Aytu BioScience announces business strategy update and Q2 financial results

Aytu BioScience, Inc. (OTCQX: AYTU), a specialty healthcare company focused on developing treatments for urological and related conditions, provided today an overview of its business and growth strategy, as well as its financial results for the quarter ended December 31, 2015.

Corporate Highlights:

• Launched urology-focused U.S. sales force
• Initiated marketing ProstaScint^® to urologists in the U.S.
• Preparing to market Primsol^®; acquired in October 2015
• Actively negotiating additional urology asset purchases
• Obtained CE Marking for MiOXSYS™ diagnostic platform for male infertility

Financial Highlights:

• Strong cash position of $11 million as of December 31, 2015
• Showed initial revenue growth; ~$1 million in sales for first half FY2016
• Rapidly achieved first MiOXSYS ex-U.S. sales; building distribution network
• Upgraded to OTCQX^® Best Market
• Achieved increased stock liquidity through distribution of Ampio Pharmaceuticals' majority stake in Aytu
• Enhanced liquidity and capital structure through conversion of $4.1 million of debt to Aytu Common Stock

Josh Disbrow, Chief Executive Officer of Aytu BioScience, Inc., stated, "We've built considerable momentum since our formation in April of last year, and we believe we are poised for significant growth over the coming quarters as we initiate commercialization of our acquired products and advance the development of MiOXSYS in male infertility toward commercialization. We launched our commercial organization and have already begun to build revenue for our initial products ProstaScint and Primsol. In parallel, we have continued to execute on our strategy of acquiring valuable late-stage assets and best-in-class, specialty commercial products. We believe Aytu is well positioned for long-term incremental growth based on our early commercial success with our expanding pipeline of substantially de-risked assets in the $10 billion global urology market."

In late November 2015, Aytu relaunched ProstaScint into the urology market primarily targeting its existing user base in the U.S. and has already demonstrated prescription growth during the first two full months of promotion. Aytu continues to anticipate booking approximately $1.7 million in revenue for this product in fiscal 2016 with expected revenue growth to follow.

The growth strategy for ProstaScint includes leveraging new data regarding ProstaScint's superior clinical performance over existing diagnostics, expanding use by leveraging both product indications in high-risk, newly diagnosed patients and recurrent patients, and seeking distribution partners in key markets outside the U.S. in order to market ProstaScint globally – all of which hadn't been a priority for ProstaScint's prior owners.

Aytu is preparing to relaunch Primsol, the only FDA-approved liquid oral formulation of a gold standard antibiotic, trimethoprim, for treating uncomplicated urinary tract infections, or UTIs. Primsol will utilize Aytu's existing U.S. urology sales channel, and similar to ProstaScint, Aytu expects revenue growth from both products throughout calendar year 2016. Revenue from Aytu's commercial-stage assets will enable Aytu to scale its sales organization accordingly and offset development costs as the Company advances MiOXSYS toward global commercialization for male infertility.

In early January 2016, Aytu received CE Marking for MiOXSYS, an in vitro diagnostic device for male infertility, and within just weeks, the Company announced that it had begun booking initial revenue for this product. In order to gain substantial, robust clinical experience using MiOXSYS, Aytu has engaged some of the world's most influential clinicians and researchers in the field of andrology and infertility with the expectation that they will present and publish compelling clinical utility data following their implementation of MiOXSYS in clinical settings. In the relative near term, Aytu expects to establish a distribution network to begin growing sales in territories where MiOXSYS is currently available commercially, as clinicians integrate MiOXSYS into their routine assessments of male infertility status. Later this year, the Company expects to initiate the FDA process for MiOXSYS and begin formal clinical studies under the FDA 510k de novo process.

Aytu reported nearly $1 million in revenue through the first half of fiscal 2016 (ended December 31, 2015), and ended its fiscal second quarter 2016 with $11 million in cash and cash equivalents. This strong cash position should enable the Company to execute on its strategic plan into fiscal 2017. Additionally, in February 2016, Aytu retired $4.1 million in debt principal from its September 2015 convertible debt offering, leaving only $1.05 million in debt principal on the balance sheet.

On January 4, 2016, Ampio Pharmaceuticals executed its previously announced strategy to distribute most of its 81.5% equity position in Aytu to Ampio shareholders. This key milestone event resulted in Aytu becoming a free-standing company with a more liquid stock, forming a solid foundation for potential value creation.

Mr. Disbrow concluded, "We are committed to the continued expansion of our commercial operations and to building significant value driven by sales from our novel urology product portfolio. We've also made important strides to augment our liquidity and improve our capital structure, as well as increase our exposure to new investors and potential strategic partners by presenting the Aytu story at numerous industry conferences. Based on our prior experience building successful specialty healthcare companies, we believe this critical groundwork and our early achievements to date place Aytu on a strong trajectory for delivering long-term value."