Aytu BioScience Inc Stock

Greetings. Welcome to the Aytu BioPharma Fiscal 2026 Full Year and Q4 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Robert Blum with Lytham Partners. You may begin.

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 fourth quarter and full year operational and financial results for the period ended June 30, 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'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 issued earlier today or by utilizing the link on the company's website under Events and Presentations.

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, 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.

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 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 U.S. prescription MDD market exceeds $22 billion. 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 the 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. 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.

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 revenue in the fourth quarter, up from $2.4 million in the third quarter, bringing its fiscal '26 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. 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 '27, 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. 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've 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 are demanding high performance across the sales organization. Standards have been set and will be upheld, and we'll remain disciplined with our capital deployment throughout the launch. Those changes temporarily reduced our coverage while we work to fill territories and optimize the profile of our sales specialist position. Since that low, we brought the sales force back to approximately 42 representatives, and we continue to fill open positions. 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.

One of the key metrics we're watching is weekly and monthly prescriptions per sales rep. Using monthly 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. In July, we had 1,377 prescriptions and 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. 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 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 5 are averaging 18.5 prescriptions per week. 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 actual prescriptions. In fact, 24 territories, or approximately 60% of the current sales force, are driving 70% of the actual prescriptions, demonstrating very good breadth across many geographies and across many sales specialists. 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 actual weekly scripts could be in the relative near term as some of our newer sales specialists we've onboarded to 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. 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.

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 run rate annually. And then at 30 TRxs per rep per week, again, a weekly number achieved by multiple reps already, and that takes the annual run rate to over $50 million, again, by simply dollarizing prescriptions.

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 relative near term. And speaking of near term, and this is happening really before any of the newly hired reps are even up the curve, we're seeing EXXUA take that next leg up. For the week ending September 4, 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.

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's how we build a commercial organization that can support EXXUA over time while maintaining the financial discipline we've 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 have written EXXUA and nearly 2,500 unique patients have received it. 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 on patient tolerability. At the same time, many physicians in that prescriber base have only used EXXUA for 1 or 2 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 remain very encouraged by the response from physicians who are moving beyond their first few patients and continuing to prescribe. And it's precisely those prescribers who have written EXXUA 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.

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. 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-to-nets are significantly higher than our initial expectations.

As we move into fiscal '27, 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 fourth quarter results are an encouraging indication of what this model can deliver. 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 remains 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. Again, 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 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 prior year. For Adzenys, our brand and authorized generic together continue 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 RxConnect model even with substantially less commercial support behind the brand.

We also have our Cotempla authorized generic in the market, and it's gained prescriptions week-over-week. As of today, Teva has not yet launched its generic version of Cotempla following the July 1 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 our -- the first half of our fiscal year typically softer due to kids being out of school. The fourth quarter performance, however, reinforces our confidence in the value this portfolio brings to Aytu. It remains an important source of profit and cash to support our investment in EXXUA.

Rounding out the legacy business, our pediatrics 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. 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?

Thank you, Josh. Let's jump right into it. I'll primarily cover our fourth quarter 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 the fourth quarter 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 the third quarter with sequential increases across all 3 portfolios. For fiscal 2026, net revenue was $57.6 million.

Breaking that down, EXXUA 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. 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. 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.

We continue to see favorable gross-to-net 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 the fourth quarter net revenue compared to $13.1 million in the prior year period and $9.1 million in the third quarter. 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.

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. 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 the fourth quarter 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 the third quarter, 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. 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'll come back to margin outlook in a moment.

Turning to operating expenses. 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.

The year-over-year increase primarily reflects EXXUA 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. 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.

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. Those arrangements had no remaining balance at June 30.

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. For fiscal 2026, net loss was $14.3 million. The fourth quarter included a $1 million noncash derivative warrant liability gain. The prior year fourth quarter 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 fourth quarter compared to a positive $2 million a year ago and a negative $2.8 million in the third quarter. 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. Cash and cash equivalents were $26.3 million at June 30 compared to $26.7 million at March 31 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 March 31. Subsequent to year-end, we repaid the remaining revolver balance.

Separately, the carrying value of our term debt, including the current and noncurrent portion, was approximately $11 million at June 30. 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. 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. As discussed last quarter, the March warrant amendments reclassified $26.4 million from warrant liabilities to equity. This was a noncash 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 million to $54 million of operating expenses on a GAAP basis. Excluding noncash expenses, total cash-based operating expenses are expected to be approximately $45 million to $49 million. The largest increase is in sales and marketing, where we expect to invest up to $6 million, now planned for fiscal '27 rather than fiscal '26. This was always part of the plan, but it has been deferred from fiscal '26 to fiscal '27. The increase will support sales force 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. 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 the fourth quarter 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 the first half of fiscal 2027 than in the second half. 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 the first quarter to half of our fiscal year. 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 EXXUA to make a larger contribution as our commercial efforts build. Based on our current plans taken together, we expect the 6-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. As always, I'm happy to go over any details during Q&A.

With that, Josh, let me turn it back over to you.

Thank you, Ryan. As we look ahead, our conviction in the EXXUA opportunity remains extremely strong. We're seeing physicians gain experience with the product, a growing patient base, and improving prescriptions per sales specialist rate. We're also taking action where 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. 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. Operator?

[Operator Instructions] The first question comes from Thomas Flaten with Lake Street Capital.

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. Can you talk a little bit about the puts and takes that made that more favorable?

I can 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. That's the simple answer. We're seeing it consistent. 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. And the 30-counts of regular way prescriptions are coming in at a higher approval rate as well. So that's the key piece. And they are holding on.

And I think I don't want to suggest 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, even higher -- or yes, better GTN, I should say. So that is representing well north of 20%, 25% of the business. 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.

And so it's a combination of that portion of the business growing and then just overall improvements in overall approval rates better than, again, we had initially modeled and initially anticipated. And this, I'll remind you, is all without the commercial contracts, and we have no supplemental Medicaid or Medicare rebates.

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

Yes. It is -- we look at shipments into RxConnect partner pharmacies, and then we look at dispensed claims. I'm most interested in dispensed claims because ultimately, that's where the rubber meets the road, and that's where the patient obviously gets the prescription. It's lower than the current percentage of ADHD, but certainly, we would expect it to grow over time. When you look at sort of, dispensed claims for ADHD, that's in any given month, upwards of 80% of our total prescriptions are dispensed through an RxConnect partner pharmacy or as part of the program.

It's not to that level, but it is growing because we do have 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. And we also are going to build a materially higher base of government business. And some of those we don't track at the moment. And while those can and are filled at RxConnect partner pharmacies, in many cases, those are just filled at a pharmacy outside of the network.

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.

And then final one for me, speaking of which, you obviously had a nice sequential uptick on the ADHD portfolio. And I realize that the Cotempla generic didn't come to market. 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? Is it just one of those things that happened? Or was there something proactive that you did?

Well, we're always monitoring the base business as it relates to gross-to-net 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. So that's a piece of it. So certainly, there's an element of being proactive. So I would say GTNs had some improvement and some uptick. There was -- and that's -- I mean, that's the bulk of it really.

So yes, I would say that has been actively managed, and that's 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 sort of in adequate shape with respect to the AG and the brand. 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 the ANDA has really been slow. The Teva product has kind of hardly scratched 20% 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 full promotion that we pulled over a year ago.

The next question is from Naz Rahman with Maxim Group.

Congrats on the progress. Just a couple. So first, in terms of the prior auths, could you provide some color on, I guess, how the prior auths are evolving? And 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 and versus how many requiring multiple back and forth? And I have a follow-up after that.

Yes. Thanks for the question, Naz. In terms of prior auths, it's still relatively early stage. And 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. So obviously, we're not doing them. We can't do them on behalf of the customers. It's the prescribers that ultimately complete the paperwork. But we've made it very simple for them. 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. And 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%. So it's we're having quite a lot of success. That's materially higher than most categories. And I think it's because of the ease of use of the program that we've implemented, also the class and the patient type. Again, this is going to be a patient that's often been on multiple medications. So it's been very, very encouraging in the early stages of this.

Got it. That was helpful. And one last question. In terms of coverage and reimbursement, I mean, previously, you've 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?

Yes, that's a good question. We don't really think of it as bringing on any sort of 1 big lever. We think it will sort of organically evolve. Frankly, if these GTN levels just maintained with the coverage we have today without any contracts, that would be a really, really good situation, 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 proactively contracting 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. They might require 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. 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 a patient that's been on 2 or 3 or maybe more medications. 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.

And because one of the things that we know is payer contracts don't drive demand. 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. 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 1 of the big 3 PBMs doesn't mean a physician will automatically prescribe.

Really, it's the contrary because we have the RxConnect setup and to some degree, we serve as the backstop, if you will, to guarantee that, that patient never pays more than $50 on the commercial claim, we don't really have a need for to go out and shout from the rooftops that we have a contract with a large PBM. It 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. And 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, and we're really in a good spot based on the GTNs today. And again, don't feel a need to proactively contract on either side of the ledger, commercial or government.

[Operator Instructions] The next question is from Ed Woo with Ascendiant Capital.

Yes. 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? And 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?

Yes. Good question, Ed. Thanks for that. The goal will be dictated, obviously, by cash flow. We said that from the beginning, but certainly materially higher than 42 or 49. 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, 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 that 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're on a good trajectory and are generating an adequate level of cash flow to justify that level of investment. 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 -- have a -- keeping a single territory just because it's able to be efficiently managed that way. And ultimately, that's sort of how we think about it.

Sorry, I missed the second part of your question?

In terms of -- how quickly do these sales rep ramp up, is it quarter or 6 months?

Yes, 6 to 9 months realistically is a good timeframe to really think of somebody as sort of adequately tooled for the job. And if you look at really sort of a breakeven 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 to meet 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.

And so as we think about a phased approach of getting to that next layer of geographies, we sort of think of it with a 6- to 9-month ramp-up period in mind. So that's what's really encouraging. We had an all-time high prescription -- a weekly prescription level the week ending September 4 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 kind of getting their feet under them.

So you get another 3 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. And so you can really envision that leg up. And that's why I use sort of 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. It's actually -- 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.

And just to clarify, the amount -- I think you mentioned 3,000 prescriptions for the quarter, does that include refills?

That includes refills, yes. That would be starter, and that would be initiation. It will be the starter titration packs 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.

And so yes -- and again, keeping in mind that many of these patients, they just got started over the first month or so. Some patients are titrating more slowly than the label sort of indicates. And so some of these patients are just getting into their first month or so. So we've not yet to see anything resembling sort of the compounding effect that we would expect to see as the months move forward.

All right. That sounds good. And I wish you guys good luck.

Thanks, Ed.

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

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 EXXUA. 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 that we're hearing through physicians due to the feedback they're getting from their patients, patients saying things back to their physicians like it's been life-changing and haven't felt this good in years. And that's just why you do -- 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 EXXUA 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.

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 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.

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

Good day. Welcome to the Aytu Biopharma Fiscal 2026 Q3 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Robert Blum, Investor Relations. You may begin.

Great. Thank you very much, and good afternoon, everyone.

As the operator indicated, during today's call, we will be discussing Aytu Biopharma's fiscal 2026 third quarter operational and financial results for the period ended March 31, 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'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 issued earlier today or by utilizing the link on the company's website under Events and Presentations.

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 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.

Thanks, Robert, and welcome, everyone.

I'm very pleased to be speaking with you today following what has been an exciting first partial quarter of commercial launch activity for EXXUA. As we've discussed, EXXUA represents a significant new opportunity for Aytu. It's the first and only selective serotonin 5-HT1A receptor agonist ever approved by the FDA for the treatment of major depressive disorder in adults. And EXXUA is already demonstrating very solid growth trajectory within the MDD category.

During our last call and during our Investor Day back in January, we spent meaningful time on the market opportunity, the clinical rationale, the unmet need in MDD and the strategy behind our commercial launch. Today, I want to focus more directly on execution and some of the things we're seeing with respect to early adoption.

Simply said, while we are still very early in the launch, the fundamentals we are seeing are highly encouraging, and the launch is progressing very well. So let's dive in.

As most of you are aware, we moved from initial commercial availability in our second fiscal quarter in December into a more formalized launch phase during our third fiscal quarter. EXXUA was made commercially available back in mid-December. The initial tranche of the sales organization completed training in January, while broader field deployment of the full 40-plus sales representatives didn't actually begin until late February, early March. That timing is important.

While Q3 was our first meaningful commercial quarter, it was still only a partial quarter of full sales support and commercial deployment, with roughly 1/3 of the sales force only getting into the field in March. So we're just getting started. The most important point here, though, is that physicians are already writing EXXUA. Patients are beginning therapy and very early refill activity is already becoming evident.

In Q3, more than 1,300 prescriptions were written for EXXUA. The monthly progression is particularly encouraging with prescriptions increasing from about 200 in January to about 400 in February to over 700 in March. That type of sequential growth is exactly what we hope we would see in the early stage of a launch as awareness builds, our representatives increase their reach and frequency and as physicians begin to identify patients who may be appropriate for EXXUA.

Importantly, that momentum has continued. In April, we saw over 920 prescriptions written, up from the 700 in March. That's a 26% month-over-month sequential growth rate. Further, we shipped over 1,300 units shipped in April, which is 51% sequential growth, and that's more than the prescriptions generated in the entire first quarter. While it's early, and we will avoid over extrapolating from any short period term of data that continued month-over-month acceleration clearly demonstrates that physician interest is building and that the launch is getting traction.

We're also encouraged by the breadth of early prescriber adoption. During the quarter, more than 450 unique prescribers wrote EXXUA prescriptions. That is meaningful because our initial focus call universe is approximately 3,500 to 4,000 highly targeted prescribers. So at this very early stage, already 10% to 13% of our target universe has written EXXUA. And yet again, we're just getting started in building a solid base of physician adoption. We believe this points to a substantial opportunity ahead as the sales force actively increases as our access initiatives mature and as peer-to-peer in rep-based education expands.

As most of you know, unit sales and prescription counts are not the same measure. Units reflect product moving through the channel and into distribution networks and ultimately into pharmacies, while prescriptions reflect what physicians rather are writing for patients. In a launch, those numbers can move at different rates because of channel stocking, titration pack and full prescription ordering, refill timing, et cetera.

With that said, during Q3, gross unit sales were 3,335 units, consisting of 1,807 30-count units or full 30-day prescriptions and 1,500 titration units. Since launch, total gross unit sales are 3,881 units, consisting of just under 2,030 count bottles at 1,991 and 1,890 titration units. So again, highly encouraging numbers at this very early stage.

When we look at the combined picture, we see a launch that is doing what we expected it to do. Physicians are beginning to prescribe, patients are starting and staying on therapy, titration packs are being utilized, channel partners are ordering and they're already reordering product. Very importantly, refills are beginning to come through, and we're seeing momentum build month over month over month.

Taking a step back, a key reason we're encouraged by the launch is that the elements of our launch plan are now moving into the market and functioning as they had been designed. We built this launch to be disciplined, efficient and scalable. Initially, we are not trying to outspend larger competitors. Instead, we're being very disciplined by focusing on the prescribers most likely to understand the unmet need, evaluate EXXUA's differentiated profile, value our access programs and become early adopters.

Our sales organization is specifically prioritizing high-value, high-prescribing psychiatry practices. Our customer targeting has been informed by market data, branded therapy adoption behavior, existing Aytu relationships and insights gained from our RxConnect platform. We believe that this is the right approach for EXXUA at this stage. The product will not benefit from broad, unfocused promotion at this important time. Right now, it needs focused engagement with clinicians who treat high numbers of MDD patients every day and who understand the limitations of existing therapies and are looking for new treatment options.

The phased deployment of the sales team has also been intentional. With only a partial quarter of full sales force support, the early prescription and prescriber numbers are even more encouraging. We believe there remains meaningful room for growth through increased reach and frequency and, of course, execution against the target universe that's already been identified. Again, this is just the beginning without a full quarter of promotion even in the books yet.

Aytu RxConnect has been and will continue to be a core pillar of the EXXUA launch. Our objective is to remove friction for both prescribers and patients, particularly in the early months when coverage policies and payer processes are still developing. Through RxConnect, commercially insured patients have a predictable and supported pathway to access EXXUA, including a no-cost, 14-day titration pack and guaranteed access through the early treatment period for commercially insured patients specifically. That allows clinicians and patients to evaluate the medicine based on clinical response rather than on early administrative or payer-driven barriers.

This is particularly important in major depressive disorder, where patients and physicians need confidence that therapy can be initiated and continued long enough to assess response and tolerability. By reducing uncertainty at the point of prescribing, RxConnect helps align our commercial model with real-world clinical needs.

We're also seeing our channel partners execute well. The more than 3,300 units sold during the quarter demonstrates preparedness across the distribution network to support the current prescription demand along with the growth we're seeing. The early launch period is not only about demand generation, it is also about making sure that when a physician prescribes EXXUA and a patient is ready to begin therapy, that product is available and the process is smooth.

The qualitative feedback from the field remains consistent with the launch thesis we had laid out previously. Physicians understand that many patients with MDD do not achieve adequate outcomes with existing therapies or struggle with tolerability issues that can affect adherence. EXXUA gives these patients and these clinicians a differentiated option with a novel mechanism of action, and that message is clearly resonating.

As it relates to physician adoption, that will build methodically as it always does. Physicians often start by identifying specific patient types where they believe EXXUA may be especially relevant or in some cases, patients who have been through a long list of antidepressants already and they're simply searching for something new. Our job is to continue educating, supporting access and building confidence through clinical experience. The fact that hundreds of prescribers have already written EXXUA gives us confidence that this process is working well and that even very challenging patients, in fact, are reporting positive results.

We're also highly encouraged by the early refill activity. Refills are an important proof point because they demonstrate that initial prescriptions are progressing into continued therapy. The base of patients is still relatively small, but the presence of refill activity, together with growth in titration utilization and sequential prescription increases clearly demonstrates that prescribing is picking up and that EXXUA is beginning to establish a role in the treatment of MDD.

Most importantly, the patient feedback we're hearing from our prescribers is nothing short of outstanding. Phrases from even difficult patients like "lifechanging" and a specific patient saying, "He has never felt this good in his entire life." are coming through at this point almost daily. Yet again, we're just getting started. We're highly confident we'll continue to hear more and more of these patient success stories.

As we move ahead, our priorities are clear. First, we will continue increasing prescriber calls within the initial target prescriber universe. We are only again at the beginning of that process. And our current prescriber base represents a small, a tiny fraction of the opportunity we have identified and an even smaller fraction of who will ultimately be prescribing EXXUA.

Second, we will continue leveraging RxConnect to support access and reduce friction. We expect access, reimbursement, gross-to-net and refill dynamics to all become clearer as the launch matures, and we'll remain disciplined in adapting our approach based on the data. By the way, the early signs on both coverage and reimbursement rates are extremely positive across both commercial and government payer channels, we're seeing solid and increasingly good coverage of EXXUA among commercial plans and Medicaid and Medicare scripts are making up an increasing portion of the overall script load. It remains early, but many of the positive payer dynamics we've spoken about prelaunch are, in fact, bearing out.

Third, we will continue investing in scientific engagement, KOL development, peer-to-peer programs and publication and medical congress activity. We believe EXXUA has a differentiated profile and the more physicians understand where EXXUA fits into their prescribing, the more opportunity we have to grow. We had a significant presence at a major psychiatric conference last weekend, the Neuroscience Education Institute Spring Congress. And as expected, interest and feedback and follow-up from the conference attendees was excellent.

Finally, we will maintain commercial discipline by aligning investment with performance and using cash flows from the legacy business to support the highest growth opportunity in the company, and that is clearly EXXUA.

Turning now briefly to our legacy portfolios. ADHD net revenue was $9.1 million in the quarter compared to $15.4 million in the prior year period. As expected, the decrease was primarily driven by a strategic shift in sales force focus late last summer towards EXXUA and some impact from the introduction of generic competition for Adzenys as well. Despite the overall shift in promotional priorities, the ADHD portfolio remains a very important contributor to Aytu and given the lack of commercial support currently behind the brands, we continue to view the portfolio as profitable and durable on a stand-alone basis.

The uptake of the third-party generic against Adzenys has been quite low, which has been encouraging with only achieving about 14% market share through 4-plus months of market availability. This tells us that the protective characteristics of the RxConnect program are proving protective given relatively little erosion as a percentage of the overall scripts written within the RxConnect ecosystem. The vast majority of decline due to the generic is coming from outside the RxConnect ecosystem. So things are working as we had expected and as we had designed.

Our Pediatric Portfolio generated just under $1 million of net revenue in the quarter compared to $3.1 million in the prior year period. We continue to efficiently service our pediatric products and believe that while small, these mature products will continue to be durable sources of profitable revenue.

Overall, the legacy business continues to provide an important foundation as we transition the company towards the larger CNS opportunity, clearly represented by EXXUA. Our goal is to balance disciplined investment in EXXUA with continued cash generation from the existing business and the existing base business does generate cash even at these levels and even at lower levels.

In summary, we're very pleased with the first meaningful quarter of EXXUA launch activity. We generated $2.4 million of revenue specifically for EXXUA, saw more than 1,300 prescriptions written in the quarter, had more than 450 unique prescribers write the product, sold more than 3,300 units into the channel during the quarter and saw great momentum and continued growth into April with almost 1,000 prescriptions generated.

Importantly, this was achieved with only a partial quarter of full sales force support and with only a small percentage of our initial target universe writing prescriptions. We're still very early. I can't emphasize that enough. There will be normal launch variability as market, payer access, prescribing and refill dynamics all settle out, but the proof points we have in hand are encouraging, and they reinforce our conviction that EXXUA can become a significant treatment option for patients living with major depressive disorder and a very meaningful growth driver for Aytu.

With that, let me turn the call over to Ryan to review the financials in more detail. Ryan?

Thank you, Josh. Let's jump right into it. Let's start on the revenue line. Net revenue for the third quarter of fiscal 2026 was $12.4 million compared to $18.5 million for the prior year period. That represents a decrease of $6 million or 33% year-over-year.

Breaking net revenue down by portfolio, EXXUA contributed $2.4 million in the quarter. As Josh mentioned, EXXUA was made commercially available in mid-December and more formally launched in mid-January after completion of sales force training with full sales force deployment occurring late in February, early March. So while we remain very early in the launch curve, we view the initial contribution as highly encouraging, particularly given that the quarter included only a partial period of full sales force support.

Further, remember that net revenue is based on gross unit sales, not scripts. During the quarter, there were 3,335 units consisting of 1,807 30-count units and 1,528 titration units sold. This equates to more than $700 per script. I want to caution that this is better than our initial expectations, and we will wait to see how the dust settles before making any changes to our long-term assumptions around net selling price of EXXUA.

The ADHD portfolio generated net revenue of $9.1 million in the third quarter compared to $15.4 million in the prior year period. The decrease is primarily attributable to lower total prescriptions as we have deliberately shifted commercial focus and sales force prioritization toward EXXUA, which is now the centerpiece of our commercial efforts as well as the launch of a generic version of one of our ADHD products late in the second quarter of fiscal 2026.

The Pediatric Portfolio generated net revenue of $0.9 million for the third quarter compared to $3.1 million in the prior year period. The Pediatric Portfolio was negatively impacted during the quarter by payer mix, which resulted in higher rebates as well as an increase in returns.

Overall, the revenue story this quarter is very much about transition. We are seeing the expected impact on the legacy portfolios as we navigate payer changes. But again, I'll remind you that the legacy portfolios do generate cash even at these levels.

Gross profit margin was 61% in the third quarter of fiscal 2026 compared to 69% in the same quarter last year. The decrease in gross profit percentage was impacted by a $700,000 inventory write-down recorded to cost of goods sold, primarily resulting from the shift from our Adzenys branded products to our Adzenys authorized generic. Excluding that write-down, gross margin for the third quarter would have been approximately 67%.

From an EXXUA perspective, the expected unit economics remain attractive. As discussed previously, EXXUA includes a 28% royalty in addition to a true-up on cost of goods sold. We continue to think about the products as having approximately 31% cost of goods sold or roughly a 69% gross contribution margin before certain fixed costs. As EXXUA scales, we expect these economics to become increasingly important to the overall model.

Turning to OpEx. Operating expenses, excluding amortization of intangible assets, were $10.9 million in the third quarter compared to $9.5 million in the prior year period. Total operating expenses were $11.7 million compared to $10.4 million last year. The increase is primarily a result of planned EXXUA launch investments, partially offset by improved operational efficiencies such as reduced facilities expense, I'll touch more on the outlook in a moment.

Interest expense decreased $0.5 million or 52% during the quarter and by $1.5 million for the year-to-date compared with the prior year, primarily due to the paydown of our fixed payment arrangements we've previously discussed.

For the quarter, we reported a net loss of $5.6 million or $0.53 net loss per share basic compared to a net income of $4 million or $0.65 net income per share basic in the prior year period.

The fiscal 2026 third quarter results included a $1.3 million noncash derivative warrant liability loss compared to a $2.3 million noncash derivative warrant liability gain in the prior year period. As a reminder, these changes in noncash derivative warrant liabilities are primarily related to changes in the company's stock price. When our stock price increases, we generally incur a noncash loss on those liabilities and when the stock price decreases, we generally recognize a noncash gain. The losses recognized during the third quarter were primarily driven by increases in our stock price.

On April 2, 2026, we filed a Form 8-K detailing warrant amendments that resolve the ambiguity of that previously required certain warrants to be classified as liabilities rather than equity. As a result, we reduced our warrant liability and increased stockholders' equity by $26.4 million on March 31, 2026. We believe this should significantly reduce future noncash earnings volatility associated with warrant liability gains and losses.

As of March 31, 2026, stockholders' equity was $35.1 million compared to $14.2 million at December 31, 2025.

Finally, adjusted EBITDA was negative $2.8 million for the third quarter of fiscal 2026 compared to a positive $3.9 million in the year ago period. The change primarily relates to the planned investments we've made towards the launch of EXXUA, combined with the broader deemphasis in marketing towards the ADHD portfolio and the impact of payer changes affecting the Pediatric Portfolio, both of which impacted net revenue and gross profit.

Turning now to the balance sheet. Cash and cash equivalents were $26.7 million at March 31, 2026. This compares to $30 million at December 31, 2025, and $31 million at June 30, 2025. The change in cash during the quarter primarily reflects the planned investments behind the EXXUA launch, along with normal working capital movements.

As of March 31, 2026, our revolving line of credit balance was $10.4 million. And total debt, including the current and noncurrent portions, was approximately $11.4 million.

As noted earlier, the warrant amendment completed at quarter end also had a meaningful positive impact on the balance sheet presentation, reducing derivative warrant liabilities and increasing stockholders' equity.

As of March 31, 2026, combining both equity-classified prefunded warrants and the issued and outstanding common shares, there were 19.5 million shares utilized for calculating the basic weighted average shares outstanding for earnings per share purposes.

Before I turn it back over to Josh, I want to spend a few minutes on how we are thinking about EXXUA from a financial perspective now that we have the first meaningful quarter of launch activity behind us. First, EXXUA net revenue of $2.4 million in the quarter was a strong initial result and ahead of our internal expectations. This revenue reflects a combination of prescriptions written and filled during the quarter as well as inventory channel stocking to meet prescription growth expectations from channel partners and pharmacies.

Said differently, prescriptions are the clearest measure of physician-written demand, while unit sales represent product moving into the channel. In the early stages of a launch, these 2 measures will not always move in lockstep, but both are important.

Second, gross-to-net dynamics are still settling. During the quarter, gross-to-net came in materially higher than our initial launch assumption, but again, it is still very early. We will continue to refine our assumptions as payer mix, RxConnect utilization, pharmacy ordering patterns and patient access programs mature. The first few months of any launch include noise, and that is especially true for a product like EXXUA, where our strategy is intentionally designed to remove early access barriers for patients and prescribers.

As we discussed last quarter, through RxConnect, we have deliberately reduced early access friction by offering a no-cost 14-day titration pack. For commercially insured patients, we are also guaranteeing coverage of both month 1 and month 2 of therapy regardless of the insurance outcome, which is intended to ensure patients can remain on treatment through dose optimization without interruption. That strategy is important clinically and commercially, but it also means that scripts can grow ahead of net revenue in the early going. As patients transition into month 3 refills and beyond, we expect the revenue model to begin normalizing more closely with ongoing utilization, although we will continue to see some variability as the launch matures.

Third, the launch investment framework remains disciplined. We made planned investments during the quarter across sales and marketing, service costs and launch infrastructure, but we continue to manage those investments carefully and align the incremental spend with launch performance and cash flow. Our objective is to support the EXXUA opportunity appropriately without losing the operating discipline that has been central to the company's progress.

In the fourth quarter of this fiscal year, we are launching our online promotional campaigns, including paid search, programmatic displays and social media advertising to drive awareness, and incremental adoption and should result in an increase in overall sales and marketing spend by $1 million to $2 million, depending on their breadth and overall impact.

Additionally, we have increased our speaker program event spending, medical education content and conferences involvement, which will likely increase our G&A spending by $200,000 to $300,000 in the upcoming quarter. Depending on the success of these programs, we currently anticipate ongoing sales and marketing quarterly spend to range from $6 million to $7 million and G&A to range from $5 million to $5.3 million going forward.

Finally, the financial model continues to be straightforward. We expect EXXUA to have attractive gross contribution margin. We expect launch-related expenses to be managed against demand and return on investment, and we expect the legacy portfolios to continue providing an important foundation as EXXUA scales. While we are not providing formal guidance today, the general framework we've discussed previously remains the right way to think about the business, mid- to high 60% gross margins over time, a disciplined operating expense base and the near-term path to profitability as EXXUA revenue builds on top of the existing platform.

As always, I'm happy to go over any details during Q&A. And with that, let me turn it back over to you, Josh.

Thanks, Ryan. So as we look ahead, I want to reemphasize again what we're seeing with EXXUA. While we're still in the very early stages of product launch, the initial traction has been highly encouraging. With more than 1,300 prescriptions written during the quarter by over 450 unique prescribers and continued growth in titration packs and early refill activity, we believe prescribers are increasingly recognizing EXXUA's differentiated role in the treatment of major depressive disorder. And again, with April posting over 900 prescriptions and over 1,300 unit shipments, we're seeing continued month, over month, over month increases in prescription and unit demand.

Importantly, this momentum was achieved with only a partial quarter of full sales force support, which reinforces our confidence in both the market opportunity and the disciplined efficient commercial strategy we've put in place.

EXXUA gives Aytu access to a very large MDD market with meaningful unmet need, attractive unit economics and a clear opportunity to build long-term value. We remain extremely excited about the path ahead and look forward to updating you as the launch continues to scale.

As always, I want to thank everyone participating on today's call. We'll now be happy to answer any questions. Operator?

Thank you. And with that we will now be conducting a question-and-answer session. [Operator Instructions] First question today is coming from Thomas Flaten from Lake Street.

Hey Ryan, just doing some back of the envelope math, I kind of figured about $1.5 million in "stocking revenue" in the EXXUA number for the quarter. Is that a reasonable assumption?

Yes, that is a pretty accurate calculation.

Okay. And then, Josh, you mentioned some efficacy anecdotes in the prepared remarks, but I was curious what you've heard back specifically related to weight gain and sexual side effects that the physicians have provided you with any feedback on that?

Yes. I'll take weight gain first, which is -- that will be -- that will always be quite a while before that develops just because of the time it takes for someone to gain weight. What I will say is we're certainly not hearing anything unexpected there. But again, you wouldn't necessarily expect in the first 2 weeks much weight gain one way or the other.

On the sexual side effects, I will say that's where things like life-changing and never felt so good in my life, those anecdotes sort of come from, even having heard from them personally from some select physicians in my area where I've had conversations, one gentleman who had been on "everything under the sun" was switched to EXXUA and immediately restored his libido.

So we're hearing very, very good positive anecdotes, way more than just those handful. That's just a couple that I put into the prepared remarks. And again, one I experienced myself directly from a prescriber here in Colorado.

And then just one last one if I might. You mentioned something like 10-ish percent of your customers have written EXXUA, but what's been the writing activity of noncustomers, so to speak, people that you haven't called on? Is there any of that?

Yes, highly encouraging as well. When you look at the amount of white space we have around the lower 48, it's fairly significant as any of those who follow us closely know, we really cover the Eastern Seaboard, call it, from Connecticut down to Miami out to Florida and then some dots kind of in flyover country. We have gotten significant prescribing from states where we have no physical presence. It's been extremely encouraging, finding their ways to the product without any promotion. We've had inbound calls. We've had significant prescribing in places where, again, there has been no presence at all. So it's been highly encouraging.

I want to say we've had prescriptions in 41 or 42 states at this point. Obviously, we don't physically have presence in nearly that many. So it's been very encouraging.

The next question will be from Naz Rahman from Maxim Group.

Congrats on the progress. I only have 2.

The first one is on reimbursement. I understand it's very early in the launch process. But in terms of like those prior authorizations, could you provide some color on, I guess, how many of those or what percentage of those prior auths are getting approved on the first pass versus how many or what percentage you have to have like a back and forth through prior to getting reimbursed?

Yes. Good question. So I'll sort of separate it into commercial as well as CMS, Medicaid, Medicare. Medicaid, Medicare is highly variable down to the individual patient and down to the individual state. What I'll say is what we're seeing early on is it fits well -- prescribing EXXUA fits well within what they currently do, which is to say, in the state of Colorado, you need to demonstrate that you failed 2 preferred agents, which are really nothing more than just generic established therapies like SSRIs and then the prior authorization goes through. We've seen that already in real-time happening in numerous states. And so that's going through smoothly and as expected.

In some places where there are mandates to allow for psychiatric prescribers specifically to essentially be waived of any PA requirement, that's happening also in the states that we expected it to. So that's all encouraging.

Medicare, relatively small numbers on Medicare, but those prescriptions are going through as well, highly variable from plan to plan in terms of what is required. Most patients will have to meet a deductible and then the benefit from the Medicare provider, for example, like AARP will start to kick in.

On the commercial side, because we've got this unique setup, and I'll bifurcate that a bit as well because we certainly have prescriptions going through the RxConnect network, and that is the vast majority. But to Tom with the previous question around prescriptions that are being dispensed and prescribers outside of our footprint, those 2 are going through. And so they're completing any prior authorizations, and we're actually seeing a relatively high rate of well-covered claims in places, again, where we have no coverage.

And within the RxConnect network, we are seeing prior authorizations go through with good success, we're seeing, of the numbers that we're doing, and it's still relatively small, over 70% of those are getting approved. And so we're seeing a very high rate. Obviously, approved claims means better for everyone, a lower co-pay for the patient and a higher net selling price to us. And so that's highly encouraging.

But even, I'll remind you, even in cases when prior authorizations either aren't done or aren't going through, that -- in the initial going for that first trial period, we're essentially covering those prescriptions for either $0 or potentially $50. But I'll say just as an overarching statement as it relates to reimbursement and coverage, the approval rates continue to improve month-on-month. And the dollars in terms of net selling price when you aggregate government and commercial are materially higher than we initially budgeted.

But to reiterate what Ryan said, we'll caution of extrapolating that out too far because things are still settling out. But I'm extremely pleased, and I think we all are, collectively here on the team, with what we're seeing with respect to reimbursement and frankly, the relative ease some of these prescriptions are going through with. So very pleased.

That was very helpful. And just kind of on that point, these patients, do you know, I guess, what line they are on by the time they get to? It sounds like in Colorado, these are like third-line patients. Do you have an idea of like how many of these patients are like second line versus third or fourth?

Yes, that's a good question. And it's still very early, and it's very heterogeneous. We have everything from second line all the way to very late line, kind of tried everything, so to speak. What I'll say is we have good data that we know in the 60-plus percent range, those patients are being switched, which suggests minimally those patients have been on one therapy.

Really, when you speak with doctors in real terms, these are patients that in the early goings have been on -- had been on multiple. So if I had to put a number, it's somewhere between probably third and fifth line realistically, but very encouraging that you've got patients that are being prescribed second line. I know of a specific patient, I don't know anything other than the patient's demographics based on a prescription that was generated just last week, it was second line. It was a young patient. I believe the patient is 22 years of age, had been on a therapy and was experience sexual side effects and was immediately switched to EXXUA. Still very early to know how that patient is doing.

So I'll say, generally speaking, I'm encouraged that we appear to be getting a little bit earlier in therapy, but certainly, there are the "train wreck" patients that are being started. But very encouragingly, those patients, in many cases, are responding quite well when other things have failed. So it's been quite encouraging.

[Operator Instructions] Next question is coming from Ed Woo from Ascendiant Capital.

Yes, congratulations on all the progress.

I just had a mechanical question. In terms of patient and prescriptions, is it normally prescribed for 30 days? And then after the 30 days, they would have to either go back to the physician or they will get automatic refills and it will show up as the refill count?

Yes. Good question, Ed. So we start patients off in an optimal world, the prescriber would prescribe the 14-day titration pack. So by definition, that's 2 weeks. And that patient would then get moved to one of the top 2 doses in most cases, either the 54.5 milligram or the 72.6 milligram. And those -- either of those, the 54.5 and the 72.6 would be prescribed for 30 days. And typically, they'll either be seen back to either stay optimized on the 54.5 or move up to the 72.6. And from that point forward, they would probably get a prescription for something like 3 months or 6 months. In some cases, we already have pharmacies dispensing 90 days or 3 full months right after they get titrated to the 54.5 or in some cases, doctors are more aggressive when we go to the 72.6. But again, they'll get the full 90 days.

So I'll say that obviously it's variable, but generally speaking, they're getting 30 days and then they're typically going to get moved to a -- every 3-month check-in with a 3-month prescription or a 6-month check-in with a 6-month prescription.

And so we're just now at the very early stages of even starting some of those sort of call that maintenance therapy on the 54.5 and the 72.6.

Okay. So it's not clearly 30 days and then you see the refill. So you might actually -- based on your data without disclosing much information, you're happy with the refill rate so far that you're seeing at this point in time?

Very. When we look at patients, the percentage of patients that are moving just from titration to a full 30-day supply, which that demonstrates tolerability. It may not necessarily demonstrate that they're getting clinical benefit yet, although I will say we're hearing very consistent anecdotes that patients are feeling better quickly.

That having been said, we're still so early. We'd hesitate to put a number on what we would expect sort of conversion to be longer term, but it's very, very solid, and we expect it to improve over time.

So again, these numbers that we're posting are really without any material annuity value baked in, in terms of repeat use, and refills and so forth. So just getting started.

That sounds good. And then my last question is just on geography. I know you mentioned that you guys are aiming for the coast, for the big markets. But are you seeing -- is that your continued plan going forward is just to target the big metro markets first and then move to the smaller markets?

What I'll say already, Ed, is we're actively contemplating in select markets moving into some of those potentially a little bit quicker than we'd initially anticipated. We'll be judicious, as Ryan said, we'll certainly be cost efficient. But in areas where we've already identified sort of a groundswell of physicians that have found themselves prescribing the product or in places where we have access, whether that be from a commercial or government perspective, places that we think we can optimize. So we are already looking.

And certainly, I mentioned a few dotted territories kind of in flyover country, so to speak. We are actively looking at north to south, east to west. And even -- that's all -- all that having been said, with the territories we have in place to have sort of this type of momentum already, understanding that a full third or more of our sales force just got out there, call it, the first full week of March.

And of course, we all know it takes a while for anybody new in the geography and of course, new physicians to start getting on board with anything that we would fully expect to expand into other markets and see that same type of uptake.

And there were no other questions at this time. I would now like to hand the call back to Josh Disbrow for closing remarks.

Thank you, Paul. And again, thanks, everyone. We could not be more excited with the progress that we're seeing in real time here. And I've got the unique benefit of not just leading the team, but in some cases, having conversations with my own. And the real-world feedback is really nothing short of amazing. We continue to hear positive feedback across the board with patients that have tried really many -- a lot of therapies and in some cases, "everything" according to the psychiatrists, and to hear the feedback that's coming back is nothing short of inspiring.

So we'll continue to keep the pedal down and obviously drive higher and higher adoption. But until we report our fiscal Q4 and full years in September, we'll be sure to be present at conferences to make sure folks are aware of what's happening and continue to update prescription trends as we move along.

Thanks for listening to today's call. Appreciate your support, and I wish you a good afternoon and good evening until next time. Thanks very much.

This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

Good day, everyone, and welcome to the Aytu Biopharma Fiscal 2026 Second Quarter Earnings Call. [Operator Instructions]

It is now my pleasure to hand the floor over to your host, Robert Blum. Sir, the floor is yours.

All right. Thank you very much, and good afternoon, everyone. As the operator indicated, during today's call, we will be discussing Aytu Biopharma's fiscal 2026 second quarter operational and financial results for the period ended December 31, 2025. 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'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 issued earlier today or by utilizing the link on the company's website under Events and Presentations.

Finally, I'd also like to call to 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. 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, let me turn the call over to Josh Disbrow, Chief Executive Officer of Aytu Biopharma. Josh, please proceed.

Thank you, Robert, and welcome, everyone. I'm excited to be speaking with you on what is truly a momentous time for Aytu as we just commercially launched EXXUA, the first and only 5HT1a agonist approved by the FDA for the treatment of MDD, representing a truly novel way to treat MDD. As many of you are aware, we held an Investor Day back on January 20, where we spent the better part of 2 hours diving into all things EXXUA. If you weren't able to attend in person or part of the live webcast, please know that a replay is available on our website under the Investor Relations page, and I certainly encourage everyone to take a listen.

Given the deep dive we just did 2 weeks ago, let me spend a few minutes summarizing a few of the key discussions that occurred during the event, which were really divided between understanding the 5HT1a receptor and its clinical importance in major depressive disorder, along with the unmet treatment needs and their implications for antidepressant treatment selection in MDD. And further, EXXUA's clinical trial data, including efficacy and safety, and some in-depth elements of our commercial launch strategy.

First, on the clinical side, Dr. Stephen Stahl, an internationally-renowned clinician, researcher, and teacher in psychiatry, with subspecialty expertise in psychopharmacology, discussed how the current standard of care for major depressive disorder has largely relied on SSRIs and SNRIs, which work by broadly increasing serotonin levels in the synapse and nonselectively activating multiple serotonin receptor subtypes. While these therapies can provide symptom relief, that lack of selectivity is believed to drive many of the well-known limitations of reuptake inhibitors, including treatment-emergent sexual dysfunction, insomnia, anxiety, appetite changes and weight gain, and other off-target side effects that can impact tolerability and patient adherence.

In contrast, EXXUA represents a fundamentally different, more targeted approach, specifically designed to engage the 5HT1a receptor, which is thought to be central to antidepressant efficacy. EXXUA acts as a full agonist at presynaptic 5HT1a autoreceptors to enhance serotonergic signaling and as a selective partial agonist at postsynaptic 5HT1a receptors, without any significant activity of receptors associated with sexual side effects or weight gain. This differentiated mechanism has potential implications across key brain regions involved in mood, anxiety, cognition, and stress, thus reinforcing our belief that EXXUA offers a novel and clinically meaningful advancement in the treatment of MDD.

Next, Dr. Anita Clayton, who has focused her clinical practice and research on multiple psychiatric areas of unmet need, including major depressive disorder, in which she has been a principal investigator for essentially all the new antidepressants approved since 1991, highlighting how major depressive disorder remains a significant and growing public health challenge, affecting an estimated 21 million U.S. adults, with nearly 15 million experiencing severe functional impairment. Despite the widespread use of first-line SSRIs, 50% to 60% of patients fail to achieve remission. And even among those who do, many never fully recover key aspects of daily functioning, such as cognition and workplace productivity. Nearly half of patients ultimately discontinue their initial therapy, often driven by tolerability issues, most notably sexual dysfunction and weight gain, which affect a substantial portion of patients on traditional antidepressants.

Against this backdrop, she discussed the important clinical implications for EXXUA, which does not carry a warning for sexual dysfunction and demonstrated a neutral sexual profile in clinical studies, with no sexual-related adverse event rates exceeding placebo, and showed no clinically meaningful weight gain compared to placebo across pivotal trials. These attributes position EXXUA as a truly differentiated option that directly addresses some of the most persistent unmet needs in the treatment of MDD.

Finally, Dr. Christoph Correll, who annually is listed as one of the most influential scientific minds and among the top 1% cited scientists in psychiatry, discussed how EXXUA's Phase III clinical program demonstrated meaningful efficacy and a well-defined safety profile in adults with major depressive disorder. I'll once again, on this call, thank these 3 esteemed members of the psychiatry community for their participation, and again, encourage everyone to listen to their commentary on EXXUA.

Okay. Now let's turn to the commercial launch plans for EXXUA, which is being executed upon with a clear balance of efficiency and comprehensiveness, with a focus on driving prescriber adoption and long-term brand growth. The core of this effort is a highly motivated and incentivized sales organization supported by metrics-based performance management, incentive-driven territory growth, and a strong sense of urgency around execution. In addition to our internal sales team, we are augmenting our reach through scalable and efficient initiatives, including a virtual sales team designed to broaden awareness and generate early customer leads, as well as a rolling contract sales organization model that allows us to flex in-person promotion in line with product performance and as profitability and cash flow allow.

Our promotional strategy is intentionally targeted, yet broad in scope, combining both personal and nonpersonal approaches to maximize impact. From a nonpersonal standpoint, we are deploying a focused, compliant, media-based consumer promotion strategy while ensuring our sales force efforts remain concentrated on the highest value psychiatry practices. Targeting has been informed by detailed customer profiling and direct sales force input, prioritizing high-volume antidepressant prescribers, prescribers with a demonstrated propensity to adopt branded therapies, and physician practices already familiar with Aytu through our ADHD portfolio and the RxConnect platform. The early wins we're seeing reinforce our confidence that this focused approach is resonating in the field.

Patient access is a critical pillar of the EXXUA launch, supported by our best-in-class Aytu RxConnect platform, along with full retail distribution through national wholesalers to ensure nationwide pharmacy availability. RxConnect was purpose-built to remove uncertainty and friction for patients and prescribers by guaranteeing predictable coverage for commercially insured patients, thus minimizing administrative burden and capping patient out-of-pocket costs at no more than $50 per prescription for EXXUA, again, for all commercially insured patients. Importantly, patients also retain the flexibility to fill prescriptions outside the RxConnect network when preferred, ensuring broad access and choice for all patients.

Finally, medical education and scientific engagement will underpin sustainable adoption. Our medical affairs team is rapidly expanding a robust KOL network and executing an active publication and medical meeting strategy as EXXUA enters its first full year of commercial availability. Insights from more than 1 million prescriptions filled through RxConnect continue to guide our payer contracting strategy, covering approximately 60% of commercially insured MDD patients, with encouraging early coverage across Medicaid and Medicare populations. Overall, the EXXUA launch is highly focused, data-driven, and designed to scale intelligently over time, aligning with -- aligning promotional investment with performance and cash flow to support durable growth.

As we are really only a couple or few weeks into launch at most, the availability of data is sparse, but let me share a couple of data points we do have, which is largely derived from our insights from the RxConnect platform. To date, scripts for EXXUA have been written from 27 states, including numerous states where we don't have sales reps, thus highlighting the very broad opportunity. Over 100 doctors have prescribed EXXUA to date, which is exciting. With us just over 30 days since EXXUA was first made commercially available, we're, in fact, already seeing our first set of refills come through the platform.

And perhaps most importantly, the early feedback from patients on EXXUA has been very good. While only a small number of patients have been on EXXUA for a month or longer, they're reporting good tolerability and satisfaction with the product. So all signs are positive in the early days here postlaunch. And to say the least, we are extremely excited to have EXXUA fully underway in launch mode. And even more encouraged by the [Audio Gap]. While still very early, our efficient yet comprehensive launch strategy is unfolding as planned. Our sales team is exceptionally well prepared, our KOL network continues to expand, and we are already seeing validation of our commercial approach. I look forward to being able to share more with you in the quarters to come.

Let's transition for a moment now to our ADHD portfolio. For the quarter, ADHD net revenue was $13.2 million, and this was just a slight decrease from the year ago period and flat compared to [ Q1 ]. Quite impressive, in my opinion, given the evolving dynamics of the sales force prioritization now geared towards EXXUA and the recent introduction of generic competition. The evolution of the ADHD portfolio continues to perform above what I'll call standard expectations, given similar circumstances, and we feel very good about the long-term prospects of the ADHD portfolio, given the protections afforded by RxConnect.

As we previously discussed, Teva did, in fact, launch their ANDA for Adzenys back in mid-December. The early data on scripts continues to reinforce our long-term conviction in the enhanced stickiness and attractive economic value of the Aytu RxConnect platform, through which, again, I'll remind you, approximately 85% of our branded ADHD prescriptions are dispensed. The launch of our own Adzenys authorized generic has also served to limit the impact to date of the Teva generic. For the 6-week period ending January 16, the Teva generic accounted for approximately 5% of prescriptions written. Over that same period, our authorized generic of Adzenys represented just under 20% of total prescriptions, with the remaining volume continuing to be branded Adzenys.

While we do expect some continued transition from the brand to generics, as we deemphasize our ADHD portfolio in favor of EXXUA , we do believe that any incremental non-Aytu generic volume will largely come from the roughly 15% of the prescriptions dispensed outside the RxConnect platform in the near term, as we expect relatively little erosion within the network. We've also taken a recent price increase, which will help to offset any script erosion via net pricing improvements we've seen over time. While time will ultimately tell, we believe the dynamics here will differ meaningfully for many comparable situations, and we do not expect the typical erosion trajectory to fully materialize in the way other brands have seen.

Quickly, on our pediatric portfolio before I turn it over to Ryan to review the financials in more detail. We saw a nice uptick in net revenue from the fiscal '26 first quarter to our fiscal second quarter, coming in at $1.7 million compared to $715,000 in Q1. Part of this relates to reduced quantity of returns we experienced last quarter, while we also saw relative stabilization of prescriptions. To be clear, given the broader commentary from the FDA around fluoride and to prioritize our largest growth driver, we, of course, continue to focus the bulk of our resources on EXXUA . If there are changes with respect to the FDA, our approach may change. But to this point, our legacy pediatric products remain noncore for the company as we go forward.

So with that, let me turn the call over to Ryan to go into more detail on the financials, and I'll make a few closing comments, and then we'll look to address any questions you might have. Ryan?

Thank you, Josh. Let me jump -- let's jump right into it. Let's start on the revenue line. Net revenue for the quarter was $15.2 million compared to $16.2 million for the prior year. Breaking net revenue down, the ADHD portfolio net revenue was $13.2 million compared to $13.8 million in the prior year period. The $13.2 million was also flat with the most recent sequential first quarter. The change from the year ago quarter is attributable to a decrease in total prescriptions, primarily due to broader deemphasis in marketing towards the ADHD portfolio as the company's marketing efforts have shifted towards EXXUA , which is now the centerpiece of our commercial efforts, and some relatively small impact from the generic that entered the market. All of this was then partially offset by product price increases and improved gross to nets.

The pediatric portfolio was $1.7 million for the first quarter compared to $2.7 million last year. And as Josh just mentioned, we had just $715,000 in the most recent sequential first quarter. The change in net revenue from the year ago quarter is primarily attributable to the broader deemphasis in marketing towards the pediatric portfolio in lieu of EXXUA, particularly given the recent commentary by the administration and the FDA around fluoride.

Gross margin was 63.5% during the quarter compared to 66.5% last year. The decrease in gross profit percentage is primarily related to the decrease in net revenue given the focus on EXXUA's launch, as well as transition-related expenses associated with the ADHD authorized generic performance, whereby there was a write-down of approximately $600,000 in inventory related to branded Adzenys. Excluding this write-down, gross margins would have been 67.4% for the second quarter of fiscal 2026.

Turning to OpEx. OpEx, operating expenses, excluding amortization of intangible assets and prior year restructuring costs, was $11.1 million in the second quarter compared to $10.2 million in the prior year period. This $11.1 million figure also includes about $300,000 in depreciation and stock compensation, so the cash OpEx number is about $10.8 million. The change is primarily a result of increased EXXUA launch investments, partially offset by improved operational efficiencies such as reduced facilities expense. We also incurred a onetime FDA PDUFA fee of $400,000 for Cotempla, which flowed through the income statement this quarter.

For the quarter, we reported a net loss of $10.6 million, or $1.05 net loss per share basic compared to net income of $0.8 million, or $0.13 net income per share basic in the prior year period. The fiscal 2026 second quarter results were impacted by derivative warrant liability loss of $8.2 million, while the year ago period had a derivative warrant liability gain of $3 million. These changes in noncash derivative warrant liabilities are primarily related to change in the company's stock price. We touched on this last quarter, but as a reminder, if our stock price increases, we incur a loss. If the stock price decreases, we incur a gain on these derivative warrant liabilities, which are a result of the prefunded warrants issued due to ownership percent blockers as part of the EXXUA transaction and a previous financing, as well as other standard warrants.

On the balance sheet, those warrants are treated as a liability until they are converted to common shares, at which time they move to additional paid-in capital. During the quarter, there were 550,000 prefunded warrants exercised, which effectively added $1.3 million to APIC. As we sit today, there are 10.7 million common shares outstanding, plus an additional 8.8 million prefunded warrants outstanding, which effectively puts us at 19.5 million shares outstanding. Finally, adjusted EBITDA was a negative $0.8 million for the second quarter of fiscal 2026, compared to a positive $1.3 million in the year ago period. The change primarily relates to the increased EXXUA launch investments and broader deemphasis in marketing towards the ADHD portfolio and the pediatric portfolio, impacting net revenue and gross profits.

Turning now to the balance sheet. Cash and cash equivalents were $30 million at December 31, 2025. This compares to $32.6 million at September 30, 2025. There were no major movements on the balance sheet during the quarter, with most changes in inventory, accounts receivable, accounts payable, accrued liabilities, and our revolving line of credit and other key items largely in line with normal operating procedures.

Before I turn it back over to Josh, I just wanted to confirm a few assumptions largely pertaining to the EXXUA launch as we enter the back half of the year. First, as we communicated to you last quarter, the December quarter was just a small initial product load-in, which was in line with expectations. With the launch now underway for the March 2026 quarter, we continue to expect to see a small initial ramp in EXXUA net revenue due to our deliberate approach to remove early access barriers. As mentioned previously, through RxConnect, we deliberately eliminated that friction by offering a no-cost 14-day titration pack.

For commercially insured patients, we are guaranteeing full coverage of both month 1 and month 2 of therapy, regardless of the insurance outcome, ensuring patients can remain on treatment through dose optimization without interruption and allowing clinicians to evaluate EXXUA based on true clinical response rather than payer-driven access challenges. As we ramp up, this will lower the net revenues recognized by Aytu until month 3 refills occur, and these no-cost guarantees are removed, which will begin to occur during the June 2026 quarter and beyond. Simplistically put, we will see scripts grow ahead of net revenue in the early going.

From a gross margin perspective, as a reminder, we have a 28% royalty on EXXUA in addition to a true-up on cost of goods sold. Think of it in essence as about a 31% cost of goods sold or a 69% gross contribution margin. We do anticipate some fixed expenses to be incurred in cost of goods sold. However, the upfront fee, postlaunch fee, and any milestone payments will be reported as an intangible asset and amortized to the operating expenses, which started in December 2025 after we launched EXXUA.

Finally, as I mentioned during the Investor Day, our original launch investment budget for EXXUA of $10 million has been reduced to under $8 million, driven by execution efficiencies and tighter cost management without sacrificing commercial readiness. And of that approximate $8 million, about $3 million is projected to be onetime items, such as training development, commercial, and medical affairs consultants, and campaign and marketing materials development. So as we look forward, for modeling purposes, we will see a continued uptick in the March quarter for OpEx, likely in the $4 million to $5 million range, excluding depreciation and amortization. Beyond that, moving forward, we will adjust our spend as the ramp of EXXUA continues, but think about exiting the fiscal year at about $11.6 million quarterly normalized run rate, with about $0.5 million of that in noncash expenses. Assuming gross margins in this mid- to high-60% range, that puts our breakeven at about $17.3 million of net revenue per quarter all in, including EXXUA spend. Cash breakeven would be about $16.6 million per quarter. As always, happy to go over any details during Q&A.

And with that, Josh, let me turn it back over to you.

Thanks, Ryan. This is truly an exciting moment in a pivotal time in the company's history as we are now fully engaged in the commercial launch of EXXUA , again, a first-in-class treatment for major depressive disorder. We're already seeing prescriptions come through and are hearing strong enthusiasm from the field, reflecting the unique opportunity EXXUA represents as the first and only 5HT1a agonist approved for the treatment of MDD in adults, addressing a very large and a very meaningful unmet need with extremely encouraging early momentum. Our commercial launch plan is comprehensive, with a clear focus on prescriber adoption and brand growth while maintaining efficiency and relative spend. What our team has accomplished in just over 6 months since acquiring EXXUA's commercial rights, what often takes years in a large pharmaceutical corporation, I simply couldn't be more proud of what's been accomplished as we work to positively impact the lives of the approximately 21 million Americans living with MDD. As always, I want to thank everyone participating on the call and for your support.

We'll now be happy to answer any questions that you have. Operator?

[Operator Instructions] Your first question is coming from Thomas Flaten from Lake Street.

Josh, you hinted at this a little bit in your prepared comments, but I'm curious in those 100 docs that have actually written prescriptions, if you have any anecdotal feedback from the sales team on why they made the decision to write, what was it that convinced them this would be a good alternative for the patients. Anything along those lines would be super helpful.

Yes. As is often the case, particularly in psychiatry, Thomas, and thanks for the question, it is mixed, as you would expect. I mean, various motivations for physicians in those very early days to prescribe. It's a cross-section of patients that have been challenging for them, and challenging meaning not getting the response or a robust response and/or side effects that patients have been experiencing in the form of, as we would expect, sexual side effects or weight gain. There's definitely an interest in just the MOA. That in and of itself is attractive for physicians, psychiatrists particularly, to try something new for a patient that, again, is probably inadequately controlled on something. And then there's an element as well that given the relative ease through which they're able to prescribe through RxConnect, there's definitely an interest in being able to prescribe something new that has minimal barriers. So I'd say those are among the key things that are being sort of fed back to us.

As we would expect in this early stage, we will get some difficult-to-treat patients, and that's expected. Any new drug is going to often get the problematic patients that have been on countless medications. And so we expect that, but we also expect, as time goes on, patients will probably better identify patients that are perhaps not down to the full extent of having tried many, many medications and start to position the product perhaps earlier in use. But that's at least the early feedback that we're getting.

And then particularly in light of Ryan's comments around cash breakeven and real breakeven, you mentioned during your Analyst Day that you were contemplating a sales force expansion over time. First part of the question is, is there an expectation of any of that occurring in fiscal '26? And then second part of the question is, what triggers are in place for that to initiate?

Yes, good question. I think the short answer is it would be unexpected to expand that quickly. I mean, we really need to get, as Ryan said, kind of through the trial periods into sort of that June time frame before we're sort of getting patients fully on their refills and obviously, just getting more and more patients experienced in general. And in the context of what will trigger it, it will be overachieving our internal forecast and getting the cash flow. We want to be clear that there is no plan to expand without cash on hand to support that. And we'll be very judicious in how we think about expansion. Have identified territories beyond the 44, as we've talked about. There's many multiples more that we could scale to. But again, it's going to be -- the primary trigger with the Board approval will be cash flow supporting it. There will not be any appetite to raise capital in the context of that specific piece for sure. So yes, we're definitely waiting for profitability and cash flow.

And then one more quick one, if I might. You mentioned in your press release that you were working on kind of a direct-to-consumer campaign. Could you maybe provide a little bit of detail on specifically what that looks like?

It will largely be web-based as most things are. We don't anticipate broad-based "media spend", traditional over-the-air type of media, but we certainly have engaged in the early stages of a search engine optimization and keyword search campaigns, so a lot of word search and things along that line as patients are looking for alternative therapies. We will continue to look at social media angles, although that can be challenging with respect to FDA and regulatory compliance, given the fact that all products in this category have a black box warning.

But we have -- are in the early stages of looking at chat room forums. And again, we need to be obviously very conscientious and compliant with that. But forums like Reddit and so forth, there's a lot of chatter. In fact, we're already seeing some mention of EXXUA for patients that have actually already tried the therapy and have been positive on it. So that will be some of -- that's an example of the types of things that we'll explore. But to be clear, we want to be very efficient. Our heavy spend will be on the face-to-face interactions with the sales force and a far secondary piece of it will be sort of the consumer piece until we start to get some momentum and a higher level of awareness among the psychiatrists that obviously we're presenting the product to.

Your next question is coming from Naz Rahman from Maxim Group.

Just 2 quick, short questions. Because of the weather around so much in the United States in the last couple of weeks, have you seen any delays or issues with scripts getting filled after they were written? Or has that not been a problem? I realize it's been early days. And just kind of following up from that, too. The scripts that have been filled, have they mostly been from RxConnect or I guess retail pharmacies? Do you know the mix there?

Yes, good question. To take the weather one first. Absolutely a huge impact. This is sort of 2 weeks of snowmageddon, so to speak. So we really haven't had a complete week in the field. When you take into consideration, we're at our launch meeting, essentially the first full -- second full week of January, essentially the week of the 12. The next week was a holiday week shortened due to the Martin Luther King holiday. So that was really their first time into the field. And then really 2 solid weeks of weather affecting a huge chunk of our territories, the vast majority, in fact, and really with the exception of the Western territories, Western really meaning essentially California, I would say, virtually every territory is affected at least in some way. So that not only impacted scripts getting filled, it affected shipments getting to pharmacies. It affected reps getting to doctors to present at appointments and meetings and so forth. So huge impacts, which is why we're even more encouraged because, frankly, we have not had anywhere close to a full week of productivity.

In terms of the prescriptions that are being filled, yes, most are coming through RxConnect, but I'm actually very pleased that we're seeing prescriptions come in areas where we don't have sales representatives, and they're coming through regular way retail as well, but the majority are coming through our RxConnect partner pharmacies. And if you look at sort of the mix, it is largely commercial as we would expect. It's still very early [ and the N ] is just too small to really see where it's going to settle out, but it's shaping up to resemble the market at large in terms of split between commercial and government, which I'll remind you, generally speaking, is in the 60-40 split in favor of commercial. We're not seeing quite that split. We're heavier towards the commercial piece as we would expect, just given our footprint and again, the early stage of launch, but that's generally how it's playing out. But yes, RxConnect is definitely doing its job, and that's where the substantial majority of prescriptions are being filled.

[Operator Instructions] Your next question is coming from Ed Woo from Ascendiant Capital.

My question is going also on the supply issue. You mentioned a little bit of weather issue that may have effect on getting inventory into the channel. Has that been corrected now? And also, do you have any issues potentially in terms of how much you could ramp up if demand does increase faster than you expect?

Yes. Good question. It has been corrected. I mean, we -- when I think about delays from the distributors, for example, into the pharmacies, we're talking a couple or a few days delay. We're not talking weeks necessarily. So they, almost without exception, kind of clear the channel. And so we've got sort of adequate supply. And in terms of can we -- do we have adequate supply to ramp. Absolutely. I mean, we were very prudent in how we organized the initial production runs to ensure that we have adequate for the very near term, really through this entire calendar year and beyond. And we have API stateside at the manufacturer. We have componentry needed to produce multiples of what we've already produced. And so we have 0 issues being able to scale appropriately if demand outstrips --even our most optimistic forecast, we will be fine with the supply that we have already stateside at our contract manufacturer.

Thank you. That does conclude our Q&A session. I'll now hand the conference back to management for closing remarks. Please go ahead.

Great. Thank you. And thanks again, everyone, for joining us on today's conference call. As mentioned, and hopefully, you can hear this, we remain very excited and highly [ convicted ] about the market potential for EXXUA and are already seeing in real time the tremendous interest from the psychiatry community. It's really been exciting. So looking forward to sharing more and speaking with you next quarter following what will be our first full quarter of EXXUA commercial availability. So until then, thanks again for joining us. Thanks for your interest, and have a good evening.

Thank you, everyone. This concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.

I'm Josh Disbrow Co-Founder and Chief Executive Officer of Aytu. And it's my pleasure to welcome you to Aytu Biopharma's first ever Investor Day. Welcome to all those here joining us in-person in New York City, and welcome also to all of those joining via the webcast, great to have you all here. It's an exciting day for Aytu having just announced the formal and official launch of Exxua just this morning prior to the market open, really a thrilling time in the company's history as we look at this transformational time and this transformational opportunity that we have as we think about the launch of Exxua, the first and only 5-HT1a agonist and truly a first-in-class treatment for major depressive disorder.

Excited to let you know that we're -- we've got the sales force now fully deployed. We're actually out there generating prescriptions as we speak, having already generated a significant number of prescriptions and hearing a lot of enthusiasm from the field. It's truly a unique opportunity for us as Aytu as we think about the opportunity that is Exxua.

Before we get started, some housekeeping items and the obligatory forward-looking statements. Just a reminder that some of us that will be speaking today may be making some forward-looking statements as we progress through the discussion.

Further, I'll refer you to Aytu Biopharma's public filings for a complete list of all of our risk factors. Also, since we'll be spending virtually all of our time speaking about Exxua, I'd like to ask that as it relates specifically to Exxua that you refer to the prescribing information on exxua.com, including the box warning about suicide risk associated with antidepressants, including Exxua in young patients.

Some additional safety information, I'll point out the contraindications for Exxua. And again, I'll invite you to consult the complete prescribing information on exxua.com. So without further ado, let's get started.

As you've heard, Exxua or gepirone is the first and only selective 5-HT1A agonist approved for MDD, major depressive disorder in adults and it is approved as a once-daily extended-release tablet.

As you'll hear from Dr. Stephen Stahl here shortly, Exxua as an azapirone with a long history of preclinical and clinical development and is a relatively not abuse prone, as you'll also hear. Gepirone has a distinct mechanism of action and that it does not inhibit reuptake like SSRIs or SNRIs, again, that will be discussed.

It uniquely activates the 5-HT1A receptor, both presynaptically and postsynaptically. Much more information will be shared here on Exxua. And so these really are just highlights.

Before we introduce our key opinion leader speakers, let me introduce the management team that's with me here today, including our CFO, Ryan Selhorn; Chief Business Officer and Co-Founder, Jarrett Disbrow; Chief Commercial Officer, Greg Pyszczymuka; as VP of Scientific Affairs, Dr. Gerwin Westfield; Senior Vice President of Operations, Margaret Cabano; Vice President of Regulatory Affairs and Quality Assurance, Suzane Kennedy, and not pictured, but with us are two other executives, Vice President of Marketing, Tyler Harrington; and Vice President of Sales, Todd Lambert. And we also have some other members of the Aytu team with us. So thanks to those folks for joining us as well.

We're also very pleased to be joined via the web today of 3 leading authorities in the field of psychiatry who are world-recognized opinion leaders, and we'll introduce those folks here shortly. We definitely appreciate their time. We appreciate their collaboration with us and their support throughout the prelaunch and throughout the launch of Exxua.

Before we get to them, though, just a brief overview of today's meeting objectives. They are multifold. So first and foremost, with the support of our esteemed panel of experts will discuss 5-HT1A receptor and its clinical importance as it relates to major depressive disorder. We'll also highlight unmet treatment needs and their implications for antidepressant treatment selection in MDD. We'll share actual clinical trial data, including efficacy and safety data and we'll close out with a review of Aytu Biopharma's financials related to both the actual license as well as the launch and the plans surrounding the launch and we'll follow with both the scientific session as well as the business section with Q&A sessions. We'll do 2 separate Q&A sessions.

And then we'll close out today's session with lunch and a brief meeting greet with the management team that's here. So without further ado and to kick things off and get investors well acquainted with the scientific and clinical data, I'm pleased to introduce you to a -- to Senior Vice President of Scientific Affairs, Dr. Gerwin Westfield. First though, a brief background on Gerwin. Gerwin is a distinguished leader in the medical and pharmaceutical fields whose work has contributed to a Nobel Prize in chemistry. He previously served with the company from 2015 through the better part of 2021, including as the Director of Medical Affairs with Aytu.

And recently, prior to joining Aytu, Gerwin as Vice President of Medical Affairs for Everly Health, a venture-backed private company in the health care space. His expertise is in directing products, trials and services within the pharmaceutical and health care industries, including medical and scientific affairs, patient advocacy and partnering with regulatory affairs, business development, in sales and marketing and high-growth companies.

Prior to originally joining Aytu in 2015, Dr. Westfield worked for Harvard Pharmaceuticals. He received his PhD in biological chemistry and B.S. in biology from the University of Michigan and is credited with over 20 peer-reviewed papers, numerous presentations and professional lectures and he's won multiple prestigious academic awards and fellowships.

So without further ado, it's my pleasure to have Gerwin come up to introduce our speakers. Gerwin.

All right. Thanks, Josh. I share Josh's enthusiasm in what it means for patients with major depressive disorder and Exxua's launch. I'm pleased to introduce today's esteemed speakers who are renowned globally recognized experts in psychiatry. These thought leaders have combined for more than 70-plus years of experience with Exxua through the review and approval process.

We look forward to continuing these efforts to build a robust publication strategy of Exxua data. I'd first like to introduce you to Dr. Stephen Stahl. Dr. Stahl is an author and professor of psychiatry with expertise in psychopharmacology. Dr. Stahl is a Professor of Psychiatry at the University of California Riverside, and at the University of California San Diego. He's an honorary fellow at Cambridge University and is a senior academic adviser for the California Department of State Hospitals. He's an author of 600 articles and chapters, 2000 scientific presentations and abstracts in 80 textbooks, including the best-selling and award-winning textbooks, Stahl's Essential Psychopharmacology and also Essential Psychopharmacology Prescriber's guide.

Dr. Stahl is an internationally renowned clinician, researcher and teacher in psychiatry with subspecialty expertise in psychopharmacology. He has received numerous awards, including the British Medical Association Book of the Year Award, the AE Bennett Award of the Society of Biological Psychiatry, the Distinguished Psychiatrist Award by the APA, the David Mrazek Award in pharmacogenetics by the APA and numerous awards for lifetime achievements in psychiatry, including the Aristotle gold medal from Greece and Honorary Doctorate of Science from the Üsküdar University in Turkey, Sapienza University of Rome Award and excuse me, it's a long list. And the Paykel Lecture from Cambridge University as well as an Honorary Doctorate from the University of Cambridge. Dr. Stahl, thank you for joining us. The floor is yours.

Thank you, Gerwin. Can you all hear me? I'm coming to you from Vegas, and welcome to all of you. Can we put up my first slide, please? We're going to talk a little bit about the mechanism of depression. And the mechanism of action of the agent, Exxua or gepirone, I don't see my slide there yet. Can we put that up? Or if you allow us to share, I can share, but we can't share our screen either.

So technically, I think they're trying to pull up the slides for you, Dr. Stahl one second.

So let me just say, you're talking about 1 of the 14 or so serotonin receptors, serotonin being a neurotransmitter in the brain. And the 5-HT1A receptor is a target of several agents but none selectively. Exxua is the first one for depression that targets this selectively. It is actually one of the reasons why some of the agents, which augment antidepressive treatment that are famous in the current marketplace like the atypical antipsychotics, it's one of their possible mechanisms because several of those do share 5-HT1A pharmacology. Let's see.

I guess I was going to talk about the biological hypotheses of depression. I still don't see my slides. Basically, for over 50 years now, the idea has been there's something wrong with the brains, neurotransmission in major depressive disorder. It is a problem with monoamines in that they may very well be depleted. Okay. Slides coming up? No slide, we can't share either capture.

If you unblock the no share, then we can bring it up. Turn unsharing.

Working through some technical issues on the back end hold on 1 second, please.

So basically, if the -- there was like some that's coming up there. If you say there are transmission of monoamine serotonin norepinephrine and dopamine are key to the brand's function. They are either actually deficient or functionally deficient and we know this because one of the final common pathways of essentially all known drugs that treat depression are to enhance one or more of these agents. And so we do think that at least compensating for whatever is wrong in the brain by increasing them is a good thing.

Now, some agents are selective and some of the most famous agents in the marketplace like the SSRI, serotonin selective reuptake inhibitors. And SNRIs, work either just on serotonin or on serotonin and norepinephrine and as I'll try to show in a very brief schematic, Exxua works directly on serotonin, but also downstream on dopamine, so it gives you a twofer. 2 for the price of 1, it does enhance neurotransmission of 2 of these critical neurotransmitters.

To give me the next slide. Next slide. So major depressive disorder is well known to everybody here. I won't spend much time on it. The diagnostic and statistical manual of the APA defines it as either depressed mood or reduced interest with 4 of the other symptoms added there altogether.

And for almost all day and for at least 2 weeks. And so it's a broad group of symptoms. And each symptom is thought to be in a different circuit. And those circuits are regulated by those monoamines. So the idea is that inefficient information processing and a circuit will give you one of these symptoms. And therefore, improving the information processing efficiency with monoaminergic boosters such as 5-HT1A agonist should improve the symptom associated with that inefficient circuit.

Next slide. So here we've got a cartoon on the left of a neurotransmitter -- my gosh, it looks like at serotonin, I can tell by just looking at it. And so the presynaptic neuron on top is throwing its neurotransmitter serotonin at those postsynaptic honey looking receptors on the postsynaptic phase and having a nice day. But on the right, you see fewer little dots of serotonin.

And you also see an upregulation or another is an increase in those little receptors on both the top presynaptic neuron and the bottom postsynaptic neuron. In some ways, that's thought to be a futile attempt to overcome the deficiency of neurotransmitter and what you might want to know is that the target for this drug is both on the pre- and postsynaptic side.

The presynaptic side only has 5-HT1A receptors and the postsynaptic side is about 14 of them and cleaning the 5-HT1A receptor. On the presynaptic side, that little baby there is a break -- and so if you step on the brake, you reduce serotonin. So if you up-regulate those receptors in depression, best a bad thing because the last thing you want to do is reduce more serotonins. So as we'll show, neurotransmitters cause a down regulation desensitization of those presynaptic 5-HT1A receptors and allow more juice to come out and you live happily ever after. It's a simplistic point of view.

Let's see the next we'll show you in schematic, there's the 1a auto receptor they're up-regulated in a disease and so are the postsynaptic receptors of many types, next one. And then what happens is with agonist occupancy of that, you end up having a desensitization. This is actually also how the SSRI and SNRI work but when they do that, they spill neurotransmitter on 14 different receptors, "Oh my God." And in doing that, you have a lot of price of doing business, which Dr. Clayton is going to tell you about in detail.

And Dr. Correll talking about some of the side effect tolerabilities. And one of the secrets of a 5-HT1A agonist is to get the presynaptic down regulation as the mechanism that you want and also to target more selectively just the 5-HT1A receptor on the postsynaptic side. There's some extra serotonin floating around, so you'll get some at all these receptors, but not like with an SSRI and therefore, it changes the tolerability profile.

Next slide. So reuptake inhibitors, which are the first-line treatment in our generic and a source of a lot of first-line treatment and competition in the marketplace certainly work by boosting serotonin. But I was I like to say in my lecture, it's like throwing the brain into a bucket of serotonin. And every wild serotonin receptor in the whole brain, all 14 of them are stimulated. That can always be good. So you get clinical benefits on the left side, of course, improved depressive symptoms or we wouldn't be talking about them.

And actually, it improves other things, and they're approved for some anxiety disorders and other disorders. But the price of doing business is on the right. You have sexual dysfunction, if you'll hear about some GI upset, sleep disturbance, central nervous system kinds of activation, and basically some mechanisms that are what people don't like about taking these SSRI-SNRI drugs.

Next one. Okay. So the presynaptic auto receptor is on the top, and that little baby is occupied by Exxua selectively. And there is actually a desensitization that occurs because if you have an agonist in a receptor, it will be sensitized and downregulated.

If you cut your brake cable, what's going to happen? More serotonin is going to come up. And that's actually going to happen. But meanwhile, back at the ranch, look at the post-synaptic side.

Next slide. The extra serotonin is coming down, but much more disproportionate will be the stimulation of the postsynaptic 5-HT1A receptor. Why do you care? Well, that's probably where the money is in terms of getting your depression better. And in the next slide, it does a very cool thing downstream, which is to cause dopamine to go up in the brain as well. And dopamine is good for motivation and energy and cognition and things like that, where serotonin tends to be better for mood and for anxiety. And you look at all these funny little places in the brain, the dorsal raphe nucleus is a fancy name for the headquarters of all the serotonin neurons that go everywhere all over in the brain with all this little, I guess, blue-colored neurons.

And those blue-colored neurons, depending on which ones are sick and inefficiently operating, depends on the circuit you're going to have and the symptom you're going to have. Long story short, distributing serotonin and dopamine throughout these circuits improves efficiency of information processing and improves symptoms without the price of doing business of spilling onto all the other serotonin receptors that make it more difficult to tolerate.

I think the next one or the last slide are very close to it. So though we already have this on the market, Dr. Stahl isn't it called buspirone? Well, it is important to know that there is another azapirone, which actually has a chemical structure and a mechanism somewhat related. Buspirone, however, has low affinity interactions, less specificity and not as highly targeted to the 5-HT1A receptor. It does have the need to take it 2 to 3 times a day because its half-life is only 2 to 3 hours, whereas Exxua is a once-a-day tablet and has decreased the need for anything more than daily dosing. And part of that is due to the controlled release. That's part of the magic of this agent, but also the doubling of the half-life inherent in the molecule itself from 2 to 3 hours to 5 hours.

The other thing is buspirone was never approved for major depression, although anecdotes suggest that adding it to SSRIs was one of the uses of it off-label. And as I told you, 5-HT1A agonism is a property of many of the atypical antipsychotics that are also used in augmentation. And so I think this gives flexibility for Exxua to be used not only as a first-line treatment as an option to the older drugs, but also even in augmentation. We'll see what happens. Those of us in psychiatry don't like to follow the rules very much. And so we may very well decide to add it to a drug. And I think there's plenty of reason to think that, that would be boosting the efficiency of SSRIs like many other agents in the marketplace are doing right now.

I think the last slide sums it all up. Key takeaways. Major depressive disorder, MDD, is thought to be in part caused by depletion of monoamine neurotransmitters across the brain. Nonselective mechanisms of monoamine reuptake blocking agents, SSRIs, SNRIs frequently cause treatment-emergent adverse effects. That put serotonin not only in the places where you want it, but also putting serotonin in the places where you don't want it. Exxua is a highly targeted 5-HT1A agonist with both pre- and post-synaptic actions.

The 5-HT1A agonism provides antidepressant effect without flooding the brain with serotonin, which can -- that flooding of which can lead to off-target and undesirable side effects and therefore, the profile of 5-HT1A selective agonism is different than an SSRI. And so you live happily ever after.

Next slide. And we'll get into the meat of the meeting now with Dr. Clayton, and then Dr. Correll will show you the clinical data. Anita, is someone going to formally introduce her? Go ahead.

So thank you, Dr. Stahl. Next, I'm pleased to introduce Dr. Anita Clayton. Dr. Clayton is the Wilford W. Spradlin Professor in Psychiatry and Neurobehavioral Sciences and Professor of Clinical Obstetrics and Gynecology at the University of Virginia. She has published over 230 peer-reviewed papers. Dr. Clayton has focused her clinical practice and research on multiple psychiatric areas of unmet need, including major depressive disorder, in which she has been a principal investigator for essentially all the new antidepressants since 1991.

She has also extensively studied mood disorders associated with reproductive life events in women, sexual dysfunction and other adverse effects of psychiatric illness and substances and medications. Dr. Clayton has developed and validated several patient-reported outcome measures for investigations or clinical trials of sexual dysfunction or disorders. She has served on the Board of Directors for the American Society of Clinical Psychopharmacology as a program committee Co-Chair for 2 years and has begun her 6-year term as President-elect, President or past President in 2023.

Dr. Clayton co-edited women's mental health, a comprehensive textbook and authored satisfaction, women sex and the quest for intimacy for the general public. She is an international leader in female sexual dysfunction and has served in leadership roles in many scientific associations. And finally, she is a Distinguished Life Fellow in the American Psychiatric Association and is a fellow in the International Society for the Study of Women's Sexual Health. Dr. Clayton, thank you for presenting, and the floor is yours.

Thank you, Gerwin. Stephen is a pretty tough act to follow, but I hope I'm going to be able to do that. So one, we're going to talk about unmet treatment needs, which clearly is true for depression and then about antidepressants and where we're going from where we are now.

Next slide, please. So major depression affects Americans at differing rates and especially when you break it down by sex, age and race. You can see here overall, and these are data from 2021, about 8.3% or 21 million Americans experienced a major depression that year. However, you can see that women are almost twice as likely as men to experience that. And we also see it much greater in younger people, basically beginning in late adolescents and until their brain sort of is fully developed. And then it's more recurrence depression that we tend to see after that.

Also, you can see that there's a fairly wide range in terms of various races and ethnicities and occurrence of MDD. And -- but we see higher rates generally in those who are of mixed race or ethnicity and also American Indian and Alaskan native individuals.

Next slide, please. Many of you, I hope, are aware of the STAR*D outcomes. They came out a while ago, but they still have a great deal of value for us. There were 4 steps. And if you fail to achieve remission in the first step, you move to the second step or if you were unable to tolerate the medication, you move to that step. And then failure in the second step, you move to the third step and then ultimately to the fourth step. And you can see there what the kinds of things were done in each step.

People started off with an SSRI. And you can see that a little better than 35% were in remission, but more than that, 40% did not achieve remission and -- or they experienced intolerable side effects. That continues on, as you can see, so that there's a decreasing response to subsequent treatments and increasing problems with those people persisting in having continued depressive symptoms. And the rates of remission are decreasing throughout that trial.

So achieving rapid remission with initial treatment is really paramount because untreated MDD can lead to high rates of suicidal ideation, completed suicide and poor functional outcomes in many individuals.

Next slide. We also need to talk about how the specific medications impact tolerability, which also is part of the reason for nonadherence. Also, quality of life is impaired if people discontinue their medication or are nonadherent or if they persist in taking the medication, but they have significant tolerability issues and reduced quality of life.

So the rate of relapse is really much lower in people who achieve remission. It's about 15%, though, in the subsequent year of treatment, but it's much higher, and you can see it here increasing to 60% in non-remission at the end of the year. That's after one treatment. It looks even worse when you look at what happens after people have received four treatments. And unfortunately, a lot of people are being switched from one monotherapy to a second monotherapy to a third monotherapy. And when 50% of patients fail to achieve remission, 50% stop their medications. And that may be due to lack of efficacy or it may be due to adverse effects.

And many people, even if they achieve symptom remission do not reach full functional recovery. So they continue to have problems in their work, in their social lives with their families, et cetera. And when that's untreated, 2/3 of patients with MDD contemplate suicide with 10% to 15% ultimately dying by suicide.

Next slide, please. So I talked about how people are often getting a monotherapy treatment, but that's a switch, right? Patients may decide, yes, this isn't working for me or I can't tolerate it, and the provider will switch them to another medication. We also need to look at the reasons for switching, why patients choose that. When we look at a large study of over 55,000 outpatients who began antidepressant therapy, they found that 8.6% switched those medications within the first 90 days. And among young adults with depression, they're not very patient, and they will switch within those first 90 days at a rate over 15%.

Moderate or severely bothersome side effects greatly increase the likelihood of medication switching, especially when they occur early in treatment, which is what happens. So you start to see side effects before you see therapeutic benefits. And in an outpatient survey on SSRI use, patients reporting those moderately or extremely bothersome side effects had 3x higher odds of switching within 3 months. And many patients who switch may do so because of these poor tolerance and adverse effects rather than lack of efficacy.

Next slide, please. So common antidepressant adverse effects can actually make major depression feel worse to the patients. It's very interesting because about 50% of patients taking an antidepressant and more than that taking an SSRI experience treatment-emergent sexual dysfunction. Now depression itself can contribute to low libido and other sexual dysfunction, but we see a persistence of that or an increase even in patients who respond to the antidepressant therapy. And things like low libido, reduced arousal and that would be lack of vaginal lubrication or erectile dysfunction, trouble achieving orgasm and lack of energy, all contribute to concerns about this treatment-emergent sexual dysfunction. And we see worsening of depression in people who are not responding and problems in relationships, lower self-esteem and even suicidality.

The other big killer in terms of side effects is weight gain, especially in long-term use. Patients don't like that. They don't want to gain weight and they don't want to have sexual dysfunction. And if you -- this can really further increase the high risk of obesity and cardiovascular disease in patients with major depressive disorder. So we are further contributing to other medical problems in our patients with this strategy.

Next slide. So it's very interesting. Atlantis & Sullivan actually looked at the relationship between major depression and common antidepressant adverse effects like sexual dysfunction and weight gain. And what they found was that major depression increases the risk of experienced sexual dysfunction by 50% to 70%. That's what I mentioned earlier. And it increases the risk of obesity by 58%. But also, if you're not depressed and you have sexual dysfunction and weight gain, they both increase the risk of depression. For sexual dysfunction, it's by 130% to 200% and for weight gain, it's 55%, respectively.

Next slide, please. How does this relate to the positioning of Exxua in clinical practice. Exxua doesn't have a warning about the risk of sexual dysfunction, unlike many other antidepressants that act on serotonin receptors. And sexual dysfunction was not reported as an AE with an incidence of greater than 2% versus placebo in the pooled MDD studies. And there was no clinically significant increase in body weight. And you can see how close those data are between patients receiving Exxua and placebo and also not seen in long-term extension studies.

Next slide, please. One of the things we know about asking people about their sexual functioning is that it helps to use a validated questionnaire. And the scoring on that can also be utilized to determine what's going on in terms of sexual function with patients. In the Exxua trials, the Derogatis inventory for sexual functioning that is patient reported is -- was used and you can see the data here.

There are elevated rates in all the domains, which you can see are things like thinking about sex and fantasies, arousal and excitement, sexual activity and wanting to participate in that orgasm and the ability to achieve orgasm and sexual satisfaction and relationship satisfaction. You can see for men, all of these are positive. And -- but it's sort of a declining rate when you get further and further into these domains. For women, however, loss of thoughts and interest in sex and also problems with arousal are very prominent. And then you see a little bit less of a problem in terms of actually participating in sexual activity.

So orgasm and satisfaction are also problematic for our women patients who are taking -- sorry, I have this totally backwards. These are positive effects on sexual functioning in men and positive effects of Exxua on sexual functioning in women. So the greater scores of the DISF-SR indicate greater levels of functioning and satisfaction with Exxua. I can answer questions about that when we get to that.

Next slide, please. So to summarize this, in 2021, there were 21 million adults in the U.S. who were living with MDD. Many patients do discontinue or switch their treatments due to bothersome side effects. The safety and tolerability of Exxua has been established in over 1,900 patients and particularly as it relates to the most distressing adverse effects of sexual functioning and weight gain. And Exxua provides antidepressant efficacy without causing sexual dysfunction or clinically significant weight gain. Thank you.

Thanks, Dr. Clayton. And finally, I'm excited to introduce Dr. Christoph Correll. Dr. Correll is a Professor of Psychiatry at the Zucker School of Medicine at Hofstra Northwell as well as a Professor and Chair of the Child and Adolescent Psychiatry Department at Charite University Medicine in Berlin in Germany. He's completed his medical studies at the Free University of Berlin in Germany and Dundee University Medical School in Scotland and is a Board certified in general psychiatry and child and adolescent psychiatry.

Since 1997, Dr. Correll has been working and conducting research in New York. And as of 2017, he has begun working in Germany again. Dr. Correll focuses on early identification and treatment of youth and adults with severe mental illnesses, psychopharmacology, clinical trials, epidemiology, meta-analyses and the interface between physical health and mental health. He has published more than 1,000 articles that have been cited more than 100,000 times, and he has received more than 40 research awards.

Since 2014, he has been listed annually by Clarivate Web of Science as one of the most influential scientific minds and among the top 1% cited scientists in psychiatry. And for 15 topics, he has been ranked expert and for [Technical Difficulty] he has been ranked world expert, which is among the top 0.1% of cited scientists. He has been ranked as the #1 world expert in more than 10 areas, including central nervous system agents, psychotropic drugs, schizophrenia, schizophrenia spectrum and other psychotic disorders, antipsychotics and delayed action preparations and weight gain.

Dr. Correll, thank you, and please go ahead.

Thanks so much, Gerwin. And thank you also, Steve and Anita, for setting the stage so nicely into which I will now embed the Exxua clinical trial data. Efficacy and safety, the two components, we start medications for efficacy. Patients continue medications mostly for safety. Obviously, they also want to see a benefit.

So let's go to the next slide and go through the clinical trial program that led to the FDA approval of the first and only treatment that is a 5-HT1A agonist for the treatment of MDD. So we have Study 1 and Study 2. Both were 8-week trials that were randomized, double-blind and placebo-controlled. So standard of care, standard of the delivery of evidence-based treatments. They were flexible dose, but with a fixed force titration, which is important that we're getting to the right dose and there were Phase III studies in adults with MDD, which is also the indication that Exxua has received.

The treatment schedule was an initial dosage of 8.2 milligrams once daily. That was then titrated to 36.3 that's almost double of it. And then that was day 4 at the end of week 1, 54.5. And then there was an opportunity, if needed after an additional 7 days, so week 2 to go to 72.6 milligrams.

Primary efficacy measure was the 17-Item Hamilton Depression Rating Scale in one study and also in the other one, it was the Montgomery Asberg Depression Rating Scale. The Clinical Global Impression scale is a very important real-world application of what does the clinician see as an overall improvement and severity of the illness.

Next slide. Here is the demographic information about the patients, very standard for MDD trials, a little bit under 40 in both trials, more females than males, about 2/3. Dr. Clayton already mentioned that females are more affected by depression for various biological but also environmental factors. First episode, that is interesting, about 1/3 or 1/4, we want this treatment to be used early because patients might discontinue antidepressants after having had a bad experience, not really trying something else because of weight gain, because of sexual side effects, because of emotional blunting that we haven't talked about, which comes also with this flooding of too much serotonin across the board that Dr. Stahl talked about.

But there were also about -- that was the highest proportion of people, 1/3 or 60% of people who have been doing okay after the first treatment, but we have restarted in this case, on Exxua to get good care for the next episode because obviously, we have recurrence of illness. We have recurrence of illness endogenously, but also because patients because of the side effects may not continue long term. Having an effective treatment that is also very well tolerated might give patients the incentive to actually stay the course and also prevent further relapses. And we know that more relapses we get more relapses.

Next slide. So here is a little bit more information on the primary outcome. Here, you can see that Exxua demonstrated a statistically significant improvement from baseline in the HAM-D17 on the primary outcome time point, which was the end of the study in the HAM-D17 score and that was statistically and clinically meaningfully relevant looking at basically halving the score almost from 22 by minus 9 and on the other one, 24 to minus 10 points. There was also a placebo effect, but obviously, that is to see whether the treatment in a controlled setting can beat the overall nonspecific effects that happen when patients are in trials, get 1011 care and a lot of attention. We, as clinicians, patients and caregivers see the absolute change from baseline to endpoint. But even despite that, there was statistically significant improvement in these two trials.

Next slide. Here's the time course of effect. That's obviously something that's relevant. And not only at 8 weeks, but in this one trial already from week 3 onwards, there was a statistically significant improvement over placebo. But again, I want to highlight that in clinical care, we don't compare this against placebo. And by week 2, we already had about 50% of the overall improvement. That's a pretty enormous change early on that patients will perceive and also act on, particularly if they don't have these early side effects that often are in turn for patients to continue with treatment. That's study 1.

Let's go to the next study. And here, we see a separation from placebo as early as week 4. But again, the difference in the score is about, again, 50% of the about 10-point change by week 2. So we can see that there is early improvement that patients will see and perceive.

Next slide. Looking at some other outcomes that were measured, we can see that this cuts across the board. It's not just looking at 17 items, but we can also on the HAM-D, which is a little bit more key toward restoring weight and sleep, which actually favors some of the older treatments where side effects of weight gain and sedation cash in as outcomes. That's not needed for Exxua because there's also a very nice separation and even stronger on the MADRS that doesn't weigh this strongly toward the side effects overlapping symptoms and signs.

We can also look at a larger scale of the HAM-D20 or a short scale that might actually be amenable to clinical application, the HAM-D6 and also the CGI-S, which I mentioned is the overall global improvement, which was clinically and statistically importantly, showed the improvement. And whenever you have a 1 point delta on the CGI-S, that's a categorical improvement from severe to mark, from mark to moderate, moderate to mild and so forth, that is clinically meaningful. And we had actually 1.3 points as an average score improvement on the CGI-S.

Next slide. There is one way of measuring success, and that is the continuous improvement. But here, we're looking at cutoffs and responder rates are important in clinical care. This is how many patients have at least a 50% reduction on the baseline score, and that was about half of the patients, which is very similar to what we've seen with other approved and well-used antidepressants. And looking at something even more important, and that is remission as early as week 8, meaning patients would not fulfill criteria for MDD anymore and have no more than mild symptomatology, already about 1/3 of patients achieved that by week 8, and we know that with more time, that actually climbs up even further.

Next slide. This is the efficacy portion, very important. But again, for staying the course and trusting a treatment, patients want tolerability. And as Professor Clayton already mentioned, they may actually not only an absence of a side effect, not having sexual side effects, but actually an improvement in sexuality, which is something that many patients really long for after a long drought of relationship-enhancing activities because of the stark colored glasses of being down on one self, having no motivation, no energy anymore.

Now if that comes back, but there's no sexual interest, that makes it really hard that this relationship reinforcing bonding social and also intimacy closeness that people want. So having a treatment that can actually again, open doors for that is important even producing resilience factors or not having a relapse because you're able to bond again with partners that have sometimes been really strange by the depressive illness.

Next slide. And I want to point out this, like what Professor Clayton mentioned, these effects are better than placebo. So it's a real effect. Looking at weight gain, who likes weight gain, very few people. And you know with semaglutide, this is a huge industry and people actually feel much better emotionally in terms of their identity, but also there are biological effects of not being obese. There's inflammation, oxidative stress that again, as Professor Clayton mentioned, can feed back into a risk for depression. So not having weight gain being totally weight neutral compared to placebo is a real plus, and we see that with Exxua.

Next slide. There are other side effects that every treatment can have side effects, but they are short-lived and early on, and we can really guide our patients through this because these are generally not marked or severe side effects. They are mild to moderate and where the rubber meets the road have not led to significant discontinuation rates. So 5-HT1A agonist can lead to dizziness, nausea, insomnia, abdominal pain and dyspepsia. Those were at least 5% and twice the incidence of placebo. But you can see that this is a time gradient. And we can set the stage with patients, letting them know that. So that goes from about 1/3 of patients by week 1 to only 1/5 by week 2. And by the end of week 6, it's basically 3 out of 100 but importantly, they did lead to discontinuation. 4 patients more out of 100 discontinued for side effects. So that tells you how well tolerated Exxua was.

Next slide. Here is a summary of the side effects that you can also see in the package insert. So this is at any time patients raising their hand at least once. It doesn't mean that it was continued for many, many days. And I think, again, the 7% versus 3% discontinuation tells us that this is very manageable.

Next slide, looking at the lower occurring side effects. Here, you see weight increase at enormously low numbers and also no sexual side effects.

Next slide. QTC prolongation has been something that has traveled with the 5-HT1A agonism, but actually it's a legacy side effect. What do I mean by that? I mean by that, that the immediate release agents that have a much higher peak value and peak trough variation had a problem with that. 18.4 milliseconds and twofold exposure of the maximum recommended dose was found with the immediate release agent that led to its discontinuation.

Exxua was not discontinued. Actually, it was introduced to combat that issue by having an extended release formulation that takes care of that. Now the FDA is very conservative and has class warnings. So the warning of -- or the -- there's no warning for QTC with Exxua, but the recommendation to do a EKG prior and during treatment has to do with the immediate release agent. Now it's a recommendation, not a necessity. And many of us will and have used Exxua without needing an EKG monitoring. It is in the package insert. But the overall change, which you can also see in the package insert was very small with Exxua itself and very few patients actually had a categorical shift that would be relevant. The categorical shifts were actually in terms of frequency, lower than on placebo. And that tells you how well this is tolerated.

Now we come to the last slide and then to the Q&A. As you've seen, Study 1 and 2 clearly showed that 8-week primary outcomes were checked off. Exxua was better than placebo with a separation as early as week 3 in the one study, week 4 in the other, but clinically meaningful separations from baseline even at the earliest treatment and measurement time point. There was no signal detected for treatment-emergent sexual dysfunction or significant weight gain. The QT interval is very well controlled with Exxua. The monitoring is still recommended, but it's more of a legacy recommendation. And very importantly, these side effects were mild to moderate and discontinuation rates were 7% versus 3%, very well tolerated and effective for use in clinical care. So I thank you for your attention. Look forward to the questions.

All right. Thanks for the presentation and the time these world leaders in psychiatry have spent with us preparing these presentations. With the prepared presentations completed, we can now open up the floor for Q&A.

I just have a couple to, I guess, all the doctors, based on [indiscernible] profile, what would be the ideal patient profile for you to prescribe the product? Would these be like first-line patients? Or would you wait until they have like 2 or 3 failures prior to prescribing -- you could go whatever order you want.

Anita, you are on mute.

Sorry, I'll speak to that. First off, one of the things we should be doing with patients is finding out what their preferences are in terms of potential side effects to avoid and other problems that they want us to also be sure to take into consideration. And we should be actively asking those questions. And I would say people who don't want to have sexual dysfunction, people who don't want to gain weight. And I'm going to tell you that's going to be the vast majority of your patients. Those are people that we should consider using Exxua fairly early on. And I think that, that can be even more pronounced in patients who experienced sexual side effects or weight gain or both on SSRIs or other medications we tend to use early on in the treatment of depression.

So I wouldn't wait for multiple failures. And we also know that when you are waiting for multiple failures and trying those, you may, in fact, see emergence of treatment-resistant depression. So don't wait, I would use it early.

I would second that the earlier use is better in the trials. There was a whole gamut of different populations, and it worked in them. But avoiding side effects, having good treatment alliance and kicking off the treatment early on without inducing maybe treatment resistance is really key.

I just have one follow-up question. I believe Dr. Stahl during his segment of the presentation said Exxua hits 2 of the 3 targets for MDD. I guess to all the KOLs, do you think there's a combination potential with Exxua another therapy? Or would it just make sense to utilize as a monotherapy?

Music to my ears. Absolutely very smart question, very perceptive. And particularly when you introduce the drug, nobody really has an unmet need for first-line treatment because it's already dictated by payers. And so it's a fantasy to think that you're going to get immediately a lot of first-line treatment. What you're going to get is the patients who are not doing well, either to switch or augment another treatment. And then if we like it, we will trickle it down to easier and easier patients. That's just the reality of it. This is a made-to-order drug. It doesn't have drug interactions with the other first-line therapies. It's got a lot less side effect baggage than the atypical antipsychotics do when added to the SSRIs.

I think that it's tailor-made to be given to people with partial responses or nonresponses to other drugs and augmented. And then I think after 6 months or a couple of years of satisfactory experience with it, then you use it in easier and easier patients and it trickles down more towards first-line use or monotherapy use. That's just my opinion. But we'll see what happens. Again, in the marketplace, people don't really read labels. They do what the unmet needs are. And I think you're very perceptive in thinking that this might be an augmentation treatment. Good work.

I'll add if there are questions from the webcast audience, you can type in your question in the ask a Question box on the web player.

Nelson Cox with Lake Street. Dr. Clayton, you referenced a study that showed 8.6% of patients switch medications within the first 90 days and then 17% with young adults. Maybe just open-ended for the group, how do you think about sexual dysfunction and weight gain actually driving patients to request treatment switching? And how early are you seeing those conversations arise?

So we have done a number of studies looking at treatment-emergent sexual dysfunction, and we used it in healthy controls just to look not at a compound with depression, but -- and I'm not talking about Exxua. It was a drug that never came to market but trying to just look at the effect on sexual function and we were measuring it. And what we really found was that patients experience -- start experiencing sexual dysfunction or these controls did within day 4 and then day 6 with different phases and finally, day 8 and 14. And so it's an early onset. It's just that people don't really notice it, especially if they're feeling depressed and they have sexual dysfunction as a symptom of their depression.

So I think it's really critical to talk to patients about this. Patients do have things that they want to avoid. Sometimes the order is reversed, but I would say both men and women want to avoid sexual dysfunction and weight gain. And other people can put up with side effects that happen early on. You saw that, that there were decreasing side effects even as the dose was increasing in the clinical trials. And generally, 2 weeks or so, that really wasn't a problem.

So we can get people through those kind of acute adverse effects like dizziness, nausea, which we see almost with every psychotropic. And also, the efficacy was statistically significant before all the highest dose was reached in those trials, too. So I think we need to be thinking about it in a really different way that we can see better sexual functioning early, and we can see efficacy even before we get to the highest dose.

Got it. And then maybe just a follow-up on the earlier question. I think Dr. Stahl might have kind of commented on a little bit, but you had said clinicians should ask patients what their preferences are. Is that generally how the psychiatry community is prescribing these patients?

I would hope so. If they want to stay in business because really, if you're not communicating with your patient and involving them in their care, they may very well not be adherent to treatment or they may give up on something before it's had time to work. So we certainly are teaching that in our residency program and our residents and graduates all do that. And we talk about that a lot at big meetings like APA and ASCP and things like that. So I hope that we are moving into that more and more and seeing it straight out of training.

But I think also with this unique profile, the marketing can help that clinicians feel equipped to actually ask about these preferences because they have an agent that sets itself aside. If all the other SSRIs have sexual side effects and the difference is really small, well, what -- in terms of choice can you give them? So I think choice and preferences is enhanced by having an agent that differentiates.

We have a webcast question here really for the group. Any possibility that Exxua could help Parkinson's disease patients?

That question is most likely because the dopamine story, Steve, maybe you can address that.

Yes. I mean I think it's theoretically possible, but I think that the amount of dopamine that you need in Parkinson's disease, you really have to blast the brain. And this is more like tweaking the brain. And so it probably is not robust enough. Actually, it turns out that the other azapirone -- buspirone actually, if anything, is a bit of an antagonist to dopamine and actually blocks it. And so that -- the sister drug would certainly be not a good idea in Parkinson's disease. This drug, it might help -- the funny thing about Parkinson's disease, they do get depressed, and it's a tough bugger of a depression to treat when you see it concomitantly. And so we're always looking for something that would be -- and I think this is a great kind of segue. Maybe we should look at Parkinson's depression as the target of this agent as a theoretical interest. But whether it would help the motor side effects commonly -- let's put it this way, it probably would have hurt, but it probably is not going to be robust.

And I'll just add that, again, at this time, Exxua is only indicated for major depressive disorder.

Well, it's not -- it's not specifically indicated for depression in Parkinson's disease. But when Parkinson's patients get major depressive disorder, you can give it. So I mean, we play regulatory games here, and you did a good job there. I'm glad you, Gerwin, you're going to keep your job. The rest of us can be a little bit more realistic and fewer handcuffs on us. But don't -- it would be something you could do from the get-go. And in fact, with the new drug, you're looking for little niches like this where major depressive disorder may have unmet needs from the current treatments as one of the first places to start. So let me be quiet because I've been overly provocative now.

I was wondering if you could give a little sense of history of the compound in the studies because my recollection vaguely under Fabre-Kramer is that it failed a lot of FDA studies. And I don't know why -- I know nothing about those studies. I'm wondering if any of you have any of the history of what was wrong in the study design or the study execution and were you all consultants to Fabre-Kramer at all or unengaged entirely?

Can I answer that? Because I was actually the presenter of gepirone to the FDA 100 years ago when it went there. And I was listening to the argument. And it is true, there were a lot of trials and a lot of the trials were what we call failed. They didn't distinguish from placebo. I think there are like 23 trials in total and only 2 of them were positive. So the FDA said, oh, this is damming with [indiscernible] praise.

Let me tell you a secret. If you have idiots running your trials, the drugs don't work. And the idiots running the trials, about 15 or 17 of those studies were immediate release formulations. No doubt, if you have peak dose side effects, it's not as tolerable as you would like, and all those studies shouldn't count against this one. If you look at the controlled release studies, Bristol-Myers Squibb had this drug and started down the pathway and quit and stopped trials like about 12 of them in the middle. And of course, they didn't distinguish from placebo, they just stopped it.

And then Fabre-Kramer had to pick up the pieces and take it over the goal line. And when they did, the last trials are published in the peer-reviewed literature and your package. The controlled release formulation of a study that was done and finished actually worked. How about that? So I think that part of this is the FDA doesn't like this drug, and they were doing everything they can to kind of -- it was really an amazing FDA advisory committee, seeing the bias of the FDA. And of course, it took a while for them to reverse their position and approve it.

So I think there's some interesting background. You could write a novel perhaps based upon some of the craziness that went on behind the scenes. But these guys got it through and they're going to market it, and it should be a nice contribution to the literature. And it's a good thing that you asked that question because there are rumors about a bunch of trials that failed, but it was a combination of immediate release trials that failed and Bristol-Myers Squibb deciding to abandon the drug and quit trials in the middle.

I will say one other thing is that we talked about the DISF being used in the 2 trials that were positive and looking at sexual function. But those studies also involved lots of details about looking at sexual function, probably overly so in some of those. And it certainly did look different in terms of sexual functioning, but that may have, in fact, contributed to other factors that would make a trial fail. So I think that study design that was heavily loaded with a lot of assessments is usually a problem.

Just a question on the label and how maybe the real-world experience might differ a bit from some of the labeling requirements. So on the ECG requirements on dose initiation and titration. I know this was a signal that was mostly observed with the IR formulation and not the extended release formulation. So just curious, in real-world practice, do you think the ECG requirement is going to be an impediment at all to your uptake? And do you think you're actually going to have to conduct these echoes as patients titrate up in the real world?

If it were a requirement, it would be a problem but it is a recommendation. And therefore, we can choose to execute it or not. And looking at the numbers for the QT prolongation versus placebo, these numbers are actually lower than placebo. So I do not think that clinicians will change their behavior and take an EKG before they prescribe an antidepressant of the modern time, and that will include Exxua. But I wonder what Steve and Anita are thinking about that.

Well, let me quickly chime in and say this is Chapter 6 of my novel of the FDA's approval of this, where they have various ways of actually trying to have retribution against a drug they don't like for some reason. And they put this, they're overwarn and I think this is -- people in practice have what we call warning fatigue. We're tired of being overwarned. We would like to be warned for things that are meaningful. I think this will be promptly ignored myself because it's an overwarning. And I think it's basically trying to cripple this drug a little bit with warnings because the FDA had this horrible history with it.

But I think that we're smart enough to get past that and to look at that. My God, if you did an QTC warning, we add drugs with QTC slight increases on top of QTC drugs that have slight increases every day in my practice a dozen times and never get a cardiogram. So I think that it's much to do about nothing, and we won't have a problem with it. What do you think, Anita?

Yes. Well, I came along when tricylic antidepressants were our staples before the SSRIs and those did require ECGs and careful monitoring and also blood levels, and those are not done at all now. So people -- once you get familiar with the drug, I think it'd be highly unlikely that people would think I need to do this. And I agree, a recommendation is not a requirement. And providers need to be aware of that.

All right. It looks like we are good on questions here. So I'd like to thank our KOLs again for participating in this Investor Day. And I'd like to hand it back over to Aytu CEO, Josh Disbrow, to move forward to the next part of the presentation. Thank you, doctors.

Thanks for having us. Bye, and have a good rest of the day.

Bye. Bye.

Thanks, Dr. Clayton, Dr. Correll, Dr. Stahl. Pleasure having you all. Appreciate your time. So let's move on with that portion of the Investor Day now behind us. We'd like to get into the business section. And so we'll have essentially 3 brief periods. We'll have Ryan come up and present the financials around Exxua, just to remind you on deal terms and some of the company's core financials, then I'll get up and kind of have a preview, and then we'll close out with our Chief Commercial Officer, Greg Pyszczymuka, presenting on specifics around the tactical plan and the implementation now that our reps are out there in the field. So without further ado, let me have Ryan come up and present the financials.

Thank you, Josh, and thanks again, everyone, for joining us today. I'll walk you through our financial position and most importantly, the economics of the Exxua partnership and what it means for near-term cash flow, long-term profitability and shareholder value. At a high level, we're entering a phase where disciplined execution, strong margins and a well-structured commercial deal converge.

Our strategy is focused on capital efficiency, risk-adjusted growth and predictable cash generation, and Exxua is central to that story. Let me spend a moment on the structure of the Exxua deal because the way we designed the agreement was very intentional. From the outset, it was important for us not to maximize upfront cash, but instead enter into a partnership where the majority of the economic value is directly aligned with the performance of the drug. We believe that approach best reflects our confidence in Exxua's commercial potential and creates long-term value for shareholders.

Accordingly, the upfront component is deliberately modest with $3 million paid at execution back in June of 2025, followed by an additional $3 million within 45 days of our first anniversary of commercial launch, which is -- the payment will now be set for January of 2027. Importantly, that second payment increases to $5 million if net sales exceed $35 million in the first 12 months, ensuring that early commercial success is immediately rewarded.

The ongoing economics are primarily performance-based royalties that we pay as Exxua generates revenues. The agreement includes a 28% base royalty on net sales as well as an amount equal to 3% of net sales less actual cost of goods sold. If cost of goods sold exceeds 3% level, then no additional payment is earned. If annual net sales exceed $300 million, the royalty rate increases, reflecting shared upside as the product achieves greater commercial success.

In addition, the agreement includes milestone payments that begin at $100 million in annual net sales, including a $5 million milestone payment at that threshold, further reinforcing that the bulk of the consideration is triggered only by strong market performance. While royalty rates are reduced upon a certain royalty trigger or following loss of exclusivity, the overall structure ensures that our largest financial obligations only incur as Exxua succeeds, aligning cost, revenue and shareholder value.

Let me turn to the balance sheet and our cash position. As a reminder, our September 2025 cash position, we held $32.6 million in cash. And based on our current projections, we do not expect to require additional capital through profitability. On a trailing 12-month basis, we delivered adjusted EBITDA of $6.7 million, while maintaining a very modest operating cash burn of just $1.4 million. This highlights our operating leverage in our model and discipline with which we manage the costs.

Exxua also exemplifies our focus on efficient capital deployment. Our original launch budget was $10 million has been reduced to about $6 million to $8 million, driven by execution efficiencies, tighter cost management without sacrificing commercial readiness.

From a margin standpoint, Exxua is expected to deliver gross margins between 66% to 68%, inclusive of the royalty payments, which is fully consistent with the company-wide trailing 12 months gross margin of 67.6%. This means we're not trading profitability for growth. We're scaling with margin integrity.

A brief word on leverage. As of September 30, 2025, we had $12.5 million outstanding on our term loan. And over the trailing 12 months, we successfully reduced our high interest liabilities by $7.4 million. This strengthens our balance sheet, lowers our interest expense and increases our strategic flexibility as we move towards sustained profitability.

From a capitalization perspective, the company has 23.6 million fully diluted shares outstanding. Of these, 3 institutional investors collectively own 52.3% of the fully diluted share count. Nantahala Capital, Stonetree Capital Management and Special Situations Private Equity Fund are well-established health care-focused firms with demonstrated track record and a long-term investment orientation.

In closing, the Exxua agreement reflects our highly disciplined capital allocation strategy. We intentionally structured the deal so that our upfront payment is modest, preserving liquidity, while the majority of our financial obligations, including royalties and milestones are paid only as the product generates revenues and demonstrates commercial success. This approach limits our downside risk, maintains our balance sheet strength and ensures the cost scale alongside performance rather than being front-loaded.

Combined with Exxua's attractive gross margin profile, reduced launch investment and our strong cash position, we believe this structure positions us well for sustainable profitability and long-term shareholder value. We're confident in Exxua's potential and equally confident that this deal structure allows us to pursue the opportunity without compromising financial discipline. Thank you for your time, and I'll turn it back over to Josh.

All right. Thanks, Ryan. I didn't feel need to introduce Ryan since most of you already know, our Chief Financial Officer, and I did obviously introduce Gerwin given that he was new to some of you. And prior to introducing Greg Pyszczymuka, I'll give a little bit of his background as well. But yes, just the last part of the meeting here as we move into the commercial piece. I'll just remind you that, look, we -- first and foremost, you've noticed probably this morning that we put out sort of a formal launch press release understanding that while we did commercialize the product initially back in December, I'd call that our soft launch. And really our hard launch or grand opening would really be today.

So if you really think about where Exxua is in its time line, I mean realistically today is day 1 with the sales force having been fully trained at our national sales meeting in New Orleans last week and us all flying here yesterday, we really do think about this as day 1 of our launch. When I say day 1, that means not just the RxConnect distributors and pharmacies are stock, but now every pharmacy in America, all 50 states could access the product, given the fact that all distributors have been loaded, all of the distribution centers have been fully loaded. And ultimately, any pharmacy in America could have the product either later today or tomorrow, worst case day after tomorrow, but realistically within 24 hours.

So distributors, wholesalers nationwide stock, physicians fully getting aware and already generating prescriptions, which has been exciting to see. One of the things you'll see from Greg and that I'll reiterate is that this will be -- while a very, very effective launch, we will make it markedly efficient in that we're not going to overspend. We're not going to spend ahead on the promise. We're going to spend as cash flow and profitability dictates. We think that's responsible. We think we've got adequate capital to enable that. And ultimately, the proof will be in the launch trajectory, which we're starting to see.

Before I hand it over to Greg, I'll just remind you of what we really view as distinct positioning. I think you've heard it from our 3 speakers, and we've heard it from myself and Ryan, if we've had individual meetings or presentations at investor conferences, but truly Exxua satisfies a really unique need and opportunity. One of truly very few novel products, if you think about the products that are today. When you think about the mechanism of action of being a full agonist presynaptically partial agonist, postsynaptically specifically to the 5-HT1A, that truly is unique.

Again, the first and only 5-HT1A agonist indicated for MDD. And when you think about mechanism of action is just a singular element of differentiation, really only Auvelity could claim anywhere close to a novel mechanism. And frankly, that's a combination of 2 old drugs that have been around since -- well for the better part of 2 generations. So that having been said, Exxua truly is novel. And even if you look at Auvelity is somewhat of a comparator in the context of potential, that's a product that is essentially has just booked a $500 million a year when you get into its kind of third full calendar year of commercialization. And while we're not necessarily guiding investors or shareholders to that number, it gives you, I think, a glimpse into the enormity of the market and the enormity of the opportunity.

But beyond the calling card around MOA, which doctors, by the way, do gravitate towards when psychiatrists hear about a specific receptor when they hear about the 5-HT1A like that, they get it. They understand it. They understand the importance of it. They understand the importance of the singularity of the 5-HT1A and that's important. But truly, the calling card, just to reiterate and sort of double down and triple down is the fact that sexual dysfunction and the clinically insignificant weight gain and frankly, no weight gain that's associated truly separates it from these other medications, as you can understand.

And then again, by being dosed once daily, you would even say it's got differentiation and a benefit over Auvelity, which is dosed twice a day. So we like to show this slide because, frankly, I think it makes it very clear how and why we expect to win and why actually are so unique.

So with that said, I'll give you a brief introduction to Greg, so he can come and give you some details around the commercial launch. Greg has served as our Chief Commercial Officer since January of '22, having come out of the Neos merger where Greg served at Neos as Vice President of Commercial since June of '20. He previously served at Neos as Vice President of Commercial Strategy and Market Access. That was from November of '18 to June of '20. And prior to that as Executive Director of Channel Strategy and Access Program.

Greg has served in commercial roles with increasing responsibility over his 20-year-plus career, including sales, marketing, distribution, channel, commercial operations, managed markets, new product training, new product planning and so forth. Prior to Neos, he was with Aqua Pharmaceuticals. Prior to that, he was with Iroko Pharmaceuticals, Zogenix and started his career in sales with Endo Pharmaceuticals. Greg also recently served on the Board of Directors for Evoke Pharma, a publicly traded specialty pharma company that was just acquired by QOL Medical back in December. And Greg, like it or not, holds a B.S. from Rutgers University and an MBA from Argus University.

So Greg, I'll have you come up and take the floor from here.

Thank you, Josh. And hello, everybody. Pleasure to join you here and review the commercial approach and strategy for Exxua. As we dial in our approach to maximizing the market opportunity in front of us here. And let me start by saying that the overarching theme of what we'll discuss today around the Exxua launch is that we will be efficient with our spend from a relative spend perspective, but we will be very focused on our approach to ensure that we have a comprehensive focus to drive prescriber activation.

With that said, we'll be placing a heavy emphasis on our sales force. And with that team, we set very clear territory performance expectations around territory productivity with a high level of urgency around prescriber activation, prescriber growth, which is supported by an incentive comp plan that we believe will motivate those individuals to perform and exceed expectations.

In addition to our Aytu sales team, we're investing in an efficient and rapidly scalable initiatives. Specifically, these initiatives, we believe, will help reach and broaden awareness for key customers and help support our in-personal promotion efforts with the intention of generating early customer leads. Additionally, we plan on leveraging a new novel rolling CSO model, which will enable us to scale our in-person promotion over time, and that will be based upon product performance and generation of cash flow, as Josh and Ryan have mentioned earlier.

With these augmentations of our in-house team of roughly 40-plus sales professionals, we're confident that we can effectively cover the very significant major depressive disorder waterfront. And on a nonpersonal front, a highly targeted media plan will be employed to the degree we can and within a compliant manner. The large takeaway here is that our promotional efforts will be targeted and comprehensive in nature.

With regards to patient access, currently, we're leveraging our best-in-class RxConnect network referred to as Aytu RxConnect. And we recently achieved full retail supply, as Josh mentioned, through the national wholesalers. This enabled broad-based product availability at pharmacies throughout the United States. That said, we'll continue to reinforce with customers that Aytu is committed to an ideal patient access experience and the lowest possible patient out-of-pocket costs when receiving their prescriptions from an Aytu RxConnect pharmacy. However, if a physician or a patient chooses to get their Exxua prescription filled at a non-network pharmacy, that option is fully available with our broad distribution that we've achieved.

Also, building broad-based awareness to our novel new chemical entity will be critical within the medical community. And Dr. Gerwin Westfield, who everyone's met here earlier, has been rapidly building out our KOL network as well as a strong publication and medical conference plan. In fact, Aytu has already attended its first scientific conference in the 2026 calendar itself is filling up fast, and it will be a very productive and busy year with our first full year of commercial availability on the market.

So Josh alluded earlier to our approach of focus, efficiency and customer familiarity in all that we do from a launch perspective. And this is exactly how we've planned our sales force targeting efforts. Our footprint covers roughly 140 million major depressive disorder prescriptions written in the last 12 months. And our sales team is currently focused on a subset of prescribers, roughly 5,500 that are high-value psychiatry prescribers that have written roughly 18.5 million prescriptions during that same time frame. This subset of prescribers will earn our highest level of focus, specifically at launch, and they were selected directly by our sales team following the completion of a comprehensive customer profiling exercise using both subjective and objective inputs.

First and foremost, we are focusing on highly productive prescribers of antidepressants, specifically SSRIs and SNRIs, which comprise roughly 65% of the entire major depressive disorder market. And these are also widely prescribed and tend to be associated with the adverse events that make Exxua an ideal next therapeutic option. And this largely goes without saying, but for sake of completeness, we're starting with those prescribers who have high potential in the MDD therapeutic class and high level of patient switching.

Second, we are focused on the psychiatry practices with a higher likelihood to prescribe brands such as Auvelity and Trintellix. Psychiatrists are prolific prescribers of branded medications and currently contribute over 50% of all branded MDD prescriptions to the market. This prescribing behavior, we believe, serves as a strong proxy and likelihood to prescribe a new medication such as Exxua.

And third, we are focused on Aytu familiar customers or those psychiatry practices actively prescribing existing Aytu medications within the RxConnect network. We believe this highly focused approach that starts with our most familiar customers will serve us well. And importantly, we've already had some quick wins demonstrating this approach is working. So what we've discussed, we're deployed in a very rational manner here with a roughly 40-plus person sales force, and we position them well across a large cross-section of the United States in addition to having a strong RxConnect overlap in coverage.

As mentioned earlier, this footprint covers roughly 140 million MDD prescriptions written in the trailing 12 months. And our sales force has also been deployed with an eye towards expansion as our performance dictates. So as we get Exxua growing at the rate that we fully expect, we plan on strategically expanding the number of total territories significantly higher than we exist today in our current footprint.

Earlier, I mentioned our rolling CSO model, which we are extremely excited about. We anticipate this model, which I'll refer to as delivering rapid and scalable territory activation will provide Aytu with a strategic advantage as we scale our sales team based upon real-time Exxua opportunities and performance. We believe that the CSO hiring profile and the sales representatives opportunity for growth in a professional way align nicely to Aytu's patient-driven culture.

And rounding it out, we have a virtual sales team that will be tasked with building broader access and awareness to Exxua beyond our in-person promotional efforts. They're expected to deliver roughly 20,000 customer contacts during the initial launch phase. And we believe this initiative will help activate not only white space prescribers, but it will help inform our future sales force scaling plan.

Now Aytu RxConnect is our platform, which is built in-house, proprietary in nature, and we refer to it as a best-in-class access program, and this will play a vitally critical role as we launch Exxua. In addition, it will continue to support our on-market assets and products from an Aytu standpoint. For some background, we initially discovered and developed the RxConnect program in early 2019, and it was driven off several guiding principles.

The first was offering predictable coverage for patients and prescribers, guaranteeing 100% commercial coverage for these commercially insured patients regardless of their individual plans. And what this mean essentially is it removes the patient and prescriber uncertainty and allows them to focus on making the right therapeutic decision for the patient and not for their insurance plan.

Second, we focus on creating a hassle-free environment for both patients and for prescribers. And we do this by removing certain obstacles that exist for branded medications at retail pharmacies, such as ensuring product availability, so patients can initiate therapy without delay. As practices become busier, their ability to prescribe a branded medication with minimal rebound noise, as we like to say, it becomes challenging, and we seek to effectively blunt that noise with RxConnect.

Third, providing affordable access for commercially insured patients by guaranteeing a capped out-of-pocket co-pay maximum. For Exxua, commercially insured patients with valid prescriptions will pay up to a maximum of $50 for their prescriptions regardless of their individual insurance coverage when that prescription sent to participating RxConnect Pharmacy. We are confident that creating the most ideal experience for the patient and the prescriber will support a successful launch of Exxua.

Since inception, we've made countless enhancements and improvements to the RxConnect program, and that's based upon insights gained from the over 1 million prescriptions dispensed by RxConnect pharmacies. These insights underpin our approach to payer contracting to ensure we achieve optimal patient approval outcomes that are balanced with favorable Aytu economics. Real-time data will continue to guide our strategic approach to Exxua contracting for the roughly 60% of commercially insured patients suffering from major depressive disorder.

The roughly 40% of remaining major depressive disorder patients are Medicare and Medicaid. And this will be a segment that we will focus on, specifically due to some of the early favorable coverage that we've seen following the launch of Exxua. So for clarity, we are not pursuing first-line use for Exxua and our contracting approach will be aligned accordingly. Our launch coverage is expected to be very similar across the payer base as recently launched MDD products have played out in the market.

In summary, the launch of Exxua will be highly focused with a heavy lean towards a well and forward expansion of promotional resources as cash flow allows, and this is fully intended to support future growth of our prescriber base, leading to further brand adoption and growth. So hopefully, this commercial overview was helpful, provide a little bit of additional color and context to our mindset and our approach, and I appreciate your time.

Now I'll turn it back over to Josh for any additional questions that may exist.

All right. Thanks, Greg. Hopefully, that provides you a good backdrop and some more specificity into the plan as we commercialize. And again, today's day 1, as I said, and excited to be really upon the formal launch with all distributors fully loaded and the sales force fully trained and out there canvassing their territories today. So that's the prepared portion of the Investor Day. I'm going to have the gentlemen that have spoken.

So Gerwin, Greg and Ryan, I'll come up. Happy to take your questions. Just a reminder for those of you on the webcast, drop those questions in the question box, and we'll read those off. And obviously, if you're here in the room, feel free to raise your hand and we'll get a microphone to you. No questions are off limits. And obviously, feel free to dig as deeply as you'd like to. So without further ado, we'll open it up for Q&A.

[Technical Difficulty].

Yes. Great question. I would say, of our initial prescriptions, which we're not talking a significant number at this point, smaller sample size. The mix, first and foremost, is we're running at probably 75% commercial remaining government, right, the remaining 25%. There have been a handful of prior authorizations while we do have a program that we just fully implemented for Exxua through our third party. We have prior authorizations as of last week that have been submitted. We have not received the insurance outcome yet as far as approved or not approved. So very early on, but that's something we're actively monitoring.

Got it. And a follow-up question. On the target patient population, on the government insurance side, do you know what quantity of patients that represents? Like how many patients are on government plans versus commercial plans and what the relative opportunity there is?

Yes. So from a -- looking at the total MDD market itself, roughly 60% are commercial and the remaining 40% are government. There's a very small sliver of cash pay. But we believe the government segment creates a pretty significant opportunity for Exxua based upon the early coverage that we've seen. But that number is roughly 40% of total scripts.

Alex Silverman at AWM. What do you expect the reps at Auvelity and some of the others to counter detail you? What do you expect their argument to be?

I'll start that, and Greg can fill it in. Yes, I think, first of all, if they're doing that, we have a good problem on our hands because we've become relevant and we've sort of potentially offset some of those patients. Speculation, but probably obvious. I mean, they'll point to the label and some of the things that the FDA, as Dr. Stahl has said, sort of maybe aggressively sort of saddled the product with around QT and they'll sort of try to create some stir around oh, you have to get the ECG and isn't that a big hassle and think about all these cardiac issues.

We'll very quickly and relatively easily handle that because we've got the cardiac safety. And frankly, that becomes probably a relatively near-term plan to get something published in the public domain around the fact that it is a very safe drug from a cardiovascular. So I think if we guess, we would say that, and they would also play up the dizziness to suggest that it's a big issue. That having been said, if Auvelity tries to weigh into the dizziness issue, they're going to have an issue because they have a high -- very high rate of dizziness. And it's nothing -- as we hear, it's nothing like the dizziness that you see with -- in the actual clinical trials, which truly is a transient lightheadedness that goes away in less than a minute as opposed to Auvelity where physicians, psychiatrists specifically will report of patients walking down the hallway back to see them at their appointment sort of wobbling.

So if I had to guess, I would say they're going to hit hard on the ECG. But again, just to bring it back to the first point, that will be a great problem to have if they're -- if they think that we're a nuisance. Would you guys add anything to that or...

Nothing else.

Okay. And then just a very quick question for Ryan. $60 million down from $10 million, is that new information today? Or is that -- was that -- I missed that back in whenever you reported?

No. So we haven't reported Q2 yet. We'll report that in about 2 weeks. But this is new. Yes, we've been constantly assessing it and looking at kind of where are we gaining cost efficiencies? Or is it just timing? And it looks like we're -- we've gained some cost efficiencies there.

And if I recall, some of that $10 million was going to be onetime in nature for the launch and some of it was going to be permanent. How do you think about the $6 million to $8 million?

Yes. A little bit less on the onetime in nature costs. So those are coming in a little bit less. The ongoing is pretty consistent with what we expected because they're mostly sales reps and such.

Nelson Cox with Lake Street. Greg, you mentioned expanding the sales force strategically. How should we think about that magnitude of expansion over time?

Well, I'd say, first and foremost, when we built the plan for the sales force footprint, it's several multiples larger than where we are here today. And as Ryan mentioned, Josh mentioned as well, our focus is on overall efficiency, right? Where we -- instead of gambling for a geography, we wanted to place folks in the most ideal markets based upon some of the learnings of recently launched MDD products there. So our current number is slightly over 40. We're 44 territories here today.

Our initial plan is to build it up to north of 100 territories, roughly 125 is what we've planned for. But it really comes down to our ability to execute to drive demand and to drive cash flow here at Aytu before we do pull the trigger there.

Our mentality is not to go all or nothing in. We're not going to go from 40 all the way up, right? We've got a very unique rolling CSO model, as we mentioned earlier, which gives us some flexibility to go to basically step into geographies that we've already mapped and make an investment there to ensure, one, you've got the right representative and we're seeing the right market uptake of the medication before rolling those individuals into a full house full-time employee here at Aytu as well. So we're going to be very, very mindful, very data-driven with making those decisions, but that's the plan at this point, Nelson.

Got you. And then given your target list is 100% aligned with RxConnect, are there any high-decile prescribers that you could capture that are not aligned there today yet?

Yes, absolutely. So when you look from a geographical perspective, we've got full coverage there. We're running in the 60% range of new targets or targets that we're focusing on that are sending medications for Aytu brands today, in particular, the ADHD products we have to an RxConnect pharmacy. Those folks that are not aligned or not -- excuse me, not currently sending prescriptions there tend to be more of the government side of insurance. So those are newer to our kind of call plan basket, and those are the folks that have been vetted by our sales team.

So at this point, overall, like I say, 60% of these doctors are sending medications already. They know who we are. They trust our medications. More importantly, they trust Aytu RxConnect, which tends to come across as a this is too good to be true, right? So they've gone beyond that hurdle. They've got confident in it. Now they're really focused on making that right therapeutic decision and not worrying what happens after I send this prescription. So room to grow for sure.

[indiscernible] once again, I understand it's early days. But for the scripts written, do you have a sense of how many of the patients are treatment naive versus switches? I assume they're mostly switches. And on that point, do you know what they're switching from? Like what kind of feedback or comments have you heard?

So good question. I would say it's too early truly. A lot of our -- the data sources that we subscribe to are similar ones that you subscribe to, Symphony Health is one in particular. And when you look at switching data, that we don't get that until a monthly basis. So essentially, a month after that first month is complete is when we'll understand the switching component there. So that's just something that's a little too early that we -- at least what we can see from an objective data standpoint, we can hear subjectively from our representatives and some of our pharmacies that these are patients switching from SSRIs or SNRIs.

Got it. And if I may, to follow up on the Auvelity question earlier, have you heard or got any feedback from physicians regarding Exxua versus Auvelity, like if one is preferred versus the other thus far? Like have you heard of any, I guess, positive comments for Exxua versus Auvelity thus far?

I'd say early on, you're going to hear all different types of feedback and comments, right? And that's when we're in the early trial phase. So I would say we need a little more clinical experience with prescribing at this point before we develop a high level of confidence on where Exxua will fit from a positioning standpoint. There are certain attributes immediately from a once-daily versus a twice-a-day dosing, right, that I think are intriguing for customers. But being that new novel MOA for the product being a new chemical entity, I think those things are intriguing folks. And now it comes down to what's that prescribing experience and what's the patient response from Exxua treatment. So a little too soon to be -- to determine, I would say, on that.

In terms of like free drug program, I guess, early on in the launch, apologies if I missed this. I guess while some of these access decisions are still being made, do you have any free drug program or bridging program available to patients sort of in the early stages of launch? And how do you think that could help contribute to growth going forward?

Yes. Great question on that. And the answer is yes. And I agree fully, if you create many challenges upfront for a clinician and a patient to get access to the drug. The perception of does it work or not is going to be impacted, unfortunately. And how we've designed the program for RxConnect, there is a titration pack for a 14-day titration pack of therapy. When those prescriptions are sent to our RxConnect pharmacies and they've got commercial insurance, that's free for the patient for the titration pack guaranteed. So we've seen good uptake and movement on that. In addition, when they titrate to effect to land on a remaining or hopefully one step closer to a finalized dosage strength within RxConnect pharmacies, we're guaranteeing that month 1 plus month 2 of therapy are covered for [indiscernible] regardless of the insurance outcome there.

So we want to create an environment where we can accelerate uptake in utilization, but more importantly, gather, I think, a healthy clinical experience that's not influenced or biased by payer action or challenges just getting access to the medication itself.

This is Vishal from Bard Associates. So Josh, you had a slide where you compare the drugs against like once -- the features of the drug like no side effects and everything, which is great. So usually what KOLs everybody was saying. Is there a similar chart if you had to like map these drugs against what payers care about and how do these drugs -- the factors, if you were to line up the factors in the top -- and how do these various drugs care rank in relation to those factors?

Yes. I can start and then Greg can play cleanup here. I would say, generally speaking, no. And in a perfect world, they would because you would hope that the payers have a real concern for efficacy, safety, the parameters that actually dictate how a psychiatrist in this case would prescribe. I mean the reality is it's cost all the time. And so the reality is we do fully expect for patients to have to have failed an SSRI or 2 or maybe even 3 just on the basis of their cost containment strategies.

That having been said, if you were to sort of lay it side by side with, again, the things that physicians are most concerned about, if you were to not directly answer your question, but -- what goes into, say, a prior authorization decision is going to be a letter of medical necessity that lays out, for example, a patient has had problematic side effects in the form of either weight gain or sexual dysfunction or it could be a number of things. But if you were to force rank those two, they would consistently and are consistently in almost every psychiatrist top 5 issues, and that's what they would send through. And that is ultimately what I think will win the day and whether it's through a first pass prior authorization or a second level or even an appeal, that's ultimately, I think, what will enable it.

Again, in a perfect world, the payers would -- for lack of a better word, care. They just don't and which is why RxConnect is such a powerful tool for us to be able to cut through all that noise and ensure that patients are getting the first 2.5 months of trial, get them up to that effective dose and potentially on that effective dose for maybe even a full 2 months. And at that point, the prior authorization may be even easier to get through because now the patient is on therapy, it's a preferred therapy. They want to continue the patient's care on that therapy, and so now it might be able to go through. So I didn't really answer your question, but the reality is that's the way the PBMs and the payers like it. They want it to be an opaque box of a mess, and that's what it is. But I don't know if you'd add anything to that, Greg?

Yes. Thanks, Josh. I think, first, we're actively engaged with payers to understand what that dynamic of rebate range looks like and which is a great thing for a product launch. And what I'll tell you as well is the approach that they are and likely will apply to us is what they've done to other products recently launched, right, as recently as Auvelity several years back. So -- and Josh really nailed it, which is the uptake, the demand, I think, really dictates what the contracting will look like at the end of the day. And that's why we're excited with the programs we have in place to really accelerate that uptake in demand earlier and prove out that Exxua can provide clinical differentiation even within a very large category such as major depressive disorder.

So we're optimistic. And I think we're being realistic with contracting as well, but it's an ongoing dialogue that we continue to have.

And just one thing to kind of close out the thought, slightly different, but just to augment it. One of the things that we're going to be and have been very conscientious about is net pricing as it relates to the landscape of the payer coverage, meaning -- if you look at the commercial piece, obviously, that's a large segment. That's over half of it, as Greg said, it's 60%. This other big chunk is it's 40% that's government.

The government rebate is relatively standardized on the Medicaid side. That's essentially the manufacturers pay a flat 23.1% rebate off of WACC. And they always get "best price" as the government does in most sectors. Well, for that reason, we're going to be very, very judicious in how we think about commercial rebating so as not to trip that best price. So because for the second that Greg, for example, signs an agreement with a commercial payer like Aetna, if it's below that 23.1%, it resets that entire 40% book of business down to that lower price. And so that's a blunt instrument that we do not want to be part of. So we're going to have to really be very, very surgical in thinking about how we do want to contract. And only in circumstances where we are virtually guaranteed that the paper that we sign with the PBM is actually worth the paper that it's printed on, only then will we do it.

So we'll just ask the folks, our guiding principle really will be that. And by the way, Axsome, the marketer, manufacturer of Auvelity, they've been very conscientious to do the same thing. They -- as we understand it, have no more than one commercial contract because they too have a big chunk of that commercial business that they pay that relatively limited rebate for. So just as an overlaying guiding philosophy around how we'll think about payer contracting.

Okay. Well, with that, I think we are wrapped up on the Q&A piece. And so I'll thank these gentlemen for spending time with me up here, and we appreciate all of your time. For those of you, I think you're all investors have been, will be again, if you're not. So thanks for coming. Thanks to all those that participated via the webcast. We were excited to do this. I couldn't be more thrilled with where we are. It's been an arduous 6-plus month process from the date of signing to where we are today. And I'll just say that the team has really pulled a rabbit out of the hat. What we've done in 6-plus months, many companies take, frankly, years to do. That's not hyperbole, that's the truth, particularly large pharma companies.

So a lot has happened in a short period of time. This is an opportunity that we think stands to truly transform the company. And we're at the very earliest days of seeing what Exxua can do, first and foremost, for patients, but very importantly, for us and for our shareholders as we think we're at an inflection point. So thanks for your support. Thanks for your questions. And we're here when you need us and you have questions. And we do plan to report our fiscal Q2, which is our December quarter, as Ryan said, in the next couple of weeks. And so we look forward to sharing those numbers with you then. And we're off and running with Exxua. So thanks again for your time.

Greetings. Welcome to the Aytu BioPharma Fiscal 2026 Q1 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Robert Blum with Investor Relations. You may begin.

All right. Thank you very much, and good afternoon, everyone. As the operator indicated during today's call, we will be discussing Aytu Biopharma's fiscal 2026 first quarter operational and financial results for the period ended September 30, 2025.

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'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 issued earlier today or by utilizing the link on the company's website under Events and Presentations.

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, let me turn the call over to Josh Disbrow, Chief Executive Officer of Aytu Biopharma. Josh, please proceed.

Thank you, Robert, and welcome, everyone. I'm excited to be speaking with you on the heels of a very positive and highly productive first quarter. Let's jump into the high-level highlights.

First off, net revenue for the quarter was $13.9 million. This was above our expectations as our ADHD portfolio has really continued to perform well. In fact, the ADHD portfolio net revenue was essentially up 10% compared to the year ago period when excluding the onetime commercial rebate benefit we received a year ago. ADHD revenue was also up on a sequential basis.

At a time when investors perhaps had expected a pullback in ADHD sales due to the threat of a generic launch and our shifting focus to EXXUA launch preparations, we are actually experiencing net revenue growth. This is quite impressive and really reinforces our long-held belief on the added stickiness and positive economic benefits that are inherent in our Aytu RxConnect platform through which I'll remind you, approximately 85% of our branded ADHD prescriptions are dispensed. I'll dive into this more in a moment.

But first and perhaps even more important is that the EXXUA launch remains on track to occur by the end of calendar '25. With significant advancements being made to ensure success, including KOL engagement, sales force training, product positioning, messaging, campaign development and pricing, payer assessments and integration within RxConnect. We continue to believe EXXUA is a game-changing opportunity for Aytu and the past few months have really reinforced that belief.

Let's dive into our EXXUA launch execution initiatives in more detail. First off, we're finalizing product manufacturing, labeling, serialization and shipment to the company's third-party logistics provider with the initial shipments on track for delivery in December of '25. In many ways, this has been the biggest gating item to launch and it remains on track.

We are nearing completion of sales force training and have our formal launch meeting scheduled to take place in January of '26. That said, leading up to the launch meeting, our reps are and will continue to be in the field talking with and preparing physicians and setting up appointments, et cetera, with the full sales force launching products stocking, following launch stocking and the launch meeting.

The product positioning, preparation of the promotional campaign, inclusive of promotional materials, refinement of physician messaging and development of patient support materials is also nearing completion. We are implementing a comprehensive promotional program, whereby we're establishing a clear positioning for EXXUA based on its attributes, the competitive landscape and ultimately where we believe we can win with the product.

We have completed refinement of the sales territory alignments with physician targeting also essentially complete. We are maintaining a sales force of approximately 40 people, the same as what we have had historically with ADHD, but have altered some territories to ensure maximum reach while also aligning with where market access is expected to be strongest and prescribing potential is expected to be the highest.

Remember, for government payers, major depressive disorder has nearly universal coverage as this condition is a federally mandated protected class, whereby MDD prescriptions must be covered. This government segment represents approximately 30% to 40% of MDD covered lives depending on the geography. So with the 30% to 40% of the antidepressant category covered by virtue of this protected status, we are aligning sales territories appropriately to ensure optimal patient access with respect to both government and commercial payers.

Further to that point, we've also established product pricing that is in line with or at a premium to other unique psychiatric treatments. We are also finalizing integration of EXXUA into our Aytu RxConnect patient access platform. We expect to drive distribution through and dispensing from our RxConnect network pharmacies as we do now with our ADHD portfolio.

This will enable us to gain strong insights on reimbursement and coverage rates to help guide selective and smart payer contracting, which we will consider as the product launch gets underway. Employing RxConnect will also help ensure minimal friction with new prescribers of EXXUA as it relates to coverage and the typical barriers they face when prescribing new brands.

And the final key launch activity has been the ramp-up in our key opinion leader engagement. EXXUA has a long history of peer-reviewed publications. And that was added to recently by yet another peer-reviewed article discussing gepirone and the class of 5HT1 agonists.

Further, we recently attended our first medical conference, the Neuroscience Education Institute Fall conference in Colorado Springs. The response to EXXUA was tremendous. Led by our Senior Vice President of Scientific Affairs, Dr. Gerwin Westfield, we will continue to be proactive in our broader education of EXXUA to the medical community and engagement with the scientific community.

Finally, as most of you likely saw, we were successful in getting the EXXUA method of use patent for EXXUAs extended to September of 2030. The patent extension further expands upon the new chemical entity exclusivity period. Beyond the 2030 date, we are engaged in discussions to expand upon the existing intellectual property through various potential life cycle management approaches, which might extend exclusivity beyond 2030.

This is all to say we are laser-focused on the successful commercial launch of EXXUA as we focus on positively impacting the lives of an estimated 21 million Americans with major depressive disorder. Our entire team is beyond thrilled as we collectively believe EXXUA is quite simply transformational for Aytu.

Turning back quickly to the ADHD portfolio. As most of you know, there has been a long since negotiated Paragraph IV settlement agreement with Teva, whereby they were allowed to enter the market with a generic to Adzenys back on September 1. As we sit here today on November 13, more than 2 months after they were eligible to have entered, they have yet to launch.

We talked about this during our last earnings call. But to quickly summarize, it's been our long-standing belief that the impact to our ADHD franchise, even if Teva does enter, will not be as significant as you might see with other products sold via traditional retail distribution.

The reasons for this are multifold, but include: one, the fact that, again, approximately 85% of our ADHD prescriptions run through our RxConnect platform, not through regular way retail like CVS or Walgreens. This system is quite unique and dramatically alters the normal way in which generics might try to compete on pricing and spread.

Two, the ADHD category is already a highly genericized market with minimal switching. Opportunities have existed for many years to prescribe and fill alternatives like generic Adderall XR, yet we've held a consistent share of the market for multiple years.

Third, the gross to nets on our ADHD portfolio are already below what industry observers might expect when generics typically enter the market. Price erosion has already largely occurred by virtue of the fact that we discount significantly to overcome patient pricing objections in a highly genericized market. This is to say that the substitution impact and transition to a generic price -- a generic market and subsequently to a generic price is not nearly as high as you might see in other situations.

And fourth, we launched our own authorized generic of Adzenys on September 2. This AG will serve as an important offensive tool in what we believe will help us maintain a material share of the Adzenys market, irrespective of a potential generic entry by having a truly equivalent version of a product available that is sold as a generic.

And importantly, our AG is already off to a very good start, representing a significant share of the prescriptions after just 2 months on the market. We know it's still early. But we continue to believe that anyone's projections of a worst-case scenario for a broader impact to our ADHD franchise are unlikely, but clearly we will continue to monitor things.

One more quick note before I turn it over to Ryan to review the financials in more detail. As some of you may have seen, on October 31, the FDA put out a communication regarding their position on fluoride-containing drugs and some potential regulatory action. This has been anticipated for some time. And we've communicated this to you during past calls.

We continue to monitor the situation, but note importantly that Aytu has not received any direct communication from the agency seeking action on our fluoride products. Even in the event FDA ultimately pursues any action, it's important to note that this is a very small portion today of our overall business.

During the quarter, fluoride products amounted to only about $300,000 in revenue. And importantly, our infant drops product line represents only approximately $1.4 million when looking at the trailing 12-month period ending September 30. So any potential impact will not have a sizable impact on our financials given that any agency action would likely center only on the fluoride liquid drops for the youngest patients.

Also importantly, following the FDA's October 31 communications on fluoride supplementation, the American Dental Association issued yet another press release that clearly supports supplementation and the association doubled down and continue with the recommendation to continue with fluoride supplementation in areas where fluorinated water either doesn't exist or has inadequate levels of fluoride. Again, we'll continue to monitor the situation.

With that, let me turn the call over to Ryan to go into more detail on the financials. I'll then make a few closing comments and look to address any questions you might have. Ryan?

Thank you, Josh. Let's jump right into it. Let's start on the revenue line.

Net revenue for the quarter was $13.9 million compared to $16.6 million for the prior year. As mentioned in the press release, the year ago quarter included a onetime benefit due to an accrued rebate liability settlement related to the ADHD portfolio of $3.3 million, which resulted in an increase in the Q1 fiscal 2025 net revenue of $3.3 million. We highlighted this item last year as well. Excluding the rebate on an apples-to-apples basis, net revenue would have actually increased 5% compared to the year ago quarter.

Breaking net revenue down, the ADHD portfolio net revenue was $13.2 million compared to $15.3 million in the prior year period. Excluding the rebate, the year ago quarter would have been $11.9 million, highlighting net revenue increasing for our ADHD portfolio of about 10% on an equivalent basis. The increase is attributable partially to product price increases during the past year and improved gross to net, offset by a decrease in total prescriptions.

The pediatric portfolio was $0.7 million for the first quarter compared to $1.3 million last year. The change in net revenue is attributable to manufacturing delays with one of our suppliers, which we are in the process of being resolved as well as multivitamin product returns and a broader deemphasis in marketing toward the pediatric portfolio in anticipation of the recent actions by the administration and the FDA.

Gross margin was 66% during the quarter compared to 72% last year. Again, the rebate here flowed entirely through the gross profit line as well. So on an equivalent basis, gross margin during the year ago period would have been 65%. So we actually saw gross margin improvement from the year ago period when excluding the rebate.

Turning to OpEx. Operating expenses, excluding amortization of intangible assets and restructuring costs, was $10.2 million in the first quarter compared to $11.2 million in the prior year period. This $10.2 million figure also includes about $100,000 in depreciation and stock compensation. So the cash OpEx number is about $10.1 million. The decrease is primarily a result of continued cost reduction efforts and improved operational efficiencies as part of the company's overall strategic realignment, offset by increased EXXUA launch investments.

When you look at the modeling of expenses going forward, we anticipate that our baseline total operating expense level, inclusive of amortization and depreciation, will remain at about that $10 million per quarter. Then added to that, we will have an incremental investment of about $10 million on the launch of EXXUA this fiscal year. So all in, that is about a $50 million OpEx number for the fiscal 2026.

Importantly, of the $10 million of EXXUA investment this year, about $6 million of that is sort of onetime items, such as training development, commercial and medical affairs consultants and campaign and marketing materials development. The bulk of this spend will be in our December and March ending quarters from a onetime perspective.

Going forward, we will certainly adjust our spend as the ramp of EXXUA continues, but think of our exiting the fiscal year at about $11.4 million quarterly normalized run rate with about $0.5 million of that in noncash expenses. Assuming gross margins in this mid to high 60% range, that puts our breakeven at about $17.3 million of net revenue per quarter all in, including EXXUA spends. Cash breakeven would be $16.6 million per quarter.

For the quarter, we reported a net income of $2 million or $0.21 net income per share basic compared to net income of $1.5 million or $0.24 net income per share basic in the prior year period. The fiscal 2026 and fiscal 2025 first quarter results were impacted by derivative warrant liability gains of $3.8 million and $2.9 million respectively, primarily due to a change in the company's stock price. And as mentioned earlier, the prior year first quarter benefited by $3.3 million due to the rebate liability adjustment, which directly increased net income. I'll touch on the warrant liability in a moment. But this is largely due to the prefunded warrants issued in the EXXUA transaction.

Finally, adjusted EBITDA was a negative $0.6 million for the first quarter of fiscal 2026 compared to a positive $1.9 million in the year ago period. The change primarily relates to the benefit we received in the year ago period from the rebate as well as EXXUA launch investments, which took place in the first quarter of this year.

Now turning to the balance sheet. Cash and cash equivalents were $32.6 million at September 30, 2025. This compares to $31 million at June 30, 2025. A couple of other small notes on the balance sheet. We continue to pay down some higher interest liabilities during the quarter, namely the Tris fixed payment arrangement. You will see that the other current liabilities line went from $3.4 million in June to $0.2 million this quarter. This has resulted in a substantial decrease in interest expense from $1 million in the prior year quarter to $0.5 million in the current year quarter. While we don't anticipate $0.5 million of savings each quarter, we should see continued savings throughout the fiscal 2026. The rest of the balance sheet is pretty much in line with where it was last quarter.

Circling back to my comment on the derivative warrant liability gain. As you may recall, the financing transaction we completed in connection with the EXXUA acquisition was basically a straight common stock deal, but it did have prefunded warrants issued due to ownership percentage blockers. This does cause gyrations to the income statement based on the movement of our stock price, which creates gains or losses to the derivative warrant liabilities line each quarter.

On the balance sheet, those warrants are treated as liability until they are converted to common shares, at which time they will move to additional paid-in capital. During the quarter, there were 935,000 prefunded warrants exercised, which effectively added $2.1 million to [ APIC ]. As we sit today, there are 10.2 million common shares outstanding, plus an additional 9.4 million prefunded warrants outstanding, which effectively puts us at 19.6 million shares outstanding.

Before I turn it back over to Josh, to reconfirm what we communicated last September -- late September during our call at year-end, let me spend a few minutes walking through some of the assumptions we have on EXXUA for the remainder of the year. To be clear, there have been no changes to what we mentioned during the last call. I simply want to make sure anyone that missed it has the information handy.

So as discussed, we plan to launch EXXUA in the fourth quarter of calendar 2025, which is our second fiscal quarter of 2026 or the December 2025 ending quarter. This will be the initial product load-in. We would not expect there to be any significant revenue to report during the second fiscal quarter. The launch will continue into the March 2026 quarter where we expect to see some initial ramp in revenue, but the real story is expected to occur during the June 2026 quarter and beyond.

From a gross margin perspective, as a reminder, we have a 28% royalty on EXXUA in addition to a true-up on cost of goods sold. Just think of it in essence as a 31% cost of goods sold or 69% gross contribution margin. We do anticipate some fixed expenses to be incurred in cost of goods sold following the launch. However, the upfront fee, post-launch fee and any milestone payments will be reported as an intangible asset and amortized to the operating expenses starting once we launch the product.

As I noted earlier, from an OpEx perspective, we expect to invest approximately $10 million in the initial launch of EXXUA here in fiscal 2026. This was well defined in the plans heading into the product acquisition and financing that we conducted. And we expect this puts us in a good cash position as EXXUA begins to ramp as we exit fiscal 2026. As always, happy to go over any details during Q&A.

With that, Josh, let me turn it back over to you.

Thanks, Ryan. I want to make sure we leave time for questions. Let me wrap up here quickly and then I'll turn it over to you for questions. Simply put, we are on the cusp of bringing to market what we believe is a game-changing opportunity for major depressive disorder. Every physician survey conducted, whether by us or independently, has shown almost universally that once available, physicians have patients for whom they will prescribe EXXUA due to its effectiveness in treating the symptoms of depression without inducing critical side effects such as sexual dysfunction and weight gain.

As I've said in the past, nowhere in the package insert are the words sexual dysfunction mentioned, a claim virtually no other MDD pharmaceutical treatment can make. We think this is critical. Further, EXXUA is weight neutral and doesn't increase anxiety to additional product features we and our survey prescribers view as extremely valuable and also distinct from many other treatment options.

And while we think the peak sales for this product are extremely high. The reality is that even if this does a fraction of what many of the competing products in the market do or if we receive just a fraction of the scripts written that our ADHD drugs have, this is a huge opportunity for Aytu and for our shareholders. The coming months are very exciting for Aytu. We're laser-focused on the launch and success of EXXUA and look forward to getting this into the hands of physicians in the months to come. As always, I want to thank everyone participating on today's call.

We'll now be happy to answer any questions. Operator?

[Operator Instructions] Your first question for today is from Thomas Flaten with Lake Street Capital.

Congrats on the quarter. Josh, I was wondering if you could comment on how significant or maybe how many territories were affected by the realignment? And then part 2 of that question is, how are you thinking about the incentive comp plan post EXXUA launch?

Yes, good questions. Thank you -- just writing those down. Thanks for those questions, Thomas. How many territories affected? In whole or in part off the top of my head, it's probably no more than about 1/3 of the territories have been maybe altered or reshaped. We have gone denser in some areas where we fully expect substantially better coverage than we have for ADHD meds and actually really favorable coverage. So I think of it as probably about 1/3 in one way, shape or form. Some were modestly affected a few ZIP codes here or there. Others were more materially affected, but probably in that range.

In terms of IC very rich IC plan still being finalized. But we will certainly incentivize very, very heavily around EXXUA, activating new psychiatrists, getting new offices set up and then obviously rewarding for going deeper within those prescribers as well. So incentivized to get them turned on and initially utilizing EXXUA and then obviously, incentives to get repeat prescribing as they identify more and more patients. So we will be hyper focused.

As we've said in the past, this will be a strict psychiatry play. So we'll be in offices that are housing psychiatrists and psychiatry nurse practitioners and PAs. And that's really where the density of the prescribing for the brands in this category happens. So that's the right place to be.

And then if I may, one more. What have you been doing prelaunch with respect to payer engagement? Is that something you've been doing? And what expectations do you have for coverage improving beyond the kind of protected Medicare component of it?

Yes. Good questions. So for us, first, second and third, around anything related to particularly commercial payers for us is wait and see. We're not going to proactively contract so as to jeopardize best price that we'll have afforded to us on the government side. As you know, with the mandate to cover antidepressants, we'll have, we think, a pretty wide open field, particularly in at least a handful of states. And we'll be able to have access -- open access with the standard 23.1% rebate to the Medicaid plans in particular.

So as we think about that and we think about the portion of the business that that is likely to represent, call that 30% to 40% depending on the geography, we want to be very judicious in how we think about contracting on the commercial side so as not to reset that best price.

So that is all to say, we have done assessments. We do have had some light engagement with commercial payers. We are reluctant to do anything at the outset until we get a sense for exactly what coverage rate looks like, exactly what the lay of the land is, and we'll have that access through RxConnect.

And so that having been said, if you look at precedent products, a good one of which is Auvelity marketed by Axsome Therapeutics, as you know, that product enjoys 100% coverage on the government side and, last we checked, in the range of 70% coverage on the commercial side. And that's with what we perceive to be very limited direct contracting, perhaps with one PBM.

And so using that as a bit of a guidepost, we will be very judicious. But we would still, out of the gate, expect enormously better coverage for EXXUA than we have for our ADHD meds and of course, just higher price points in general when you look at net pricing by virtue of the coverage on both the commercial and the government side.

So hopefully, that answers your question. But we are not one to go out and announce a bunch of deals with payers that frankly may not be worth the paper they're written on. We'd rather take it one step at a time, utilize the RxConnect mechanisms to optimize reimbursement on the pharmacy front while obviously minimizing the co-pay and the hassle on the patient front. So that's how we'll approach it. Not to say we'll never contract. We'll certainly look at it, but we'll be very judicious. But I want to make sure we approach it in the right way.

Your next question for today is from Naz Rahman with Maxim Group.

Congrats on the progress. I understand you haven't initiated the full launch yet. But thus far, how much of your target prescriber market have you reached out to? And what kind of feedback have you gotten from that prescriber market thus far?

Yes. Good question. I would say probably second question first, which is nearly universally positive when you look at the doctors that are -- that we're most actively engaged with. The sweet spot for us in terms of targets is psychiatrists in our footprint that are already comfortable with our products and with RxConnect. And when you overlay sort of those 3 criteria, you get an overwhelmingly positive response.

In terms of the percentage of the market that we've reached out to, still relatively small by virtue of the fact that we're trying to be hyper focused in the areas where we know we can be successful. Again, these are physician customers that are already fans of ours. They already prescribed Adzenys and Cotempla in many cases to the tunes of hundreds of prescriptions a week or -- sorry, a month or a quarter and thousands over the course of a year. And so that's really where we want to start.

And we think by really kind of tripling down and not trying to spread ourselves all over and try to be all things to all people, let's be very focused and very concentrated with who we think will be the most likely to prescribe. And these are doctors, again, in our geographies, like our products, utilized our pharmacy partners. They also prescribed the newer products like Auvelity and Trintellix and Spravato.

And so you put all those things together and we think that's going to lead to a relatively highly accelerated launch and then we'll expand out from there.

That was helpful. And based on the feedback you have gotten thus far from limited physicians. Have you been able to build out what a target patient profile might look like or what kind of patients that these physicians might initially treat or attempt to treat with EXXUA?

We have and this is part of our communications and part of our materials. But it's a younger patient in the prime of their life seeking to improve their life. And by virtue of that, minimize the side effects they may be experiencing on current medications. So we would rightly be targeting patients that have been on a therapy or 2 or 3 and remain dissatisfied largely due to the side effects they're experiencing with respect to sexual dysfunction and weight gain.

And before they would go to another therapy that maybe has less incidence of sexual side effects, we would insert ourselves in there and say for that younger patient -- when I say younger, 18 to 50, I just turned 50, so I'd like to think of myself as still in that demographic. Those are patients ideally suited to be switched from an SSRI or an SNRI that again might be working to some degree, but it's leaving them dissatisfied from a side effect perspective.

So that's the type of profile that we'll be starting with. Again, we want to be very specific. We don't want to go in and ask a physician for all of his or her patients. That's not realistic. It's not going to be really allowable by virtue of just the market dynamics and just the standardization of care given that 99 times out of 100 patients will start on SSRI or SNRI and the payers, by the way, will require that.

And so we'll be looking for that switch after that. And honestly, even if we get the switch after that switch or after the switch after that, that is a huge funnel of patients to be starting with even if we're talking third, fourth, fifth, sixth or even later line. So just such a big market opportunity with 340-plus million prescriptions annually. And at the price point that we would anticipate netting. That's a huge opportunity for us even if it's used much later line.

[Operator Instructions] Your next question is from Ed Woo with Ascendant Capital.

Yes. Congratulations on all the progress. My question specifically is on your supply chain. How quickly and flexible are you to ramp up if demand is greater than you expect? And what is your leverage opportunity -- margin opportunity to get if you do get to a certain scale in terms of your margin expansion?

I'll take the first one, Ed, and hand the second one to Ryan in terms of margin expansion. I would say, generally speaking, we have flexibility. We are working through a contract manufacturer. But there is enough supply produced for, I would say, an outsized forecast even versus what we have as a base case.

So we could -- we have enough produced sitting in bulk; not yet packaged, but sitting in bulk. That's multiples higher than our first 24-month forecast. And our first 24-month forecast, I wouldn't call conservative. So we have adequate supply to scale as needed. There's also API already in hand to enable us to accelerate production of sort of a second run. So plenty of product to get us started, plenty of product to ramp, again, by multiples in the event that we need to.

And in terms of opportunities for margin expansion, maybe, Ryan, you can just share generally how the margin works and kind of the sales level at which we would potentially start to see a reduction in royalty.

Yes, absolutely. So as I mentioned, we have a 28% royalty. So that's not obviously related to the manufacturing of the product. But that will drop down to 24% once we hit about $1.3 billion in active sales. The actual cost of the product is only about -- we're projecting about 2% of the net revenue per product per unit. So it's pretty small to begin with.

If we were to size up the batches, there's a little bit of efficiency. But it's not an expensive drug to produce in the out-front.

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

Thanks very much, everyone, for joining us on today's call. Very excited about the progress we're making as we are on the precipice of launching EXXUA. The next time we'll talk will be in February, at which time we fully expect to be in the field, having announced our full commercial launch. So until that time, we'll be very busy getting things ready and again, continue to have a high level of excitement around this opportunity to help these many millions of patients fighting major depressive disorders. So with that, thanks again for joining. And we look forward to updating you after our second quarter wraps up on our quarterly call in February. Thanks very much and have a good evening.

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

Greetings. Welcome to the Aytu BioPharma to Report Fiscal 2025 Full Year and Fourth Quarter and Operational and Financial Results on September 23, 2025, Conference Call. Please note, this conference is being recorded. I will now turn the conference over to your host, Robert Blum with Lytham Partners. You may begin.

All right. Thank you very much, and good afternoon, everyone. As the operator indicated, during today's call, we will be discussing Aytu Biopharma's fiscal 2025 full year and fourth quarter operational and financial results for the period ended June 30, 2025. 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'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 issued earlier today or by utilizing the link on the company's website under Events and Presentations. 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, let me turn the call over to Josh Disbrow, Chief Executive Officer of Aytu Biopharma. Josh, please proceed.

Thank you, Robert, and welcome, everyone. This is an extremely exciting time for Aytu given the strong financial performance during the recent fiscal year and perhaps a, which we believe significantly transforms Aytu for years to come. At a high level, fiscal year 2025, which, as a reminder, we have a June 30 year-end, saw stability within our existing ADHD and pediatric portfolios as well as our focus on driving efficiencies across our operations to report our ninth consecutive quarter and third consecutive year of positive adjusted EBITDA. For the year, net revenue was $66.4 million, which was a slight increase from the previous year. On the adjusted EBITDA line, we came in at $9.2 million. Again, this is now 3 consecutive years of positive adjusted EBITDA as we really pivoted this company the past few years to focus on our prescription pharmaceutical business, while we halted our development efforts, wound down and sold our Consumer Health business. and outsourced our ADHD manufacturing to a U.S.-based CMO. It should not be overstated how different we look today from just a few years ago. I give tremendous credit to the entire team for their efforts to unlock value in Aytu and thank them for all they're doing to put us in this strong position. With all the heavy lifting completed over the last few years, we positioned ourselves to build upon the uniqueness of our sales force's psychiatry focus and alignment with our proprietary Aytu RxConnect patient access platform to begin the next stage of focus, product acquisitions, which can align with our psychiatry focus. To that end, in June of this year, we announced that what we believe is a truly transformational opportunity for Aytu by signing an exclusive agreement to commercialize EXXUA in the United States. With EXXUA, we are bringing to market a novel first-in-class treatment for major depressive disorder, or MDD, and over $2 billion U.S. market, the key word here is novel. EXXUA is not an SSRI nor is it an SNRI. It does not inhibit neurotransmitter reuptake. It is in a new class of MDD treatment as a 5-HT1A receptor agonist. It is a partial agonist of the 5-HT1A receptor and it's long-acting. By upregulating the 5-HT1 receptor, EXXUA uniquely targets a receptor chiefly implicated in mood, notably depression and anxiety. Because EXXUA targets the specific receptor so selectively, it does not carry the same risk of sexual dysfunction and doesn't cause weight changes when compared to placebo, which the SSRIs and SNRIs routinely do. As it relates specifically to the sexual function, not only does it not cause sexual related side effects such as low lobido, ejaculatory delay and erectile dysfunction. Recently published work actually shows -- actually will improve sexual function and desire in depressed patients. And while that isn't an approved claim, we will specifically make with clinicians that data is peer-reviewed and published and in the public domain. So while SSRIs and SNRIs are generally effective for some patients in treating MDD, the problems associated from a side effect perspective, particularly as it relates to sexual dysfunction and weight gain commonly lead to patient dissatisfaction with treatment. As you can imagine, these side effects are many times simply untenable for patients already struggling with their mental health, and thus many patients stop these treatments altogether or seek alternatives. Thus, we believe a significant market need exists for targeted and specific therapies, minimizing off-target effects and adverse events such as sexual side effects and weight gain while effectively treating symptoms of MDD. This is key to the market positioning for EXXUA. As I mentioned, this is an over $22 billion market in the U.S. with over 340 million prescriptions written annually in the U.S. for antidepressants. SSRIs and SNRIs represent approximately 220 million TRxs or over 60% of all antidepressants prescribed. While the category is largely genericized, there are numerous branded products that have entered the market relatively recently including newer antidepressants like Trintellix, Auvelity, and Spravato. These products have received strong physician uptake despite having some of the same side effects older products present, particularly Trintellix and Auvelity. Both products list adverse events, specifically including sexual dysfunction, among others. So we view ex U.S. having a potentially favorable profile compared to those 2 given its unique MOA and high receptor selectivity and lack of sexual dysfunction. Further, as it relates to Auvelity, that's dosed twice daily. So actually as once-daily dosing may offer a benefit in terms of patient convenience and compliance. Trintellix, a product that generated over 2 million prescriptions in calendar '24 has an exceedingly high rate of sexual side effects, 29% to 34% at the highest approved doses in men and women, respectively. Sexual dysfunction is actually listed as a warning for Trintellix, so this is a very real problem with this product. So frankly, even if EXXUA was only the recipient of TRINTELLIX failures or just satify patients that would make EXXUA a significant success for us. All this said, we obviously won't just target just 1 or 2 of those products failures as there are many millions more prescriptions to pull from across the spectrum of approved MDD treatments, particularly the SSRIs and SNRIs that dominate the MDD market despite their shortcomings. Needless to say, our expectations for EXXUA are high as we believe we can help patients that are dissatisfied or are dealing with side effects with current treatment options. And there are many based on our market research and conversations with the psychiatry community.

So let's turn to our key EXXUA launch activities that are underway. Since completing the transaction in June, we've been working rapidly to bring the product to market. As a reminder, EXXUA is already FDA approved. We are currently finalizing product manufacturing, packaging, validation, labeling, serialization and delivery to our third-party logistics provider. This is the biggest gating factor at the moment with the current expectation that we will have product available by the end of the calendar year.

On the medical affairs front, we have brought on Dr. Gerwin Westfield as our Senior Vice President of Scientific Affairs. Dr. Westfield is a distinguished leader in the medical and pharmaceutical fields whose work has contributed to a Nobel Prize. Dr. Westfield previously worked with us at Aytu from 2015 to 2021 as our Director of Medical Affairs. Led by Dr. Westfield, we are focused on broadening EXXUA's clinical profile via peer review publications and key opinion leader engagement, as you need to do with any successful product launch. With this, we expect to employ an active education, publication and predication approach, highlighting ex U.S. sexual function and anxiety data in conjunction, of course, with the product's depression efficacy data and safety data over the thousands of patients studied.

On the sales front, we have refined our sales territory alignment and physician targeting. It's important to note that our existing psychiatry centric 40-plus person sales force will make EXXUA their primary promotional responsibility going forward. Our sales team already overlaps with a significant majority of targeted writers in our current geography, and thus, this really is a plug-and-play opportunity, enabling us to efficiently launch with only a slightly modified footprint, and will be specifically aligned to high branded antidepressant prescribing psychiatrists and psychiatrist aligned nurse practitioners and PAs. So we don't intend to significantly expand the sales team initially. But realignment of territories is now essentially complete to ensure maximum reach while also aligning with where market access is expected to be strongest and of course, prescribing potential is expected to be the highest. I'll remind you that for government payers, major depressive disorder has nearly universal coverage as this condition is a federally mandated protected class where MDD prescriptions must be covered. And importantly, the government pay segment represents approximately 30-plus percent of the MDD covered lives depending on the geography. So with 30% or even 40% of the antidepressant category depending on geography, covered by virtue of this protected status, we are, of course, aligning sales territories appropriately to ensure optimal patient access with respect to both government and commercial payers. As it relates to the branding and promotional aspect, we continue to work internally and with our agency to optimize product positioning and messaging, prepared promotion materials and refine our overall platform around EXXUA from a commercial perspective. We plan to implement a comprehensive promotal program, whereby we established a clear positioning for EXXUA based on its attributes, the competitive landscape and ultimately where we believe we can win with this product. You'll see more on this in the months ahead as we formally make EXXUA commercially available and launch EXXUA through our sales force. From a payer and distribution perspective, we do plan to integrate EXXUA into our Aytu RXConnect access platform. We expect to drive distribution through and dispensing from our Rx Connect network pharmacies as we do now with our [indiscernible] portfolio. This wil enable us to gain strong insights on reimbursement and coverage rates to help guide selective and smart payer contract we will consider. As you know, with our current products, we're able to successfully navigate the payer landscape even in a category like ADHD for which brand reimbursement is spotty at best. And we've always been very judicious and selective in payer contracting. We will take contracting and rebating on a case-by-case basis as we do now, but our single biggest objective around reimbursement with EXXUA will be to minimize coverage barriers and to help get patients successfully on therapy. The payer landscape in MDD is materially better than an ADHD based on the classes protected status and other factors. So we're anticipating materially higher net pricing and better overall coverage and reimbursement rates. More to follow on pricing and reimbursement as this piece unfolds and as we get closer to and into the actual launch.

Finalization of manufacturing is the gating factor to launch. But today, we feel comfortable that we are on track to have EXXUA available at the end of the calendar year. While efforts in the near future are on the EXXUA launch. A question that frequently comes up is around opportunities to efficiently extend EXXUA's life cycle, whether that's through considering the pursuit of additional intellectual property or exploring alternate formulations or 1 of [indiscernible] active metabolites. As a reminder, EXXUA's IP will extend to late 2030 or early 31 through a combination of patent term extension being worked on through along with the new chemical entity designation granted by the FDA. So as we think about it, this is a nice runway already from a patent or exclusivity perspective. Of course, there can be no guarantee we'll be able to execute on extensions to this late '30, early '31 time line, but we're having early discussions with prospective partners on ways that we believe those could be accomplished to make an already attractive opportunity for Aytu potentially even more so if we do, in fact, extend the IP. Our entire team is beyond thrilled to get things rolling on all things on EXXUA. As I said at the beginning, for us, the actual opportunity is quite simply transformational, and we look forward to executing on this opportunity in the quarters and years to come.

Before I turn it over to Ryan to review the financials in more detail, just a few comments on our ADHD portfolio. As most of you know, there's been a long since negotiated [ Paragraph IV ] settlement agreement with Teva whereby Neos allowed them to enter the market with a generic to Adzenys on September 1, 2025. As we sit here today, 3 weeks into September, they have activated their ANDA in the Orange Book and thus have signaled their intent to at some point enter the market, but they have yet to officially launch. Importantly, we have also launched an authorized generic of Adzenys. In fact, we launched it on September 2, and this product's early trajectory in the early weeks is very encouraging to say the least. This AG will serve as an important offensive tool, and we believe helping us maintain a material share of the Adzenys market irrespective of Teva's potential entry by having a truly equivalent product available that is now being sold as a generic. Through the first few weeks of the month of September, we have not seen any impact on script trends to our overall ADHD portfolio by virtue of the fact, as I just mentioned, Teva has not yet entered. So of course, we're pleased with that. This may, of course, change in the future if and when Teva does enter the market. But I believe it bears reminding that we have optimism that the impact on our business will be far less than under normal circumstances when prescription brands are through -- or sold through broad retail distribution, including the large national retail pharmacy chains. There are a few reasons behind this that I always like to point out. First, approximately 85% of our ADHD scripts go through our RxConnect platform. This is important as we have very tight controls and highly specific insights into the vast majority of prescriptions running through the platform. We see the planned coverage and reimbursement rates realized by the pharmacies and ultimately the dispensing pharmacies margin on the scripts they dispense. And again, by virtue of how we manage this highly integrated system of analytics, business rules and algorithms we ensure margin any time a pharmacy is dispensing our brand and now our AG. Through our systems, we're able to price match or better in the face of pharmacies having an alternative option to dispense. This is critical as we look at blunting potential erosion from an ANDA. Second, the ADHD category is already a highly generic market with minimal switching. Opportunities have existed for many years to prescribe and fill alternatives, yet we've held a consistent, albeit small share of the market with both Adzenys and Cotempla. Importantly, prescribers do prefer brands in the ADHD category, given the reliability and the consistency from a PK perspective. So with our brands having this unique co-pay backstop, we offer a commercially insured patients of paying no more than $50 out of pocket. We've been able to carve out a solid niche and a sea of cheap generics. Third, the gross to nets on our ADHD portfolio are already below what industry observers might expect when generics typically enter the market. This is to say that the substitution impact and transition to a generic market is not as high as you might see in other [indiscernible] circumstances. While we don't publish our gross to nets, we do generally communicate that our net selling prices for both Adzenys and Cotempla are materially lower than what industry observers associate with typical Rx brands. So the potential for price erosion beyond our current net selling price per unit is also materially lower. That said, we don't yet know what and how Teva will approach pricing or contracting. There are several other interrelated factors at play as well to give us comfort that the Adzenys franchise has good market share protections in place, but the 3 I just covered are really the key ones. More to follow if and when Teva enters, but for now, it remains business as usual for Aytu. One other small detail, every year, we pay an annual what's called a PDUFA fee to the FDA of about $2 million for Adzenys. This is a standard fee, all branded manufacturers pay and the fee goes up for each SKU the product has. Importantly, by law, when an AB-rated generic is activated in the Orange Book, that fee goes away. So the savings, which by the way, is within our COGS line, will offset some initial impact we might see. Additionally, starting in late fiscal '26 and then really as we start to get into fiscal '27 and beyond, we expect further COGS reductions through improvements in packaging configurations. So once we fully move both ADHD brands to a more compact and efficient packaging setup, we expect to realize additional savings, which we'll talk to you as we get closer to that implementation. That said, we expect those COGS improvements to be material if we maintain current volumes. Look, we know time will tell as it relates to the impact we might see within our ADHD portfolio from generics. And I don't want to come out and say we expect no impact. But again, given the uniqueness of RxConnect and the various other factors we've discussed, we don't believe this will be as much of an impact as what might be seen in other situations where products are distributed in a more traditional way.

With that, let me turn the call over to Ryan to go into detail on the financials, and I'll make a few closing comments, and then we'll look to address any questions you might have. Ryan?

Thank you, Josh. Please note that our June full year and fourth quarter fiscal 2025 financial results are detailed in both our press release and fiscal 2025 Form 10-K that we filed today with the SEC. I'm going to focus my comments primarily on the annual results. If there are any questions on details pertaining to the fourth quarter, please let me know. .

Let's start with the revenue line. Net revenue for the full year fiscal 2025 was $66.4 million compared to $65.2 million for the prior year. Breaking it down, the EHC portfolio net revenue was $57.6 million compared to $57.8 million in the prior year period. The change was a result of a decrease in the number of scripts written offset by improvements in the gross-to-net through assertive management of our brands economics as enabled through Aytu RxConnect platform. The pediatric portfolio was $8.8 million in the full year fiscal 2025 compared to $7.3 million. The pediatric portfolio growth reflects the positive effects from the company's recently implemented Return to Growth Plan with an increase in the number of units sold during the fiscal year, slightly offset by a decrease in gross to net by virtue of some changes within RxConnect to regain prescription volume.

Gross margin was 69% in the full year fiscal 2025 compared to 75% last year. The decrease in gross profit percentage is primarily related to increased cost of sales in our ADHD inventory. We've talked about this in the past, but as a reminder, the inventories higher cost resulted from the allocation of certain overhead costs associated with the now closed Grand Prairie, Texas manufacturing facility to a reduced amount of ADHD products that was produced there. This situation occurred as we ramped up production at our contract manufacturer and concurrently decreased production at the Grand Prairie, Texas facility. We expect the gross margins to improve in coming quarters as this inventory is fully liquidated. To add clarity in our fiscal 2025 gross margins, the contribution margin, which incorporates only the variable cost in our cost of goods sold, was 77.9%. Our fixed costs within cost of goods sold amounted to $4.5 million for the year, and the noncash amortization costs amounted to $1.3 million. The PDUFA fee for adzenys that Josh referenced earlier, which did not continue after September 2025, represented $1.5 million of the $4.5 million within the fixed cost amount for the year. The pro forma aggregate gross margin would have been 71.3 -- sorry, 71.3% without such PDUFA fee in fiscal 2025.

Turning to OpEx. Operating expenses, excluding amortization of intangible assets, restructuring costs and impairment expense were $39.6 million in the full year fiscal 2025 compared to $44.8 million in the prior year. The decrease primarily is a result of continued cost reduction efforts and improved operational efficiencies as part of the company's overall strategic alignment. With the shutdown of the Grand Prairie manufacturing facility and divestiture of the Consumer Health business in the first half of fiscal 2025, this is the second quarter in a row that we have been able to demonstrate the new cost structure which projects a pro forma annual expense of $36.3 million. While we will certainly incur additional expenses related to the EXXUA launch in fiscal 2026, this new cost structure resulted in a breakeven level of about $52.6 million annually or $13.2 million quarterly for our current base business of ADHD and pediatric portfolio. We are excited that the hard work over the past 3 years to reduce expenses has positioned us well as we prepare for this new product launch.

For the year, net loss was $13.6 million compared to a net loss of $15.8 million in the prior year. The full year fiscal 2025 results were impacted by an $8.3 million impairment expense on our pediatric portfolio, primarily the result of our shifted focus on our commercial efforts for EXXUA and our ADHD portfolio. $1.7 million of derivative warrant liabilities loss due to primarily an increase in the fair value of the $8.2 million liability classified prefunded warrants from when they were issued in June 2025 until the end of fiscal 2025, partially offset by a decrease in the fair value of our other warrants and prefunded warrants due to an overall decrease in our stock price during fiscal 2025. And a $2 million restructuring cost primarily related to the closure of our Grand Prairie Texas manufacturing site. If you were to exclude these various impacts, net loss would have been about $1.5 million in fiscal 2025 compared equivalently with a $9.7 million loss in fiscal '24.

Finally, on adjusted EBITDA line, as Jsoh mentioned, we reported our third consecutive year of positive adjusted EBITDA coming in at $9.2 million in the full year fiscal 2025 compared to $10.8 million in the prior year period. For the fourth quarter, adjusted EBITDA was $2 million, which was flat with the year ago quarter.

Turning now to the balance sheet. Cash and cash equivalents were $31 million at June 30, 2025, this compares to $18.2 million at March 31, 2025. As a reminder, in June 2025, we accompanied the EXXUA agreement with a highly successful upsized at-the-market public offering of common stock with full exercise of the overallotment totaling $16.6 million gross and just under $15 million net after fees and expenses, led by our current and some new health care-focused institutional investors. We greatly appreciate the ongoing support of Nantahala Capital, [ Stone Time ] Capital and the new investors that came alongside with this at the time at the market financing. We view this strong support from long-term life science-focused investors as further validation of the EXXUA deal and the opportunity it presents Aytu. Our thanks also go out to our banking colleagues at Bookrunner Lake Street Capital Markets, lead manager, Maxim Group and Financial Adviser at [ Senvion's ] Capital Markets as our partners in getting this deal done.

A couple of other small notes on the balance sheet. We topped off our loan with [ Eclipse ] from $11.1 million to $13 million and extended maturity to June of 2029. We also temporarily increased our maximum revolving line of credit by $1.5 million. We continue to pay down some higher interest liabilities during the quarter, namely the [ TRIS ] fixed payment arrangement by another $1.2 million. The remaining balance of this arrangement of $3.1 million was paid off in full in July 2025, using the funds obtained from the Eclipse loan refinancing. You will see this as a reduction in other current liabilities on the balance sheet. With this liability eliminated, we anticipate a reduction in our interest expense of almost $1.5 million in fiscal 2026. As I mentioned a moment ago, we incurred $8.3 million of impairment expense on our pediatric portfolio primarily as a result of our shifted focus on commercial efforts for EXXUA and our ADHD portfolio as well as the reduced net revenue compared with previous years and expectations going forward for the portfolio. You will see this as a reduction in intangible assets.

Finally, the offering we conducted was basically a straight common deal with prefunded warrants as ownership percentage for [ lockers ]. due to the accounting for the prefunded warrants of liabilities, A portion of the issuance costs were recorded in other expenses in the amount of $1.3 million as opposed to in [ APIC ] as is traditionally done in common stock capital raises.

Before I turn it back over to Josh, let me spend a few minutes walking through some of the investments we plan to make in the EXO launch and ensure everyone has a good understanding of the modeling moving forward. First off, we plan to launch EXXUA in the fourth quarter of calendar 2025, which is our second fiscal quarter of 2026 or the December 2025 quarter ending. This will be the initial product loaded. We would not expect there to be any significant revenue to report during the second fiscal quarter. The launch will continue into the March ending quarter, where we expect to see some small initial ramp in revenue, but the real story is expected to occur in June 2026 quarter and beyond. From a gross margin perspective, as a reminder, we have a 28% royalty on EXXUA in addition to a true-up on COGS, Think about it in essence as about a 31% cost of goods sold or 69% gross contribution margin. We do anticipate some fixed expenses to be incurred in the cost of goods sold following the launch as well. The upfront fee, the post-launch fee and any milestone payments will be reported as intangible assets and amortized in operating expenses initiating once we launch the product. From an OpEx perspective, we expect to invest approximately $10 million in the initial launch of EXXUA here in fiscal 2026. This was well defined in the plan heading into the product acquisition and financing we conducted and we expect this puts us in a good cash position as EXXUA begins to ramp as we exit fiscal 2026. To reiterate Josh's sentiment, we are thrilled with the opportunity ahead of us, the work you have done over the past 3 years to focus on our prescription pharmaceutical business by way of halting our development efforts, winding down and selling our consumer health business and outsourcing our manufacturing to a U.S.-based CMO and has put us in the position to make all of this happen. With a base business driven by our ADHD and pediatric portfolio lines and then the layering in of EXXUA, we have the ability to transform the outlook of Aytu for years to come. We are intent on executing efficiently on opportunity. Again, happy to go over any details during Q&A.

With that, Josh, let me turn it back over to you.

Thanks, Ryan. And before I turn it over to your question, let me just share some personal experience I've had while being in the field with a couple of our sales representatives over the past month or so as it relates to EXXUA, which reaffirms mine and really our overall excitement for the product. I've traveled with a couple of our top sales specialists visiting with doctors in Texas as we began the process of presenting EXXUA into the market. And over a 2.5-day period, we met with more than 30 psychiatrists and psychiatric nurse practitioners and PAs. Every single 1 of them indicated that they have at least 1 patient for whom they'd be willing to try EXXUA when it became available. It was highly positive feedback, and I will tell you it is this positive feedback that reconfirms an independent market research study that we had conducted also indicating that virtually every physician and specifically psychiatric PAs and NPs. Every 1 interview [indiscernible] for EXXUA in their treatment of depression. And finally, it reconfirms the survey that Lake Street conducted, which similarly as 20 respondents all psychiatrists would you prescribe [indiscernible] for your patients with MED for which all 20 indicated, yes. Three different surveys from 3 different sources, essentially all indicated that they would prescribe EXXUA. This reconfirms everything that we've thought about the long-term opportunity for this unique product. And as we said, while we don't expect revenue in the immediate or near term, given ramp expectations around any branded product launch, as we exit our fiscal '26, so again, late spring and into early summer of next year, we believe the signs of trajectory and momentum will start to appear.

Okay. So we went a little longer than we might normally go, but we thought it was important to provide a little added color given the excitement surrounding the EXXUA launch and some discussion around our ADHD portfolio. As you can hopefully hear, our excitement really is at an all-time high. As I stated in the press release, as we ramp up our commercial focus on EXXUA, it is our expectation that we will exit fiscal '26 on a trajectory that positions Aytu as 1 of the fastest-growing CNS-focused companies in the industry. This is certainly an exciting time for all of us here at Aytu and for everyone involved. As always, I want to thank everyone participating on today's call. We'll now be happy to answer some questions.

[Operator Instructions] our first question comes from Thomas Flaten with Lake Street.

Josh, if you guys are loading the channel in the fourth calendar quarter, should we just assume then that you're having a national sales meeting kind of full launch in the first calendar quarter? Or will you -- how are you thinking of sequencing those 2 events?

Yes, good question, Thomas. That's exactly right. We would expect the load in kind of higher kind of near the end 2025 calendar with the sales force, get together launch meeting and then full that launch immediately thereafter. So I'd be thinking kind of initial physician detailing happening in the Q1 calendar time frame. That's exactly right.

Got it. And just related to that timing with the recent warning letters that came in, is it your plan to preclear promotional materials? Or will you forego then?

No. We -- and good question about the warning letters and just sort of the general environment. We do not plan to pretty clear. We've got a, we think, a very solid, very compliant promotional platform, having actually just reviewed a good deal that yesterday, myself and some of the other members of the management team. So given, frankly, at the time that would be involved and preclearing with the FDA, given their current staffing issues, and again, given our strong sense that we've got a highly compliant message, we don't feel a need to do that. So we will do the traditional 22.53 submission process. So yes, good question.

Got it. And then just 1 final 1 for me, if I could. So you mentioned that your intent is to engage with payers on a case-by-case basis. So do we read into that 1 that you haven't been out doing any kind of prelaunch discussions with payers? And what is it that would trigger a case-by-case basis review with the payers? I know there's 2 questions in there, but if you get [indiscernible] going with those.

Yes, exactly. So as we do with the current business, Thomas, as you're probably aware, we are highly selective because based on just some of the structures of some of these rebates you end up putting yourself really in a bit of an upside down circumstance from a margin perspective if you're not careful, it really all comes down to planned pull-through. And even if you've got a contract with the PBM, plans aren't putting product on formulary aren't removing some of the mechanisms with through utilization management, you may not be getting what you're paying for. Furthermore, in this category because the government pay scenario is so positive, given that it's essentially near universal coverage, really universal coverage and that there is this mandate who have have products for both depression and schizophrenia covered under both Medicare and Medicaid plans. It doesn't make a lot of sense to proactively contract on the commercial side, so it's not to trip best price understanding that the government is going to get a flat 23.1% rebate, and we want to preserve the margin on that side of the ledger. So that really is what will drive the very selective contracting, first and foremost, getting a sense for where we are from a government perspective. in terms of distribution of prescriptions across the geographies that have favorable government, pay schemes and then layer in only as appropriate, very selective and only really favorable contracting on the commercial side. But again, it's really critical that we pay attention to both sides of the ledger. On the left side, the commercial side, again, being selective to make sure that we're getting what we're paying for in the context of rebates that actually result in pull-through. And on the right side of the ledger on the government side, making sure we're not doing anything that would undermine that 23.1% flat discount that you give to payers because the second you contract at a rate higher than that. you reset the price lower as I'm sure you're aware. So we'll be very judicious. But importantly, as I said, we will run these prescriptions preferentially through the RxConnect platform. And as we do now, we think we're very good in navigating just the overall flow of these prescriptions, making sure we're identifying exactly where scripts are covered and obviously, maximizing those. -- and obviously, still backstopping patients to the degree that it makes sense to ensure that patients are still able to get the product. So again, not just something from what we're doing now, we're just going to be smart and really take it 1 by one. We're not going to go out and blast press releases that suggests we've picked up 30 or 40 or 50 million American lives when in reality, that might actually net us something negative in terms of our ultimate margin. and it still might actually not improve patient access. So sorry if it's a long-winded question, but hopefully, that covers it.

The next question comes from Naz Rahman with Maxim Group.

I have a couple. The first 1 is on the [indiscernible], just call it ADHD pediatric [indiscernible]. So obviously, it's the focus of [indiscernible] on EXXUA. But ADHD have been very volatile over, let's call it the last 8 quarters in terms of sales and Ps obviously had reimbursement impact. I guess at this point, while pulling sales force efforts, where do you sort of see these 2 businesses sort of leveling out in terms of potential annual sales and contributions?

So I'll answer from a general perspective and then Ryan, maybe you can layer in, in terms of really what the base business kind of needs to be to kind of operate at breakeven than going forward. We are a as we said during our prepared remarks, a shifting promotional resources almost entirely to EXXUA understanding that the base business has some relative stickiness from a volume perspective, and we see in both covered and noncovered geographies that these products do have some level of stick. And so while we might expect some level of drift from a volume perspective, just as time goes on, with the launch of the AG particularly as it relates to Adzenys, we actually may see some improvement in terms of in terms of net selling price. Further to that, though, as you think about a stand-alone P&L as it relates to the base business, obviously, we'll be shifting expenses off of that business such that it should cash flow even at a lower level. So we're not necessarily in a position to guide to what we think top line will be, but I'm comfortable in saying that, that business will be margin positive, just again, given the fact that the expenses will be largely removed from that. But Ryan, maybe you can speak to kind of where that base business needs to be in order for us to essentially contribute cash or at the very least breakeven as it stands with just the ADHD and pediatric portfolio.

Yes, absolutely. So as I kind of mentioned, our ADHD portfolio kind of hit the $57.6 million this year and our paeds is $8.8 million. going forward, like Josh said, if you look at all the sales and marketing, the majority of that will get shifted to EXXUA. So the ADHD and Paeds will basically be covering our G&A going forward. Just on the core base business, like I mentioned, with our current expense run rate, we really only need to hit about 13 -- a little over $13 million a quarter. to break even. So we're kind of leveraging this new cost structure, expectation that, yes, ADHD may slip a little bit, especially depending on the Teva entrance but we think we're in a good position kind of to be when we -- now that we're launching EXXUA.

Got it. And on top of the sales force effort, could you kind of talk a little bit about what the medical affairs effort right now is for EXXUA. Are you guys planning on presenting at any conference doing more physician education, publications, et cetera?

Yes, an extensive effort underway in the medical affairs, scientific affairs arena. Obviously, as I mentioned, we hired back Dr. Gerwin Westfield and he has already made tremendous effort in aligning with several key opinion leaders with that, we certainly do expect to have presence at medical conferences. We do conferences more surgically precise than I would say, large companies, whereby we don't go with big fanfare, large expensive boosts and sort of a high marketing spend. It really tends to be very oriented around one-on-one engagements with really the the key opinion leaders. We've already engaged with multiple. We also, from an education perspective, aligning with really 1 of the absolute leaders in the field, have already begun to outline educational programs to ensure that we're getting the word out on EXXUA, on both the branded as well as an unbranded perspective. And so obviously, just getting psychiatrists familiar with the mechanism of action. Review of this class of medications, which, again, this is the first time this class has been approved in we will plan subsequent to that as we go through various data review access and potentially implement initiator -- investigator-initiated trials, we would expect publications and presentations, abstracts being developed as an output of a lot of those efforts. So you have fulsome effort underway. Understanding will be again, very surgically precise, very specific. We won't be everywhere all at once. We'll be very disciplined in how we deploy that. But Gerwin and his team are already well underway with that effort. So yes, a lot happening there beyond the scenes.

The next question comes from Ed Woo with [ Ascendiant ] Capital.

Congratulations on the progress. My question is a clarifying question for Ryan. You say that it was $39 million in operating expenses on kind of a pro forma basis? And then you mentioned that it was going to be $10 million extra investments for the launch of EXXUA. Is there a distribution pattern for the year? How should we figure out when that will be spent?

Yes. Just to clarify, if you -- pro forma the year [indiscernible] for more number ongoing. And in terms of the [indiscernible] there's going to be a decent amount of spend starting in the Q2 December quarter, that's where I would start seeing and then we'll ramp up from there but good amount of the [indiscernible] in marketing [indiscernible] about 50% would be in Q2 and then the other 50% in Q3 and Q4. you guys good luck. .

We have no further questions in queue. I'd like to turn the floor back to management for closing remarks.

Thank you, John, and thanks, everyone. Thanks to the analysts who asked the questions. I really appreciate everyone's interest and time today really continue just to express our extreme enthusiasm for what we have in front of us here with EXXUA. We know we still have a lot of work to do. And obviously, still some time until we are out there in the field and certainly a little bit more time than that to make impact. What we really do think that coming out of '26 and then heading into our fiscal '27. So into the middle of the calendar year is when we'll start to see really meaningful results, and I think folks will start to share our enthusiasm. But until that time, it's time to put our heads down and go back to work and ensure readiness for the EXXUA launch here late this year and as we get out into early 2020. Thanks very much for your time, and thanks for your support of Aytu BioPharma, and we'll talk to you at next quarter's earnings. Thanks very much. Have a good afternoon and evening.

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