cash flow. We've said that from the beginning, but certainly materially higher than $42 or $49.

Josh Disbrow: Yeah, good question, Ed. Thanks for that. The goal will be dictated obviously by cash flow. We have said that from the beginning, but certainly materially higher than 42 or 49. We have a plan that is at least a multiple of that, if not higher, in terms of where ultimately we see the footprint getting from a sales specialist perspective. The timeline will be driven by profitability and cash flow to enable us to expand in a prudent fashion. We do not have a specified goal of it has to be 60 reps by the end of the calendar year and then 120 by the middle of next. Although that type of cadence would suggest that we are on a good trajectory and are generating an adequate level of cash flow to justify that level of investment. We are being very judicious in how we think about territories.

Speaker #1: I mean, we have a plan that's at least a multiple of that, if not higher, in terms of where ultimately we see the footprint getting from a sales specialist perspective.

Speaker #1: But that will be driven—the timeline will be driven—by profitability and cash flow to enable us to expand in a prudent fashion. And so we don't have a specified goal of, you know, it has to be 60 reps by the end of the calendar year and then 120 by the middle of next.

Speaker #1: Although that type of cadence would suggest that we're on a good trajectory and are generating an adequate level of cash flow to justify that level of investment.

Speaker #1: And we're being very judicious in how we think about territories. In some cases, we are doubling up in areas. In other cases, we're keeping a single territory just because it's able to be efficiently managed that way.

Josh Disbrow: In some cases, we are doubling up in areas. In other cases, we are keeping a single territory just because it is able to be efficiently managed that way. Ultimately, that is how we think about it. Sorry, I missed the second part of your question.

Speaker #1: And, you know, ultimately that's—that's sort of how we think about it. Sorry, I missed the second part of your question.

Speaker #4: In terms of how quickly these sales reps ramp up, is it quarterly, or six months?

Ed Wu: In terms of how quickly do these sales rep ramp up?

Ed Woo: In terms of how quickly do these sales rep ramp up?

Josh Disbrow: Okay. Yeah. Thank you.

Ed Wu: Is it a quarter or 6 months?

Ed Woo: Is it a quarter or 6 months?

Speaker #1: Yeah, six to nine months, realistically, is a good time frame to really think of somebody as sort of adequately tooled for the job. And if you look at really sort of a break-even analysis, you know, you would look at something closer to nine or twelve months.

Josh Disbrow: Yeah. 6 to 9 months, realistically, is a good timeframe to really think of somebody as adequately tooled for the job. If you look at really a break-even analysis, you would look at something closer to 9 or 12 months. But in terms of really identifying, I guess there's a couple of components there. Identifying that the person has the requisite skills, drive, demeanor, all the things you need to be successful, that takes less time. To ultimately get that rep to turn that into action on the part of the prescribers, that's something more like 6 to 9 months. As we think about a phased approach of getting to that next layer of geographies, we think of it with a 6 to 9 months ramp-up period in mind. That's what's really encouraging.

Speaker #1: But in terms of really identifying, I guess there's a couple of components there: identifying that the person has the records and skills, drive, demeanor—all the things you need to be successful.

Speaker #1: That takes less time to ultimately get that rep to turn that into action on the part of the prescribers. That's something more like six to nine months.

Speaker #1: And so, as we think about a phased approach to getting to that next layer of geographies, you know, we sort of think of it with a six- to nine-month ramp-up period in mind.

Speaker #1: So that's what's really encouraging. You know, we hit an all-time high weekly prescription level the week ending September 4th, of almost 400 prescriptions.

Josh Disbrow: We hit an all-time high prescription, a weekly prescription level the week ending 4 September of almost 400 prescriptions. I'll remind you, that's still with something south of 40 reps really active. When you think about really that we had a crop that came in a few months ago, they're still just getting their feet under them. So you get another 3 months down the road, that crop of reps starts to get turned on and deliver, then another crop that we'll have coming in here in the fall. You can really envision that leg up, that's why I use the numbers I did of if you just got some of those reps up to 10, 15, and certainly it's realistic to think that they could all be at 20 to 30 a week.

Speaker #1: I'll remind you, that's that's still with a, you know, something south of 40 reps really active, you know, when you think about really that we had a crop that came in a few months ago, they're still just kind of getting their feet under them.

Speaker #1: So you get, you know, another three months down the road, and that crop of reps starts to get turned on and deliver, and then another crop that we'll have coming in here in the fall.

Speaker #1: And so, you can really envision that leg up. And that's why I use sort of the numbers I did—if you just got some of those reps up to 10, 15, and certainly it's realistic to think that they could all be at 20 to 30 a week.

Speaker #1: It's actually significantly lower than any of our reps got on Adzenis if you looked at its historical highs. So, quite confident that 40 to 45 reps, and then expanding to 50 and beyond—getting to 20, 30, and then ultimately, you know, 50-plus prescriptions a week—it's pretty exciting to think about where that puts us from a revenue trajectory perspective.

Josh Disbrow: That's significantly lower than any of our reps got on ADZENYS if you looked at its historical highs. So quite confident that 40 to 45 reps and then expanding to 50 and beyond, getting to 20, 30, and then ultimately 50 plus prescriptions a week. It's pretty exciting to think where that puts us from a revenue trajectory perspective.

Speaker #4: And just to clarify, the amounts—I think you mentioned 3,000 prescriptions for the quarter. Does that include refills?

Ed Wu: And just to clarify, the amounts, I think you mentioned 3,000 prescriptions for the quarter. Does that include refills?

Ed Woo: And just to clarify, the amounts, I think you mentioned 3,000 prescriptions for the quarter. Does that include refills?

Speaker #1: That includes refills. Yeah, that would be starter, and that would be initiation of the starter titration packs, which would be sort of the initiation. And then we think of refills as once they get transitioned to the 30-count regular, sort of stable dose, and then a refill beyond that.

Josh Disbrow: That includes refills. Yes. That would be starter and that would be initiation. The starter titration packs would be the initiation, and then we think of refills as once they get transitioned to the 30 count, regular stable dose, and then a refill beyond that. So, yes. And again, keeping in mind that many of these patients, they have just gotten started over the first month or so. Some patients are titrating more slowly than the label indicates, and so some of these patients are just getting into their first month or so. So we have not yet to see anything resembling the compounding effect that we would expect to see as the months move forward.

Speaker #1: And so, yeah, again, keeping in mind that many of these patients, you know, they've just gotten started over the first month or so.

Speaker #1: Some patients are titrating more slowly than the label sort of indicates. And so, you know, some of these patients are just getting into their first month or so.

Speaker #1: So we've not yet to see anything resembling sort of the compounding effect that we would, you know, expect to see as as the months move move forward.

Speaker #4: All right, that sounds good. Well, thanks for answering my questions, and I wish you guys good luck. Thank you.

Ed Wu: All right. That sounds good. Well, thanks for answering my questions, and I wish you guys good luck. Thank you.

Ed Woo: All right. That sounds good. Well, thanks for answering my questions, and I wish you guys good luck. Thank you.

Speaker #1: Thanks, Ed.

Josh Disbrow: Thanks, Ed.

Speaker #3: We have reached the end of the question and answer session, and I will now turn the call over to management for closing remarks.

Operator: We have reached the end of the question and answer session, and I will now turn the call over to management for closing remarks.

Speaker #1: Thank you, John. Again, just to reiterate, we're extremely pleased with the progress this quarter, particularly as it relates to the trajectory we're seeing with Exua.

Josh Disbrow: Thank you, John. Again, just to reiterate, we are extremely pleased with the progress this quarter, particularly as it relates to the trajectory we are seeing with EXXUA. We are increasingly encouraged by the number of territories driving meaningful prescriptions and ultimately the breadth of prescribing. We are most excited about the response that we are hearing through physicians due to the feedback they are getting from their patients. Patients saying things back to their physicians like, "It has been life-changing," and, "Haven't felt this good in years." That is just why we do what we do. We continue to have the pedal down, work very hard every single day to ensure that as many prescribers as we can hear about the EXXUA story and ultimately put pen to paper to prescribe what we think is an outstanding treatment, and it is proving to be that in the real world. With that, we are very encouraged.

Speaker #1: We're increasingly encouraged by the number of territories driving meaningful prescriptions, and ultimately, the breadth of prescribing. We're most excited about the response we're hearing through physicians, due to the feedback they're getting from their patients—patients saying things back through their physicians like, "It's been life-changing," and "I haven't felt this good in years."

Speaker #1: And that's just why we do what we do. So we continue to have the pedal down, work very hard every single day to ensure that as many prescribers as we can hear about the Exua story and ultimately put pen to paper to prescribe what we think is an outstanding treatment, and it's proving to be that in the real world.

Speaker #1: So with that, we're very encouraged. We are now, of course, into our fiscal '27, towards the end already of our first quarter. So we'll look forward to sharing those results with you all in November.

Josh Disbrow: We are now, of course, into our fiscal 2027, towards the end already of our Q1. We will look forward to sharing those results with you all in November. Until then, thank you for your interest in Aytu. Thanks for your time, and have a good evening.

Speaker #1: Until then, thank you for your interest in A2. Thanks for your time, and have a good evening.

Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.