Greetings. Welcome to the Aytu BioPharma Fiscal 2024 Q2 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Roger Weiss. You may begin.

Good afternoon, everyone and thank you for joining us for Aytu BioPharma's fiscal 2024 second quarter financial and operational results conference call for the period ended December 31, 2023. 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'll 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 press release and issued earlier today. Finally, I'd like to call your attention to the 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, Roger and welcome, everyone. I'm extremely pleased to be speaking with you today following the release of our fiscal '24 second quarter financial results. Which culminated in our first quarter of positive operating income in company history. This is clearly quite an achievement and a significant inflection point for a business that incurred more than $100 million consolidated loss from operations in fiscal '22. Also another key accomplishment during the quarter was positive adjusted EBITDA of $5.1 million, up from $0.7 million last year. Further, this is now our sixth out of the last 7 quarters with positive adjusted EBITDA for our Rx segment. Equally important, our cash balance remained steady at $19.5 million, compared to $20 million at the end of the September quarter, all to all a very strong quarter. The strategic initiatives we've undertaken to reposition Aytu as a growing and operating profitable specialty Pharma company focused on commercializing novel prescription therapeutics are clearly working. I'll remind you that this repositioning started in October of '22, when we indefinitely suspended our clinical development programs and continue with the wind down of our Consumer Health segment which we announced in mid-calendar '23. These 2 parts of our business were a drain on cash and masked the strength of our Rx segment which has been growing nicely and has been profitable from a segment perspective. With the Consumer Health segment almost completely wound down which should be completed around the end of June, the go-forward Aytu business will be highlighted by our rapidly growing ADHD portfolio which just posted record quarterly revenues of $16.6 million, up 49%, compared to Q2 of last year. And our Pediatric portfolio focused on Poly-Vi-Flor and Tri-Vi-Flor, 2 complementary prescription fluoride-based multivitamins, as well as carbonate ER, an extended-release carbinoxamine based antihistamine…

Josh, thank you and welcome to everyone joining us on this call. Let's dive in and take a closer look at this quarter's numbers, starting with revenue. Net revenue for our fiscal 2024, second quarter was $22.9 million, down 13%, compared to fiscal 2023, second quarter of $26.3 million. And reflects the planned wind-down of the Consumer Health segment. Looking at the segment contributions, net revenue from prescription -- I'm sorry, from Rx product sales in the 2024, second quarter was $18.8 million, up 4% from $18 million in the same quarter a year ago. Within our RX segment, the ADHD portfolio products notched 49% revenue growth to $16.6 million in the 2024, second quarter against $11.1 million in the quarter a year ago. These robust ADHD portfolio revenue gains reflected the ongoing successful execution of our commercial efforts and market share gains, as the ADHD market continues to experience manufacturing and supply chain issues that Josh outlined earlier. Our quarterly ADHD written prescriptions were up 14.5% year-over-year. The second part of the RX segment is the Prescription Pediatric portfolio which again this quarter reflected declines from the timing-related ordering of our prescription multivitamins, following a payer change. Peads experienced a 66% decrease in net revenue to $2.2 million in our 2024, second quarter, compared to $6.3 million in 2023. We are confident that we will be able to reinvigorate the multivitamin revenues to more normalized levels over the next few quarters. Since the second quarter's end, we have been seeing some unslacking of this channel and in return -- and the return of more reasonable channel inventory levels. I want to highlight that even with the impact from this time-based multivitamin issue, we continue to post strong results in our Rx segment. In regard to our Consumer Health segment,…

Thanks, Mark. So as you might imagine, I'm extremely pleased with the results of the second quarter, highlighted by the company's first ever quarter of positive operating income and growing adjusted EBITDA, as the wind down of the Consumer Health segment is completed, combined with the continued growth and operational improvements within our Rx segment, we believe the financial profile of Aytu will continue to become increasingly strong. With the expectation of positive cash flow generation in the quarters to come, coupled with a strong balance sheet of $19.5 million in cash at the end of December, I couldn't be more excited for the future of the company. I want to sincerely thank the entire team at Aytu for their hard work and dedication to delivering for patients, clinicians and our stockholders. It has taken a disciplined approach from the whole organization to get to this point and the management team and I are grateful to our Aytu colleagues for making such tremendous progress. Thank you to everyone participating on today's call. We'll now be happy to answer any questions. Operator?

[Operator Instructions] The first question comes from Naz Rahman with Maxim Group.

Congratulations on all the progress you made especially over the last couple of years. So obviously, as you talked about it, there's -- the shortage is still ongoing and obviously, manufacturers are sort of exiting this space. What gives you confidence that you could get enough quota for your products? Like how are your conversations with the DEA going? And I guess, do you have a time line of -- for how much -- or for what period of time you have inventory for?

Yes. Thanks, Naz. Good question. And obviously, that's an ongoing challenge. Every company in the stimulant space is facing. I will say the DEA is becoming increasingly accommodating and open to meetings with us, in fact, had a recent meeting with the FDA -- with the DEA rather in a really good dialogue and really good open lines of communication. They certainly want to be helpful. They understand the situation with the shortage. And while that would stand to benefit, not just small manufacturers but large ones, we're confident that the line of communications are wide open and definitely a high level of interest from the DEA and making sure that they don't put anybody out of stock. They recognize the rise in demand, they communicate regularly with the DEA to understand exactly where they think prescription trends are going. And while I have a responsibility to obviously curtail problems like diversion, they don't want to put anybody in the spot, most notably smaller manufacturers. So we're comfortable with the current inventory. We frankly could always use more. We're always in a position to go back and request supplemental API and have been doing that as long as -- frankly, since the beginning and that goes all the way back to prior to the acquisition of Neos. And we've got a great team on the ground, a great team that is operating diligently. We don't have infinite supply but we're comfortable for the foreseeable future and are comfortable that we can continue to get more API, as we need it. And what's important about us is we continue to be very nimble. Obviously, we're a small company. We still are operating in the Grand Prairie facility, as we transition to the contract manufacturers. So we've availed ourselves now of two facilities continue with that transition process, while we still make product in Grand Prairie and what I'll say generally speaking is we're -- we've not stocked out to date and don't have any plans to.

Got it. That was very helpful. So obviously, your ADHD franchise has seen a lot of growth over the last call -- let's call it the calendar quarter and obviously the fiscal calendar year and the fiscal year too. Could you talk a little bit about how much of that growth or at least what [indiscernible] growth is due to I guess, what percentage growth in prescribers? And how much there is a breadth in -- or how much of an increase you saw like on a per prescriber basis or writing the scripp, like how much more are prescribed writing now versus like last January versus how many more -- how much more prescribers you have that drove the growth?

Yes. Great question. So the prescription growth is being driven by, as you would expect, a combination of established prescribers and new prescribers. New prescribers actually are up about 20% year-to-date, when you look at it versus fiscal '23. And so that pretty well mirrors the level of prescribing. And so what that suggests is that the level of prescribing on a per physician basis is static which is good. It's about what you want to see. They've found a place in their practice for Adzenys and Cotempla, they consistently prescribe it for those types of patients. And I think we've done clearly a better job of getting out there, given the fact that we still have a very, very small share of voice. But the fact that we have increased prescribers by, call it, 18% to 20% after increasing prescribers by about that same percentage year-over-year the last year. So -- and that, as you recall, it's coming off of a much higher baseline. So, great to see that level of prescriber growth, when you've got these products that are somewhat mature. Obviously, very, very competitive category with some generic competition and various constraints mostly by virtue of our size. Keeping in mind that we essentially work with a small commercial team of, call it, 40 or so sales representatives. And very encouraging to see that the word is getting out there. And as those prescribers come on board, they're more or less prescribing at that same consistent level. So we're encouraged by that.

And sort of on that point and I know we talked about and you discussed there's ongoing charges. But have you seen any impact of generic Vyvanse on your products? Also, have you seen any situations where patients if they were able to get their prior prescriptions or prior stimulus they switched away from your products? Or do you see patients just kind of staying on Aytu's products?

I'll take the second one first. More so staying on our products. You're always going to have patients that for whatever reason to fall back to what they had been on. But we've really held our gains which has been great to see. We've had patients that have moved over from mix salt amphetamine ER and specifically Adderall to Adzenys XR-ODT and really like it -- like not just what they feel clinically. And in fact, some patients will report that they like it better in some ways. Some patients report not necessarily needing a booster dose which sometimes you'll hear about with our L-XR, as much they like the system, they like the program. They like the fact that they can get it predictably, particularly this time of year when deductibles are resetting and it can be very, very unpredictable and unexpected in terms of what you might pay at the pharmacy counter. And so equal parts sort of clinical benefits and how they feel and the service and the overall level of predictability that they're getting. So it's been good to see that level of stickiness. Again, you're never going to have 100% of your patients stay, once they switch to your product. That's just a fact of life. These many of these patients have been on Adderall their entire lives or their entire adult lives. But to see so many sort of come over and stay over that's been very encouraging. And what I'll say about VYVANSE is, it's been a significant issue for patients and prescribers, in pharmacies. A significant number of VYVANSE generics were approved in the low teens. Significant issues just with some of the manufacturers getting quota, so that inhibited their ability to gain any significant share and you cross -- you intersect…

Just one last question, if I may. So on this Pediatric business, you said you engaged some initiatives to reaccelerate growth. Could you talk a little bit about what those initiatives are and when we could see the impact those initiatives?

Yes, happy to. So it's really threefold. I would say, first and foremost, is diversification. We had some concentration risk there with some customers and we've now begun in earnest, really diversifying our ordering customers, most notably some of our pharmacy customers to make sure that we don't run the risk of any one pharmacy having too much of our business. And we're starting to see some of that come through in that large customer is now proportionately a smaller part of our business than they were, say, a couple of quarters ago. So we're starting to see that. Equal parts diversification into areas in different geographic areas. So for example, we've begun to move westward and we've put some virtual reps in place to enable us to access physician customers, pharmacy customers in places outside of the traditional non-Floridated areas which are really in the tristate area, New York, New Jersey, Connecticut and then you would add in Pennsylvania. So by getting out into some of the areas out West, California and so forth, while those aren't I would say, per capita or sort of per individual state, as big as maybe the Tri-state area when you add those together and aggregate all of the potential demand in these non-Floridated area, it's a nice opportunity. So we are starting to see some nice movement there, as Mark mentioned and I had as part of my prepared script, we are starting to see some of the unslacking, as we communicated on the last call. It really was a timing issue. Obviously, there's a supply chain that has to sort of be drained before they need to reorder. We did see some nice reorders here in January or back in January and have seen some improved trajectory. I don't want to…

[Operator Instructions] There are currently no questions in queue. I'd like to turn it back to management for closing remarks.

Thank you, John. Again, I just want to reiterate my thanks to the entire team at Aytu, for all they've done for their hard work and dedication. We really are delivering for patients and clinicians at an important time, particularly as the ADHD category remains really challenged. So my thanks to everybody for putting their best foot forward. We've met demand. We've continued to get more physicians and patients introduced to our ADHD brands and I'm really proud of the progress we're making on the pediatric side of the business, as well as we start to see some recovery there. It has indeed taken a significant disciplined approach from the ground up and the entire organization to get to this point. But we are grateful to our shareholders, grateful to all of our stakeholders and our teammates for getting us to this point. So until next time, we're excited about the progress we're making and look forward to sharing more progress on our next call, after the March quarter closes out. So thanks, everyone, for participating on the call and have a good afternoon and good evening.

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