Good afternoon, everyone, and welcome to Aytu BioPharma's Fourth Quarter and Fiscal Year 2022 Financial Results Conference Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Robert Blum with Lytham Partners. Sir, the floor is yours.

All right. Thank you very much. Good afternoon, everyone, and the operator said, thank you for joining us for today's Aytu BioPharma fourth quarter and fiscal year 2022 financial results conference call. Joining us on today's call is Aytu's CEO, Josh Disbrow; and the company's Chief Financial Officer, Mark Oki. 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. A replay of today's call will be available by using the telephone numbers and conference ID provided in the earnings press release issued earlier today. Finally, I'd also like to call to your attention 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. 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. With that said, I'd like to turn the event over to Josh Disbrow, Chief Executive Officer of Aytu BioPharma. Josh, please proceed.

Thank you, Robert, and welcome, everyone. I'm pleased to be sharing this fiscal '22 full year and Q4 review on the call and look forward to holding these quarterly calls going forward. I'm extremely pleased with the traction we are achieving in our commercial operations. We attained record fourth quarter and fiscal year net revenues, which are being driven by strong growth in our Prescription business and high single-digit annual growth in our Consumer Health segment. As you saw in today's press release, the $18.7 million in prescription revenues was a new quarterly record for the company and up 28% compared to last year's fourth quarter. The growth is largely being driven by the continuing execution of our sales force and the leverage we're gaining through Aytu RxConnect, our novel and proprietary patient access program. RxConnect enables affordable, predictable, hassle-free patient access to Aytu's prescription products and along with our sales force is a cornerstone of our Rx business. Our sales force is making incremental strides with our physician and patient-centric messaging, and we're experiencing tailwinds from the growth of our key prescription markets, particularly within ADHD. I'll expand more on all of this in a moment. Another milestone to highlight during the quarter was the achievement of positive adjusted EBITDA within our Prescription segment. This milestone was achieved through a combination of operational improvements, commercial execution, strong prescription trends, and positive market drivers. We believe these trends bode well for us as we enter fiscal '23, particularly as we continue both our top line growth and margin improvement through the outsourcing and production of Adzenys XR-ODT and Cotempla XR-ODT to a contract manufacturer to further improve our bottom line. Now, there will always be some seasonal variations that impact our commercial operations in any given quarter, and in particular,…

Thank you, Josh, and welcome to everyone joining us on this call. Let me build upon comments that Josh has already provided, starting with revenue. Net revenue for the fourth quarter of fiscal 2022 was $27.4 million compared to $23.5 million for the fourth quarter of fiscal 2021, a 17% increase. For the year, net revenue was $96.7 million compared to $65.6 million for fiscal 2021, a 47% increase. Breaking down the quarter, net revenue from prescription sales in the fourth quarter of fiscal 2022 was $18.7 million compared to $14.6 million in the same quarter last year, an increase of 28%. ADHD experienced 21% growth in net revenue to 12.2 million in the fourth quarter of fiscal 2022 compared to 10.1 million during the fourth quarter of 2021. Prescription pediatric portfolio experienced 64% growth in net revenue to $6.1 million in our 2022 fourth quarter compared to $3.7 million in our fourth quarter of 2021. For the fourth quarter of 2022, net revenue from Consumer Health franchise was $8.7 million compared to $8.9 million in the same quarter last year, a decrease of 2%. This decrease was largely driven by the short-term supply chain disruptions Josh mentioned earlier. Looking at the year, net revenue from prescription products for fiscal 2022 was $61.1 million compared to $32.7 million in fiscal 2021, an increase of 87%. ADHD experienced 294% growth in net revenue to $42.9 million in fiscal 2022 compared to fiscal 2021. As a reminder, the ADHD products were acquired in March of 2021 and reflect a prior year stub period of ownership. Prescription pediatrics experienced 29% growth in net revenue to 16.1 million in fiscal 2022 compared to 12.4 million for fiscal 2021. Net revenue for fiscal 2022 from the Consumer Health franchise was $35.5 million compared to $33…

Thank you, Mark. Let me just conclude with where I started. I'm extremely pleased with the traction we are retrieving in our commercial operations as we achieved record fourth quarter and fiscal year net revenues driven by strong growth in our Prescription business and high single digit growth on the year in our Consumer Health segment. Through operational improvements, commercial execution and positive market drivers, we have delivered positive adjusted EBITDA in the fourth quarter within our Prescription segment. We believe this bodes well for us as we enter fiscal '23, particularly as we continue both our top line growth and margin improvement through the tech transfer of Adzenys and Cotempla to further improve our bottom line. As we look to the future, I believe we are well positioned as we expect continued growth in our portfolio of Prescription and Consumer Health products. This organic growth when coupled with operational and manufacturing efficiencies as well as portfolio prioritization should drive us towards positive adjusted EBITDA for our commercial businesses. This solid base coupled with the clinical advancement of AR101 and our Phase 3 PREVEnt clinical trial for the treatment of patients with VEDS, it provides us with the unique ability to have a solid fundamentally driven commercial business, coupled with a high value pipeline opportunity to create value for the future. We look forward to that future with tremendous optimism. I appreciate everyone's participation on the call today. And now we'll be happy to answer questions. Operator?

Thank you. Ladies and gentlemen, the floor is now open for questions. [Operator Instructions]. The first question is coming from Vernon Bernardino with H.C. Wainwright. Your line is live.

Hi, thanks for taking my question. Hi, Josh. Congrats on the strong results and the progress with enzastaurin. I was just wondering if you could talk a little bit about the discontinued products. If you could either tell us what they are or perhaps characterize what decision process you made to deprioritize them, including perhaps some idea of the cost of sales of those versus the cost of sales of the other Consumer Health products?

Yes. Thanks, Vernon. I appreciate the call and the questions, and I'll have Mark fill in if there's anything I miss on. But generally speaking, the discontinued products are - were a drag on the company's bottom line. These were relatively small revenue players and actually contribute in aggregate negative gross margin over the last year plus. And so these were not products that were going to be long-term growth drivers. As you likely recall before the pandemic, we acquired a product line from Cerecor that we refer to as the pediatric product line. And really, the centerpiece of that portfolio was what we've identified as the core pediatric brands today, Poly-Vi-Flor, Tri-Vi-Flor, and Karbinal, and we brought some additional products that while they were revenue contributors, we did not expect them to be big growth drivers, and again contributed largely negative gross margin. So relatively de minimis revenue that comes from that and a pickup in the context of us being able to pick up -- reverse some of that negative contribution margin. And then we did discontinue, I'll remind you, Natesto. We discontinued that along with Tuzistra back in March of 2021. When we were on the precipice of closing the deal with Neos, we entered into negotiations with two separate parties to return those assets back to their originators and did that. While Natesto did contribute some revenue, Tuzistra was de minimis. And so frankly, it was addition by subtraction when you look at all those products. And this is all to say is we're squarely focused on our core ADHD and pediatric brands. Obviously, Adzenys XR and Cotempla XR is the lion's share of the revenue. But really, the pediatric products, Poly-Vi-Flor, Tri-Vi-Flor, and Karbinal are really beginning to be meaningful growth drivers for the company. And this enables us to focus squarely in pediatrics and ADHD, remove the distractions of these non-core products that were a drag on the company's bottom line. So hopefully, that gives you some perspective.

Terrific, it does. I have one follow-up question, but I'll get back in the queue for now.

[Operator Instructions]. Okay. We have a follow-up from Vernon. Vernon, your line is live.

Hi. Thanks for taking the follow-up. The Healight device has always been interesting to me. What are our current activities related to that? And perhaps you mentioned monetization opportunities, but what perhaps is in the COVID environment is how one may perhaps advance the product into either clinical development or even just experimental further use?

Yes. Thank you, Vernon. So just to recap, where obviously Healight started was the concept of potentially treating SARS-CoV-2, the COVID-19 virus. And while it did show early promise, we began to make a pivot when it really became clear that clearly the market has found ways to solve for COVID at least in large part through vaccinations and some of the treatments that have since received authorizations. But what was clear from the beginning is that this was going to be a device that had far more potential than just SARS-CoV-2, inclusive of severe pneumonias and then specifically with respect to ventilator-associated pneumonia. And so that's where we find ourselves now with - in the throes of a preclinical study at the university clinic to Barcelona under the supervision of Dr. Tony Torres is to look in a very refined, sophisticated ventilator-associated pneumonia pig model, which is really kind of the gold standard and one of the only places on the planet that employs such a model to look and see, can we either delay the time of onset of VAP or potentially prevent it altogether? And so where we stand is we are in the midst of a larger pig study after completing a relatively small one to demonstrate proof of concept that in fact the rates of Pseudomonas and the ability to delay onset of Pseudomonas-driven VAP was significant. And so we need to do a larger study now and that will in turn inform a decision about where we take development. And frankly, we're excited about what this could mean for us from a couple of perspectives. The ability to focus on our core business, which as I mentioned is our commercial business and advancing AR101 towards the first patient getting dosed in the PREVEnt trial, but it also enables Healight to potentially get into the hands of a larger company that may be more focused in respiratory illnesses, anti-infectives and already has a presence in major European hospitals and so forth. And we think there could be a meaningful opportunity to get non-dilutive funding in through an out-licensing deal through a company that has more resources than we currently do. You can't be all things to all people. What we've said over the last year plus following our transition into a pediatrics and ADHD company is we'll consider all opportunities to bring in additional sources of funding and we think Healight could represent a really good source for that. So we've kicked off the process and more to follow as to what might come from that, but excited about the ability to get it into the hands of a company that can really resource it and drive something meaningful through a potential out-licensing deal.

When might we see results from those studies in the pig? And I guess that's it.

Yes. So I don't want to give you specific guidance, because this all depends on the workflows within a large hospital and of course that's anything but predictable these days. But I think it's realistic to think that late this year or early next we'll have a read on the porcine model to understand what we do from there and whether we pursue more of a preventative type of approach, which would be a different protocol and a different sort of set of studies versus whether we go after a treatment. The bigger opportunity frankly is a preventative to go after. That's the bigger market where you can envision that every hospital is employing this as part of their standard operating procedure for any high risk patient that comes in with a respiratory illness and has been – and needs to be mechanically ventilated. So excited about what this could mean. And I don't want to signal necessarily that we fully expect to get a deal done. We are starting the process and given what we perceive is a very exciting opportunity. We - there could be a something – a meaningful deal that gets done with Healight.

Terrific. Thank you. That's very helpful and perhaps defining the opportunity. Appreciate you taking my follow-ups.

Thanks, Vernon.

Okay. The next question is coming from Sumant Kulkarni with Canaccord. Sumant, your line is live.

Josh and Mark, thanks for taking my question. Could you give us a sense of what the cost of the PREVEnt study might be for enzastaurin in VEDS and how that might play out relative to the cash in hand right now?

Yes. Thanks, Sumant. Good to have you on the call. So what we've discussed in a general sense is that all-in up to the interim analysis, which would be kind of a go/no go is about a $16 million to $17 million spend, it's about an $8 million annual spend. So that's about -- call that 24 months out. If we get a positive indication from either an efficacy perspective or it's primarily being oriented as a safety read, just to make sure that we have the safety profile to enable us to add in some adolescent patients. So at the very least, it would be, okay, now it's safe to add in adolescents, go back to the FDA. It is powered and we have afforded ourselves alpha such that if there's a significant -- statistically significant response, there could be an unblinding to potentially enable filing for benefit at that point. So generally speaking, think of it as about an $8 million annual spend over two but could be three years, assuming that we don't necessarily expect to get an interim read from an efficacy perspective. So there may be another year added on to that. So think of about as an $8 million or so annualized spend all-in.

Got it. Thanks a lot. And then now that you are gotten further along on the PREVEnt trial, could you give us a sense of what the latest discussions have been with the FDA, if any?

The FDA has been relatively quiet because we got to a good agreement on the protocol. We got really everything that we needed out of them in terms of a real clear endpoint exactly what they're looking for. And so, if anything, we've had more interactions with some of the European regulatory agencies getting ethics approval, getting the country by country CTAs approved. And we have that in four of the five countries at this point. So from an FDA perspective, we've been, shall I say, signed, sealed and delivered for multiple months, really just wanting to synergize and make sure that we've got all of the runners at the starting line on both sides of the Atlantic, such that we can maximize the stats plan to make sure that we were accruing for the right number of events. And the more we can frontload that the better. So FDA has been more or less in our camp. Everything is solid. Obviously got the Fast Track designation, which obviously allows for sort of much more frequent and ready access to the FDA, and so we're excited to have gotten agreement from them relatively swiftly and are now in a position to really just again get the runners to the starting line.

Got it. Thanks for the detail.

Thank you, Sumant.

[Operator Instructions]. Okay. It looks like we have no further questions in queue. I'd like to turn the floor back to management for any closing remarks.

Thank you, John, and thanks to everyone for attending today's call and for those that joined via the webcast online. I hope you can hear my enthusiasm. I hope you share the excitement of what we have accomplished here this past year. Significant transition has taken place and we're really excited about the progress that's been made looking forward to the future and continuing to grow the commercial business. We're obviously excited about the fact that we crossed over the EBITDA positive line on the Rx side. Expect to continue to see improvements. We expect to continue to advance towards the first patient getting dosed in the PREVEnt trial. So again, thanks for the support. Thanks for your continuing interest in Aytu. For those of you that are shareholders and have not yet voted your shares, we would ask you to do that in consideration of certainly the importance of maintaining our NASDAQ listing. And so I appreciate everyone that hasn't voted doing so. And again, thank you for your support and for your time on today's call. Everyone, have a very good evening or afternoon depending on where you may be. Thanks very much. Have a good day.

Thank you. Ladies and gentlemen, this does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.