AYTU BIOPHARMA, INC Q4 FY2026 earnings call

• Exua Launch Progress: Exua is in early-stage commercialization with strong momentum; prescriptions grew 81% month-over-month from July to August despite market declines. Weekly prescriptions hit a record high of nearly 400 in early September.
• Sales Force Optimization: Management implemented a disciplined, performance-based sales strategy, reducing headcount to a low of 32 reps in July before stabilizing at ~42. Productivity improved significantly, with prescriptions per rep increasing more than twofold to ~43 per month.
• Physician Adoption: Nearly 1,200 unique prescribers have written Exua prescriptions, with encouraging feedback on tolerability and efficacy. Repeat prescribing is growing as physicians gain experience.
• Access and Reimbursement: Gross-to-net (GTN) discounts were more favorable than initially modeled due to higher-than-expected approval rates across commercial payers. Government payer contribution (Medicare/Medicaid) is growing, currently exceeding 20-25% of business.
• ADHD Portfolio Durability: The ADHD franchise performed better than anticipated, retaining ~80% market share for Adzenis. The Cotempla authorized generic continues to gain traction while Teva’s generic launch remains delayed.
• Financial Discipline: A2 returned to positive adjusted EBITDA ($0.5 million) in Q4 FY26. The company emphasizes cash preservation and ROI-driven spending, avoiding an 'oversized' launch approach.

Net revenue for the fourth quarter of fiscal 2026 was $16.1 million, a 6% increase year-over-year. The Exua segment contributed $3.9 million in net revenue (up from $2.4 million in Q3), representing approximately 24% of total quarterly revenue. The ADHD portfolio generated $10.4 million in net revenue (down from $13.1 million YoY but up sequentially from $9.1 million), contributing roughly 65% of total revenue. The pediatric portfolio generated $1.8 million in net revenue (up from $0.9 million in Q3), accounting for about 11% of total revenue.

• No Revenue Guidance: Management explicitly stated they are not providing specific revenue guidance for fiscal 2027.
• Operating Expenses: Planned GAAP operating expenses are expected to be between $49 million and $54 million. Cash-based operating expenses are projected to be $45 million to $49 million.
• Sales and Marketing Investment: Up to $6 million in sales and marketing costs, deferred from FY26, will be invested in FY27 to support salesforce coverage and education.
• Gross Margin: Consolidated gross margin is expected to be lower in the first half of FY27 due to product mix and fixed cost absorption, improving to 66%-67% by Q4 FY27.
• Profitability Timeline: The company expects the six-month period ending June 30, 2027, to generate positive adjusted EBITDA, driven by stronger H2 contributions from Exua and seasonal recovery in ADHD.

• Commercial Execution Risk: Success depends heavily on the ability of the sales force to ramp up effectively; underperformance could delay growth trajectories.
• Reimbursement Uncertainty: While current GTN economics are favorable, management notes it is too early to assume these realization rates will hold long-term without proactive contracting.
• Competitive Pressure: Although Teva’s generic Cotempla has been delayed, eventual generic entry poses a risk to the ADHD portfolio's durability.
• Cash Flow Variability: Seasonality in the ADHD business (softer first half) and upfront PDUFA fees may pressure cash flow in the first half of FY27.

Q: Thomas Flayton asked about the drivers behind the favorable gross-to-net (GTN) discounts for Exua compared to initial models and how RxConnect utilization compares to the ADHD portfolio. / A: CEO Josh Disbrow explained that GTNs are favorable due to higher-than-anticipated prior authorization approval rates across commercial payers, which remain consistent month-over-month. He noted that government payer volume (Medicare/Medicaid) is growing to over 25% of the business, further improving economics without supplemental rebates. Regarding RxConnect, usage is lower than the 80% seen in ADHD but is growing as white-space prescriptions and government claims increasingly utilize partner pharmacies.

Q: Naz Rahman inquired about the evolution of prior authorization (PA) success rates and when significant payment boluses from government vs. commercial payers might occur. / A: Disbrow reported that PA approval rates via their streamlined vendor process are approximately 70%, significantly higher than typical categories, driven by the complex patient profile (multiple treatment failures). He stated that payer contracts do not drive immediate demand steps; instead, growth will evolve organically. Management is not proactively contracting with major PBMs or government entities unless economically compelling, as current GTN levels are already strong.

Q: Ed Wu questioned the target size of the Exua sales force and the ramp-up time for new representatives. / A: Disbrow clarified that there is no fixed headcount goal, as expansion is dictated by cash flow and profitability. The current team of ~42 reps is a foundation for potential expansion to 50+ if metrics justify it. New reps typically require 6-9 months to become fully productive, with break-even analysis suggesting a 9-12 month horizon. He emphasized that weekly prescription volumes are already showing strong early adoption trends.