AYTU 10-K
Aytu Biopharma, Inc (AYTU)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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As of December 31, 2025, the aggregate market value of common stock held by non-affiliates of the registrant was $
As of September 15, 2026, there were
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required by Items 10, 11, 12, 13 and 14 of Part III of this report is incorporated by reference from portions of the registrant’s Definitive Proxy Statement on Schedule 14A relating to its 2027 annual meeting of stockholders, to be filed within 120 days after June 30, 2026.
AYTU BIOPHARMA, INC.
FORM 10-K
CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K for the year ended June 30, 2026, (“Form 10-K” or “Annual Report”), includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Annual Report, including statements regarding our anticipated regulatory events, future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements are generally written in the future tense and/or are preceded by words such as “may,” “will,” “should,” “forecast,” “could,” “expect,” “suggest,” “believe,” “estimate,” “continue,” “anticipate,” “intend,” “plan,” “potential,” or similar words, or the negatives of such terms or other variations on such terms or comparable terminology. Such forward-looking statements include, without limitation, statements regarding the markets for our approved products and our plans for our approved products, the anticipated start dates, durations and completion dates, as well as the potential future results, of any potential future clinical trials, the anticipated designs of any potential future clinical trials, anticipated future regulatory submissions and events, the potential future commercialization of any potential product candidates, our anticipated future cash position and future events under our current and potential future collaborations. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including without limitation the risks described in Part I, Item 1A, Risk Factors below and elsewhere in this Annual Report. These risks are not exhaustive. Other sections of this Annual Report include additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. We assume no obligation to update or supplement forward-looking statements.
Unless otherwise indicated or unless the context otherwise requires, references in this Form 10-K to the “Company,” “Aytu,” “we,” “us,” or “our” are to Aytu BioPharma, Inc. and its wholly owned subsidiaries.
This Form 10-K refers to registered trademarks that we currently own or license, such as Aytu, Aytu BioPharma, Aytu RxConnect, Neos Therapeutics, EXXUA, Adzenys, Adzenys ER, Adzenys XR-ODT, Cotempla, Cotempla XR-ODT, and Karbinal, which are protected under applicable intellectual property laws and are our licensed or owned property or the property of our subsidiaries. This Form 10-K also contains trademarks, service marks, copyrights and trade names of other companies, which are the property of their respective owners. Solely for convenience, our trademarks and tradenames referred to in this Form 10-K may appear without the ® or ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and tradenames. We obtained statistical data, market and product data, and forecasts used throughout this Form 10-K from market research, publicly available information and industry publications.
The following list summarizes what we believe to be the principal risks relevant to our company. The following summary is further elaborated on by the full text of the risk factors provided in Part I, Item 1A, Risk Factors of this Annual Report. All capitalized terms in this section not defined herein shall have the meanings given to them elsewhere in this Annual Report. Material risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, the following:
Risks Related to Our Business and Financial Position
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We have incurred losses to date and can give no assurance of profitability. |
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We may need to raise additional funding, which may not be available on acceptable terms, or at all. |
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We may not have cash available to us in an amount sufficient to enable us to make interest or principal payments on our indebtedness when due. |
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The terms of our loan agreement place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our operating and financial flexibility. |
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We have been and, in the future, may become a defendant in one or more stockholder derivative, class-action, and other litigation, and any such lawsuits may adversely affect our business, financial condition, results of operations and cash flows. |
Risks Related to Commercialization
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We are heavily dependent on the commercial success of our commercial products. To date, we have not generated sufficient net revenue from the sales of these products to achieve sustained company-wide profitability and we may never achieve or maintain profitability. |
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We rely on third parties to manufacture our products, and third-party manufacturing risks and inefficiencies may result in costs and delays that prevent us from successfully commercializing products and adversely affect our ability to produce our products. |
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Government restrictions and future potential actions on pricing and reimbursement, as well as other healthcare payor cost-containment initiatives, may negatively impact our ability to generate net revenue. |
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Our financial results will depend on the acceptance among clinicians, third-party payors and the medical community of our products. |
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If third-party payors do not reimburse our customers for the products we sell or if reimbursement levels are set too low for us to sell our products at a profit, our ability to sell those products and our results of operations will be harmed. |
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Adzenys and Cotempla contain controlled substances, and their manufacture, use, sale, importation, exportation, prescribing and distribution are subject to regulation by the DEA. |
Risks Related to Our Intellectual Property
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A dispute concerning the infringement or misappropriation of our proprietary rights, or the proprietary rights of others could be time consuming and costly, and an unfavorable outcome could harm our business. |
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We are dependent on our relationships and license and commercialization agreements, and we rely on the intellectual property rights granted to us pursuant to the license and commercialization agreements. |
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The expiration or loss of patent protection may adversely affect our future net revenue and operating results. |
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Our ability to compete may decline if we do not adequately protect or enforce our intellectual property rights. |
Risks Related to Our Organization, Structure and Operations
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Our efforts to expand and transform our businesses may require significant investments; if our strategies are unsuccessful, our business, results of operations and/or financial condition may be materially adversely affected. |
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We may have difficulties integrating acquired businesses or assets and such acquisitions may not result in the anticipated benefits, as a result, our business, results of operations and/or financial condition may be materially adversely affected. |
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In fiscal 2026, the great majority of our gross revenue and gross accounts receivable were due to five significant customers, the loss of which could materially and adversely affect our results of operations. |
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Our accounts receivable subjects us to credit risk. |
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Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us. |
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Public concern over the abuse of medications that are controlled substances, including increased legislative, legal and regulatory action, could negatively affect our business. |
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Certain of our stockholders own a large percentage of our stock and their interests may conflict with yours. |
Company Overview
Aytu BioPharma, Inc. (“Aytu,” the “Company,” “we,” “us,” or “our”) is a pharmaceutical company focused on advancing innovative medicines for complex central nervous system diseases to improve the quality of life for patients. We were originally incorporated as Rosewind Corporation on August 9, 2002, in the state of Colorado and re-incorporated as Aytu BioScience, Inc. in the state of Delaware on June 8, 2015. In March 2021, we changed our name to Aytu BioPharma, Inc. Our common stock trades on the Nasdaq Capital Market LLC (the “Nasdaq”) under the ticker symbol “AYTU.” Our principal office is located at 7900 East Union Avenue, Suite 920, Denver, Colorado 80237, and our telephone number is (720) 437-6580.
Our strategy is to become a leading pharmaceutical company that improves the lives of patients. We use a focused approach of in-licensing, acquiring, developing and commercializing novel prescription therapeutics in order to continue building our portfolio of revenue-generating products and leveraging our commercial team’s expertise to launch and build leading brands within large therapeutic markets. In June 2025, we entered into an Exclusive Commercialization Agreement (the “Commercialization Agreement”) with Fabre-Kramer Holdings, Inc. (“Fabre-Kramer”) to commercialize EXXUA ("Gepirone") extended-release tablets (“EXXUA”) in the United States. Gepirone is a new chemical entity, and we believe EXXUA to be a novel first-in-class selective serotonin 5HT1a receptor agonist approved by the United States Food and Drug Administration (“FDA”) for the treatment of major depressive disorder (“MDD”) in adults. In fiscal 2026, we began selling EXXUA and made it the centerpiece of our commercial efforts.
EXXUA has been extensively studied in over 5,000 patients and represents a new class of therapeutics to compete in the over $22 billion United States prescription MDD market. We believe it can become a very important treatment option for the estimated 21.0 million Americans affected by MDD. Over 360 million antidepressant prescriptions were written in 2025 in the United States, yet significant unmet needs remain considering the unacceptable side effects associated with current therapeutics. Importantly, we believe that EXXUA is the only antidepressant acting on serotonin receptors that does not carry a label warning about the risk of sexual dysfunction. The mechanism of the antidepressant effect of EXXUA is believed to be related to its modulation of serotonin activity and, specifically, its strong binding affinity for 5HT1a receptors, which are key regulators of mood and emotion. EXXUA is not a selective serotonin reuptake inhibitor (“SSRI”) and has no reuptake inhibition activity. EXXUA also exhibits no significant adverse effects on weight, blood pressure, heart rate or liver function. It is our expectation that EXXUA has the potential to serve as a major growth catalyst for us and we launched EXXUA in fiscal 2026 as a centerpiece of our commercial efforts.
In addition, we will continue to focus on commercializing innovative prescription products that address central nervous system conditions, including attention deficit hyperactivity disorder (“ADHD”). We are focusing our efforts on accelerating the growth of our commercial business and achieving positive operating cash flows. To achieve these goals, we indefinitely suspended active development of our clinical development programs and have wound down and divested unprofitable operations. In the first quarter of fiscal 2025 we completed the previously announced wind down and divestiture of our Consumer Health business and now operate our business as a single operating and reporting segment. The accounting requirements for reporting the Consumer Health business as a discontinued operation were met when the wind down and divestiture was completed on July 31, 2024. Accordingly, our consolidated financial statements for all periods presented reflect the Consumer Health business as a discontinued operation.
Our business from continuing operations is focused on the commercial launch and growth of EXXUA and on our current prescription pharmaceutical products sold primarily through third-party wholesalers and pharmacies and which primarily consists of two product portfolios. The first primarily consists of two products for the treatment of ADHD: Adzenys XR-ODT (amphetamine) extended-release orally disintegrating tablets, as well as its authorized generic equivalent (“Adzenys”) and Cotempla XR-ODT (methylphenidate) extended-release orally disintegrating tablets, as well as its authorized generic equivalent that was launched on July 15, 2026 (“Cotempla” and Adzenys together with Cotempla the “ADHD Portfolio”). The second primarily consists of Karbinal ER (carbinoxamine maleate extended-release oral suspension) (“Karbinal”), an extended-release first-generation antihistamine suspension containing carbinoxamine indicated to treat numerous allergic conditions (the “Pediatric Portfolio”). During the fourth quarter of fiscal 2024, we successfully completed the transition of all manufacturing of our Adzenys and Cotempla products to a United States-based third-party contract manufacturer in an offer to improve the manufacturing efficiency and profitability of these products.
We have incurred significant losses in each year since inception. Our net loss was $14.3 million for the year ended June 30, 2026, and as of June 30, 2026, we had an accumulated deficit of $347.8 million. We expect to continue to incur significant expenses in connection with our ongoing activities. While we believe continued growth of our commercial business will support future profitability, there can be no assurance that profitability will be achieved.
In light of our own business activities and external developments in the biotechnology and biopharmaceutical industries, Aytu management and our board of directors (the “Board” or the “Board of Directors”) regularly reviews our performance, prospects and risks such as the potential impact to our business resulting from our competitive landscape (i.e., entry of generic competitors, payor pressures, new branded entrants, etc.). These reviews have included consideration of potential partnerships, collaborations, and other strategic transactions such as acquisitions or divestitures of programs or technology to enhance stockholder value. Aytu management and our Board expect to continue to evaluate potential strategic transactions and business combinations.
Recent Business Development
As part of our ongoing strategic evaluation and go-forward operating plan, we continue to prioritize growing our prescription business given the opportunity for EXXUA in the MDD market and the current market trends supporting our products’ growth. We believe focusing resources on our most profitable, growing products provides the most effective pathway to achieve company-wide profitability and continued growth. As part of our plan, we completed the wind down of operations and divested our Consumer Health business in the first quarter of fiscal 2025. Following Aytu's June 2025 entry into the Commercialization Agreement, we made EXXUA commercially available in mid-December 2025, completed sales force training in mid-January 2026, and deployed the full sales force in late February 2026.
For fiscal 2026, we recorded net revenue of $57.6 million. We successfully launched EXXUA during fiscal 2026, and recorded net revenue of $6.6 million for the year ended June 30, 2026. During the year, we were able to continue the production of our ADHD medications, Adzenys and Cotempla, without encountering any supply chain interruptions that were present in the industry in prior years, in order to provide patients receiving stimulant prescriptions for the treatment of ADHD with alternative solutions to products that have experienced supply interruptions. However, due to our focus shifting towards launching EXXUA, revenue for the ADHD Portfolio decreased by 20.4% to $45.8 million. We also saw Pediatric Portfolio decline to $5.1 million, a 41.4% decrease from fiscal 2025, which was primarily due to our shift in efforts related to the commercial launch of EXXUA.
As an additional result of focusing on building our portfolio of revenue-generating products and generating profitability, in fiscal 2023 we terminated our license agreements relating to Healight and NT0502 (N-desethyloxybutynin), and we indefinitely suspended active development of our clinical development programs including AR101 (enzastaurin) (“AR101”). In connection with this suspension, we engaged in negotiations with EnzCo, LLC (“EnzCo”) and Rumpus VEDS LLC, (“Rumpus VEDS”), Rumpus Therapeutics LLC, (“Rumpus Therapeutics”) and Rumpus Vascular LLC, (“Rumpus Vascular” and, together with Rumpus VEDS and Rumpus Therapeutics, “Rumpus”) for the repurchase of AR101. On August 5, 2025, we reached terms with Rumpus and EnzCo whereby for mutual consideration and releases, we transferred all rights, title and interest in AR101 held by us and Rumpus to EnzCo, which extinguished and terminated all of our obligations and Rumpus’ obligations under the April 21, 2021, asset purchase agreement by and between us and Rumpus (the “Rumpus Asset Purchase Agreement”). There is no other relationship between us, EnzCo or Rumpus other than as contracting parties to terminate the Rumpus Asset Purchase Agreement, and there are no penalties or remaining obligations for us for terminating the Rumpus Asset Purchase Agreement.
On October 31, 2024, we received a Paragraph IV Certification Notice Letter (the “Notice Letter”) from Granules Pharmaceuticals, Inc. (“Granules”), stating that it intends to market a generic version of Adzenys before the expiration of all patents currently listed in the FDA’s publication of approved drug products with therapeutic equivalence evaluations (the “Orange Book”). The Notice Letter states that Granules’ New Drug Application (“NDA”) for the generic version of Adzenys contains a Paragraph IV certification alleging that these patents are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use or sale of the generic version of Adzenys. We timely filed a patent infringement lawsuit on December 11, 2024, against Granules to trigger a stay precluding the FDA from approving Granules’ NDA for a generic version of Adzenys for up to 30 months or entry of judgment holding the patents invalid, unenforceable, or not infringed, whichever occurs first. On January 7, 2025, Granules submitted an answer to the complaint. This litigation is ongoing, with trial originally scheduled to begin on December 7, 2026, now rescheduled to January 12, 2027. We plan to vigorously enforce our intellectual property rights related to Adzenys.
Debt and Equity Financings
Equity Financings
In June 2025, we raised gross proceeds of $16.6 million from the issuance of (i) 2,806,668 shares of our common stock, at a public offering price of $1.50 and 8,233,332 prefunded warrants at a public offering price of $1.4999 to purchase 8,233,332 shares of our common stock at an exercise price of $0.0001 per share (the “June 2025 Prefunded Warrants”). We received $14.8 million in proceeds net of underwriting commissions and offering expenses and used the net proceeds from the offering for working capital, general corporate purposes and our exclusive commercialization of EXXUA.
Eclipse Agreement
In June 2025, we and certain of our subsidiaries entered into an Amendment No. 6 to Loan and Security Agreement (the “Eclipse Amendment No. 6”) to the loan and security agreement dated October 2, 2019, as amended by Amendment No. 1, dated March 19, 2021; Amendment No. 2, dated January 26, 2022; Amendment No. 3, dated June 1, 2022; Amendment No. 4 dated March 24, 2023; and Amendment No. 5 dated June 12, 2024 (together the “Eclipse Agreement”), with Eclipse Business Capital LLC (“Eclipse”), as agent, and the lenders party thereto (agent and such lenders, collectively, the “Eclipse Lender”). Under the Eclipse Agreement, we have two loan agreements, a term loan (the “Eclipse Term Loan”) and a revolving credit facility (the “Eclipse Revolving Loan”).
The Eclipse Term Loan consists of an outstanding principal amount of $13.0 million on the closing date of the Eclipse Amendment No. 6, at an interest rate of the secured overnight financing rate as administered by the SOFR Administrator (the “SOFR”) plus 7.0%, with a four-year term and a straight-line loan amortization period of seven years, which would provide for a loan balance at the end of the four-year term of $5.6 million to be repaid on the June 12, 2029, maturity date, as amended.
The Eclipse Revolving Loan has a potential maximum borrowing base of $14.5 million at an interest rate of the SOFR plus 4.5%, which was temporarily increased pursuant to a $1.5 million incremental advance at an interest rate of the SOFR plus 5.5% (the “Eclipse Incremental Advance”), with repayment and permanent reduction of the Eclipse Incremental Advance commencing on August 1, 2025, and continuing on the first day of each calendar month thereafter, in an amount equal to $125,000 per month, until the Eclipse Incremental Advance has been reduced to $0. As of June 30, 2026, the amount outstanding on the Eclipse Incremental Advance was $0.1 million, which was paid off in July 2026. In addition, we are required to pay an unused line fee of 0.5% of the average unused portion of the maximum Eclipse Revolving Loan amount during the immediately preceding month. The ability to make borrowings and obtain advances of the Eclipse Revolving Loan remains subject to a borrowing base and reserve, and availability blockage requirements and the maturity date, as amended, is June 12, 2029.
Commercial Business Overview
We operate through one business segment consisting of various prescription pharmaceutical products sold through third parties. We generate net revenue by selling our products through third-party intermediaries in our distribution channels as well as directly to our pharmacy customers. Over the past three years, we have undergone a planned, strategic change to focus on our core prescription business while seeking to acquire differentiated, branded central nervous system (“CNS”) products that complement our portfolio and focus. With this focus, we recently signed an exclusive commercialization agreement for EXXUA, which we believe to be a novel first-in-class treatment for MDD that can become an important treatment for MDD in the United States. Further, we believe that EXXUA is a perfect strategic fit and has become a centerpiece of our commercial efforts going forward considering the significant commercial potential, uniqueness of the product, our sales force’s CNS focus and alignment with our proprietary Aytu RxConnect patient access platform. In fiscal 2026, we began selling EXXUA and shifted our commercial prioritization toward the EXXUA opportunity. We transitioned the manufacturing of Adzenys and Cotempla to a third-party manufacturer during the fourth quarter of fiscal 2024 and continue to use third-party manufacturers for all other products.
Our business consists of EXXUA, which we launched in fiscal 2026, our ADHD Portfolio and our Pediatric Portfolio. Our prescription products are sold primarily in the United States and are distributed through multiple channels, including sales to pharmaceutical wholesalers, distributors and pharmacies, using third-party logistics enterprises.
EXXUA is an extended-release medication that is FDA-approved for the treatment of MDD with what we believe to be a novel first-in-class oral selective serotonin 5HT1a receptor agonist indicated for the treatment of MDD in adults. EXXUA has also been studied in other psychiatric disorders, including generalized anxiety disorder (“GAD”) and hypoactive sexual desire disorder (“HSDD”).
Our ADHD products are extended-release stimulant medications formulated in patient-friendly, orally disintegrating tablets (“ODT”) that utilize the internally developed patented microparticle modified-release drug delivery technology platform. Products containing amphetamine or methylphenidate are the most commonly prescribed medications in the United States for the treatment of ADHD. Adzenys (for patients six years of age and above) and Cotempla (for patients six to seventeen years of age) are the first and only FDA-approved amphetamine and methylphenidate extended-release, orally disintegrating tablets, respectively, for the treatment of ADHD.
Our prescription Pediatric Portfolio primarily includes Karbinal ER, an extended-release carbinoxamine (a first-generation antihistamine) suspension indicated to treat numerous allergic conditions for patients two years of age and above. The products in this portfolio serve established pediatric markets and offer distinct clinical features and patient benefits.
We commercialize our business through our internal commercial organization that includes approximately 40 sales territories for EXXUA, with the ADHD Portfolio and Pediatric Portfolio currently non-promoted by our sales force.
Our Aytu RxConnect patient support program operates through a network of over 1,000 pharmacies to offer affordable, predictable copays and hassle-free availability to all commercially insured patients, regardless of their individual insurance plan. In addition, Aytu RxConnect seeks to significantly reduce the challenges and frustrations that health care professionals and their office staff can face when prescribing branded medications, including our medications, for their patients.
In September 2024, we entered into an exclusive collaboration, distribution and supply agreement with Lupin Pharma Canada Ltd (“Lupin”), a subsidiary of global pharmaceutical company Lupin Limited, for Lupin to commercialize Adzenys and Cotempla in Canada. We will supply Adzenys and Cotempla to Lupin based on forecasts and provide various product commercialization, regulatory and quality assurance resources. Lupin is responsible for seeking local regulatory approvals and marketing authorizations for both Adzenys and Cotempla, which is expected to occur over the next 12 months.
Strategy
We are a pharmaceutical company focused on advancing innovative medicines for complex CNS diseases to improve the quality of life for patients. We are committed to enhancing the lives of individuals affected by psychiatric conditions with our innovative treatments for MDD and ADHD and ensuring broad access for those who need them most.
Our strategic priorities are to continue to increase net revenue and enhance our financial performance through operational and manufacturing efficiencies and portfolio prioritization. Specifically, we intend to:
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accelerate adoption of EXXUA following its fiscal 2026 commercial launch as the centerpiece of our commercialization efforts; |
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continue to grow our commercial branded, revenue-generating products, by increasing product sales and improving patient access in order to drive net revenue growth of our products already in the marketplace when EXXUA was launched, which consist primarily of Adzenys, Cotempla, and Karbinal. We expect to increase market share using our internal commercial organization and leveraging our advanced analytics platform to increase prescribing of our medicines; |
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leverage our novel Aytu RxConnect patient support platform, which is designed to reduce access barriers to medicines facing patients and healthcare professionals (“HCPs”) by providing coverage for all commercially insured patients, regardless of their individual insurance plan, thus establishing an affordable and predictable monthly co-pay for patients, and eliminating many of the hassles facing HCPs and their staff by improving availability of Aytu products at participating pharmacies; and |
We believe our history of acquiring companies and in-licensing and acquiring products, along with our success in building out commercial organizations and executing product growth strategies, is a distinct competitive advantage. Our transactional adeptness and execution orientation enable us to continue to seek growth opportunities through both organic growth and opportunistic in-licensing or strategic acquisitions. Further, our commercial infrastructure and advanced analytics capability is scalable and lends itself to additional on-market assets and future product candidates that fit within our commercial capabilities and infrastructure. As such, in the near term, we may seek to leverage our commercial model and infrastructure by expanding our commercial portfolio with external product opportunities as we have done since our inception.
Products and Markets
Prescription Products: EXXUA (Gepirone) Extended-Release for the Treatment of Major Depressive Disorder in Adults
MDD, also known as clinical depression, is a serious mood disorder characterized by persistent feelings of sadness, hopelessness, and loss of interest in activities that once brought pleasure. These symptoms must be present for at least two weeks to warrant a patient’s diagnosis. MDD can significantly impact an individual’s daily life, affecting their ability to work, socialize, engage in self-care and maintain relationships. It is considered one of the leading causes of disability globally. While the exact causes are not fully understood, factors like genetics, brain chemistry imbalances, stressful life events and certain medical conditions are believed to play a role. Various treatment options, including medication, psychotherapy and lifestyle changes are available and can be effective for many individuals with MDD. However, despite many available treatment options, significant unmet needs remain in MDD given both ineffectiveness of treatments for many patients as well as a high rate of adverse events that affect patient compliance and treatment satisfaction.
The United States MDD market opportunity is significant given the over 360 million prescriptions written annually and the high rate of patient dissatisfaction and resulting high rate of switching MDD medications often attributable to adverse events caused by these medications. The most commonly prescribed treatments for MDD are SSRIs such as Paxil®, Prozac®, Lexapro® and Zoloft® and serotonin-norepinephrine reuptake inhibitors (“SNRIs”) such as Cymbalta® and Effexor®. While sometimes effective in treating MDD symptoms, these classes of medications commonly cause adverse events in the form of sexual side effects and weight gain. Greater than 40% of MDD patients switch from these initial therapies, indicating a high level of treatment ineffectiveness and side effects. Up to 70% of MDD patients complain of treatment emergent sexual dysfunction and greater than 65% complain of weight gain. As the only FDA-approved antidepressant acting on serotonin that does not carry a label warning about the risk of sexual dysfunction, we believe EXXUA can serve an important role in MDD treatment for these patients.
EXXUA is a new chemical entity, and we believe it to be a novel first-in-class selective serotonin 5HT1a receptor agonist approved by the FDA for the treatment of MDD in adults. EXXUA has been extensively studied in over 5,000 patients and represents a new class of therapeutics to compete in the over $22 billion United States prescription MDD market. Importantly, we believe that EXXUA is the only antidepressant acting on serotonin receptors that does not carry a label warning about the risk of sexual dysfunction. The mechanism of the antidepressant effect of EXXUA is believed to be related to its modulation of serotonin activity and, specifically, its exclusive and strong binding affinity for 5HT1a receptors, which are key regulators of mood and emotion. EXXUA is not a SSRI and has no reuptake inhibition activity. EXXUA also exhibits no significant adverse effects on weight, blood pressure, heart rate or liver function.
Given the compelling and novel product profile of EXXUA and the unmet needs of MDD patients, we believe EXXUA can become a very important treatment option for the estimated 21.0 million Americans affected by MDD. Over 360 million antidepressant prescriptions were written in 2025 in the United States, yet significant unmet needs remain considering the unacceptable side effects associated with current therapeutics. We are well positioned to realize the significant market potential of EXXUA while positively impacting the lives of MDD patients.
EXXUA has demonstrated efficacy in treating MDD in two well-controlled clinical trials (and five additional supportive studies) while avoiding sexual dysfunction seen with SSRIs and SNRIs, and no statistically significant weight changes. EXXUA was approved by the FDA in September 2023.
The two pivotal phase three trials established the efficacy and safety of EXXUA for MDD. The first was Study FK-GBE-007 (n = 248) (“Study FK-GBE-007”) and the second was Study 134001 (n ≈ 202, ITT population) (“Study 134001”). Both were randomized, double-blind, placebo-controlled and eight-week outpatient studies in adults meeting Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition (“DSM-IV”) criteria for MDD. In Study FK-GBE-007, flexible-dose gepirone extended release (20–80 mg/day; mean ≈ 58 mg) produced a mean HAMD-17 reduction of –10.1 vs –7.8 for placebo, with an LS-mean difference of –2.4 (95% CI: –4.4 to –0.3; p = 0.023). In Study 134001, using a similar dosing schedule (mean dose ≈ 70 mg), showed a HAMD-17 change of –9.04 vs –6.75 for placebo (LS-mean difference –2.47; 95% CI: –4.41 to –0.53; p = 0.013).
Both trials demonstrated symptom improvement emerging by week 2–3. Safety findings were consistent across studies, with the most common adverse events being headache, mild-to-moderate dizziness, and nausea; discontinuation rates due to adverse events were low (~3% for dizziness). Importantly, EXXUA showed no significant sexual dysfunction, or weight gain, supporting a favorable tolerability profile. For complete prescribing information, including warnings, precautions and adverse reactions, see the FDA-approved prescribing information for EXXUA.
Prescription Products: ADHD Portfolio
ADHD Market and Treatment Options
ADHD is a neurobehavioral disorder characterized by a persistent pattern of inattention and/or hyperactivity/impulsivity that interferes with functioning and/or development. ADHD can have a profound impact on an individual’s life, causing disruption at school, work, home and in relationships. It is one of the most common developmental disorders in children and often persists into adulthood. The Centers for Disease Control and Prevention (“CDC”) reported that in 2024, 7.1 million children in the United States ages 3 to 17 had a current ADHD diagnosis. Current ADHD treatment guidelines recommend a multi-faceted approach that uses medications in conjunction with behavioral interventions.
In 2025, approximately 115.3 million prescriptions for medications with ADHD labeling were written in the United States, generating $31.3 billion in sales. Approximately 88% of these prescriptions were for stimulant medications, such as amphetamine and methylphenidate, which are and have remained the standard of care for several decades. The market for ADHD medications outside of the United States is less developed, but we believe it will continue to grow as recognition and awareness of the disorder increase.
Extended-release, or long-acting, dosage forms of stimulant medications are the standard of care for treating ADHD, making up approximately 60% of ADHD prescriptions. The most prescribed extended-release medications for ADHD, Adderall XR® and Concerta® (and each of their generic equivalents), are long-acting versions of previously short-acting amphetamine and methylphenidate medications, respectively. Most of these extended-release dosage forms allow for once-daily dosing in the morning, which eliminates the need to re-dose during the day. Our products, Adzenys and Cotempla, are extended-release orally disintegrating tablets that allow for once-daily dosing based upon our internally developed proprietary microparticle delivery technology and are the only approved extended-release orally disintegrating tablet formulations of amphetamine and methylphenidate for the treatment of ADHD.
ADHD Product Portfolio Overview
Our modified-release drug delivery technology platform has enabled us to create extended-release ODT formulations of amphetamine and methylphenidate. This was achieved by developing an extended-release profile that allows for once daily dosing and an ODT formulation that allows for easier administration and ingestion and twelve-hour duration of action.
Adzenys and Cotempla are the first and only XR-ODT products for the treatment of ADHD. These XR-ODT products offer unique attributes to ADHD patients and caregivers, including:
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ease of administration and ingestion because they disintegrate rapidly in the mouth and may be taken without water; |
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taste-masking of bitter ADHD medications, with pleasant-tasting flavor; and |
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prevention of “cheeking,” the practice of hiding medication in the mouth and later spitting it out rather than swallowing it. |
Adzenys XR-ODT: Amphetamine XR-ODT for the Treatment of ADHD
Adzenys is approved by the FDA for the treatment of ADHD in patients six years and older and is the first FDA-approved amphetamine XR-ODT for the treatment of ADHD. The NDA for Adzenys relies on the efficacy and safety data that formed the basis of FDA approval for the reference listed drug, Adderall XR, 30 mg, together with bioequivalence, bioavailability, and aggregate safety data from the Adzenys clinical program. Adzenys contains amphetamine loaded onto a mixture of immediate-release and polymer-coated delayed-release resin particles, which are formulated and compressed into an ODT along with other tableting excipients using our patented Rapidly Disintegrating Ionic Masking (“RDIM”) technology. The result is amphetamine with an in vivo extended-release profile delivered through a tablet that quickly disintegrates in the mouth without the need for water. Adzenys is available in 30-day supply, child-resistant blister packs.
The remaining unexpired composition-of-matter patent for Adzenys is scheduled to expire in 2032. This patent is listed in the Orange Book. In addition, we entered into a settlement agreement with Actavis Laboratories FL, Inc. (“Actavis”) (which is now owned by Teva Pharmaceutical Industries Limited), which resolved all ongoing litigation involving Adzenys patents and Actavis’ ANDA with the FDA for a generic version of Adzenys. Under the agreement with Actavis, Actavis has the right to manufacture and market its approved generic version of Adzenys under the ANDA beginning on September 1, 2025, and launched the ANDA in December 2025.
Cotempla XR-ODT: Methylphenidate XR-ODT for the Treatment of ADHD
The FDA approved Cotempla for the treatment of ADHD in patients six to seventeen years old. The Cotempla NDA relies on the efficacy and safety data that formed the basis of FDA approval for the reference listed drug, Metadate CD®, together with bioavailability/bioequivalence data and efficacy/safety data from the Cotempla clinical program. The results of the Cotempla Phase 3 clinical efficacy and safety trial showed a statistically significant improvement in ADHD symptom control compared to placebo across the school day. Onset of effect was observed within one-hour post-dose and persisted through 12 hours. No serious adverse events were reported during the study, and the adverse event profile was consistent with the drug’s mechanism of action.
Cotempla contains methylphenidate loaded onto a mixture of immediate-release and polymer-coated delayed-release resin particles, which are formulated and compressed into an ODT along with other tableting excipients using our RDIM technology. The result is methylphenidate with an in vivo extended-release profile delivered through a tablet that quickly disintegrates in the mouth. Cotempla is available in 30-day supply, child-resistant blister packs. Cotempla is the first FDA-approved methylphenidate XR-ODT for the treatment of ADHD.
We hold composition-of-matter patents in the United States which we expect will provide Cotempla intellectual property protection until 2032, and a method-of-use patent was issued which extends protection to 2038. These patents are listed in the Orange Book. In addition, we entered into a settlement agreement with Teva Pharmaceuticals USA, Inc. (“Teva”), which resolved all ongoing litigation involving the Cotempla patents and Teva’s ANDA with the FDA for a generic version of Cotempla. Under the agreement with Teva, we granted Teva the right to manufacture and market its approved generic version of Cotempla under the ANDA beginning on July 1, 2026.
Prescription Products: Pediatric Portfolio
Karbinal: Extended Release Carbinoxamine Oral Suspension for the Treatment of Seasonal and Perennial Allergies
Karbinal ER (carbinoxamine maleate extended-release oral suspension) is an H1 receptor antagonist (antihistamine) indicated to treat seasonal and perennial allergic rhinitis, vasomotor rhinitis, allergic conjunctivitis due to inhalant allergens and food, mild, uncomplicated allergic skin manifestations of urticaria and angioedema, dermatographism, as therapy for anaphylactic reactions adjunctive to epinephrine and other standard measures after the acute manifestations have been controlled, and amelioration of the severity of allergic reactions to blood or plasma for patients two years of age and above.
More than 106 million people in the United States experience various types of allergies each year. Allergic conditions are one of the most common health issues affecting children in the United States. Numerous allergy treatments exist to address allergies and allergic symptoms depending upon the symptom(s). Oral antihistamines are considered a mainstay of allergy treatment, and the prescription antihistamine market is a large category with approximately 56.4 million antihistamine prescriptions written in 2025. The prescription antihistamine category is dominated by generic products and consists of first-generation and second-generation molecules. Generally, first-generation antihistamines block both histaminic and muscarinic receptors and pass the blood-brain barrier. Second-generation antihistamines mainly block histaminic receptors, but they do not pass the blood-brain barrier. First-generation antihistamines, which are generally characterized as more sedating, accounting for 4% of 2025 total prescriptions, while non-sedating, second-generation antihistamines accounted for 96% of total prescriptions.
Karbinal is the only FDA-approved, 12-hour carbinoxamine oral suspension and is an effective antihistamine with a broad range of indications. Karbinal is positioned as a second-line allergy treatment for patients who continue to suffer from allergic symptoms following initial treatment with a second-generation, non-sedating antihistamine. Further, as Karbinal is an oral suspension formulation, children are the primary target patient given their preference for liquid treatments and, in many cases, their inability to swallow tablets or capsules. Karbinal is indicated for children as young as two years of age. Karbinal is available in 480 mL bottles.
Through a supply and distribution agreement with Tris Pharma, Inc. (“Tris”), we own exclusive rights to commercialize Karbinal in the United States through August 2033, unless the agreement is terminated earlier pursuant to the termination provisions in the agreement. As part of the agreement, we pay sales-based royalties based on net revenue. Additionally, we were committed to making annual minimum payments to Tris through August 2025. Two core patents protect Karbinal in the United States, and both patents are listed in the FDA’s Orange Book, the latest of which expires in March 2029.
Manufacturing
We contract with contract manufacturing organizations (“CMOs”) for the manufacture and testing of our products. We have entered into the following key supply agreements for the commercial manufacture and supply of certain of these products:
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EXXUA is purchased through Fabre-Kramer through their manufacturing agreement with a CMO, as part of our exclusive commercialization agreement with Fabre-Kramer. We are obligated to the material terms of Fabre-Kramer’s manufacturing agreement in terms of supply prices, minimum order sizes, forecasting provisions and all regulatory and compliance provisions. Fabre-Kramer’s manufacturing agreement has an initial term ending in September 2028. |
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During fiscal 2024 we completed the process of transferring the manufacturing of our Adzenys and Cotempla products to a United States-based CMO who started manufacturing both Adzenys and Cotempla during the third quarter of fiscal 2024 and will manufacture all of our ADHD products going forward. Our CMO is responsible for manufacturing the products, conducting quality control, quality assurance, validation activities, stability testing, packaging and providing related services for the manufacture of the products. We are required to purchase all of our ADHD products from them, with certain exceptions. Our agreement with this CMO has an initial term beginning in November 2023, and ending in November 2028, and automatically renews after the initial term for successive terms of three years, with certain termination rights for both parties as outlined in the agreement. |
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Karbinal is purchased through a supply agreement with Tris. This agreement terminates in August 2033, subject to earlier termination or extension in accordance with the terms of the agreement. |
We believe the third-party manufacturers have adequate capacity to manufacture sufficient quantities of our products to meet anticipated commercial demands. As we rely on CMOs, we continue to employ personnel with extensive technical, manufacturing, supply chain management, analytical and quality experience to oversee contract manufacturing and testing activities, and to compile manufacturing and quality information for our regulatory submissions. Manufacturing is subject to extensive regulations that impose various procedural and documentation requirements, and which govern record-keeping, manufacturing processes and controls, personnel, quality control and quality assurance, among other activities. Our systems and our contractors are required to comply with these regulations, and we assess this compliance regularly through monitoring of performance and a formal audit program.
Research and Development
We have indefinitely suspended research and development activities in order to focus our resources on our commercialization efforts and as a result, research and development spending has significantly declined. Research and development spending primarily relates to required regulatory activities and maintenance of our intellectual property and regulatory filings.
Intellectual Property
We seek trademark protection in the United States when appropriate. We currently own or license registered trademarks for Aytu, Aytu BioPharma, Aytu RxConnect, Neos Therapeutics, EXXUA, Adzenys, Adzenys ER, Adzenys XR-ODT, Cotempla, Cotempla XR-ODT, and Karbinal, in the United States, as well as trademarks related to our Dynamic Treatment Regimes (“DTRS”) technology. From time to time, we may find it necessary or prudent to obtain licenses from third-party intellectual property holders. On October 28, 2025, we announced that the method-of-use patent for EXXUA had been extended through September 2, 2030, under 35 U.S.C 156.
Government Regulation
We are subject to extensive regulation by the FDA and other federal, state, and local regulatory agencies. The United States Federal Food, Drug, and Cosmetic Act (“FDCA”) and the FDA’s implementing regulations set forth, among other things, requirements for the testing, development, manufacture, quality control, safety, effectiveness, approval, labeling, storage, record-keeping, reporting, distribution, import, export, sale, advertising and promotion of our products and product candidates. We may seek approval for, and market, our products in other countries in the future. Generally, our activities in other countries will be subject to regulation that is similar in nature and scope as that imposed in the United States, although there can be important differences.
Development and Approval
Under the FDCA, FDA approval of an NDA is required before any new drug can be marketed in the United States. NDAs, in the case of new drugs, may require extensive studies and submission of a large amount of data by the applicant, including the following:
Preclinical Testing
Preclinical testing generally includes laboratory evaluation of product chemistry and formulation, as well as toxicological and pharmacological studies in several animal species to assess the toxicity and dosing of the product.
Clinical Trials
Clinical trials involve the administration of a drug to healthy human volunteers or to patients, under the supervision of a qualified investigator.
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Phase 1 clinical trials involve the initial administration of the investigational drug to humans, typically to a small group of healthy human subjects, but occasionally to a group of patients with the targeted disease or disorder. Phase 1 clinical trials generally are intended to evaluate the safety, metabolism and pharmacologic actions of the drug, the side effects associated with increasing doses, and, if possible, to gain early evidence of effectiveness. |
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Phase 2 clinical trials generally are controlled studies that involve a relatively small sample of the intended patient population and are designed to develop initial data regarding the product’s effectiveness, to determine dose response and the optimal dose range, and to gather additional information relating to safety and potential adverse effects (“AEs”). |
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Phase 3 clinical trials are conducted after preliminary evidence of effectiveness has been obtained and are intended to gather the additional information about safety and effectiveness necessary to evaluate the drug’s overall risk-benefit profile, and to provide a basis for physician labeling. Generally, Phase 3 clinical development programs consist of expanded, multi-site, large-scale studies of patients with the target disease or disorder to obtain statistical evidence of the efficacy and safety of the drug at the proposed dosing regimen. Phase 3 data often form the primary basis on which the FDA evaluates a drug’s safety and effectiveness when considering the product application. |
Post-Approval Regulation
Once approved, drug products are subject to continuing regulation by the FDA. If ongoing regulatory requirements are not met or if safety or manufacturing problems occur after the product reaches the market, the FDA may at any time withdraw product approval or take actions that would limit or suspend marketing. Additionally, the FDA may require post-marketing studies or clinical trials, changes to a product’s approved labeling, including the addition of new warnings and contraindications, or the implementation of other risk management measures, including distribution-related restrictions, if there are new safety information developments.
DEA Regulation
Our ADHD products are each considered a “controlled substance” as defined in the Controlled Substances Act of 1970 (“CSA”), because Adzenys contains amphetamine and Cotempla contains methylphenidate. Because amphetamine and methylphenidate are Schedule II controlled substances, the DEA has Adzenys and Cotempla listed and regulated as Schedule II controlled substances. EXXUA and all of our pediatric products (primarily Karbinal) are not considered “controlled substances.”
Annual registration is required for any facility that manufactures, distributes, dispenses, imports or exports any controlled substance. The registration is specific to the particular location, activity and controlled substance schedule. As we no longer occupy a manufacturing facility, we no longer need a DEA facility registration.
The DEA establishes annually an aggregate quota for how much of a controlled substance may be produced in and/or imported into the United States-based on the DEA’s estimate of the quantity needed to meet legitimate scientific and medicinal needs. The DEA may adjust aggregate production quotas and individual production and procurement quotas from time to time during the year, although the DEA has substantial discretion in whether or not to make such adjustments. Our manufacturer’s quotas of an active ingredient may not be sufficient to meet commercial demand, which could have a material adverse effect on our business, financial position and results of operations.
Individual states also independently regulate controlled substances. We and our manufacturers will be subject to state regulation on distribution of these products, including, for example, state requirements for licensures or registration. Additionally, we use third-party logistics firms to inventory and fill sales orders for our commercial portfolio.
Human Capital
As of June 30, 2026, we employed 76 employees, of which 75 were full-time employees. Of our 76 employees, 4 are involved in operations, 45 are involved in commercialization and 27 are involved in general and administrative activities. All of our colleagues are located in the United States. Of these colleagues, approximately 43% are female, 53% are male, and 4% declined to self-identify. Our colleagues are not represented by a labor union.
Our values – team-oriented, hard-working, relentless determination, integrity, visionary, entrepreneurial, and servant-minded – are built on the foundation that the colleagues we hire and the way we treat one another promote innovation, and high productivity, which spur our success. This culture depends in large part on our ability to attract, retain and develop a diverse population of talents and high-performing employees at all levels of our organization. By providing market-competitive pay and benefit programs, opportunities for employees to participate in the Company's success, and regular communication regarding organizational performance, we seek to foster an inclusive culture in which employees can thrive.
Available Information
Our principal executive offices are located at 7900 East Union Avenue, Suite 920, Denver, Colorado 80237, and our phone number is (720) 437-6580.
We maintain a website on the internet at https://aytubio.com. We make available, free of charge, through our website, by way of a hyperlink to a third-party site that includes filings we make with the United States Securities and Exchange Commission (“SEC”) website (www.sec.gov), our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports electronically filed or furnished pursuant to Section 15(d) of the Exchange Act. The information on our website is not, and shall not be deemed to be, a part of this Annual Report or incorporated into any other filings we make with the SEC. In addition, the public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington D.C., 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.
Code of Ethics
We have adopted a written code of ethics that applies to our officers, directors, and employees, including our principal executive officer and principal accounting officer. We intend to disclose any amendments to, or waivers from, our code of ethics that are required to be publicly disclosed pursuant to rules of the SEC by filing such amendment or waiver with the SEC. This code of ethics and business conduct can be found in the corporate governance section of our website, https://investors.aytubio.com/corporate-governance#CorporateGovernance.
Investing in our securities includes a high degree of risk. You should consider carefully the specific factors discussed below, together with all of the other information contained in this Annual Report. If any of the following risks actually occurs, our business, financial condition, results of operations and future prospects would likely be materially and adversely affected. This could cause the market price of our securities to decline and could cause you to lose all or part of your investment.
Risks Related to Our Business and Financial Position
We have incurred losses to date and can give no assurance of profitability.
We have incurred losses in each year since our inception. Our net loss for the years ended June 30, 2026, and 2025, was $14.3 million and $13.6 million, respectively. We have not demonstrated the ability to be a profit-generating enterprise to date. Even though we expect to have net revenue growth in the next several fiscal years, it is uncertain that the net revenue growth will be significant enough to offset our expenses and generate a profit in the future. Potential investors should evaluate us in light of the expenses, delays, uncertainties, and complications typically encountered by healthcare businesses, many of which will be beyond our control. These risks include the following:
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uncertain market acceptance of our products; |
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difficulties in maintaining coverage and reimbursement for our products; |
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lack of sufficient capital; |
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United States and foreign regulatory approval of our products; |
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unanticipated problems, delays, and expense relating to product development and implementation; |
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lack of sufficient intellectual property; |
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the ability to attract and retain qualified employees; |
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the introduction of generic competition; |
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competition; and |
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technological changes. |
As a result of the increasingly competitive nature of the markets in which we compete, our historical financial data is of limited value in anticipating future operating expenses. Our planned expense levels will be based in part on our expectations concerning future operations, which is difficult to forecast accurately based on our historical strategy of product and/or business acquisition to develop our product and business portfolio. We may be unable to adjust spending in a timely manner to compensate for any unexpected budgetary shortfall.
To obtain net revenue from our products, we must succeed, either alone or with others, in a range of challenging activities, including expanding markets for our existing products, manufacturing, marketing and selling our existing products, satisfying any post-marketing requirements, and obtaining reimbursement for our products from private insurance or government payors. We, and our collaborators, as applicable, may not be successful in these activities and, even if we or our collaborators do, we may never generate net revenue that is sufficient to achieve profitability.
We may need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain necessary capital when needed may force us to delay, limit or terminate our growth efforts or other operations. Further, future sales and issuances of our common stock or rights to purchase common stock will result in dilution of the percentage ownership of our existing stockholders and could cause our stock price to fall.
We are expending resources to commercialize our prescription products and to service our debt obligations. We may require additional funding through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements, or a combination of these approaches. As of June 30, 2026, our cash and cash equivalents totaled $26.3 million. During the year ended June 30, 2025, we received $14.8 million of net proceeds from our June 2025 public offering and $3.2 million of net proceeds from the Eclipse Amendment No. 6 that was executed in June 2025.
Our operating plans may change as a result of many factors currently unknown to us, and we could need additional capital in the future to continue our operations and may need to seek additional funds sooner than planned. Raising funds in the current economic environment may present additional challenges. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.
If we sell common stock, convertible securities or other equity securities in more than one transaction, any such sales may result in material dilution to our existing stockholders, and new investors could gain rights, preferences, and privileges senior to those of our existing common stockholders. Further, any future sales of our common stock by us or resales of our common stock by our existing stockholders could cause the market price of our common stock to decline. Any future grants of securities exercisable or convertible into our common stock, or the exercise or conversion of such shares, and any sales of such shares in the market, could also have an adverse effect on the market price of our common stock.
In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. The incurrence of additional indebtedness would result in increased fixed payment obligations, and we may be required to agree to additional restrictive covenants, such as further limitations on our ability to incur additional debt, additional limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or products or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.
If we are unable to obtain funding on a timely basis, we may be unable to expand the market for our products or expand our operations generally or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.
We may not have cash available to us in an amount sufficient to enable us to make interest or principal payments on our indebtedness when due.
As of June 30, 2026, we have a $13.0 million term loan and up to $16.0 million of secured revolving loans under the Eclipse Agreement, which includes the temporary Eclipse Incremental Advance of $1.5 million. As of June 30, 2026, $11.1 million was outstanding under the term loan and $6.1 million was outstanding under the secured revolving loan. All obligations under our loans are secured by substantially all of our existing property and assets subject to certain exceptions. These debt financings and any future debt financings may create additional financial risk for us, particularly if our business or prevailing financial market conditions are not conducive to paying off or refinancing our outstanding debt obligations at maturity.
As a result, we may not have sufficient funds, or may be unable to arrange for additional financing, to pay the amounts due on our outstanding indebtedness under our debt agreements. Further, funds from external sources may not be available on economically acceptable terms, if at all. For example, if we raise additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish potentially valuable rights to our products or technologies, or to grant licenses on terms that are not favorable to us. If adequate funds are not available when and if needed, our ability to make interest or principal payments on our debt obligations, and finance our operations and other general corporate activities would be significantly limited and we may be required to delay, significantly curtail, or eliminate one or more of our programs.
Failure to satisfy our current and future debt obligations under our loan agreements with the Eclipse Lender could result in an event of default and if such event of default is not cured or curable, our lenders could accelerate all of the amounts due. In the event of an acceleration of amounts due under one or both of our debt agreements as a result of an event of default, we may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness. In addition, our lenders could seek to enforce their security interests in any collateral securing such indebtedness.
The terms of our loan agreement place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our operating and financial flexibility.
The Eclipse Agreement subjects us to financial covenants and restrictions on our ability to incur liens, incur additional indebtedness, make certain dividends and distributions with respect to equity securities, engage in mergers and acquisitions or make asset sales without the prior written consent of the lenders of which there can be no guarantee that we will receive such consent. Failure to comply with such covenants could permit the lenders to declare our obligations under the loan agreements, together with accrued interest and fees, to be immediately due and payable, plus any applicable additional amounts relating to a prepayment or termination.
These restrictive covenants could limit our flexibility in operating our business and our ability to pursue business opportunities that we or our stockholders may consider beneficial. Any declaration by the lenders of an event of default could significantly harm our business and prospects and could cause the price of our common stock to decline. We may not have enough available cash or be able to raise additional funds through equity or debt financings to repay these outstanding obligations at the time any event of default occurs. Further, if we raise any additional capital through debt financing, the terms of such additional debt could further restrict our operating and financial flexibility.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
As of June 30, 2026, we had federal net operating loss carryforwards of $452.2 million. The available net operating losses, if not utilized to offset taxable income in future periods, will continue to expire and, except for certain indefinite-lived net operating loss carryforwards, will completely expire in 2037. Under the Internal Revenue Code of 1986, as amended (the “IRC”) and the regulations promulgated thereunder, including, without limitation, the consolidated income tax return regulations, various corporate ownership changes limit our ability to use our net operating loss carryforwards and other tax attributes to offset our income.
Ownership changes have limited our ability to offset, post-change, United States federal taxable income. Section 382 of the IRC imposes an annual limitation on the amount of post-ownership change taxable income a corporation may offset with pre-ownership change net operating loss carryforwards and certain recognized built-in losses. Previous acquisitions, financing transactions, and equity ownership changes in the past five years have caused a significant limitation on our ability to use all $452.2 million of pre-acquisition net operating loss carryovers. As a result, we expect $288.8 million of net operating losses to expire unused by 2037, at which point we will only retain indefinite-lived carryforwards. The ownership changes have resulted in increased future tax liability and are a driver of the change from a zero percent effective tax rate.
We have been and, in the future, may become a defendant in one or more stockholder derivative, class-action, and other litigation, and any such lawsuits may adversely affect our business, financial condition, results of operations and cash flows.
We and certain of our officers and directors have been and may in the future become defendants in one or more stockholder derivative actions or other class-action lawsuits. These lawsuits can divert our management’s attention and resources from our ordinary business operations, and we would likely incur significant expenses associated with their defense (including, without limitation, substantial attorneys’ fees and other fees of professional advisors, increases in insurance premiums, deductibles and high retention amounts and potential obligations to indemnify current and former officers and directors who are or may become parties to such actions). In connection with these lawsuits, we may be required to pay material damages, consent to injunctions on future conduct and/or suffer other penalties, remedies or sanctions, or issue additional shares upon the exercise of certain warrants, which may cause additional dilution. In addition, any such future lawsuits could adversely impact our reputation and/or ability to launch and commercialize our products, thereby harming our ability to generate net revenue. Accordingly, the ultimate resolution of these matters and any future matters could have a material adverse effect on our business, financial condition, results of operation and cash flows and, consequently, could negatively impact the trading price of our common stock.
Risks Related to Commercialization
We are heavily dependent on the commercial success of our commercial products. To date, we have not generated sufficient net revenue from the sales of these products to achieve company-wide profitability and we may never achieve or maintain profitability.
Our ability to become profitable depends upon our ability to generate increased net revenue from sales of our prescription products. While we have been selling pharmaceutical products for several years, we have limited commercial experience selling some of our pharmaceutical products, having only generated net revenue from EXXUA in fiscal 2026, the sale of our pediatric products since acquiring that portfolio in November 2019 and from our ADHD products since acquiring that portfolio in March 2021. None of our marketed products have thus far generated product revenue at levels sufficient for us to consistently attain profitability. We have not generated any revenue from product sales of any other product candidates and, to date, have incurred significant operating losses.
We have incurred, and anticipate continuing to incur, significant costs associated with commercialization of our approved products and, if approved, any other product candidates that we may develop. It is possible that we will never attain sufficient product net revenue to achieve profitability.
If we are unable to differentiate our products from branded drugs or existing generic therapies for similar treatments, or if the FDA or other applicable regulatory authorities approve additional generic products that compete with any of our products, our ability to successfully commercialize such products would be adversely affected.
We expect to compete against branded drugs with distinct clinical attributes and to compete with their generic counterparts that will be sold for a lower price. Although we believe that our products are or will be differentiated from other branded drugs and their generic counterparts, if any, including through clinical efficacy or through improved patient compliance, ease of administration, and our patient support programs, it is possible that such differentiation will not impact our market position. If we are unable to achieve significant differentiation for our products and accompanying support services against other drugs, the opportunity for our products to achieve premium pricing and be commercialized successfully would be adversely affected.
After an NDA, including a 505(b)(2) application, is approved, the covered product becomes a “listed drug” that, in turn, can be cited by potential generic competitors in support of approval of an abbreviated new drug application, or ANDA. The FDCA, implementing regulations and other applicable laws provide incentives to manufacturers to create modified, non-infringing versions of a drug to facilitate the approval of an ANDA or other application for generic substitutes. These manufacturers might only be required to conduct a relatively inexpensive study to show that their product has the same active ingredient(s), dosage form, strength, route of administration, and conditions of use, or labeling as our product candidate and that the generic product is bioequivalent to ours, meaning it is absorbed in the body at the same rate and to the same extent as our product candidate. These generic equivalents, which must meet the same quality standards as the listed drugs, would be significantly less costly than ours to bring to market and companies that produce generic equivalents are generally able to offer their products at lower prices.
Thus, after the introduction of a generic competitor, a significant percentage of the sales of any branded product can be lost to the generic version. Accordingly, competition from generic equivalents to our products could materially adversely impact our net revenue, profitability and cash flows and substantially limit our ability to obtain a return on the investments we have made in our products. For example, on July 25, 2016, we received a paragraph IV certification from Actavis advising us that Actavis filed an ANDA with the FDA for a generic version of Adzenys. On October 17, 2017, we entered into a Settlement Agreement and a Licensing Agreement with Actavis (which is now owned by Teva Pharmaceutical Industries Limited), pursuant to which we granted Actavis the right to manufacture and market its now approved generic version of Adzenys under the ANDA beginning on September 1, 2025. On October 31, 2017, we received a paragraph IV certification from Teva advising us that Teva filed an ANDA with the FDA for a generic version of Cotempla. On December 21, 2018, we entered into a Settlement Agreement and a Licensing Agreement with Teva, pursuant to which we have granted Teva the right to manufacture and market its now approved generic version of Cotempla under the ANDA beginning on July 1, 2026.
On October 31, 2024, we received a Paragraph IV Certification Notice Letter (the “Notice Letter”) from Granules Pharmaceuticals, Inc. (“Granules”), stating that it intends to market a generic version of Adzenys before the expiration of all patents currently listed in the FDA’s publication of approved drug products with therapeutic equivalence evaluations (the “Orange Book”). The Notice Letter states that Granules’ New Drug Application (“NDA”) for the generic version of Adzenys contains a Paragraph IV certification alleging that these patents are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use or sale of the generic version of Adzenys. We timely filed a patent infringement lawsuit on December 11, 2024, against Granules to trigger a stay precluding the FDA from approving Granules’ NDA for a generic version of Adzenys for up to 30 months or entry of judgment holding the patents invalid, unenforceable, or not infringed, whichever occurs first. On January 7, 2025, Granules submitted an answer to the complaint. This litigation is ongoing, with trial originally scheduled to begin on December 7, 2026, now rescheduled to January 12, 2027. We plan to vigorously enforce our intellectual property rights related to Adzenys.
Our pharmaceutical products may prove to be difficult to effectively commercialize as planned or on the timeframes we announce and expect.
Various commercial, regulatory, and manufacturing factors may impact our ability to maintain or grow net revenue from sales of our pharmaceutical product offerings. Moreover, we have limited experience selling some of our current products given their acquisition from other companies or their recent approval. We sometimes estimate for planning purposes the timing of the accomplishment of various scientific, clinical, regulatory, and other product development objectives and, from time to time, we may publicly announce the expected timing of some of these milestones. The achievement of many of these milestones may be outside of our control and if we fail to achieve announced milestones in the timeframes we announce and expect, the commercialization of our products may be delayed and our business, prospects and results of operations may be harmed. Specifically, we may encounter difficulty by virtue of the following, each of which could be negatively impacted if expected timeframe goals are not achieved:
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our available capital resources; |
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our inability to have clear proprietary rights to the products; |
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our inability to manufacture or cost-effectively manufacture the products; |
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our inability to adequately market and increase sales of any of these products; |
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of adverse side effects that make using the products less desirable; |
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our inability to attract and retain a skilled support team, marketing staff and sales force necessary to increase the market for our approved products and to maintain market acceptance for our products; |
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our inability to secure continuous prescribing of any of these products by current or previous users of the product; |
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our inability to effectively transfer and scale manufacturing if and as needed to maintain an adequate commercial supply of these products; |
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reimbursement and medical policy changes that may adversely affect the pricing, profitability or commercial appeal of pharmaceutical products; and |
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our inability to effectively identify and align with commercial partners outside the United States, or the inability of those selected partners to gain the required regulatory, reimbursement, and other approvals needed to enable commercial success of our products. |
We rely on limited sources of supply for our products, and any disruption in the chain of supply may impact production and sales of our products, and cause delays in developing and commercializing our currently manufactured and commercialized products.
Some of our products are produced infrequently and by single-source suppliers, including but not limited to Halo Pharmaceutical, Inc, Mission Pharmacal Company, and Tris Pharma. Due to the limited production quantities, production of these products may not be prioritized by the third-party manufacturer and may not be scheduled and produced at all. We are reliant on a limited number of suppliers for resin, active pharmaceutical ingredients (“APIs”), coating and other component substances of our final products. If any of these single-source suppliers were to breach or terminate their supply agreement with us, or otherwise not supply us, we would need to identify an alternative source for the supply of component substances for our products. If we fail to procure supply of our products, or if the prices of the supply increase due to general economic conditions or tariffs, we could lose potential revenue and our business, financial condition, results of operation and reputation could be adversely affected.
Identifying an appropriately qualified source of alternative supply for any one or more of the component substances for our products could be time consuming, and we may not be able to do so without incurring material delays in the development and commercialization of our approved products or a decrease in sales of our approved products, which could harm our financial position and commercial potential for our products. Any alternative vendor would also need to be qualified through an FDA Prior Approval Supplement process which could result in further delay. The FDA, DEA, or other regulatory agencies outside of the United States may also require additional studies if we enter into agreements with new suppliers for the manufacture of our ADHD products that differ from the suppliers used for clinical development of such products.
These factors could cause a delay of commercialization of our products, cause us to incur higher costs and prevent us from commercializing them successfully. Furthermore, if our suppliers fail to deliver the required commercial quantities of components and APIs on a timely basis and at commercially reasonable prices, including if our suppliers did not receive adequate DEA quotas for the supply of certain scheduled components, and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, commercialization of our ADHD products may be delayed or we could lose potential revenue and our business, financial condition, results of operation and reputation could be adversely affected.
We rely on third parties to manufacture certain products, and third-party manufacturing risks and inefficiencies may result in costs and delays that prevent us from successfully commercializing products and adversely affect our ability to produce our products.
We completed the process of outsourcing the manufacturing of our Adzenys and Cotempla products during fiscal 2024 to a third-party manufacturer based in the United States, to produce commercial quantities of these products. If the third party is not successful or does not meet our expectations (for example, timeliness of production, quantity of production, maintenance of needed documentation or regulatory compliance), we may have to find a different manufacturer and incur expenses and delays in the process. Manufacturers of our FDA regulated products must comply with good manufacturing practice (“GMP”) requirements enforced by the FDA, NMPA, EMA and other comparable foreign health authorities through facilities inspection programs. These requirements include quality control, quality assurance, and the maintenance of records and documentation. Manufacturers of our FDA regulated products may be unable to comply with these GMP requirements and with other FDA, National Medical Products Administration (“NMPA”), European Medicines Agency (“EMA”), DEA, state, and foreign regulatory requirements. A failure to comply with these requirements may result in fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure or recall, or withdrawal of product approval. If the safety of any quantities supplied is compromised due to a manufacturer’s failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our drugs, which would seriously harm our business.
We do not expect to have our own manufacturing capabilities, thus for all other products and any future products, we expect to use third-party manufacturers. In determining the required quantities of any product and the manufacturing schedule, we must make significant judgments and estimates based on inventory levels, current market trends, and other related factors. Because of the inherent nature of estimates and our limited experience in marketing our current products, there could be significant differences between our estimates and the actual amounts of product we require. If we do not effectively maintain our supply agreements, we will face difficulty finding replacement suppliers, which could harm sales of those products. If we fail in similar endeavors for future products, we may not be successful in establishing or continuing the commercialization of our products.
Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured these components ourselves, including:
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reliance on third parties for regulatory compliance and quality assurance; |
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possible breaches of manufacturing agreements by the third parties because of factors beyond our control; |
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possible regulatory violations or manufacturing problems experienced by our suppliers; and |
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possible termination or non-renewal of agreements by third parties, based on their own business priorities, at times that are costly or inconvenient for us. |
We may not be able to meet the demand for our products if one or more of any third-party manufacturers is unable to supply us with the necessary components that meet our specifications. It may be difficult to find alternate suppliers for any of our products in a timely manner and on terms acceptable to us.
The manufacturing processes and facilities of third-party manufacturers we have engaged for our current approved products are, and any future third-party manufacturer will be, required to comply with the federal Quality System Regulation (“QSR”), which covers procedures and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of devices. The FDA enforces the QSR through periodic unannounced inspections of manufacturing facilities. Any inspection by the FDA could lead to additional compliance requests that could cause delays in our product commercialization. Failure to comply with applicable FDA requirements, or later discovery of previously unknown problems with the manufacturing processes and facilities of third-party manufacturers we engage, including the failure to take satisfactory corrective actions in response to an adverse QSR inspection, can result in, among other things:
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administrative or judicially imposed sanctions; |
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injunctions or the imposition of civil penalties; |
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recall or seizure of the product in question; |
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total or partial suspension of production or distribution; |
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the FDA’s refusal to grant pending future clearance or pre-market approval; |
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withdrawal or suspension of marketing clearances or approvals; |
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clinical holds; |
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warning letters; |
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refusal to permit the export of the product in question; and |
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criminal prosecution. |
Any of these actions, in combination or alone, could prevent us from marketing, distributing or selling our products, and would likely harm our business.
In addition, a product defect or regulatory violation could lead to a government-mandated or voluntary recall by us. We believe the FDA would request that we initiate a voluntary recall if a product was defective or presented a risk of injury or gross deception. Regulatory agencies in other countries have similar authority to recall drugs or devices because of material deficiencies or defects in design or manufacture that could endanger health. Any recall would divert our management’s attention and financial resources, expose us to product liability or other claims, and harm our reputation with customers.
Third-party performance failures may increase our development costs, delay our ability to obtain regulatory approval, and delay or prevent the commercialization of our products. While we believe that there are numerous alternative sources to provide these services, in the event that we seek such alternative sources, we may not be able to enter into replacement arrangements without incurring delays or additional costs.
We face substantial competition, including the introduction of generics, from companies with considerably more resources and experience than we have, which may result in others discovering, developing, receiving approval for, or commercializing products before or more successfully than us.
The biopharmaceutical industries are intensely competitive and subject to rapid and significant technological change. We compete with companies that design, manufacture and market already-existing and new products. We anticipate that we will face increased competition in the future as new companies enter the market with new technologies and/or our competitors improve their current products, and companies introduce generic equivalents. One or more of our competitors may offer technology superior to ours and render our technology obsolete or uneconomical. Most of our current competitors, as well as many of our potential competitors, have greater name recognition, more substantial intellectual property portfolios, longer operating histories, significantly greater resources to invest in new technologies, more substantial experience in product marketing and new product development, greater regulatory expertise, more extensive manufacturing capabilities and the distribution channels to deliver products to customers. Our competitors may be more successful in acquiring new products than we are. If we fail to acquire new products, implementation of our business plan would be delayed, which could have a negative adverse effect on our business and prospects. If we are not able to compete successfully against our current and future competitors, our business will not grow, and our financial condition and operations will suffer. Our ability to compete successfully will depend largely on our ability to:
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expand the market for our approved products, especially our pharmaceutical and devices regulated by the FDA; |
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successfully commercialize our products alone or with commercial partners; |
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discover and develop products that are superior to other products in the market; |
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obtain required regulatory approvals; |
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attract and retain qualified personnel; and |
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obtain patent and/or other proprietary protection for our products. |
Established pharmaceutical companies devote significant financial resources to discovering, developing or licensing novel compounds that could make our products obsolete. Our competitors may obtain patent protection, receive FDA approval, and commercialize medicines before us. Other companies are or may become engaged in the discovery of compounds that may compete with the products we are developing.
We compete with companies that design, manufacture and market treatments that compete with our products. Many of our competitors have substantially greater financial, technical and other resources, such as larger research and development staff and more experienced marketing and manufacturing organizations. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors. As a result, these companies may obtain regulatory approval more rapidly than we are able and may be more effective in selling and marketing their products as well. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our competitors may succeed in developing, acquiring or licensing on an exclusive basis drug products or drug delivery technologies that are more effective or less costly than those of our products.
Government restrictions on pricing and reimbursement, as well as other healthcare payor cost-containment initiatives, may negatively impact our ability to generate net revenue.
The continuing efforts of the government, insurance companies, managed care organizations and other payors of health care costs to contain or reduce costs of health care may adversely affect one or more of the following:
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our or our collaborators’ ability to set a price we believe is fair for our approved products; |
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our ability to generate net revenue from our approved products and achieve profitability; and |
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the availability of capital. |
The Patient Protection and Affordable Care Act (the “PPACA”) and the Health Care and Education Reconciliation Act (the “Health Care Reconciliation Act”) significantly impacted the provision of, and payment for, health care in the United States. Various provisions of these laws are designed to expand Medicaid eligibility, subsidize insurance premiums, provide incentives for businesses to provide health care benefits, prohibit denials of coverage due to pre-existing conditions, establish health insurance exchanges, and provide additional support for medical research. Amendments to the PPACA and/or the Health Care Reconciliation Act, as well as new legislative proposals to reform healthcare and government insurance programs, along with the trend toward managed healthcare in the United States, could influence the purchase of medicines and medical devices and reduce demand and prices for our products, if approved. This could harm our or our collaborators’ ability to market any approved products and generate net revenue. As we expect to receive significant net revenue from reimbursement of our products by commercial third-party payors and government payors, cost containment measures that health care payors and providers are instituting and the effect of further health care reform could significantly reduce potential net revenue from the sale of any of our products approved in the future, and could cause an increase in our compliance, manufacturing or other operating expenses. In addition, in certain foreign markets, the pricing of prescription drugs and devices is subject to government control and reimbursement may in some cases be unavailable. We believe that pricing pressures at the federal and state level, as well as internationally, will continue and may increase, which may make it difficult for us to sell any approved product at a price acceptable to us or any of our future collaborators.
In addition, in some foreign countries, the proposed pricing for a drug or medical device must be approved before it may be lawfully marketed. The requirements governing pricing vary widely from country to country. For example, the European Union (the “EU”) provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product, or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. A member state may require that physicians prescribe the generic version of a drug instead of our approved branded product. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products or product candidates. Historically, pharmaceutical products launched in the EU do not follow price structures of the United States and generally tend to have significantly lower prices.
Our financial results will depend on the acceptance among clinicians, third-party payors and the medical community of our products.
Physicians may not choose to prescribe our products if we or any collaborator is unable to demonstrate that, based on experience, clinical data, side-effect profiles and other factors, our product is preferable to existing medicines or treatments. Our future success depends on the acceptance by our target customers, third-party payors, and the medical community that our products are reliable, safe, and cost-effective. We cannot predict the degree of market acceptance of any of our approved products. Many factors may affect the market acceptance and commercial success of our products, including:
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our ability to convince our potential customers of the advantages, safety and economic value our products and product candidates over existing technologies and products; |
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the approved labeling for the product and any required warnings; |
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the prevalence and severity of adverse events or publicity; |
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potential product liability claims; |
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the relative convenience and ease of our products over existing technologies and products; |
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the introduction of new technologies and competing products that may make our products less attractive for our target customers; |
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our success in training medical personnel on the proper use of our products; |
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the willingness of third-party payors to reimburse our target customers that adopt our products; |
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increases in rebate payments with payors; |
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the acceptance in the medical community of our products; |
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the extent and success of our manufacturing, marketing, and sales efforts; and |
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general economic conditions. |
If our future products fail to gain market access and acceptance, this will have a material adverse impact on our ability to generate net revenue to provide a satisfactory, or any, return on our investments. Even if some therapies achieve market access and acceptance, the market may prove not to be large enough to allow us to generate significant revenue.
If third-party payors do not reimburse our customers for the products we sell or if reimbursement levels are set too low for us to sell one or more of our products at a profit, our ability to sell those products and our results of operations will be harmed.
While our pharmaceutical products are approved and generating net revenue in the United States, they may not receive, or continue to receive, clinician or patient acceptance, or they may not maintain adequate reimbursement from third-party payors. In the future, we might possibly sell other products to target customers substantially all of whom receive reimbursement for the health care services they provide to their patients from third-party payors, such as Medicare, Medicaid, other domestic and foreign government programs, private insurance plans and managed care programs.
Reimbursement decisions by particular third-party payors depend upon a number of factors, including each third-party payor’s determination that use of a product is:
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a covered benefit under its health plan; |
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appropriate and medically necessary for the specific indication; |
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cost effective; and |
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neither experimental nor investigational. |
Third-party payors may deny reimbursement for covered products if they determine that a medical product was not used in accordance with cost-effective diagnosis methods, as determined by the third-party payor, or was used for an unapproved indication.
Obtaining coverage and reimbursement approval for a product from each government or third-party payor is a time-consuming and costly process that could require us to provide supporting scientific, clinical and cost-effectiveness data for the use of our potential product to each government or third-party payor. We may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement. In addition, eligibility for coverage does not imply that any product will be covered and reimbursed in all cases or reimbursed at a rate that allows our potential customers to make a profit or even cover their costs.
Third-party payors are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement for medical products and services. Levels of reimbursement may decrease in the future, and future legislation, regulation or reimbursement policies of third-party payors may adversely affect the demand for and reimbursement available for any product or product candidate, which in turn, could negatively impact pricing. If our customers are not adequately reimbursed for our products, they may reduce or discontinue purchases of our products, which would result in a significant shortfall in achieving revenue expectations and negatively impact our business, prospects and financial condition.
Reporting and payment obligations under the Medicaid Drug Rebate Program and other governmental drug pricing programs are complex and may involve subjective decisions. Any failure to comply with those obligations could subject us to penalties and sanctions.
As a condition of reimbursement by various federal and state health insurance programs, pharmaceutical companies are required to calculate and report certain pricing information to federal and state agencies. The regulations governing the calculations, price reporting and payment obligations are complex and subject to interpretation by various government and regulatory agencies, as well as the courts. Reasonable assumptions have been made where there is a lack of regulations or clear guidance and such assumptions involve subjective decisions and estimates. Pharmaceutical companies are required to report any revisions to their calculations, price reporting and payment obligations previously reported or paid. Such revisions could affect liability to federal and state payors and also adversely impact reported financial results of operations in the period of such restatement.
Uncertainty exists as new laws, regulations, judicial decisions, or new interpretations of existing laws, or regulations related to our calculations, price reporting or payments obligations increases the chances of a legal challenge, restatement or investigation. If a company becomes subject to investigations, restatements, or other inquiries concerning compliance with price reporting laws and regulations, it could be required to pay or be subject to additional reimbursements, penalties, sanctions or fines, which could have a material adverse effect on the business, financial condition and results of operations. In addition, it is possible that future healthcare reform measures could be adopted, which could result in increased pressure on pricing and reimbursement of products and thus have an adverse impact on financial position or business operations.
Further, state Medicaid programs may be slow to invoice pharmaceutical companies for calculated rebates resulting in a lag between the time a sale is recorded and the time the rebate is paid. This results in a company having to carry a liability on its consolidated balance sheets for the estimate of rebate claims expected for Medicaid patients. If actual claims are higher than current estimates, the company’s financial position and results of operations could be adversely affected.
In addition to retroactive rebates and the potential for 340B Program refunds, if a pharmaceutical firm is found to have knowingly submitted any false price information related to the Medicaid Drug Rebate Program to the Centers for Medicare & Medicaid Services (“CMS”), it may be liable for civil monetary penalties. Such failure could also be grounds for CMS to terminate the Medicaid drug rebate agreement, pursuant to which companies participate in the Medicaid program. In the event that CMS terminates a rebate agreement, federal payments may not be available under government programs, including Medicaid or Medicare Part B, for covered outpatient drugs.
Additionally, if a pharmaceutical company overcharges the government in connection with the Federal Supply Schedule (“FSS”) program or Tricare Retail Pharmacy Program, whether due to a misstated Federal Ceiling Price or otherwise, it is required to refund the difference to the government. Failure to make necessary disclosures and/or to identify contract overcharges can result in allegations against a company under the False Claims Act (“FCA”) and other laws and regulations. Unexpected refunds to the government, and responding to a government investigation or enforcement action, would be expensive and time-consuming, and could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
Our collaborators are also subject to similar requirements outside of the United States and thus the attendant risks and uncertainties. If our collaborators suffer material and adverse effects from such risks and uncertainties, our rights and benefits for our licensed products could be negatively impacted, which could have a material and adverse impact on our net revenue.
Our future growth may depend, in part, on our ability to penetrate foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties.
Our future profitability may depend, in part, on our ability to commercialize our products in foreign markets for which we intend to primarily rely on collaboration with third parties such as the agreement we entered into with Lupin in September 2024 to commercialize Adzenys and Cotempla in Canada. If we commercialize our products in foreign markets, we would be subject to additional risks and uncertainties, including:
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our inability to directly control commercial activities because we are relying on third parties; |
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the burden of complying with complex and changing foreign regulatory, tax, accounting and legal requirements; |
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different medical practices and customs in foreign countries affecting acceptance in the marketplace; |
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import or export licensing requirements; |
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longer accounts receivable collection times; |
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longer lead times for shipping; |
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language barriers for technical training; |
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reduced protection of intellectual property rights in some foreign countries, and related prevalence of generic alternatives to our products; |
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foreign currency exchange rate fluctuations; |
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our customers’ ability to obtain reimbursement for our products in foreign markets; and |
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the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute. |
Foreign sales of our products could also be adversely affected by the imposition of governmental controls, political and economic instability, trade restrictions and changes in tariffs.
We are subject to United States and foreign anti-corruption and anti-money laundering laws with respect to our operations and non-compliance with such laws can subject us to criminal and/or civil liability and harm our business.
We are subject to the United States Foreign Corrupt Practices Act of 1977, as amended (“FCPA”), the United States domestic bribery statute contained in 18 U.S.C. § 201, the United States Travel Act, the USA PATRIOT Act, and other state and national anti-bribery and anti-money laundering laws in countries in which we conduct activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, third-party intermediaries, joint venture partners and collaborators from authorizing, promising, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector. We may have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other organizations. In addition, we may engage third-party intermediaries to obtain necessary permits, licenses, and other regulatory approvals. We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize or have actual knowledge of such activities.
We have adopted a Code of Business Conduct and Ethics that mandates compliance with the FCPA and other anti-corruption laws applicable to our business throughout the world. We cannot ensure, however, that our employees and third-party intermediaries will comply with this code or such anti-corruption laws. Noncompliance with anti-corruption and anti-money laundering laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage, and other collateral consequences. If any subpoenas, investigations, or other enforcement actions are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations and financial condition could be materially harmed. In addition, responding to any such action will likely result in a materially significant diversion of management’s attention and resources and significant defense and compliance costs and other professional fees. In certain cases, enforcement authorities may even cause us to appoint an independent compliance monitor which can result in added costs and administrative burdens.
We are subject to various health care fraud and abuse and reimbursement laws pertaining to the marketing of our approved products.
We are subject to various federal and state laws pertaining to healthcare fraud and abuse, including prohibitions on the offer of payment or acceptance of kickbacks or other remuneration for the purchase of our products, including inducements to potential patients to request our products and services. Additionally, any product promotion educational activities, support of continuing medical education programs, and other interactions with health-care professionals must be conducted in a manner consistent with the FDA regulations, Physician Payments Sunshine Act, and the Anti-Kickback Statute. The Anti-Kickback Statute prohibits persons or entities from knowingly and willfully soliciting, receiving, offering or providing remuneration, directly or indirectly, to induce either the referral of an individual, or the furnishing, recommending, or arranging for a good or service, for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs. Violations of the Anti-Kickback Statute can also carry potential federal False Claims Act liability. Additionally, many states have adopted laws similar to the Anti-Kickback Statute. Some of these state prohibitions apply to referral of patients for healthcare items or services reimbursed by any third-party payor, not only the Medicare and Medicaid programs, and do not contain identical safe harbors. These and any new regulations or requirements may be difficult and expensive for us to comply with, may adversely impact the marketing of our existing products or delay introduction of our products, which may have a material adverse effect on our business, operating results and financial condition.
Adzenys and Cotempla contain controlled substances, and their manufacture, use, sale, importation, exportation, prescribing and distribution are subject to regulation by the DEA.
Adzenys and Cotempla, (collectively, our “Controlled Substance Products”), which are approved by the FDA, are regulated by the DEA as Schedule II controlled substances. Before any commercialization of any product candidate that contains a controlled substance, the DEA determines the controlled substance schedule of a drug, taking into account the recommendation of the FDA. Our Controlled Substance Products are, and our other future products may be, if approved, regulated as “controlled substances” as defined in the Controlled Substances Act of 1970, or CSA, and the implementing regulations of the DEA, which establish registration, security, recordkeeping, reporting, storage, distribution, importation, exportation, inventory, quota and other requirements administered by the DEA. These requirements are applicable to us, to our third-party manufacturers and to distributors, prescribers, and dispensers of our products. For example, Schedule II controlled substances are subject to various restrictions, including, but not limited to, mandatory written prescriptions and the prohibition of refills. The DEA regulates the handling of controlled substances through a closed chain of distribution. This control extends to the equipment and raw materials used in their manufacture and packaging, in order to prevent loss and diversion into illicit channels of commerce. A number of states and foreign countries also independently regulate these drugs as controlled substances. State-controlled substance laws and regulations may have more extensive requirements than those determined by the DEA and FDA. Though state-controlled substances laws often mirror federal law because the states are separate jurisdictions, they may schedule products separately. While some states automatically schedule a drug when the DEA does so, other states require additional state rulemaking or legislative action, which could delay commercialization. Some state and local governments also require manufacturers to operate a drug stewardship program that collects, secures, transports, and safely disposes of unwanted drugs. The DEA regulates controlled substances as Schedule I, II, III, IV or V substances. Schedule I substances by definition have no established medicinal use, and may not be marketed or sold in the United States. A pharmaceutical product may be listed as Schedule II, III, IV or V, with Schedule II substances considered to present the highest risk of abuse and Schedule V substances the lowest relative risk of abuse among such substances.
Amphetamine and methylphenidate, which are the active ingredients in our Adzenys and Cotempla products, respectively, are listed by the DEA as a Schedule II controlled substance under the CSA. Scheduled controlled substances are subject to DEA regulations relating to supply, procurement, manufacturing, storage, distribution, and physician prescription procedures. Our United States-based contract manufacturer of our Controlled Substance Products is also registered with and inspected by the DEA.
Registered entities are subject to DEA inspection and also must follow specific labeling and packaging requirements, and provide appropriate security measures to control against diversion of controlled substances. Security requirements vary by controlled substance schedule with the most stringent requirements applying to Schedule I and Schedule II controlled substances. Required security measures include background checks on employees and physical control of inventory through measures such as vaults and inventory reconciliations. Failure to follow these requirements can lead to significant civil and/or criminal penalties and possibly even lead to a revocation of a DEA registration. The DEA also has a production and procurement quota system that controls and limits the availability and production of Schedule I or II controlled substances. If we or any of our suppliers of raw materials that are DEA classified as Schedule I or II controlled substances are unable to receive any quota or a sufficient quota to meet demand for our products, if any, our business would be negatively impacted.
Annual registration is required for any facility that manufactures, distributes, dispenses, imports or exports any controlled substance. The registration is specific to the particular location, activity and controlled substance schedule.
Because of their restrictive nature, these laws and regulations could limit commercialization of our products containing controlled substances. Failure to comply with these laws and regulations could also result in withdrawal of our DEA registrations, disruption in manufacturing and distribution activities, consent decrees, criminal and civil penalties, and state actions, among other consequences.
The design, development, manufacture, supply and distribution of our products are technically complex and require regulatory compliance.
Our third-party suppliers must comply with all applicable regulatory requirements of the FDA and foreign authorities. For instance, because each of our ADHD products is a regulated drug product and subject to the DEA and state-level regulations, we have had to, and will continue to need to, secure state licenses from each required state in which we intend to sell such product allowing us to distribute a regulated drug product in such state.
If we fail to maintain regulatory compliance, the FDA can impose regulatory sanctions including, among other things, refusal to approve a pending application for a new drug product or revocation of a pre-existing approval, or civil or criminal penalties. As a result, our business, financial condition and results of operations may be materially harmed.
There is a risk we may be unable to sell and distribute certain of our products if we cannot continue to comply with the serialization requirements of the Drug Quality and Security Act within the necessary time frames.
Title II of the Drug Quality and Security Act of 2013 provided increased FDA oversight over tracking and monitoring of the sale and distribution of prescription drugs. We are required to provide product identification information, or serialization, at the manufacturing batch, or lot level. In addition, we are required to track and verify wholesaler and pharmacy authentication and verification. We are required to conduct unit level tracking throughout the entire supply chain. We are now serializing our products and are compliant with the Drug Quality and Security Act, but there is no guarantee that we will be able to continue to satisfy each ever-stringent product identification requirements. Failing to do so could result in a delay or inability to sell our products within the United States.
Failure to comply with health and data protection laws and regulations could lead to United States federal and state government enforcement actions, including civil or criminal penalties, private litigation, and adverse publicity and could negatively affect our operating results and business.
We and any potential collaborators may be subject to United States federal and state data protection laws and regulations, such as laws and regulations that address privacy and data security. In the United States, numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws, govern the collection, use, disclosure, and protection of health-related and other personal information. In addition, we may obtain health information from third parties, including research institutions which are subject to privacy and security requirements under Health Insurance Portability and Accountability Act (“HIPAA”), as amended by Health Information Technology for Economic and Clinical Health (“HITECH”). To the extent that we act as a business associate to a healthcare provider engaging in electronic transactions, we may also be subject to the privacy and security provisions of HIPAA, as amended by HITECH, which restricts the use and disclosure of patient-identifiable health information, mandates the adoption of standards relating to the privacy and security of patient-identifiable health information, and requires the reporting of certain security breaches to healthcare provider customers, the federal government, and media outlets with respect to such information. Additionally, many states have enacted similar laws that may impose more stringent requirements on entities like ours. Depending on the facts and circumstances, we could be subject to significant civil, criminal, and administrative penalties if we obtain, use, or disclose individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA.
Compliance with United States and foreign privacy and data protection laws and regulations could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use and disclose data, or in some cases, impact our ability to operate in certain jurisdictions. Failure to comply with these laws and regulations could result in government enforcement actions (which could include civil, criminal, and administrative penalties), private litigation, and/or adverse publicity and could negatively affect our operating results and business. Moreover, employees and other individuals about whom we or our potential collaborators obtain personal information, as well as the providers who share this information with us, may limit our ability to collect, use and disclose the information. Claims that we have violated individuals’ privacy rights, failed to comply with data protection laws, or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.
We may use hazardous chemicals and biological materials in our business. Any claims relating to improper handling, storage or disposal of these materials could be time-consuming and costly.
Our research and development processes may involve the controlled use of hazardous materials, including chemicals and biological materials. We cannot eliminate the risk of accidental contamination or discharge and any resultant injury from these materials. We may be sued for any injury or contamination that results from our use or the use by third parties of these materials, and our liability may exceed any insurance coverage and our total assets. Federal, state and local laws and regulations govern the use, manufacture, storage, handling and disposal of these hazardous materials and specified waste products, as well as the discharge of pollutants into the environment and human health and safety matters. Compliance with environmental laws and regulations may be expensive and may impair our research and development efforts. If we fail to comply with these requirements, we could incur substantial costs, including civil or criminal fines and penalties, clean-up costs or capital expenditures for control equipment or operational changes necessary to achieve and maintain compliance. In addition, we cannot predict the impact on our business of new or amended environmental laws or regulations or any changes in the way existing and future laws and regulations are interpreted and enforced.
Risks Related to Our Intellectual Property
A dispute concerning the infringement or misappropriation of our proprietary rights, or the proprietary rights of others could be time consuming and costly, and an unfavorable outcome could harm our business.
There is significant litigation in the pharmaceutical industry regarding patent and other intellectual property rights. As discussed in Part I, Item 3, Legal Proceedings of this Annual Report, we are currently subject to intellectual property litigation. It is possible that this litigation or future intellectual property litigation could consume a substantial portion of our managerial and financial resources, regardless of whether we win or lose. We may not be able to afford the costs of litigation. Any adverse ruling or perception of an adverse ruling in defending ourselves against these claims could have a material adverse impact on our cash position and stock price. Any legal action against us or our collaborators could lead to:
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payment of damages, potentially treble damages, if we are found to have willfully infringed a party’s intellectual property rights; |
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injunctive or other equitable relief that may effectively block our ability to further develop, commercialize, and sell products; or |
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we or our collaborators having to enter into license arrangements that may not be available on commercially reasonable or acceptable terms, if at all, all of which could have a material adverse impact on our cash position and business, prospects and financial condition. As a result, we could be prevented from commercializing our products. |
We are dependent on our relationships and license agreements, and we rely on the intellectual property rights granted to us pursuant to the license agreements.
A number of our patent and trademark rights are derived from our license agreements with third parties. Pursuant to these license agreements, we have licensed rights to various patents, patent applications, trademarks and trademark applications within and outside of the United States. We may lose our rights to this intellectual property if we breach our obligations under such license agreements, including, without limitation, our financial obligations to the licensors. If we violate or fail to perform any term or covenant of the license agreements, the licensors may terminate the license agreements upon satisfaction of applicable notice requirements and expiration of any applicable cure periods. Additionally, any termination of license agreements, whether by us or the licensors may not relieve us of our obligation to pay any license fees owing at the time of such termination. If we fail to retain our rights under these license agreements, we will not be able to commercialize certain products subject to patent or patent application or trademark or trademark application, and our business, results of operations, financial condition and prospects would be materially adversely affected. In addition, the licensor may not be able to obtain valid and enforceable patents that protect the licensed products and may not be able to prevent third parties from infringing on those rights.
From time to time, we may renegotiate the terms of our existing licensing agreements or other material contracts. There can be no guarantee that the terms of the renegotiated license agreement will be viewed favorably by the market although the renegotiated terms might be advantageous to our business or that the other party would agree to material changes to benefit us. For example, in May 2022, we negotiated to terminate the License, Development, Manufacturing and Supply agreement with Tris. The negotiations resulted in reducing the future minimum payments we owed to Tris by approximately $8.0 million. If we were unable to renegotiate the terms of the agreement, it would have had a material negative impact on our cash flows and financial position.
The expiration or loss of patent protection may adversely affect our future net revenue and operating results.
The composition-of-matter patent for Adzenys is scheduled to expire in 2032. The composition-of-matter patents in the United States for Cotempla expire in 2032, and the method-of-use patent expires in 2038. There is no guarantee that we will be able to extend the life of these patents or to obtain additional patents, licenses, or other instruments that can provide us with a comparable level of exclusivity to the intellectual property underlying the expiring patents.
We rely on patent, trademark and other intellectual property protection in the discovery, development, manufacturing and sale of our products. In particular, patent protection is, in the aggregate, important in our marketing of products in the United States. Patents covering our products normally provide market exclusivity, which is important for the profitability of many of our products.
As patents for certain of our products expire, we may face competition from lower priced generic or bioequivalent products. In general, the expiration or loss of patent protection for a product may allow market entry by substitute products that could significantly reduce sales for the original product in a short amount of time. If our competitive position is compromised because of generic or bioequivalent products or otherwise, it could have a material adverse effect on our business and results of operations. In addition, proposals emerge from time to time for legislation to further encourage the early and rapid approval of generic or bioequivalent products. Any such proposals that are enacted into law could increase the negative effect of generic competition.
Our ability to compete may decline if we do not adequately protect or enforce our intellectual property rights.
Our success depends in part on our ability to manufacture, use, sell and offer to sell our products and in obtaining and maintaining intellectual property rights in our products, proprietary know-how and technology advances. We rely on patent protection, as well as a combination of trademark and trade secret laws to protect and prevent others from making, using and/or selling our compounds, processes, apparatuses and technology. While a presumption of validity exists with respect to patents issued to us in the United States, there can be no assurance that any of our patents will not be challenged, invalidated, circumvented or rendered unenforceable. Such means may afford only limited protection of our intellectual property and may not (i) prevent our competitors from duplicating our inventions; (ii) prevent our competitors from gaining access to our proprietary information and technology; or (iii) permit us to gain or maintain a competitive advantage. In addition, our competitors or other third parties may obtain patents that restrict or preclude our ability to lawfully practice, produce or sell our products in a competitive manner.
Obtaining and maintaining a patent portfolio entails significant expense and resources. We may or may not choose to pursue or maintain protection for particular inventions. In addition, there are situations in which failure to make certain payments or noncompliance with certain requirements in the patent process can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If we choose to forgo patent protection or allow a patent application or patent to lapse purposefully or inadvertently, our competitive position could suffer. In addition, the patent scope can be limited in prosecution or by the courts after issuance.
In addition, we may face claims by third parties that our agreements with employees, contractors, or consultants obligating them to assign intellectual property to us are ineffective, or in conflict with prior or competing contractual obligations of assignment, which could result in ownership disputes. Litigation may be necessary to resolve an ownership dispute, and if we are not successful, we may be precluded from using certain intellectual property, or may lose our exclusive rights in that intellectual property. Either outcome could have an adverse impact on our business.
Legal actions to enforce our patent rights and administrative challenges at the United States Patent and Trademark Office can be expensive and may involve the diversion of significant management time. In addition, these actions could be unsuccessful and could also result in the invalidation of our patents or a finding that they are unenforceable. We may or may not choose to pursue litigation or other actions against those that have infringed on our patents, or used them without authorization, due to the associated expense and time commitment of monitoring these activities. If we fail to protect or to enforce our intellectual property rights successfully, our competitive position could suffer, which could harm our business, prospects, financial condition and results of operations.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
In addition to patent protection, because we operate in the highly technical field of development of pharmaceuticals, we rely in part on trade secret protection in order to protect our proprietary technology and processes. However, trade secrets are difficult to protect. We expect to enter into confidentiality and intellectual property assignment agreements with our employees, consultants, outside scientific and commercial collaborators, sponsored researchers, and other advisors. These agreements generally require that the other party keep confidential and not disclose to third parties all confidential information developed by the party or made known to the party by us during the course of the party’s relationship with us. These agreements also generally provide that inventions conceived by the party in the course of rendering services to us will be our exclusive property. However, these agreements may not be honored and may not effectively assign intellectual property rights to us.
In addition to contractual measures, we try to protect the confidential nature of our proprietary information using physical and technological security measures. Such measures may not, for example, in the case of misappropriation of a trade secret by an employee or third party with authorized access, provide adequate protection for our proprietary information. Our security measures may not prevent an employee or consultant from misappropriating our trade secrets and providing them to a competitor, and recourse we take against such misconduct may not provide an adequate remedy to protect our interests fully. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive, and time-consuming, and the outcome is unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. Trade secrets may be independently developed by others in a manner that could prevent legal recourse by us. If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, our competitive position could be harmed.
We may not be able to enforce our intellectual property rights throughout the world.
The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to pharmaceuticals. This could make it difficult for us to stop the infringement of some of our patents, if obtained, or the misappropriation of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. In addition, some countries allow patents to be challenged by third parties in administrative proceedings, which may result in a reduction in scope or cancelation of some or all of the claims. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of intellectual property.
Risks Related to Our Organization, Structure and Operation
Our efforts to expand and transform our businesses may require significant investments; if our strategies are unsuccessful, our business, results of operations and/or financial condition may be materially adversely affected.
We continuously evaluate opportunities for expansion and change. These initiatives may involve making acquisitions, entering into partnerships and joint ventures, divesting assets, restructuring our existing operations and assets, creating new financial structures and building new facilities, any of which could require a significant investment and subject us to new kinds of risks. We may incur additional indebtedness to finance these opportunities. If our strategies for growth and change are not successful, we could face increased financial pressure, such as increased cash flows demands, reduced liquidity and diminished access to financial markets, and the equity value of our businesses could be diluted.
The implementation of strategies for growth and change may create additional risks, including:
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diversion of management time and attention away from existing operations; |
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requiring capital investment that could otherwise be used for the operation and growth of our existing businesses; |
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disruptions to important business relationships; |
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increased operating costs; |
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limitations imposed by various governmental entities; and |
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difficulties due to lack of or limited prior experience in any new markets we may enter. |
Our inability to mitigate these risks or other problems encountered in connection with our strategies for growth and change could have a material adverse effect on our business, results of operations and financial condition. In addition, we may fail to fully achieve the savings or growth projected for current or future initiatives notwithstanding the expenditure of substantial resources in pursuit thereof.
We may have difficulties integrating acquired businesses or assets and such acquisitions may not result in the anticipated benefits, as a result, our business, results of operations and/or financial condition may be materially adversely affected.
We have completed a number of acquisitions, and we intend to continue to acquire additional products and businesses through mergers, asset purchases or in-licensing, businesses or products, or form strategic alliances as part of our business strategy. Such growth strategies involve risks, including:
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inability to efficiently operate new businesses or launch the sale of purchased assets or to integrate acquired products, assets and businesses; |
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inability to accurately predict delays in realizing the costs and benefits of acquisitions, partnerships, or joint ventures; |
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unexpected losses of customers or suppliers of an acquired or existing business; |
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difficulties in retaining key employees of acquired businesses; |
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difficulties in realizing projected synergies; |
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failure of the acquired business or assets to produce the expected value; and |
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exposure to unanticipated liabilities, including unexpected environmental exposures, litigation challenging a merger, product liability or illegal activities conducted by an acquired company or a joint venture partner. |
Our inability to address these risks in a timely manner or at all could cause us to fail to realize the anticipated benefits of such acquisitions or joint ventures and could have a material adverse effect on our business, results of operations and financial condition.
In fiscal 2026, the great majority of our gross revenue and gross accounts receivable were due to five significant customers, the loss of which could materially and adversely affect our results of operations.
Five customers contributed greater than 10% of our gross revenue during the year ended June 30, 2026. During the year ended June 30, 2026, these five customers accounted for 83% of our gross revenue. While all of these customers have been and continue to be consistently financially strong, the loss of one or more of our significant customers could have a material adverse effect on our business, operating results or financial condition. Any reduction, delay or cancellation of an order from these customers or the loss of any of these customers could cause our revenue to decline. If we are unable to diversify our customer base, we will continue to be susceptible to risks associated with customer concentration.
Our accounts receivable subjects us to credit risk.
We are also subject to credit risk from our accounts receivable related to our product sales. As of June 30, 2026, five customers accounted for 90% of our gross accounts receivable. Our profitability and cash flows are dependent on receipt of timely payments from customers. Any delay in payment by our customers may have an adverse effect on our profitability, working capital and cash flows. There is no assurance that we will be able to collect all or any of our accounts receivable in a timely matter. If any of our customers face unexpected situations such as financial difficulties, we may not be able to receive full or any payment of the uncollected sums or enforce any judgment debts against such clients, and our business, results of operations and financial condition could be materially and adversely affected.
Product liability and other lawsuits could divert our resources, result in substantial liabilities and reduce the commercial potential of our products.
We will be exposed to potential product liability and professional indemnity risks that are inherent in the research, development, manufacturing, marketing, and use of therapeutic candidates. Any failure of future therapeutic candidates by us and our corporate collaborators may expose us to liability claims as may the potential sale of any therapies approved in the future. These claims might be made by patients who use our therapies, healthcare providers, pharmaceutical companies, our corporate collaborators or other third parties that research or sell our therapies. Any claims against us, regardless of their merit, could be difficult and costly to defend and could materially adversely affect the market for our future therapeutic candidates or any prospects for commercialization of our future therapeutic candidates.
The risk that we may be sued on product liability claims is inherent in the development and commercialization of pharmaceutical products. Side effects of, or manufacturing defects in, products that we commercialize could result in the deterioration of a patient’s condition, injury or even death. Once a product is approved for sale and commercialized, the likelihood of product liability lawsuits increases. Claims may be brought by individuals seeking relief for themselves or by individuals or groups seeking to represent a class. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. These lawsuits may divert our management from pursuing our business strategy and may be costly to defend. In addition, if we are held liable in any of these lawsuits, we may incur substantial liabilities and may be forced to limit or forgo further commercialization of the affected products.
We may be subject to legal or administrative proceedings and litigation other than product liability lawsuits which may be costly to defend and could materially harm our business, financial condition and operations.
Although we maintain general liability and product liability insurance, this insurance may not fully cover potential liabilities. In addition, insurance coverage is increasingly expensive and difficult to obtain. For example, we have experienced increasing difficulty in procuring insurance coverage for our products, in particular, our ADHD products, due to their status as controlled substances. Inability to obtain or maintain sufficient insurance coverage at an acceptable cost or to otherwise protect against potential product or other legal or administrative liability claims could prevent or inhibit the commercial production and sale of any of our products that receive regulatory approval, which could adversely affect our business. Product liability claims could also harm our reputation, which may adversely affect our collaborators’ ability to commercialize our products successfully. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.
Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.
Our certificate of incorporation provides that we will indemnify our directors to the fullest extent permitted by Delaware law. In addition, as permitted by Section 145 of the Delaware General Corporation Law, our bylaws provide that:
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we may, in our discretion, indemnify other officers, employees and agents in those circumstances where indemnification is permitted by applicable law; |
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we are required to advance expenses, as incurred, to our directors and executive officers in connection with defending a proceeding, except that such directors or executive officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification; |
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we will not be obligated pursuant to our bylaws to indemnify any director or executive officer in connection with any proceeding (or part thereof) initiated by such person unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by our Board of Directors, (iii) such indemnification is provided by us, in our sole discretion, pursuant to the powers vested in the corporation under applicable law or (iv) such indemnification is required to be made pursuant to our amended and restated bylaws; |
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the rights conferred in our bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons; and |
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we may not retroactively amend our bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents. |
As a result, if we are required to indemnify one or more of our directors or executive officers, it may reduce our available funds to satisfy successful third-party claims against us, may reduce the amount of money available to us and may have a material adverse effect on our business and financial condition.
Public concern over the abuse of medications that are controlled substances, including increased legislative, legal and regulatory action, could negatively affect our business.
Products containing controlled substances may generate public controversy. Certain governmental and regulatory agencies, as well as state and local jurisdictions, are focused on the abuse of controlled substances such as opioids in the United States. State and local governmental agencies have commenced investigations into pharmaceutical companies and others in the supply chain in connection with the distribution of opioid medications. Certain cases in the industry have recently been settled, some for hundreds of millions of dollars. In the future, political pressures and adverse publicity could lead to delays in, and increased expenses for, and limit or restrict, the introduction and marketing of our products, the withdrawal of currently approved products from the market, or result in other legal action.
In addition, we are aware of other legislative, regulatory or industry measures to address the misuse of prescription opioid medications which could affect our business in ways that we may not be able to predict. Liabilities for taxes or assessments under any such laws will likely have an adverse impact on our results of operations, unless we are able to mitigate them through operational changes or commercial arrangements where permitted and may result in us ceasing to continue to sell our products in these jurisdictions.
Certain of our stockholders own a large percentage of our stock and their interests may conflict with yours.
As of June 30, 2026, Nantahala Capital Management, LLC (“Nantahala”), Stonepine Capital Management, LLC and Laurence W. Lytton hold approximately 12.1%, 10.1% and 5.6%, respectively, of our outstanding common stock and hold warrants and/or prefunded warrants which can be exercised to purchase additional shares of our common stock resulting in an ownership of 19.99% of our currently outstanding common stock, and for certain of our warrants and prefunded warrants in excess of 19.99% subject to stockholder approval. Accordingly, these stockholders may be able to exert influence over our management and affairs and over matters requiring security holder approval and their interests may conflict with yours.
In addition, in connection with our public offering of securities in June 2023, Nantahala was granted the right to designate an individual to join our Board of Directors, who has since joined the Board of Directors, and to nominate an additional candidate who is acceptable to us to be elected to the Board of Directors, subject to Nasdaq regulations. To date Nantahala only occupies one Board seat. The interests of this stockholder could conflict with the interests of our other stockholders.
Risk Related to Securities Markets and Investment in Our Securities
Our failure to maintain compliance with Nasdaq's continued listing requirements could result in the delisting of our common stock, which could adversely affect the liquidity and market price of our common stock and our ability to raise capital.
Our common stock is currently listed on The Nasdaq Capital Market. Nasdaq requires listed companies to satisfy various continued listing standards, including, amount other things, requirements related to minimum bid price, market value of listed securities, public float, stockholders’ equity, corporate governance and other quantitative and qualitative criteria. If we fail to satisfy one or more of these requirements, Nasdaq may take action to delist our common stock.
There can be no assurance that we will be able to maintain compliance with all applicable Nasdaq continued listing requirements in the future. If we receive a notice of non-compliance from Nasdaq, we may be required to implement measures to regain compliance, which may include seeking to increase our market value, improving our stock price, taking actions to increase stockholders’ equity or pursuing a reverse stock split. Any such actions may not be successful.
If our common stock is delisted from Nasdaq, the market liquidity of our common stock could be adversely affected, and our common stock may trade in the over-the-counter market. Delisting could reduce the trading volume and market price of our common stock, decrease analyst coverage, reduce the interest of institutional investors, make it more difficult for investors to buy and sell shares, and impair our ability to obtain additional financing or raise capital on acceptable terms, or at all. In addition, any perception that we may not be able to maintain our Nasdaq listing could adversely affect the market price of our common stock.
Recent changes to Nasdaq’s continued listing standards and enforcement practices have increased the risk of accelerated delisting for certain issuers that fail to satisfy applicable listing criteria. As a result, there can be no assurance that we would be afforded sufficient time to regain compliance with applicable Nasdaq requirements if a deficiency were to occur. Any delisting of our common stock from Nasdaq could materially and adversely affect our business, financial condition, results of operations and the value of an investment in our common stock.
Effecting a reverse stock split, if determined by the Board in its discretion, may not achieve one or more of our objectives.
We have effected five reverse stock splits since June 8, 2015, each of which has impacted the trading liquidity of the shares of our common stock. There can be no assurance that the market price per share of our common stock after a reverse stock split will remain unchanged or increase in proportion to the reduction in the number of shares of our common stock outstanding before the reverse stock split. The market price of our shares may fluctuate and potentially decline after a reverse stock split. Accordingly, the total market capitalization of our common stock after a reverse stock split may be lower than the total market capitalization before the reverse stock split. Moreover, the market price of our common stock following a reverse stock split may not exceed or remain higher than the market price prior to the reverse stock split.
Additionally, on October 11, 2024, the SEC approved a Nasdaq proposed rule change that changes how it views reverse stock splits. The new rule allows Nasdaq to initiate the delisting process for any company whose common stock bid price had closed below $1.00 per share for 30 consecutive business days (the “Minimum Bid Requirement”) if, within the prior year, the company conducted a reverse stock split, regardless of the ratio. Although we have not effectuated a reverse stock split since January 2023, given our history of effectuating reverse stock splits in order to comply with the Minimum Bid Requirement, there can be no assurance that our securities will continue to be listed on Nasdaq if we do not comply with the Minimum Bid Requirement.
There can be no assurance that a reverse stock split will result in a per-share market price that will attract institutional investors or investment funds or that such share price will satisfy investing guidelines of institutional investors or investment funds. As a result, the trading liquidity of our common stock may not necessarily improve. Further, if a reverse stock split is effected and the market price of our common stock declines, the percentage decline may be greater than would occur in the absence of a reverse stock split.
Our share price is volatile and may be influenced by numerous factors, some of which are beyond our control.
The trading price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report, these factors include:
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the success of products we acquire for development or commercialization relative to the success of our competitors; |
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product safety; |
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conditions or trends in the healthcare, biotechnology and pharmaceutical industries, including healthcare payment systems; |
| ● |
our ability to effectively manage operations, financial decisions, internal controls over financial reporting or disclosure controls, performance relative to projections, and attract and retain employees; |
| ● |
our dependence on third parties, including Contract Sales Organizations (“CSOs”), Contract Research Organizations (“CROs”) and scientific and medical advisors; |
| ● |
adverse regulatory decisions or changes in laws or regulations; |
| ● |
disputes or other developments relating to patents and other proprietary rights and our ability to obtain patent protection for our products; |
| ● |
general political and economic conditions and effects of natural or man-made catastrophic events; and |
| ● |
other events or factors, many of which are beyond our control. |
In addition, the stock market in general, and the stocks of small-cap healthcare, biotechnology, and pharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. The realization of any of the above risks or any of a broad range of other risks, including those described in this “Risk Factors” section and elsewhere in this Annual Report could have a dramatic and material adverse impact on the market price of our common stock. You might not be able to resell your shares at or above the price you paid for them.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and any trading volume could decline.
Any trading market for our common stock that may develop will depend in part on the research and reports that securities or industry analysts publish about us or our business. We cannot control the number of securities and industry analysts who publish research on us, the extent of their coverage or the content of their reports. Downgrades of our stock or publishing inaccurate or unfavorable research about our business, would likely lead to a decline in our stock price. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose market visibility and demand for our stock could decrease, which might cause our stock price and any trading volume to decline.
Some provisions of our charter documents and applicable Delaware law may discourage an acquisition of us by others, even if the acquisition may be beneficial to some of our stockholders.
Provisions in our Certificate of Incorporation, as amended, and our Amended and Restated Bylaws, as well as certain provisions of Delaware law, could make it more difficult for a third-party to acquire us, even if doing so may benefit some of our stockholders. These provisions include:
| ● |
the authorization of 50.0 million shares of “blank check” preferred stock, the rights, preferences and privileges of which may be established and shares of which may be issued by our Board of Directors at its discretion from time to time and without stockholder approval; |
| ● |
limiting the removal of directors by the stockholders; |
| ● |
allowing for the creation of a staggered Board of Directors; |
| ● |
eliminating the ability of stockholders to call a special meeting of stockholders; and |
| ● |
establishing advance notice requirements for nominations for election to the Board of Directors or for proposing matters that can be acted upon at stockholder meetings. |
These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board of Directors, which is responsible for appointing the members of our management. In addition, we are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with an interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder, unless such transactions are approved by the Board of Directors. This provision could have the effect of discouraging, delaying or preventing someone from acquiring us or merging with us, whether or not it is desired by or beneficial to our stockholders.
Any provision of our Certificate of Incorporation, as amended, or our Amended and Restated Bylaws, or of Delaware law that is applicable to us that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock in the event that a potentially beneficial acquisition is discouraged, and could also affect the price that some investors are willing to pay for our common stock.
We are and may continue to be subject to short-selling strategies.
Short sellers of our stock may be manipulative and may attempt to drive down the market price of shares of our common stock. Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is therefore in the short seller’s best interests for the price of the stock to decline, many short sellers (sometime known as “disclosed shorts”) publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects to create negative market momentum and generate profits for themselves after selling a stock short. Although traditionally these disclosed shorts were limited in their ability to access mainstream business media or to otherwise create negative market rumors, the rise of the Internet and technological advancements regarding document creation, videotaping and publication by blogging have allowed many disclosed shorts to publicly attack a company’s credibility, strategy and veracity by means of so-called “research reports” that mimic the type of investment analysis performed by large Wall Street firms and independent research analysts. These short attacks have, in the past, led to selling of shares in the market, on occasion in large scale and broad base. Issuers who have limited trading volumes and are susceptible to higher volatility levels than large-cap stocks, can be particularly vulnerable to such short seller attacks. These short seller publications are not regulated by any governmental, self-regulatory organization or other official authority in the United States, are not subject to certification requirements imposed by the SEC and, accordingly, the opinions they express may be based on distortions or omissions of actual facts or, in some cases, fabrications of facts. In light of the limited risks involved in publishing such information, and the enormous profit that can be made from running a successful short attack, unless the short sellers become subject to significant penalties, it is more likely than not that disclosed short sellers will continue to issue such reports. Significant short selling of a company’s stock creates an incentive for market participants to reduce the value of that company’s common stock. Short selling may lead to the placement of sell orders by short sellers without commensurate buy orders because the shares borrowed by short sellers do not have to be returned by any fixed period of time. If a significant market for short selling our common stock develops, the market price of our common stock could be significantly depressed.
General Risk Factors
We are and may become involved in litigation or other proceedings from time to time relating to the enforcement or defense of patent and other intellectual property rights, which could cause us to divert our resources and could put our intellectual property at risk.
To prevent infringement or unauthorized use of our intellectual property, we have in the past, and may in the future, need to file infringement claims. For example, on December 11, 2024, we filed a patent infringement lawsuit in the United States District Court for the District of Delaware against Granules Pharmaceuticals, Inc. (see Part I, Item 3, Legal Proceedings in this Annual Report for further detail of this matter). When we pursue litigation to stop another party from using the inventions claimed in any patents we own or control, that party has the right to ask the court to rule that such patents are invalid or should not be enforced against that third party. In addition to patent infringement lawsuits, we may decide to file interferences, oppositions, ex parte reexaminations, post-grant review, or inter partes review proceedings before the United States Patent and Trademark Office (the “USPTO”) and corresponding foreign patent offices. Litigation and other proceedings relating to intellectual property are unpredictable and expensive and may consume time and resources and divert the attention of managerial and scientific personnel. Such litigations and proceedings could substantially increase our operating losses and reduce the resources available for research, development and other activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings or may be required to divert such resources from our ongoing and planned research and development and other activities. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing or misappropriating or successfully challenging our intellectual property rights. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.
There also is a risk that a court or patent office in such proceeding will decide that our patents or the patents of our licensors are not valid or are not enforceable, and that we do not have the right to stop the other party from using the inventions. Additionally, even if the validity of such patents is upheld, the court may refuse to stop the other party on the ground that such other party’s activities do not infringe our rights to such patents. If we are not successful in enforcing or defending our intellectual property, our competitors could develop and market products based on our discoveries and technologies, which may reduce the commercial viability of, and demand for, our product candidates and any future products.
Our business and operations would suffer in the event of system failures, cybersecurity attacks, data leakages or other security breaches.
We utilize information technology, or IT, and some of our vendors utilize artificial intelligence and similar systems and networks to process, transmit and store electronic information in connection with our business activities. As use of digital technologies has increased, cyber incidents, including deliberate cybersecurity attacks and attempts to gain unauthorized access to computer systems and networks, have increased in frequency and sophistication. These threats pose a risk to the security of our systems and networks and the confidentiality, availability, and integrity of our data. There can be no assurance that we will be successful in preventing cyber-attacks or successfully mitigate their effects.
Despite the implementation of security measures, our internal computer systems and those of our contractors and consultants are vulnerable to damage from such cybersecurity attacks, including computer viruses, unauthorized access, ransomware attacks, phishing expeditions, natural disasters, terrorism, war and telecommunication and electrical failures. Such an event could cause interruption of our operations. To the extent that any disruption or security breach were to result in a loss of or damage to our data, or inappropriate disclosure of confidential or proprietary information, we could suffer reputational harm or face litigation, or adverse regulatory action and the development of our products could be delayed.
Our sales force and other employees, third-party logistics partners, CMOs, CROs, CSOs, principal investigators, collaborators, independent contractors, consultants and other vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.
The global credit and financial markets may experience extreme volatility and disruptions (including as a result of actual or perceived changes in interest rates and economic inflation), which include severely diminished liquidity and credit availability, declines in consumer confidence, slower economic growth, high inflation, tariffs, trade wars, uncertainty about economic stability and swings in unemployment rates. The financial markets and the global economy may also be adversely affected by the impact of supply chain disruptions, labor shortages, fluctuations in currency exchange rates, changes in interest rates, military conflict, acts of terrorism or other geopolitical events. Sanctions imposed, and other actions taken, by the United States and other countries in response to geopolitical conflicts continue to adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. There can be no assurance that a deterioration in credit and financial markets and confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions, including our ability to purchase necessary supplies on acceptable terms, if at all. If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to further delay or abandon clinical development plans, if we were to resume such development. In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive an economic downturn, which could directly affect our ability to attain our operating goals on schedule and on budget.
The United States government has indicated its intent to alter its approach to international trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements and treaties with foreign countries. In addition, the United States government has initiated or is considering imposing tariffs on certain foreign goods. Related to this action, certain foreign governments, including China, have instituted or are considering imposing tariffs on certain United States goods. It remains unclear what the United States administration or foreign governments will or will not do with respect to tariffs or other international trade agreements and policies. A trade war or other governmental action related to tariffs or international trade agreements or policies has the potential to disrupt our research activities, affect our suppliers and/or the United States or global economy or certain sectors thereof and, thus, could adversely impact our businesses.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
Cybersecurity Risks
We rely on internal and -party information technology systems and networks to process, transmit and store electronic information in our operations, including our proprietary business information and that of our customers, suppliers and employees. We use various internal and third-party information technology systems and networks to manage our operations and maintain effective internal control over financial reporting. We also collect and store sensitive data, including intellectual property, proprietary business information and personal information of our customers, suppliers and employees, in our data centers and on our networks. The secure operation of these information technology systems and networks, and the processing and maintenance of this information, are critical to our business operations and strategy.
Despite our security measures, our internal and third-party information technology systems and networks may be subject to damage, disruption, or unauthorized access due to a variety of factors, including cyber-attacks by computer hackers, computer viruses, ransomware, phishing, denial-of-service attacks, physical or electronic break-ins, employee error or malfeasance, power outages, natural disasters, or other catastrophic events. Any such damage, disruption, or unauthorized access could compromise our internal and third-party networks and the information stored there could be accessed, publicly disclosed, lost, or stolen. Any such access, disclosure, or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disruption to our operations, damage to our reputation, loss of customers, potential harm to our competitive position and additional costs to remediate the issue.
Cybersecurity Practices
Cybersecurity Governance
Aytu adheres to the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework 2.0, which provides a set of standards, guidelines and best practices to manage cybersecurity-related risks. We have developed and documented our systems disaster recovery plan, which outlines the roles, responsibilities and procedures for restoring our critical systems and data in the event of a cyber incident. We have also crafted internal policies to help maintain a secure environment, such as our information security policy, our data classification policy, our incident response policy and our password policy. We regularly conduct phishing simulations, vulnerability scans and audits to test the effectiveness of our controls and backups, and to identify and remediate any gaps or weaknesses in our cybersecurity posture.
Cybersecurity Incidents
Despite our efforts to prevent and mitigate cybersecurity incidents, we cannot guarantee that we, or third-party providers that we rely on, will not experience any breaches, disruptions, or unauthorized access to our information technology systems and networks. During fiscal 2026, we did not experience any cybersecurity incidents that materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition, however, there can be no assurance that the measures we have taken to address IT and cybersecurity risks will prove effective in the future. Potentially material cybersecurity incidents are escalated through management's disclosure controls and procedures, including evaluation by senior management and, as appropriate, notification to the Audit Committee. For additional discussion of the IT and cybersecurity risks facing our business, please refer to Part 1, Item 1A, Risk Factors of this Annual Report.
We prioritize investment in cybersecurity risk management and governance. We continually assess the adequacy of our resources and capabilities to address emerging threats, regulatory requirements and changes in technology. As cybersecurity threats evolve, we may need to further enhance our processes and technologies, which could require additional financial resources.
We lease various office buildings within the United States, which we continuously review and evaluate as a part of our strategy to optimize our business operations. The following table sets forth a list of our properties as of June 30, 2026:
| Location |
|
Leased/Owned |
Purpose |
|
| Denver, CO |
|
Leased |
Corporate headquarters |
|
| Berwyn, PA |
Leased |
Office |
From time to time, we become involved in or are threatened with legal disputes arising out of our business and operations in the normal course of business. Most of these disputes are not likely to have a material effect on our business, financial condition, or operations. Except as described below, as of the filing of this Annual Report, no legal proceedings are pending against us that we believe individually or collectively are likely to have a materially adverse effect upon our financial condition, results of operations, or cash flows.
Granules Paragraph IV. On October 31, 2024, the Company received the Notice Letter from Granules, stating that it intends to market a generic version of Adzenys before the expiration of all patents currently listed in the Orange Book. The Notice Letter states that Granules’ NDA for the generic version of Adzenys contains a Paragraph IV certification alleging that these patents are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use or sale of the generic version of Adzenys. On December 11, 2024, the Company filed a patent infringement lawsuit against Granules which triggered a stay precluding the FDA from approving Granules’ NDA for a generic version of Adzenys for up to 30 months or entry of judgment holding the patents invalid, unenforceable, or not infringed, whichever occurs first. On January 7, 2025, Granules submitted an answer to the complaint. This litigation is ongoing, with trial originally scheduled to begin on December 7, 2026, now rescheduled to January 12, 2027. The Company plans to vigorously enforce its intellectual property rights related to Adzenys.
Revive Investing. The Company had been named as a nominal plaintiff in a lawsuit by two shareholders against Armistice Capital Master Fund, Ltd (“Armistice”), entitled Revive Investing, LLC. et al v. Armistice Master Fund, Ltd. et al, Case 1:20-cv-02849-CMA-TPO, in the United States District Court for the District of Colorado, contending that Armistice was liable for short swing trading profits in violation of Section 16(b) of the Exchange Act for certain trades it made in Company stock in 2019 and 2020 and must disgorge those profits to the Company. That matter proceeded to trial before a jury, which on January 29, 2025, returned a verdict finding no liability. On March 6, 2025, the plaintiffs filed an appeal in the United States Court of Appeals for the Tenth Circuit. As with the original case, regardless of the outcome, this case will not have a materially adverse effect upon the Company’s financial condition, results of operations, or cash flows.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock has been listed on the Nasdaq under the symbol “AYTU” since October 20, 2017. As of September 15, 2026, the closing price as reported on the Nasdaq of our common stock was $1.99, and there were 180 holders of record of our common stock. A substantially greater number of holders of our common stock are beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions.
Equity Compensation Plan Information
We have an equity compensation plan under which options and shares of our common stock are authorized for grant or issuance as compensation to eligible employees, consultants, and members of the Board of Directors. Our stockholders have approved this plan. Refer to Note 15 - Equity Incentive Plan in Part II, Item 8 of this Annual Report for further information about the material terms of our equity incentive plan. The following table displays equity compensation plan information as of June 30, 2026, relating to securities reserved for future issuance upon exercise:
| Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights |
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights |
Number of Securities Remaining Available for Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column A) |
||||||||||
| Plan Category |
(Column A) |
(Column B) |
(Column C) |
|||||||||
| Equity compensation plans approved by security holders: |
||||||||||||
| 2023 Equity Incentive Plan (1) |
||||||||||||
| Outstanding stock options (2) |
202,265 | $ | 4.36 | |||||||||
| Unvested restricted stock (3) |
213,083 | N/A | ||||||||||
| Total from the 2023 Equity Incentive Plan |
415,348 | 140,467 | ||||||||||
| Equity compensation plans not approved by security holders (4) |
4 | N/A | — | |||||||||
| Total for all plans |
415,352 | 140,467 | ||||||||||
| (1) |
On May 18, 2023, our stockholders approved the adoption of the Aytu BioPharma, Inc. 2023 Equity Incentive Plan (the “2023 Equity Incentive Plan”), which replaced all previous plans. For the 2023 Equity Incentive Plan, the stockholders approved (a) 200,000 new shares; (b) 87,155 shares “rolled over” to the 2023 Equity Incentive Plan from plans replaced by the 2023 Equity Incentive Plan; and (c) any shares that are returned to us under plans replaced by the 2023 Equity Incentive Plan to be added to the 2023 Equity Incentive Plan. On May 21, 2025, our stockholders approved an amendment (the “Plan Amendment”) to the 2023 Equity Incentive Plan. The Plan Amendment increased the number of shares reserved for issuance under the 2023 Equity Incentive Plan by 300,000 shares to bring the total number of shares reserved for issuance under the 2023 Equity Incentive Plan to 500,000 shares, not including unissued shares from available awards under prior plans or any returned shares. The Plan Amendment became effective immediately upon approval by our stockholders and we registered the 300,000 shares pursuant to a registration statement on Form S-8 filed with the SEC on September 23, 2025. |
| (2) |
As of June 30, 2026, there were 161,529 exercisable stock options with a weighted-average exercise price of $5.00 (see Note 15 - Equity Incentive Plan in Part II, Item 8 of this Annual Report for further information). |
| (3) |
Unvested restricted stock does not have exercise prices associated with them, but rather a weighted-average per unit fair value, which is presented in order to provide additional information regarding the potential dilutive effect of the awards. The weighted-average grant date per unit fair value for unvested restricted stock granted under the 2023 Equity Incentive Plan as of June 30, 2026, was $12.36 (see Note 15 - Equity Incentive Plan in Part II, Item 8 of this Annual Report for further information). |
| (4) |
As of June 30, 2026, there were four shares of unvested restricted stock that were granted outside of equity compensation plans approved by security holders, which vested on July 7, 2026 (see Note 15 - Equity Incentive Plan in Part II, Item 8 of this Annual Report for further information). |
Dividend Policy
We have never declared or paid any dividends on our capital stock. We currently intend to retain all available funds and any future earnings, if any, to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be made at the discretion of our Board of Directors. Our ability to pay dividends on our common stock is limited by restrictions under the terms of our debt agreements. In addition, any future indebtedness that we may incur could preclude us from paying dividends. Investors should not purchase our common stock with the expectation of receiving cash dividends.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this Annual Report. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business and related financing strategy, includes forward-looking statements that involve risks and uncertainties. You should read Part 1, Item 1A, Risk Factors of this Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. We are not undertaking any obligation to update any forward-looking statements or other statements we may make in the following discussion or elsewhere in this document even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made. Therefore, no reader of this document should rely on these statements being current as of any time other than the time at which this document is filed with the SEC.
Objective
The purpose of the Management’s Discussion and Analysis (the “MD&A”) is to present information that management believes is relevant to an assessment and understanding of our results of operations and cash flows for the year ended June 30, 2026, and our financial condition as of June 30, 2026. The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and notes thereto.
Overview
We are a pharmaceutical company focused on advancing innovative medicines for complex central nervous system diseases to improve the quality of life for patients. Our strategy is to become a leading pharmaceutical company that improves the lives of patients. We use a focused approach of in-licensing, acquiring, developing and commercializing novel prescription therapeutics in order to continue building our portfolio of revenue-generating products and leveraging our commercial team’s expertise to build leading brands within large therapeutic markets. In June 2025, we entered into the Commercialization Agreement with Fabre-Kramer to commercialize EXXUA in the United States. Gepirone is a new chemical entity, and we believe EXXUA to be a novel first-in-class selective serotonin 5HT1a receptor agonist approved by the FDA for the treatment of MDD in adults.
EXXUA has been extensively studied in over 5,000 patients and represents a new class of therapeutics to compete in the over $22 billion United States prescription MDD market. We believe it can become a very important treatment option for the estimated 21.0 million Americans affected by MDD. Over 360 million antidepressant prescriptions were written in 2025 in the United States, yet significant unmet needs remain considering the unacceptable side effects associated with current therapeutics. Importantly, we believe that EXXUA is the only antidepressant acting on serotonin receptors that does not carry a label warning about the risk of sexual dysfunction. The mechanism of the antidepressant effect of EXXUA is believed to be related to its modulation of serotonin activity and, specifically, its exclusive and strong binding affinity for 5HT1a receptors, which are key regulators of mood and emotion. EXXUA is not a SSRI and has no reuptake inhibition activity. EXXUA also exhibits no significant adverse effects on weight, blood pressure, heart rate or liver function. We successfully launched EXXUA in fiscal 2026 as the centerpiece of our commercial efforts, and it is our expectation that EXXUA has the potential to serve as a major growth catalyst for us.
In addition, we will continue to focus on commercializing innovative prescription products that address central nervous system conditions, including ADHD. We are focusing our efforts on accelerating the growth of our commercial business and achieving positive operating cash flows. To achieve these goals, we indefinitely suspended active development of our clinical development programs and have wound down and divested unprofitable operations. In the first quarter of fiscal 2025 we completed the previously announced wind down and divestiture of our Consumer Health business and now operate our business as a single operating and reporting segment. The accounting requirements for reporting the Consumer Health business as a discontinued operation were met when the wind down and divestiture was completed on July 31, 2024. Accordingly, our consolidated financial statements for all periods presented reflect the Consumer Health business as a discontinued operation.
Our business from continuing operations is focused on the growth of EXXUA and on our current prescription pharmaceutical products sold primarily through third-party wholesalers and pharmacies and which primarily consists of two product portfolios. The first, the ADHD Portfolio, primarily consists of two products for the treatment of ADHD: Adzenys and Cotempla. The second, the Pediatric Portfolio, consists primarily of Karbinal, an extended-release first-generation antihistamine suspension containing carbinoxamine indicated to treat numerous allergic conditions. During the fourth quarter of fiscal 2024, we successfully completed the transition of all manufacturing of our Adzenys and Cotempla products to a United States-based third-party contract manufacturer to improve the efficiency and profitability of these products.
We have incurred significant losses in each year since inception. Our net loss was $14.3 million for the year ended June 30, 2026, and as of June 30, 2026, we had an accumulated deficit of $347.8 million. We expect to continue to incur significant expenses in connection with our ongoing activities, although we do expect to become profitable through the continued growth of our commercial business.
In light of our own business activities and external developments in the biotechnology and biopharmaceutical industries, Aytu management and our Board of Directors regularly reviews our performance, prospects and risks such as the potential impact to our business resulting from our competitive landscape (i.e., entry of generic competitors, payor pressures, new branded entrants, etc.). These reviews have included consideration of potential partnerships, collaborations, and other strategic transactions such as acquisitions or divestitures of programs or technology to enhance stockholder value. Aytu management and our Board expect to continue to evaluate potential strategic transactions and business combinations.
Significant Developments
Business Environment
We continue to experience inflationary pressures and economic uncertainty caused by global geopolitical factors and tariffs and our industry is currently encountering supply chain disruptions related to the sourcing of raw materials, increased costs of materials as result of tariffs, energy, logistics and labor for a number of reasons, including ongoing geopolitical events. While we do not have sales or operations in Russia or Ukraine and we do not have significant sales or operations in the Middle East, it is possible that conflicts and trade wars could adversely affect some of our markets and suppliers, economic and financial markets, costs and availability of energy and materials, or cause further supply chain disruptions. Inflationary pressures, increased costs and supply chain disruptions could be significant across the business throughout fiscal 2027 and into fiscal 2028. Understanding these risks, we have not experienced stock outages for our EXXUA or ADHD products since the launch of those products, and the pediatric product supply has remained adequate to satisfy demand for the preceding five years.
In October 2024, we received the Notice Letter from Granules, stating that it intends to market a generic version of Adzenys before the expiration of all patents currently listed in the Orange Book. The Notice Letter states that Granules’ NDA for the generic version of Adzenys contains a Paragraph IV certification alleging that these patents are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use or sale of the generic version of Adzenys. We timely filed a patent infringement lawsuit on December 11, 2024, against Granules to trigger a stay precluding the FDA from approving Granules’ NDA for a generic version of Adzenys for up to 30 months or entry of judgment holding the patents invalid, unenforceable, or not infringed, whichever occurs first. On January 7, 2025, Granules submitted an answer to the complaint. This litigation is ongoing, with trial originally scheduled to begin on December 7, 2026, now rescheduled to January 12, 2027. We plan to vigorously enforce our intellectual property rights related to Adzenys.
Aytu Business
As part of our ongoing strategic evaluation and go-forward operating plan, we continue to prioritize growing our prescription business given the opportunity for EXXUA in the MDD market and the current market trends supporting our products’ growth such as the positive rebound of our Pediatric Portfolio in fiscal 2025. We believe focusing resources on our most profitable, growing products provides the most effective pathway to achieve company-wide profitability and continued growth. As part of our plan, we completed the wind down of operations and divested our Consumer Health business in the first quarter of fiscal 2025.
For fiscal 2026, we recorded net revenue of $57.6 million. During the year, we focused on the commercial launch and growth of EXXUA. We were also able to continue the production of our ADHD medications, Adzenys and Cotempla, without encountering any supply chain interruptions in order to provide patients receiving stimulant prescriptions for the treatment of ADHD with alternative solutions to products that have experienced supply interruptions. However, as a result of our focus on the EXXUA commercialization launch, revenue in both our ADHD Portfolio and our Pediatric Portfolio declined from the prior year. We recognized $45.8 million of net revenue for our ADHD Portfolio and $5.1 million for our Pediatric Portfolio.
To reduce the costs associated with the manufacture of Adzenys and Cotempla, we transferred the manufacturing of these products to a United States-based third-party manufacturer in the fourth quarter of fiscal 2024. Prior to this, we manufactured these products in our now closed facility in Grand Prairie, Texas.
As an additional result of focusing on building our portfolio of revenue-generating products and generating profitability, in fiscal 2023 we terminated our license agreements relating to Healight and NT0502 (N-desethyloxybutynin), and we indefinitely suspended active development of our clinical development programs including AR101. In connection with this suspension, we engaged in negotiations with EnzCo and Rumpus for the repurchase of AR101. On August 5, 2025, we reached terms with Rumpus and EnzCo whereby for mutual consideration and releases, we transferred all rights, title and interest in AR101 held by us and Rumpus to EnzCo, which extinguished and terminated all of our obligations and Rumpus’ obligations under the Rumpus Asset Purchase Agreement. There is no other relationship between us, EnzCo or Rumpus other than as contracting parties to terminate the Rumpus Asset Purchase Agreement, and there are no penalties or remaining obligations for us for terminating the Rumpus Asset Purchase Agreement.
Debt and Equity Financings
Equity Financings
In June 2025, we raised gross proceeds of $16.6 million from the issuance of (i) 2,806,668 shares of our common stock, at a public offering price of $1.50 and 8,233,332 prefunded warrants at a public offering price of $1.4999 to purchase 8,233,332 shares of our common stock at an exercise price of $0.0001 per share. We received $14.8 million in proceeds net of underwriting commissions and offering expenses and are using the net proceeds from the offering for working capital, general corporate purposes and the commercialization of EXXUA.
Eclipse Agreement
Under our Eclipse Agreement, we have two loan agreements, the Eclipse Term Loan and the Eclipse Revolving Loan. The Eclipse Term Loan consists of an outstanding principal amount of $13.0 million on the closing date of the Eclipse Amendment No. 6, at an interest rate of the SOFR plus 7.0%, with a four-year term and a straight-line loan amortization period of seven years, which would provide for a loan balance at the end of the four-year term of $5.6 million to be repaid on the June 12, 2029, maturity date, as amended. In June 2024, we used the initial proceeds from the Eclipse Term Loan and a portion of the proceeds from the warrant exercises described above to repay in full a $15.0 million term loan. The Eclipse Revolving Loan has a potential maximum borrowing base of $14.5 million at an interest rate of the SOFR plus 4.5%, which was temporarily increased pursuant to the $1.5 million Eclipse Incremental Advance, with repayment and permanent reduction of the Eclipse Incremental Advance commencing on August 1, 2025, and continuing on the first day of each calendar month thereafter, in an amount equal to $125,000 per month, until the Eclipse Incremental Advance has been reduced to $0. As of June 30, 2026, the amount outstanding on the Eclipse Incremental Advance was $0.1 million, which was paid off in July 2026. In addition, we are required to pay an unused line fee of 0.5% of the average unused portion of the maximum Eclipse Revolving Loan amount during the immediately preceding month. The ability to make borrowings and obtain advances of the Eclipse Revolving Loan remains subject to a borrowing base and reserve, and availability blockage requirements and the maturity date, as amended, is June 12, 2029.
The One Big Beautiful Bill Act
The enactment of the One Big Beautiful Bill Act (the “OBBBA”) on July 4, 2025 includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act (the “TCJA”), allowing for accelerated tax deductions for qualified property and research expenditures, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in calendar year 2025 and others implemented through calendar year 2027. The income tax provision considers the impacts to our deferred tax assets and liabilities on the consolidated balance sheet as of June 30, 2026, including deferred tax assets for interest, fixed assets and section 174 capitalization.
Results of Operations
The results of operations for the year ended June 30, 2026, compared to the year ended June 30, 2025, is as follows:
| Year Ended |
||||||||||||
| June 30, |
||||||||||||
| 2026 |
2025 |
Change |
||||||||||
| (in thousands) |
||||||||||||
| Net revenue |
$ | 57,570 | $ | 66,382 | $ | (8,812 | ) | |||||
| Cost of goods sold |
20,752 | 20,551 | 201 | |||||||||
| Gross profit |
36,818 | 45,831 | (9,013 | ) | ||||||||
| Operating expenses: |
||||||||||||
| Selling and marketing |
23,369 | 20,906 | 2,463 | |||||||||
| General and administrative |
19,272 | 17,379 | 1,893 | |||||||||
| Research and development |
— | 1,326 | (1,326 | ) | ||||||||
| Amortization of intangible assets |
2,492 | 3,683 | (1,191 | ) | ||||||||
| Restructuring costs |
— | 2,101 | (2,101 | ) | ||||||||
| Impairment expense |
— | 8,263 | (8,263 | ) | ||||||||
| Total operating expenses |
45,133 | 53,658 | (8,525 | ) | ||||||||
| Loss from operations |
(8,315 | ) | (7,827 | ) | (488 | ) | ||||||
| Other income (expense), net |
713 | (512 | ) | 1,225 | ||||||||
| Interest expense |
(1,895 | ) | (3,703 | ) | 1,808 | |||||||
| Derivative warrant liabilities loss |
(4,734 | ) | (1,703 | ) | (3,031 | ) | ||||||
| Loss from continuing operations before income tax expense |
(14,231 | ) | (13,745 | ) | (486 | ) | ||||||
| Income tax expense |
(21 | ) | (437 | ) | 416 | |||||||
| Net loss from continuing operations |
(14,252 | ) | (14,182 | ) | (70 | ) | ||||||
| Net income from discontinued operations, net of tax |
— | 620 | (620 | ) | ||||||||
| Net loss |
$ | (14,252 | ) | $ | (13,562 | ) | $ | (690 | ) | |||
Net Revenue by Product Portfolio
Net revenue disaggregated by product portfolios for the year ended June 30, 2026, compared to the year ended June 30, 2025, is as follows:
| Year Ended |
||||||||||||
| June 30, |
||||||||||||
| 2026 |
2025 |
Change |
||||||||||
| (in thousands) |
||||||||||||
| EXXUA |
$ | 6,574 | $ | — | $ | 6,574 | ||||||
| ADHD Portfolio |
45,825 | 57,576 | (11,751 | ) | ||||||||
| Pediatric Portfolio |
5,135 | 8,769 | (3,634 | ) | ||||||||
| Other |
36 | 37 | (1 | ) | ||||||||
| Total net revenue |
$ | 57,570 | $ | 66,382 | $ | (8,812 | ) | |||||
During the year ended June 30, 2026, total net revenue decreased by $8.8 million, or 13.3% compared to the year ended June 30, 2025. During the year ended June 30, 2026, we focused on the successful commercialization and launch of EXXUA, resulting in net revenue of $6.6 million. This contribution was more than offset by declines in the ADHD and Pediatric portfolios, which reflected our commercial prioritization of EXXUA, the impact of generic competition in the ADHD portfolio, and reduced promotional emphasis on legacy products.
Gross Profit
Gross profit and gross profit percentage for the year ended June 30, 2026, compared to the year ended June 30, 2025, were as follows:
| Year Ended |
||||||||||||
| June 30, |
||||||||||||
| 2026 |
2025 |
Change |
||||||||||
| (in thousands, except gross profit percentage) | ||||||||||||
| Gross profit |
$ | 36,818 | $ | 45,831 | $ | (9,013 | ) | |||||
| Gross profit percentage |
64 | % | 69 | % | (5 | )% | ||||||
During the year ended June 30, 2026, gross profit decreased by $9.0 million, or 19.7% compared to the year ended June 30, 2025. Gross profit percentage decreased to 64% for the year ended June 30, 2026, compared to 69% for the year ended June 30, 2025. The decrease in gross profit percentage is primarily related to (i) lower net revenue in the ADHD and Pediatric Portfolios as we focused on the successful commercialization and launch of EXXUA, (ii) an inventory write-down of $2.2 million in fiscal 2026 compared to $0.3 million in fiscal 2025 primarily resulting from a shift from our Adzenys branded products to the Adzenys generic products during fiscal 2026, and (iii) the absence of a $3.3 million fiscal 2025 increase in estimated variable consideration as a result of successful negotiations with a vendor that had no corresponding cost of goods sold impact.
Selling and Marketing
During the year ended June 30, 2026, selling and marketing expense increased by $2.5 million, or 11.8%, compared to the year ended June 30, 2025, primarily driven by increased spend on promotional materials, consulting services, our sales force, and advertising to support our commercial launch of EXXUA. We expect selling and marketing expense to increase during fiscal 2027 as we continue to support and expand the commercialization of EXXUA. The anticipated increase is expected to be driven by higher sales force-related costs, promotional and marketing activities, physician and patient education initiatives, commercial support programs, and commission expense associated with anticipated growth in EXXUA prescription sales. We expect these investments to support increased market awareness, prescribing activity, and broader adoption of EXXUA as we continue to execute our commercialization strategy. The timing and amount of these investments may vary depending on EXXUA prescription trends, market access, available liquidity, and our ability to manage operating expenses while pursuing profitability.
General and Administrative
During the year ended June 30, 2026, general and administrative expense increased by $1.9 million or 10.9%, compared to the year ended June 30, 2025. The increase is primarily a result of increased costs related to consulting services associated with the initial launch and ongoing support of EXXUA. We expect general and administrative expense to increase during fiscal 2027 as we continue to scale our commercial operations in support of EXXUA. The anticipated increase is expected to be driven by additional personnel, professional services, information technology and compliance-related costs, as well as other infrastructure investments necessary to support the growth of our commercial organization and expanding business activities. We believe these investments are necessary to support the continued execution of our growth strategy and the anticipated expansion of EXXUA commercialization efforts.
Research and Development
During the year ended June 30, 2026, research and development expense decreased by $1.3 million, or 100.0%, compared to the year ended June 30, 2025, driven by the previously announced suspension of our development programs to focus on our commercial operations. We expect research and development expense to remain de minimis and be related to any required regulatory filings and maintenance of our intellectual property.
Amortization of Intangible Assets
During the year ended June 30, 2026, amortization of intangible assets, excluding amounts included in cost of goods sold, decreased by $1.2 million, or 32.4%, compared to the year ended June 30, 2025, primarily due to impairments of certain intangible assets recorded in fiscal 2025 (Refer to Note 7 - Intangible Assets in Part II, Item 8 of this Annual Report for further information), partially offset by amortization of our intangible asset related to EXXUA that began in fiscal 2026. We expect amortization of intangible assets to increase in the future as our intangible asset related to EXXUA include a full year of amortization in the future, as opposed to a partial year of amortization that was recognized in the current year.
Restructuring Costs
During the year ended June 30, 2025, we recognized $2.1 million of restructuring costs, primarily related to the closure of our Grand Prairie, Texas manufacturing site. No restructuring costs were recognized for the year ended June 30, 2026. We do not anticipate any restructuring costs during fiscal 2027 as our restructuring activities were completed during fiscal 2025. See Note 17 - Restructuring Costs in Part II, Item 8 of this Annual Report for further information.
Impairment Expense
During the year ended June 30, 2026, no impairment expense was recognized. During the year ended June 30, 2025, we recognized total impairment expense of $8.3 million, which was primarily the result of our increased focus on our commercial efforts for EXXUA and our ADHD Portfolio at the expense of our Pediatric Portfolio. See Note 7 - Intangible Assets in Part II, Item 8 of this Annual Report for further information.
Other Income (Expense), Net
During the year ended June 30, 2026, other income (expense), net increased by $1.2 million, compared to the year ended June 30, 2025, primarily due to $1.3 million of underwriting commissions and offering expenses from the issuance of the June 2025 Prefunded Warrants that impacted the prior fiscal year results and were not present in the current fiscal year results. Other than those underwriting commissions and offering expenses recognized in the prior year, other income, net, remained relatively consistent with the prior year. We expect other (expense) income, net to continue to be relatively consistent during fiscal 2027.
Interest Expense
During the year ended June 30, 2026, interest expense decreased by $1.8 million, or 48.8%, compared to the year ended June 30, 2025, primarily due to the paydown of our fixed payment arrangements. We expect interest expense to remain relatively steady during fiscal 2027.
Derivative Warrant Liabilities Loss
The fair value of derivative warrant liabilities, which is calculated using either the Black-Scholes option pricing model or the Monte Carlo simulation model, are revalued at each reporting period and changes are reflected through income or expense. For the year ended June 30, 2026, we recognized an unrealized loss of $4.7 million from the fair value adjustment primarily driven by an increase in our stock price, partially offset by gains from the exercise of liability classified warrants. For the year ended June 30, 2025, we recognized an unrealized loss of $1.7 million from the fair value adjustment primarily driven by an increase in the fair value of the June 2025 Prefunded Warrants from the issuance date through year end, 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.
Income Tax Expense
For the years ended June 30, 2026, and 2025, there was insignificant income tax expense and $0.4 million of income tax expense from continuing operations, which was an effective tax rate of negative 0.1% and negative 3.2%, respectively. This income tax expense was primarily driven by the limitations on losses as a result of Section 382 of the IRC changes in ownership coupled with existing valuation allowances.
Net Income from Discontinued Operations, Net of Tax
Net income from discontinued operations, net of tax is related to the wind down and divestiture of our Consumer Health business that was completed in the first quarter of fiscal 2025. See Note 20 - Discontinued Operations in Part II, Item 8 of this Annual Report for further information.
Liquidity and Capital Resources
Cash Flows
The following table sets forth the primary sources and uses of cash for the periods indicated:
| Year Ended |
||||||||||||
| June 30, |
||||||||||||
| 2026 |
2025 |
Change |
||||||||||
| (in thousands) |
||||||||||||
| Net cash from operating activities |
$ | 3,281 | $ | (1,937 | ) | $ | 5,218 | |||||
| Net cash from investing activities |
(29 | ) | (2,560 | ) | 2,531 | |||||||
| Net cash from financing activities |
(7,896 | ) | 15,443 | (23,339 | ) | |||||||
| Net change in cash and cash equivalents |
$ | (4,644 | ) | $ | 10,946 | $ | (15,590 | ) | ||||
Net Cash From Operating Activities
Net cash from operating activities during these periods primarily reflected our net losses, partially offset by changes in working capital and non-cash charges including impairment, stock-based compensation expense, gain or loss on derivative warrant liabilities, depreciation, amortization and accretion, adjustments from discontinued operations and other charges.
During the year ended June 30, 2026, net cash from operating activities totaled $3.3 million, which was primarily due to a greater focus on accounts receivable collections and inventory turnover. This was partially offset by negative cash earnings of $2.6 million (net loss offset by non-cash items, primarily derivative warrant liabilities loss, depreciation, amortization, and inventory write-down expense), as well as increased payments on accounts payable and accrued liabilities as we focused on reducing our outstanding liabilities.
During the year ended June 30, 2025, net cash from operating activities totaled $1.9 million, which was primarily the result of an increase in accounts receivable and prepaid expenses and other current assets, partially offset by positive cash earnings (net loss offset by non-cash items primarily from impairment expense, depreciation, amortization, stock-based compensation expense, derivative warrant liabilities adjustment, inventory write-down, adjustments from discontinued operations and other certain non-cash adjustments) and increases in inventories, other operating assets and liabilities, net, and changes in operating assets and liabilities from discontinued operations.
Net Cash From Investing Activities
Net cash from investing activities is generally related to our mergers and acquisitions, cash payments for acquired intangible assets such as EXXUA, as well as purchases of assets to support our operations and disposal of assets related to exit and disposal costs.
Net cash from investing activities during the year ended June 30, 2026, was due to purchases of fixed assets.
Net cash from investing activities was $2.6 million during the year ended June 30, 2025, which was primarily from a $3.0 million cash payment for acquired intangible assets related to the EXXUA Commercialization Agreement and the purchase of various property and equipment, partially offset by cash received from the sale of fixed assets.
Net Cash From Financing Activities
Net cash from financing activities of $7.9 million during the year ended June 30, 2026, was primarily due to payments on our revolver, fixed payment arrangements, and debt as we focused on reducing our outstanding liabilities.
Net cash from financing activities of $15.4 million during the year ended June 30, 2025, was primarily from $14.8 million of net proceeds received from our public offering of common stock and prefunded warrants in June 2025, $6.7 million of net proceeds from our Eclipse Revolving Loan and $1.9 million of proceeds received from borrowings in June 2025 on our Eclipse Term Loan related to the Eclipse Amendment No. 6, partially offset by $6.0 million of payments for fixed payment arrangements and $1.9 million of payments made against the principal balance of our Eclipse Term Loan throughout fiscal 2025.
Capital Resources
Sources of Liquidity
We have obligations related to our loan agreements, milestone payments for licensed products, and manufacturing purchase commitments. We finance our operations through a combination of sales of our common stock and warrants, borrowings under our revolving credit facility and from cash generated from operations.
Shelf Registrations
On September 26, 2024, we filed a shelf registration statement on Form S-3, which was declared effective by the SEC on October 15, 2024. This shelf registration statement covers the offering, issuance and sale by us of up to an aggregate of $100.0 million of our common stock, preferred stock, debt securities, warrants, rights and units (the “2024 Shelf”). Through the filing date of this Annual Report, $100.0 million remains available under the 2024 Shelf. This availability is subject to the SEC’s “baby shelf” limitation as set forth in SEC Instruction I.B.6 limitation to the Form S-3.
Equity Financings
We have engaged in several different types of equity financings throughout our history. Most recently in June 2025, we raised gross proceeds of $16.6 million from the issuance of (i) 2,806,668 shares of our common stock, at a public offering price of $1.50 and (ii) 8,233,332 prefunded warrants at a public offering price of $1.4999 to purchase 8,233,332 shares of our common stock at an exercise price of $0.0001 per share. We received $14.8 million in proceeds net of underwriting commissions and offering expenses and are using the net proceeds from the offering for working capital, general corporate purposes and the commercialization of EXXUA.
Eclipse Agreement
Under our Eclipse Agreement, we have two loan agreements, the Eclipse Term Loan and the Eclipse Revolving Loan. The Eclipse Term Loan consists of an outstanding principal amount of $13.0 million on the closing date of the Eclipse Amendment No. 6 (June 20, 2025), at an interest rate of the SOFR plus 7.0%, with a four-year term and a straight-line loan amortization period of seven years, which would provide for a loan balance at the end of the four-year term of $5.6 million to be repaid on the June 12, 2029, maturity date, as amended. In June 2024, we used the initial proceeds from the Eclipse Term Loan and a portion of the proceeds from the warrant exercises described above to repay in full a $15.0 million term loan. The Eclipse Revolving Loan has a potential maximum borrowing base of $14.5 million at an interest rate of the SOFR plus 4.5%, which was temporarily increased pursuant to the $1.5 million Eclipse Incremental Advance, with repayment and permanent reduction of the Eclipse Incremental Advance commencing on August 1, 2025, and continuing on the first day of each calendar month thereafter, in an amount equal to $125,000 per month, until the Eclipse Incremental Advance has been reduced to $0. As of June 30, 2026, the amount outstanding on the Eclipse Incremental Advance was $0.1 million, which was paid off in July 2026. In addition, we are required to pay an unused line fee of 0.5% of the average unused portion of the maximum Eclipse Revolving Loan amount during the immediately preceding month. The ability to make borrowings and obtain advances of the Eclipse Revolving Loan remains subject to a borrowing base and reserve, and availability blockage requirements and the maturity date, as amended, is June 12, 2029.
Contractual Obligations, Commitments and Contingencies
As a result of our acquisitions, exclusive commercialization agreement, and licensing agreements, we are contractually and contingently obliged to pay, when due, various fixed and contingent milestone payments. See Note 18 - Commitments and Contingencies in Part II, Item 8 of this Annual Report for further information.
In May 2022, we entered into an agreement with Tris to terminate the License, Development, Manufacturing and Supply Agreement dated November 2, 2018, related to Tuzistra (the “Tuzistra License Agreement”). Pursuant to such termination we accrued a settlement liability, which as of June 30, 2025, had a remaining balance of $3.1 million accrued in other current liabilities on the consolidated balance sheet payable to Tris, which was paid in full during the first quarter of fiscal 2026.
Upon closing of the acquisition of a line of prescription pediatric products from Cerecor, Inc. in October 2019, we assumed payment obligations that require us to make fixed and product milestone payments. As of June 30, 2025, we had an accrued fixed payment arrangement balance related to these payment obligations of $0.2 million recorded in other current liabilities on the consolidated balance sheet, which was paid in full during fiscal 2026.
In connection with our suspension of active development of AR101, we engaged in negotiations with EnzCo and Rumpus for the repurchase of AR101. On August 5, 2025, we reached terms with Rumpus and EnzCo whereby for mutual consideration and releases, we transferred all rights, title and interest in AR101 held by us and Rumpus to EnzCo, which extinguished and terminated all of our obligations and Rumpus’ obligations under the Rumpus Asset Purchase Agreement. There is no other relationship between us, EnzCo or Rumpus other than as contracting parties to terminate the Rumpus Asset Purchase Agreement, and there are no penalties or remaining obligations for us for terminating the Rumpus Asset Purchase Agreement.
Critical Accounting Estimates
Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of any contingent assets and liabilities at the date of the consolidated financial statements, as well as reported revenue and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in Note 2 - Summary of Significant Accounting Policies in the accompanying notes to the consolidated financial statements later in this Annual Report, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our consolidated financial statements and notes thereto.
Revenue Recognition
We generate net revenue from continuing operations from product sales of EXXUA, our ADHD Portfolio and our Pediatric Portfolio. We evaluate our contracts with customers to determine revenue recognition using the following five-step model: (1) identify the contract with the customer; (2) identify the performance obligations and if they are distinct; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when (or as) a performance obligation is satisfied.
Net product sales consist of sales of prescription pharmaceutical products, principally to a limited number of wholesale distributors and pharmacies in the United States. Prescription product revenue is recognized at the point in time that control of the product transfers to the customer in accordance with shipping terms (i.e., upon delivery), which is generally “free-on-board” destination when shipped domestically within the United States and “free-on-board” shipping point when shipped internationally consistent with the contractual terms.
We make estimates of the net sales price, including estimates of variable consideration to be incurred on the respective product sales (known as “Gross to Net” adjustments). Significant judgement is required in estimating Gross to Net adjustments considering legal interpretations of applicable laws and regulations, historical experience, payor channel mix, current contract prices under applicable programs, unbilled claims, processing time lags and inventory levels in the distribution channel.
The Gross to Net adjustments includes:
| ● |
Savings offers. We offer savings programs for our patients covered under commercial payor plans in which the cost of a prescription to such patients is discounted. |
| ● |
Wholesale distribution fees. Wholesale distribution fees are based on definitive contractual agreements for the management of our products by wholesalers. |
| ● |
Rebates. Our products are subject to commercial managed care and government (e.g., Medicaid) programs whereby discounts and rebates are provided to participating managed care organizations and federal and/or state governments. Calculations related to rebate accruals are estimated based on historical information from third-party providers. |
| ● |
Wholesaler chargebacks. Our products are subject to certain programs with wholesalers whereby pricing on products is discounted below wholesaler list price to participating entities. These entities purchase products through wholesalers at the discounted price, and the wholesalers charge the difference between their acquisition cost and the discounted price back to us following the product purchases of the wholesalers’ end customers. |
| ● |
Returns. Wholesalers’ contractual return rights are limited to defective product, product that was shipped in error, product ordered by customer in error, product returned due to overstock, product returned due to dating or product returned due to recall or other changes in regulatory guidelines. The return policy for expired product allows the wholesaler to return such product starting six months prior to expiry date to twelve months post expiry date. We analyze return data available from sales since inception date to determine a reliable return rate. |
Savings offers, rebates and wholesaler chargebacks reflect the terms of underlying agreements, which may vary. Accordingly, actual amounts will depend on the mix of sales by product and contracting entity. Future returns may not follow historical trends. Our periodic adjustments of our estimates are subject to time delays between the initial product sale and ultimate reporting and settlement of deductions. We continually monitor these provisions and do not believe variances between actual and estimated amounts have been material.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, we are not required to provide information under this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | Page |
| Report of Independent Registered Public Accounting Firm (PCAOB ID | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Aytu BioPharma, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Aytu BioPharma, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of June 30, 2026, and 2025, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the two years in the period ended June 30, 2026, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2026, and 2025, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2026, in conformity with accounting principles generally accepted in the United States of America.
Basis for opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the United States federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Variable consideration related to certain gross to net adjustments
As described further in Note 2 to the consolidated financial statements, the Company estimates adjustments to the transaction price of certain product sales (“Gross to Net” adjustments). Certain Gross to Net adjustments involve the use of significant assumptions and judgments to develop the estimate. The most significant assumption used in the ADHD Portfolio savings offers Gross to Net adjustment is the inventory levels in the distribution channel as of the balance sheet date. We identified the ADHD Portfolio savings offerings Gross to Net adjustment as a critical audit matter.
The principal considerations for our determination that the ADHD Portfolio savings offerings Gross to Net adjustment is a critical audit matter are (a) the inherent limitations over management’s visibility and insight into the underlying details of the source data, which requires management to depend and rely on external data from multiple sources and (b) the extent to which the external data is used by management to develop the estimate of the ADHD Portfolio savings offerings Gross to Net adjustment.
Our audit procedures related to this critical audit matter included the following, among others:
| (i) | We evaluated the relevance and reliability of the external data used by management to develop the estimate of inventory levels in the distribution channel as of the balance sheet date. |
| (ii) | We evaluated the reasonableness of the identified significant assumption related to inventory levels in the distribution channel to determine the ADHD Portfolio savings offers Gross to Net adjustment by comparing to external data. |
| (iii) | We tested the overall reasonableness of the ADHD Portfolio savings offers Gross to Net adjustment as of the balance sheet date by developing an expectation for comparison to actual subsequent payments. |
/s/
We have served as the Company’s auditor since 2022.
September 22, 2026
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Intangible assets, net | ||||||||
| Other non-current assets | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Revolving credit facility | ||||||||
| Current portion of debt | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities: | ||||||||
| Debt, net of current portion | ||||||||
| Derivative warrant liabilities | ||||||||
| Other non-current liabilities | ||||||||
| Total non-current liabilities | ||||||||
| Commitments and contingencies (note 18) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, par value ; shares authorized; shares issued or outstanding | ||||||||
| Common stock, par value ; shares authorized; and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes to the consolidated financial statements are an integral part of this statement.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
| Year Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net revenue | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Selling and marketing | ||||||||
| General and administrative | ||||||||
| Research and development | ||||||||
| Amortization of intangible assets | ||||||||
| Restructuring costs | ||||||||
| Impairment expense | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense), net | ( | ) | ||||||
| Interest expense | ( | ) | ( | ) | ||||
| Derivative warrant liabilities loss | ( | ) | ( | ) | ||||
| Loss from continuing operations before income tax expense | ( | ) | ( | ) | ||||
| Income tax expense | ( | ) | ( | ) | ||||
| Net loss from continuing operations | ( | ) | ( | ) | ||||
| Net income from discontinued operations, net of tax | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted weighted-average common shares outstanding | ||||||||
| Net (loss) income per share: | ||||||||
| Basic and diluted - continuing operations | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted - discontinued operations, net of tax | $ | $ | ||||||
| Basic and diluted - net loss | $ | ( | ) | $ | ( | ) | ||
The accompanying notes to the consolidated financial statements are an integral part of this statement.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balances, June 30, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock-based compensation expense | — | — | ||||||||||||||||||
| Issuance of common stock from exercise of warrants | — | — | ||||||||||||||||||
| Issuance of common stock, net of $ issuance cost | ||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||
| Balances, June 30, 2025 | ( | ) | ||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||
| Issuance of common stock from exercise of warrants | ||||||||||||||||||||
| Reclassification of derivative warrant liabilities to equity | — | |||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||
| Balances, June 30, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
The accompanying notes to the consolidated financial statements are an integral part of this statement.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Year Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash from operating activities: | ||||||||
| Impairment expense | ||||||||
| Depreciation, amortization and accretion | ||||||||
| Stock-based compensation expense | ||||||||
| Derivative warrant liabilities loss | ||||||||
| Amortization of debt discount and issuance costs | ||||||||
| Inventory write-down | ||||||||
| Other non-cash adjustments | ||||||||
| Non-cash adjustments from discontinued operations | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | ( | ) | ||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Accrued liabilities | ( | ) | ||||||
| Other operating assets and liabilities, net | ||||||||
| Changes in operating assets and liabilities from discontinued operations | ||||||||
| Net cash from operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Cash received from sales of fixed assets | ||||||||
| Cash payments for fixed asset purchases | ( | ) | ( | ) | ||||
| Cash payments for acquired intangible assets | ( | ) | ||||||
| Net cash from investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net proceeds from issuance of common stock and warrants | ||||||||
| Payments made to fixed payment arrangement | ( | ) | ( | ) | ||||
| Net payments made to revolving credit facility | ( | ) | ||||||
| Payments made to borrowings | ( | ) | ( | ) | ||||
| Proceeds from borrowings | ||||||||
| Payments for debt issuance costs | ( | ) | ||||||
| Net cash from financing activities | ( | ) | ||||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flows information: | ||||||||
| Cash payments for interest | $ | $ | ||||||
| Cash payments for income taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Change in acquired intangible asset accruals | $ | $ | ||||||
| Other non-cash investing and financing activities | $ | $ | ||||||
The accompanying notes to the consolidated financial statements are an integral part of this statement.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Nature of Business and Financial Condition
Aytu BioPharma, Inc. (“Aytu,” the “Company,” “we,” “us,” or “our”), is a pharmaceutical company focused on advancing innovative medicines for complex central nervous system diseases to improve the quality of life for patients. The Company was originally incorporated as Rosewind Corporation on August 9, 2002, in the state of Colorado and was re-incorporated as Aytu BioScience, Inc. in the state of Delaware on June 8, 2015. In March 2021, the Company changed its name to Aytu BioPharma, Inc.
The Company’s strategy is to become a leading pharmaceutical company that improves the lives of patients. The Company uses a focused approach of in-licensing, acquiring, developing and commercializing novel prescription therapeutics in order to continue building its portfolio of revenue-generating products and leveraging its commercial team’s expertise to build leading brands within large therapeutic markets. In June 2025, the Company entered into an Exclusive Commercialization Agreement (the “Commercialization Agreement”) with Fabre-Kramer Holdings, Inc. (“Fabre-Kramer”) to commercialize EXXUA (“Gepirone”) extended-release tablets (“EXXUA”) in the United States. Gepirone is a new chemical entity, and the Company believes EXXUA to be a novel first-in-class selective serotonin 5HT1a receptor agonist approved by the United States Food and Drug Administration (“FDA”) for the treatment of major depressive disorder (“MDD”) in adults. In fiscal 2026, the Company began selling EXXUA and made it the centerpiece of its commercial efforts.
In addition, the Company will continue to focus on commercializing innovative prescription products that address central nervous system conditions, including attention deficit hyperactivity disorder (“ADHD”). The Company is focusing its efforts on accelerating the growth of its commercial business and achieving positive operating cash flows. To achieve these goals, the Company indefinitely suspended active development of its clinical development programs and has wound down and divested unprofitable operations.
In the first quarter of fiscal 2025 the Company completed the previously announced wind down of its Consumer Health business and on July 31, 2024, the Company entered into a definitive agreement to divest its Consumer Health business to a private, e-commerce focused company affiliated with the Company’s former Vice President of Consumer Health, Jonathan Hughes. Pursuant to the definitive agreement, Mr. Hughes resigned from the Company effective July 31, 2024. The divested business encompassed the established e-commerce platform, certain inventory and associated consumer brands, intellectual property, contracts and liabilities and provided for the Company to receive up to $
The Company’s business from continuing operations is focused on the continued momentum of EXXUA following its successful launch and commercialization in fiscal 2026, and on its current prescription pharmaceutical products sold primarily through third-party wholesalers and pharmacies and which primarily consists of two product portfolios. The first primarily consists of two products for the treatment of ADHD: Adzenys XR-ODT (amphetamine) extended-release orally disintegrating tablets (“Adzenys”) and Cotempla XR-ODT (methylphenidate) extended-release orally disintegrating tablets (“Cotempla” and Adzenys together with Cotempla the “ADHD Portfolio”). The second primarily consists of Karbinal ER (carbinoxamine maleate extended-release oral suspension) (“Karbinal”), an extended-release first-generation antihistamine suspension containing carbinoxamine indicated to treat numerous allergic conditions (the “Pediatric Portfolio”). During the fourth quarter of fiscal 2024, the Company successfully completed the transition of all manufacturing of its Adzenys and Cotempla products to a United States-based third-party contract manufacturer to improve the profitability of these products.
In September 2024, the Company entered into an exclusive collaboration, distribution and supply agreement with Lupin Pharma Canada Ltd (“Lupin”), a subsidiary of global pharmaceutical company Lupin Limited, for Lupin to commercialize Adzenys and Cotempla in Canada. The Company will supply Adzenys and Cotempla to Lupin based on forecasts and provide various product commercialization, regulatory and quality assurance resources. Lupin is responsible for seeking local regulatory approvals and marketing authorizations for both Adzenys and Cotempla, which is expected to occur over the next 12 months.
Note 2 - Summary of Significant Accounting Policies
Principles of Consolidation
The Company’s consolidated financial statements and notes thereto include the accounts of its wholly owned subsidiaries Aytu Therapeutics, LLC and Neos Therapeutics, Inc. (“Neos”) and their respective wholly owned subsidiaries, as well as Innovus Pharmaceuticals, Inc. (“Innovus”) and its wholly owned subsidiaries prior to the divestiture of Innovus on July 31, 2024. All significant inter-company balances and transactions have been eliminated in consolidation.
Basis of Presentation
The Company’s consolidated financial statements and notes thereto have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
Use of Estimates
The preparation of financial statements and footnotes requires the use of management estimates, judgments and assumptions. Actual results may differ from estimates. In the accompanying consolidated financial statements and notes thereto, estimates are used for, but not limited to, stock-based compensation; revenue recognition, determination of variable consideration for accruals of chargebacks, administrative fees and rebates, government rebates, returns and other allowances; allowance for credit losses; inventory impairment; determination of right-of-use (“ROU”) assets and lease liabilities; valuation of financial instruments, warrants and derivative warrant liabilities, intangible assets, and long-lived assets; depreciable lives of long-lived assets; accruals for contingent liabilities; and determination of the income tax provision, deferred taxes and valuation allowance. Because of the uncertainties inherent in such estimates, actual results may differ from those estimates. The Company periodically evaluates estimates used in the preparation of the financial statements for reasonableness.
Cash and Cash Equivalents
The Company’s primary objectives for investment of available cash are the preservation of capital and the maintenance of liquidity. The Company invests its available cash balances in bank deposits and money market funds. The cash balances in bank deposits are subject to the Federal Deposit Insurance Corporation (“FDIC”) insurance limits, and cash balances in the money market funds are not FDIC insured. The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.
Accounts Receivable, Net
Accounts receivable, net represents amounts due from customers less allowances for credit losses, discounts and pricing chargebacks. An allowance for credit losses, when needed, is based on the best estimate of the amount of probable credit losses in existing accounts receivable, which is determined from the Company’s historical write-off experience and expected future default probabilities based on ongoing evaluations of the Company’s customers’ financial condition; payment history; collections experience on other accounts; and economic factors or events expected to affect future collections. The Company has elected the practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. An allowance for credit losses, when needed, consists of an amount identified for specific customers and an amount based on overall estimated exposure. Accounts receivable are customer obligations due under normal trade terms. Recovery of bad debt amounts which were previously written off are recorded as a reduction of bad debt expense in the period the payment is collected. If the Company’s actual collection experience changes, revisions to the Company’s allowance for credit losses may be required. After attempts to collect a receivable have failed, the receivable is written off against the allowance for credit losses. The allowance for credit losses was for both years ended June 30, 2026, and 2025. The allowance for discounts was $
The table below presents the opening and closing balances of accounts receivable, gross from customers.
| Accounts | ||||
| Receivable, | ||||
| Gross | ||||
| (in thousands) | ||||
| Balance, June 30, 2024 | $ | |||
| Increase in accounts receivable, gross | ||||
| Balance, June 30, 2025 | ||||
| Decrease in accounts receivable, gross | ( | ) | ||
| Balance, June 30, 2026 | $ | |||
The table below details the change in allowance for discounts and allowance for chargebacks for the periods presented.
| Allowance for | Allowance for | Total | ||||||||||
| Discounts | Chargebacks | Allowance | ||||||||||
| (in thousands) | ||||||||||||
| Balances, June 30, 2024 | $ | $ | $ | |||||||||
| Reduction of net revenue | ||||||||||||
| Payments | ( | ) | ( | ) | ( | ) | ||||||
| Balances, June 30, 2025 | ||||||||||||
| Reduction of net revenue | ||||||||||||
| Payments | ( | ) | ( | ) | ( | ) | ||||||
| Balances, June 30, 2026 | $ | $ | $ | |||||||||
Inventories
Inventories consist of raw materials, work in process and finished goods and are recorded at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Prior to regulatory approval, before economic benefit is probable, pre-launch inventories are expensed as research and development. The Company periodically reviews the composition of its inventories in order to identify obsolete, slow-moving or otherwise unsaleable items. In the event that such items are identified and there are no alternate uses for the inventory, the Company will record a charge to cost of goods sold to reduce the value of the inventory to net realizable value in the period the impairment is identified.
Property and Equipment
Property and equipment are recorded at cost less accumulated depreciation. Furniture and equipment are depreciated on a straight-line basis over their estimated useful lives which are generally to years. Leasehold improvements are amortized over the shorter of the estimated useful life or remaining lease term. The Company begins depreciating assets when they are placed into service. Maintenance and repairs are expensed as incurred.
Leases
At the inception of an arrangement, the Company determines if an arrangement is, or contains, a lease. Lease classification, recognition and measurement are determined at the lease commencement date. Lease liabilities and ROU assets are recorded based on the present value of lease payments over the expected lease term, including options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. In determining the present value of the lease payments, the Company uses the implicit interest rate when readily determinable and uses the Company’s incremental borrowing rate when the implicit rate is not readily determinable based upon the information available at the lease commencement date.
Fixed, or in substance fixed, lease payments are recognized over the expected term of the lease using the effective interest method. Variable lease payments are expensed as incurred. Fixed and variable lease expenses on operating leases are recognized within cost of goods sold and operating expenses in the Company’s consolidated statements of operations. ROU asset amortization and interest costs on financing leases are recorded within cost of goods sold and interest expense, respectively, in the Company’s consolidated statements of operations. The Company has elected to account for payments on short-term leases of 12 months or less as lease expense on a straight-line basis over the respective lease term.
Operating leases are included in other liabilities in the Company’s consolidated balance sheets. Financing leases are included in property and equipment, net, current portion of debt and debt, net of current portion in the Company’s consolidated balance sheets.
Fair Value of Financial Instruments
Acquisitions
In an acquisition of a business, or a group of assets that qualifies to be accounted for as a business, the Company uses the acquisition method of accounting which identifies, recognizes, and measures the identifiable assets acquired, liabilities assumed and any non-controlling interest at their acquisition date fair values. Any excess of the purchase consideration over the fair values of the net identifiable assets acquired is recorded as goodwill. If the Company determines the assets acquired do not meet the definition of a business, the transaction is accounted for as an acquisition of assets, and the Company records the assets acquired at the purchase price with no resulting goodwill.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. Liability and equity classified warrants are valued using a Black-Scholes option pricing model or Monte Carlo simulation model at issuance and for each reporting period when applicable.
Revenue Recognition
The Company generates net revenue from continuing operations from sales of prescription pharmaceutical products from EXXUA and the Company’s ADHD Portfolio and Pediatric Portfolio. Sales are principally to a limited number of wholesale distributors and pharmacies in the United States. The Company evaluates its contracts with customers to determine revenue recognition using the following five-step model: (1) identify the contract with the customer; (2) identify the performance obligations; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when (or as) a performance obligation is satisfied. There is not a recognized financing component related to product sales. Net revenue is recognized at the point in time that control of the product transfers to the customer, which typically aligns with shipping terms (i.e., upon delivery), generally “free-on-board” destination when shipped domestically within the United States, consistent with contractual terms. The Company expenses the incremental costs to obtain a contract as incurred, since they are satisfied within one year.
EXXUA, ADHD Portfolio and Pediatric Portfolio net revenue is recognized net of consideration paid to the Company’s customers and other adjustments to the transaction price (known as “Gross to Net” adjustments). Significant judgement is required in estimating Gross to Net adjustments considering legal interpretations of applicable laws and regulations, historical experience, payor channel mix, current contract prices under applicable programs, unbilled claims, processing time lags and inventory levels in the distribution channel.
The Gross to Net adjustments include:
| ● | Savings offers. The Company offers savings programs for its patients covered under commercial payor plans in which the cost of a prescription to such patients is discounted. |
| ● | Prompt payment discounts. Prompt payment discounts are based on standard provisions of wholesalers’ services. |
| ● | Wholesale distribution fees. Wholesale distribution fees are based on definitive contractual agreements for the management of the Company’s products by wholesalers. |
| ● | Rebates. The Company’s products are subject to commercial managed care and government (e.g., Medicaid) programs whereby discounts and rebates are provided to participating managed care organizations and federal and/or state governments. Calculations related to rebate accruals are estimated based on historical information from third-party providers. |
| ● | Wholesaler chargebacks. The Company’s products are subject to certain programs with wholesalers whereby pricing on products is discounted below wholesaler list price to participating entities. These entities purchase products through wholesalers at the discounted price, and the wholesalers charge the difference between their acquisition cost and the discounted price back to the Company following the product purchases of the wholesalers’ end customers. |
| ● | Returns. Wholesalers’ contractual return rights are limited to defective product, product that was shipped in error, product ordered by customer in error, product returned due to overstock, product returned due to dating or product returned due to recall or other changes in regulatory guidelines. The return policy for expired product allows the wholesaler to return such product starting six months prior to expiry date to twelve months post expiry date. The Company analyzes return data available from sales since inception date to determine a reliable return rate. |
Savings offers, rebates and wholesaler chargebacks reflect the terms of underlying agreements, which may vary. Accordingly, actual amounts will depend on the mix of sales by product and contracting entity. Future returns may not follow historical trends. The Company’s periodic adjustments of its estimates are subject to time delays between the initial product sale and ultimate reporting and settlement of deductions. The Company continually monitors these provisions and does not believe variances between actual and estimated amounts have been material.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to credit risk concentrations consist of cash, cash equivalents and accounts receivable.
The Company maintains deposits in financial institutions in excess of federally insured limits. The Company periodically monitors the credit quality of the financial institutions with which it invests and believes that the Company is not exposed to significant credit risk due to the financial position of those institutions.
The Company is also subject to credit risk from accounts receivable related to product sales. The Company’s customers, sometimes referred to as partners or customers, are primarily large wholesale distributors that resell the Company’s products to retailers. The loss of one or more of these large customers could have a material adverse effect on the Company’s business, operating results or financial condition. The Company does not charge interest or require collateral related to its accounts receivable. Credit terms are generally to days.
The following table presents customers that contributed more than 10% of gross revenue and gross accounts receivable:
| Percentage of | Percentage of | |||||||||||||||
| Gross Revenue | Gross Accounts Receivable | |||||||||||||||
| Year Ended June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Customer A | % | % | % | % | ||||||||||||
| Customer B | % | % | % | % | ||||||||||||
| Customer C | % | % | % | % | ||||||||||||
| Customer D | % | % | % | % | ||||||||||||
| Customer E | % | * | % | * | ||||||||||||
* Customer did not represent more than 10% of the respective metric
Cost of Goods Sold
Cost of goods sold from continuing operations primarily consists of manufactured product cost, products acquired from third-party manufacturers, amortization of product technology rights, freight, production, inventory write-downs, indirect manufacturing overhead costs and FDA fees for commercialized products. Certain of the Company’s sales activities depend on licensing and commercialization arrangements that may require royalty payments, which are also included in cost of goods sold. In addition, distribution, shipping and handling costs invoiced by the Company’s third-party logistics companies are included in cost of goods sold.
Stock-Based Compensation Expense
The Company accounts for stock-based payment compensation expense using a fair value-based model. Restricted stock and restricted stock unit grants are valued based on the Company’s common stock closing trading price on the date of grant and recognized ratably over the requisite service period. Stock option grants are valued using the Black-Scholes option pricing model and compensation costs are recognized ratably over the period of service using the graded method. The Black-Scholes option pricing model requires the Company to estimate the expected term of the award, the expected volatility, the risk-free interest rate, and the expected dividends. The expected term is determined using the “simplified method,” which is the midpoint between the vesting date and the end of the contractual term and is utilized by the Company as it does not have sufficient historical data to determine a more reliable expected term estimate. The risk-free interest rate is based on the United States Treasury yield in effect at the time of the grant for the expected term of the award. The Company does not anticipate paying any dividends in the near future. Forfeitures are recognized as they occur.
Employee Benefits Plan
The Company has a 401(k) plan (“Aytu 401(k) Plan”), which allows participants to contribute a portion of their salary, subject to eligibility requirements and annual Internal Revenue Service (“IRS”) limits. Through December 31, 2025, the Aytu 401(k) Plan matches
Research and Development
Research and development costs are expensed as incurred and include salaries and benefits; facilities costs; overhead costs; raw materials; laboratory and clinical supplies; clinical trial costs; contract services; milestone payments and fees paid to regulatory authorities for review and approval of the Company’s product candidates; and other related costs.
Intangible Assets
The Company records acquired intangible assets based on fair value on the date of acquisition. The Company capitalizes to the carrying value of intangible assets any contingent payments made that are considered part of the total consideration paid for an asset acquisition and which are not within the scope of derivative guidance once the contingencies related to these payments are resolved and the Company adjusts the carrying value of the intangible asset on a cumulative catch-up basis as if the additional capitalized amount had been capitalized on the same date that the intangible asset was put to use. Finite-lived intangible assets are recorded at cost and amortized on a straight-line basis over the estimated lives of the assets.
Impairment of Long-lived Assets
The Company assesses impairment of asset groups, including intangible assets, when events or changes in circumstances indicate that their carrying amount may not be recoverable. Long-lived assets consist of property and equipment, net, right of use assets and other intangible assets, net. Circumstances which could trigger a review include, but are not limited to: (i) changes in Company plans; (ii) competition; (iii) significant adverse changes in the business climate or legal or regulatory factors; or (iv) expectations that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life. If any such conditions are present, the Company will then test the asset for recoverability. If the estimated future undiscounted cash flows, excluding interest charges, from the use of an asset are less than its carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value.
Income Taxes
The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and net operating loss and tax credit carryforwards. The amount of deferred taxes on these temporary differences is determined using the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, as applicable, based on tax rates and laws in the respective tax jurisdiction enacted as of the balance sheet date. A valuation allowance is recorded to reduce the net deferred tax asset when it is more likely than not that some portion or all of its deferred tax asset will not be utilized.
The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained upon an examination. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense in the consolidated statements of operations.
Debt Discount and Issuance Costs
Debt issuance costs reflect fees paid to lenders and third parties directly related to issuing debt. Debt discount and issuance costs related to term loans are reported as direct deductions to the outstanding debt and amortized over the term of the debt using the effective interest method as an addition to interest expense. Debt issuance costs related to a revolving credit facility are classified as assets and subsequently amortized using the straight-line method over the term of the revolving credit facility as additional interest expense.
Segment Information
Operating segments are identified as components that engage in business activities from which they may earn revenues and incur expenses and for which discrete financial information is available and regularly reviewed by the Company’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the respective segment and to assess performance. Operating segments are aggregated for reporting purposes when the operating segments are identified as similar in accordance with the basic principles and aggregation criteria in the accounting standards. After the previously announced successful wind down and divestiture of the Consumer Health business in the first quarter of fiscal 2025, the Company determined that its continuing operations operate in a single operating and reportable segment. The Company’s CODM is its Chief Executive Officer, who manages operations and regularly reviews the financial information of the Company’s continuing operations as a single operating segment for the purposes of allocating resources and evaluating its financial performance. The results of the Consumer Health business have been reported as discontinued operations (see Note 20 - Discontinued Operations for further detail).
The CODM reviews net income or loss as a measure of segment profit or loss in assessing performance and allocating resources. Segment revenues, expenses and profit or loss is reported on the consolidated statements of operations, with particular emphasis on net revenue by product portfolio (see Note 3 - Revenue for net revenue disaggregated by product portfolio). Additionally, the measure of segment assets is reported on the Company’s balance sheet as total assets, with particular emphasis on the Company’s available liquidity and working capital, including its cash and cash equivalents, accounts receivables, net, inventories and current liabilities. As of June 30, 2026, and June 30, 2025, all long-lived assets were domiciled within the United States.
Paragraph IV Litigation Costs
Legal costs incurred by the Company in the enforcement of the Company’s intellectual property rights are charged to expense in the general and administrative financial statement line item in the consolidated statement of operations.
Business Combinations
The Company recognizes the identifiable tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The excess of purchase price over the aggregate fair values is recorded as goodwill. The Company calculates the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed to allocate the purchase price at the acquisition date.
Employee Retention Credit
On March 27, 2020, the United States government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to provide certain relief as a result of the COVID-19 pandemic. The CARES Act provides tax relief, along with other stimulus measures, including a provision for an Employee Retention Credit (“ERC”), which allows for employers to claim a refundable payroll tax credit against the employer share of Social Security tax equal to 70% of the qualified wages paid to employees after December 31, 2020, through September 30, 2021. The ERC was designed to encourage businesses to keep employees on the payroll during the COVID-19 pandemic.
As there is no authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, the Company accounted for the ERC by analogy to International Accounting Standard (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance (“IAS 20”). In accordance with IAS 20, the Company recorded a $
Earnings Per Share
Basic net income or loss per share is calculated by dividing net income or loss available to common stockholders by the basic weighted-average number of common shares outstanding for the respective period. Diluted net income or loss per share is calculated by dividing net income or loss by the diluted weighted-average number of common shares outstanding, which includes the effect of potentially dilutive securities. Potentially dilutive securities for this calculation consist of warrants to purchase common stock that are either liability classified or equity classified (see Note 16 - Warrants); stock options (see Note 15 - Equity Incentive Plans); unvested restricted stock (see Note 15 - Equity Incentive Plans); and unvested restricted stock units (see Note 15 - Equity Incentive Plans). For the years ended June 30, 2026, and 2025, if the Company’s net loss from continuing operations divided by the diluted weighted-average number of common shares outstanding decreased the net loss from continuing operations per share, then the Company did not include common equivalent shares in the computation of diluted net loss from continuing operations per share; diluted net income (loss) from discontinued operations, net of tax; or diluted net loss per share because the effect would have been anti-dilutive.
The following table sets forth securities that could be considered anti-dilutive, and therefore are excluded from the calculation of diluted weighted-average common shares outstanding and related per share calculations:
| June 30, | |||||||||
| 2026 | 2025 | ||||||||
| Warrants to purchase common stock - liability classified | (Note 16) | ||||||||
| Warrants to purchase common stock - equity classified | (Note 16) | ||||||||
| Prefunded warrants to purchase common stock - liability classified | (Note 16) | ||||||||
| Outstanding stock options | (Note 15) | ||||||||
| Unvested restricted stock | (Note 15) | ||||||||
| Total | |||||||||
Weighted-average shares for fiscal 2026 include prefunded warrants from the March 31, 2026, reclassification of such warrants to equity. Prefunded warrants were excluded as anti-dilutive in prior periods when such warrants were liability-classified.
Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). The amendments in ASU 2024-03 require public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. The Company is currently evaluating the provisions of this guidance and assessing the potential impact on the Company’s consolidated financial statements and disclosures.
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”), to provide guidance on how business entities should recognize, measure, and present government grants received. ASU 2025-10 is effective for fiscal years beginning after December 15, 2028, including interim periods within those fiscal years. Early adoption is permitted, and the amendments may be applied using a modified prospective, modified retrospective, or full retrospective adoption. The Company is currently evaluating the impact the adoption of ASU 2025-10 may have on the Company’s consolidated financial statements and disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”), which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with U.S. GAAP. ASU 2025-11 also addresses the form and content of such financial statements, interim disclosure requirements, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied prospectively or retrospectively to all periods presented in the financial statements. The Company is currently evaluating the impact the adoption of ASU 2025-11 may have on the Company’s consolidated financial statements and disclosures.
There have been no significant changes to the Company’s significant accounting policies and there is no other accounting guidance that has been issued and not yet adopted that is applicable to the Company and that the Company expects would have a material effect on the Company’s consolidated financial statements and related disclosures as of June 30, 2026, and through the filing of this report.
Note 3 - Revenue
The Company disaggregates its net revenue from continuing operations by product portfolio, which for the years ended June 30, 2026, and 2025, includes EXXUA; the ADHD Portfolio, comprised primarily of Adzenys and Cotempla; and the Pediatric Portfolio, comprised primarily of Karbinal. The Company’s disaggregation of revenue is consistent with its operating segment.
Net Revenue by Product Portfolio
Net revenue disaggregated by product portfolios for the years ended June 30, 2026, and 2025, were as follows:
| Year Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (in thousands) | ||||||||
| EXXUA | $ | $ | ||||||
| ADHD Portfolio | ||||||||
| Pediatric Portfolio | ||||||||
| Other | ||||||||
| Total net revenue | $ | $ | ||||||
Other includes net revenue from various discontinued or deprioritized products. The Consumer Health business was divested in the first quarter of fiscal 2025 and is reported within discontinued operations (see Note 20 - Discontinued Operations).
Net Revenue by Geographic Location
The Company’s net revenue is predominately within the United States, with insignificant international sales.
Note 4 - Inventories
Inventories consist of the following:
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (in thousands) | ||||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Inventories | $ | $ | ||||||
The Company incurred inventory write-downs from continuing operations of $
Note 5 - Property and Equipment
Property and equipment, net consist of the following:
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (in thousands) | ||||||||
| Manufacturing and lab equipment | $ | $ | ||||||
| Office equipment, furniture and other | ||||||||
| Leasehold improvements | ||||||||
| Property and equipment, gross | ||||||||
| Less: accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense from continuing operations was $
Note 6 - Leases
The Company’s operating leases are for its offices, and these leases have original lease periods expiring between 2029 and 2030. Most leases include option provisions under which the parties may extend the lease term. The Company’s lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. The Company had
In June 2024, the Company entered into a forward-starting operating lease agreement with the owner of its office space in Berwyn, Pennsylvania to lease the same premises that the Company had previously occupied under a sublease arrangement. The Company determined that it is an operating lease, and that lease commencement occurred in July 2024. The initial lease termination date is July 31, 2030, and under the lease agreement the Company has one -year renewal option to extend the lease through July 2035. The Company has elected to utilize the practical expedient to not separate lease and non-lease components upon recognition and variable lease payments are expensed as incurred. The Company recorded an operating lease ROU asset of $
In May 2023, the Company entered into an operating lease agreement to relocate its principal office to Denver, Colorado. The initial lease termination date is March 31, 2029, and under the lease agreement the Company has one five-year renewal option to extend the lease through March 2034. Undiscounted minimum monthly rent payments average approximately $
During the fourth quarter of fiscal 2024, as part of the previously announced wind down of the Consumer Health business and the closure of the Grand Prairie, Texas manufacturing site, the Company ceased using its leased Oceanside, California warehouse and its Grand Prairie, Texas manufacturing facility. As a result, the Company wrote off the remaining related operating lease ROU assets in the fourth quarter of fiscal 2024. The lease for the Oceanside, California warehouse was set to expire on December 31, 2026, however, in March 2025, the Company terminated this lease with the landlord and recorded a net gain on lease termination of $
The components of lease costs for continuing operations are as follows:
| Year Ended | |||||||||
| June 30, | |||||||||
| 2026 | 2025 | Statement of Operations Classification | |||||||
| (in thousands) | |||||||||
| Lease cost: | |||||||||
| Operating lease cost | $ | $ | Operating expenses | ||||||
| Short-term lease cost | Operating expenses | ||||||||
| Total lease cost | $ | $ | |||||||
Supplemental balance sheet information related to leases is as follows:
| June 30, | |||||||||
| 2026 | 2025 | Balance Sheet Classification | |||||||
| (in thousands) | |||||||||
| Assets: | |||||||||
| Non-current: operating leases | $ | $ | Operating lease right-of-use assets | ||||||
| Liabilities: | |||||||||
| Current: | $ | $ | Other current liabilities | ||||||
| Non-current: | Other non-current liabilities | ||||||||
| Total lease liabilities | $ | $ | |||||||
The remaining weighted-average lease term and discount rate used are as follows:
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Weighted-average remaining lease term (years): | ||||||||
| Operating lease right-of-use assets | ||||||||
| Weighted-average discount rate: | ||||||||
| Operating lease right-of-use assets | % | % | ||||||
Supplemental cash flows information related to leases is as follows:
| Year Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (in thousands) | ||||||||
| Cash flows classification of lease payments: | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
| Operating cash flows from finance leases | $ | $ | ||||||
| Financing cash flows from finance leases | $ | $ | ||||||
As of June 30, 2026, the Company’s estimated future minimum lease payments were as follows:
| Operating | ||||
| (in thousands) | ||||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Lease liabilities | $ | |||
Note 7 - Intangible Assets
A summary of the Company’s intangible assets, all of which are definite-lived intangible assets, as of June 30, 2026, and June 30, 2025, is as follows:
| June 30, 2026 | ||||||||||||||||
| Weighted- | ||||||||||||||||
| Gross | Net | Average | ||||||||||||||
| Carrying | Accumulated | Carrying | Remaining | |||||||||||||
| Amount | Amortization | Amount | Life | |||||||||||||
| (in thousands) | (in years) | |||||||||||||||
| Product technology rights | $ | $ | ( | ) | $ | |||||||||||
| Technology rights | ( | ) | ||||||||||||||
| Commercialization rights | ( | ) | 4.2 | |||||||||||||
| Total intangible assets | $ | $ | ( | ) | $ | |||||||||||
| June 30, 2025 | ||||||||||||||||
| Weighted- | ||||||||||||||||
| Gross | Net | Average | ||||||||||||||
| Carrying | Accumulated | Carrying | Remaining | |||||||||||||
| Amount | Amortization | Amount | Life | |||||||||||||
| (in thousands) | (in years) | |||||||||||||||
| Product technology rights (1) | $ | $ | ( | ) | $ | |||||||||||
| Technology rights | ( | ) | ||||||||||||||
| Commercialization rights | N/A | |||||||||||||||
| Total intangible assets | $ | $ | ( | ) | $ | |||||||||||
| (1) | In June 2025, the Company recorded an impairment to its product technology rights intangible asset of $ |
Gross carrying amounts are net of any impairment charges from prior periods. An intangible asset with zero net carrying amount at the end of a reporting period is not presented in the table of a future reporting period. Certain of the Company’s amortizable intangible assets include renewal options, extending the expected life of the asset. Renewal periods generally range between approximately
Amortization expense of intangible assets from continuing operations included in the consolidated statements of operations for the years ended June 30, 2026, and 2025, are set forth in the table below:
| Year Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (in thousands) | ||||||||
| Statement of operations classification: | ||||||||
| Cost of goods sold | $ | $ | ||||||
| Operating expenses | ||||||||
| Total amortization of intangible assets expense | $ | $ | ||||||
The following table summarizes the estimated future amortization expense of intangible assets to be recognized over the next five years and periods thereafter:
| June 30, | ||||
| (in thousands) | ||||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Thereafter | ||||
| Total estimated future amortization expense | $ | |||
Product Technology Rights
The product technology rights are related to the rights to production, supply and distribution agreements of various products.
ADHD Portfolio
The Company has developed product technology rights related to the production and sale of Adzenys and Cotempla. The formulations for the ADHD products are protected by patented technology. As of June 30, 2026, the estimated remaining economic life of these proprietary product technology rights is
Karbinal
The Company acquired and assumed all rights and obligations pursuant to the supply and distribution agreement, as amended, with Tris Pharma, Inc. (“Tris”) for the exclusive rights to commercialize Karbinal in the United States (the “Tris Karbinal Agreement”). The Tris Karbinal Agreement’s initial term terminates in August of 2033, with an optional initial
Pediatric Portfolio - Other
The Company acquired and assumed all rights and obligations pursuant to a supply and license agreement and various assignment and release agreements, including a previously agreed to settlement and license agreement for the exclusive rights to commercialize certain products in the United States. As a result of the Company's shifted focus of its commercial efforts on EXXUA and its ADHD Portfolio, the Company recorded a full impairment of these intangible assets in June 2025, resulting in impairment expense of $
Technology Rights
TRRP Proprietary Technology
The Company has time release resin particle (“TRRP”) proprietary technology, which is a proprietary drug delivery technology protected by the Company as a trade secret that allows the Company to modify the drug release characteristics of each of its respective products. The TRRP technology underlies each of the ADHD Portfolio core products and can potentially be used in future product development initiatives as well. As of June 30, 2026, the estimated remaining economic life of these proprietary technology rights is
Commercialization Rights
As part of the Commercialization Agreement for the exclusive commercialization rights of EXXUA in the United States, the Company capitalizes to the carrying value of intangible assets any contingent payments made that are considered part of the Commercialization Agreement’s total consideration and which are not within the scope of derivative guidance once the contingencies related to these payments are resolved. In December 2025, the commercialization rights were considered placed in service commensurate with the launch date of EXXUA. The Company began amortizing the commercialization rights on a straight-line basis over the estimated life of the asset and, if necessary, the Company will adjust the carrying value of the commercialization rights on a cumulative catch-up basis for any future payments as if the additional capitalized amount had been capitalized on the same date that the intangible asset was placed in service. As of June 30, 2026, the estimated remaining economic life of the EXXUA commercialization rights is
Note 8 - Accrued Liabilities
Accrued liabilities consist of the following:
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (in thousands) | ||||||||
| Accrued savings offers | $ | $ | ||||||
| Accrued customer and product related fees | ||||||||
| Return reserve | ||||||||
| Accrued program liabilities | ||||||||
| Accrued employee compensation | ||||||||
| Other accrued liabilities | ||||||||
| Total accrued liabilities | $ | $ | ||||||
Accrued savings offers represent programs for the Company’s patients covered under commercial payor plans in which the cost of a prescription to such patients is discounted. Accrued customer and product related fees include accrued expenses and deductions for rebates, wholesaler chargebacks and fees, and other product-related fees and deductions such as royalties for Pediatric Portfolio products, accrued distributor fees, and Medicaid liabilities. The return reserve represents the Company’s accrual for estimated product returns. Accrued program liabilities include government and commercial rebates. Accrued employee compensation includes sales commissions, paid time off earned, accrued payroll and accrued bonus. Other accrued liabilities consist of various other accruals, none of which individually or in the aggregate represent greater than five percent of total liabilities.
The following table details the change in return reserve for the periods presented:
| Return Reserve | ||||
| (in thousands) | ||||
| Balance, June 30, 2024 | $ | |||
| Reduction of net revenue | ||||
| Payments | ( | ) | ||
| Balance, June 30, 2025 | ||||
| Reduction of net revenue | ||||
| Payments | ( | ) | ||
| Balance, June 30, 2026 | $ | |||
Note 9 - Other Liabilities
Other liabilities consist of the following:
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (in thousands) | ||||||||
| Fixed payment arrangements | $ | $ | ||||||
| Employee retention credit | ||||||||
| Operating lease liabilities | ||||||||
| Other | ||||||||
| Total other liabilities | ||||||||
| Less: current portion of other liabilities | ( | ) | ( | ) | ||||
| Total other liabilities, non-current | $ | $ | ||||||
Fixed payment arrangements
Fixed payment arrangements represent obligations to an investor assumed as part of the acquisition of products from Cerecor, Inc. in 2019, including fixed and variable payments.
In May 2022, the Company entered into an agreement with Tris to terminate the license, development, manufacturing and supply agreement dated November 2, 2018, related to Tuzistra XR (the “Tuzistra License Agreement”). Pursuant to such termination the Company accrued a settlement liability, which as of June 30, 2026, had
The Tris Karbinal Agreement grants the Company exclusive right to distribute and sell Karbinal in the United States. The initial term of the agreement was
Employee Retention Credit
The $
Operating Lease Liabilities
The Company has entered into various operating lease agreements for certain of its offices. Please refer to Note 6 - Leases for further detail.
Other
Other consists of taxes payable, deferred cost, and various other accruals, none of which individually or in the aggregate represent greater than five percent of total liabilities.
Note 10 - Revolving Credit Facility
On June 20, 2025, the Company and certain of its subsidiaries entered into an Amendment No. 6 to Loan and Security Agreement (the “Eclipse Amendment No. 6”) to the loan and security agreement dated October 2, 2019, as amended by Amendment No. 1, dated March 19, 2021; Amendment No. 2, dated January 26, 2022; Amendment No. 3, dated June 1, 2022; Amendment No. 4 dated March 24, 2023; and Amendment No. 5 dated June 12, 2024 (together the “Eclipse Agreement”), with Eclipse Business Capital LLC (“Eclipse”), as agent, and the lenders party thereto (agent and such lenders, collectively, the “Eclipse Lender”). Under the Eclipse Agreement, the Company has two loan agreements, a term loan (the “Eclipse Term Loan”) and a revolving credit facility (the “Eclipse Revolving Loan”). The Eclipse Term Loan is described further in Note 11 - Debt.
The Eclipse Revolving Loan has a potential maximum borrowing base of $
In the event that, for any reason, all or any portion of the Eclipse Agreement is terminated prior to the scheduled maturity date, in addition to the payment of all outstanding principal and unpaid accrued interest, the Company is required to pay a fee equal to (i)
The Eclipse Agreement contains customary affirmative covenants, negative covenants and events of default, as defined in the Eclipse Agreement, including covenants and restrictions that, among other things, require the Company to satisfy certain capital expenditure limitations and other financial covenants, and restrict the Company’s ability to incur liens, incur additional indebtedness, make certain dividends and distributions with respect to equity securities, engage in mergers and acquisitions or make asset sales without the prior written consent of Eclipse. A failure to comply with these covenants could permit Eclipse to declare the Company’s obligations under the Eclipse Agreement, together with accrued interest and fees, to be immediately due and payable, plus any applicable additional amounts relating to a prepayment or termination, as described above. As of June 30, 2026, the Company was in compliance with the covenants under the Eclipse Agreement. The Company’s obligations under the Eclipse Agreement are secured by substantially all of the Company’s assets, as defined further in the Eclipse Agreement.
The Company allocated debt issuance costs of $
Note 11 - Debt
On June 20, 2025, the Company and certain of its subsidiaries entered into Eclipse Amendment No. 6, which provided for among other things, an increase in the Eclipse Term Loan principal amount of $
The Eclipse Term Loan incurs interest at a rate of the plus
In the event that, for any reason, all or any portion of the Eclipse Agreement is terminated prior to the scheduled maturity date, in addition to the payment of all outstanding principal and unpaid accrued interest, the Company is required to pay a fee equal to (i)
The Eclipse Agreement contains customary affirmative covenants, negative covenants and events of default, as defined in the Eclipse Agreement, including covenants and restrictions that, among other things, require the Company to satisfy certain capital expenditure limitations and other financial covenants, and restricts the Company’s ability to incur liens, incur additional indebtedness, make certain dividends and distributions with respect to equity securities, engage in mergers and acquisitions or make certain asset sales without the prior written consent of the Eclipse Lender. A failure to comply with these covenants could permit the Eclipse Lender to declare the Company’s obligations under the agreement, together with accrued interest and fees, to be immediately due and payable, plus any applicable additional amounts relating to a prepayment or termination, as described above. As of June 30, 2026, the Company was in compliance with the covenants under the Eclipse Agreement.
The Company recorded debt discount and allocated debt issuance costs of less than $
Debt consists of the following:
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (in thousands) | ||||||||
| Term loan principal amount | $ | $ | ||||||
| Unamortized debt discount and issuance costs | ( | ) | ( | ) | ||||
| Total debt | ||||||||
| Less: current portion of debt | ( | ) | ( | ) | ||||
| Total debt, net of current portion | $ | $ | ||||||
Future principal payments of debt are as follows:
| June 30, | ||||
| (in thousands) | ||||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| Total future principal payments | ||||
| Less: unamortized debt discount and issuance costs | ( | ) | ||
| Less: current portion of debt | ( | ) | ||
| Total debt, net of current portion | $ | |||
Note 12 - Fair Value Measurements
The Company determines the fair value of financial and non-financial assets using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value as follows:
| Level 1: | Inputs that reflect unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities; |
| Level 2: | Inputs include quoted prices for similar assets and liabilities in active or inactive markets or that are observable for the asset or liability either directly or indirectly; and |
| Level 3: | Unobservable inputs that are supported by little or no market activity. |
The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, derivative warrant liabilities, fixed payment arrangements and current and non-current debt. The carrying amounts of certain short-term financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to their short maturities. Current and non-current debt are reported at their amortized costs on the Company’s consolidated balance sheets. The remaining financial instruments are reported on the Company’s consolidated balance sheets at amounts that approximate current fair values. The Company’s policy is to recognize transfers in and/or out of fair value hierarchy as of the date in which the event or change in circumstances caused the transfer. There were no transfers between Level 1, Level 2 and Level 3 in the periods presented.
Recurring Fair Value Measurement
The following table presents the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2026, and 2025, by level within the fair value hierarchy:
| Fair Value at | Fair Value Measurements at June 30, 2026 | |||||||||||||||
| June 30, 2026 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| (in thousands) | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Derivative warrant liabilities | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Fair Value at | Fair Value Measurements at June 30, 2025 | |||||||||||||||
| June 30, 2025 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| (in thousands) | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Derivative warrant liabilities | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Cash and cash equivalents in the consolidated balance sheets include bank deposits and money market funds and reflect their fair value at Level 1 in the fair value hierarchy.
Non-Recurring Fair Value Measurement
The Company’s financial assets and liabilities that were accounted for at fair value on a non-recurring basis during the years ended June 30, 2026, and 2025, were fixed payment arrangements and intangible assets.
Fixed payment arrangements are recognized at their amortized cost basis using market appropriate discount rates and are accreted up to their notional face value over time. Significant assumptions used in valuing the fixed payment arrangements were discount rates from
Based on the Company’s impairment analyses for fiscal 2026 and 2025, the Company did record an for the year ended June 30, 2026, and the Company recorded an impairment charge of $
Summary of Level 3 Input Changes
The following table sets forth a summary of changes to those fair value measures using Level 3 inputs for the periods presented:
| Derivative | ||||
| Warrant Liabilities | ||||
| (in thousands) | ||||
| Balance as of June 30, 2024 | $ | |||
| Issued (1) | ||||
| Settlements (2) | ( | ) | ||
| Included in earnings | ||||
| Balance as of June 30, 2025 | ||||
| Reclassification of derivative warrant liabilities to equity (3) | ( | ) | ||
| Settlements (4) | ( | ) | ||
| Included in earnings | ||||
| Balance as of June 30, 2026 | $ | |||
| (1) | Relates to the June 2025 issuance of |
| (2) | Relates to the exercise of |
| (3) | Relates to the Company amending and restating certain warrants and prefunded warrants, which resulted in them being reclassified from liability classified to equity classified on March 31, 2026 (see Note 16 - Warrants for further detail). |
| (4) | Relates to the exercise of |
Level 3 Inputs
Significant assumptions as of June 30, 2026, used in valuing the derivative warrant liabilities, marked to market, were as follows:
| June 2023 Tranche A Warrants | Warrants Other (1) | |||||||
| Monte Carlo & Black-Scholes | Black-Scholes | |||||||
| Aytu closing stock price | $ | $ | ||||||
| Equivalent term (years) | ||||||||
| Expected volatility | % | |||||||
| Risk-free rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| (1) | Includes all liability classified warrants and prefunded warrants except the June 2023 Tranche A Warrants (see Note 16 - Warrants for further information). |
Note 13 - Income Taxes
For the years ended June 30, 2026, and 2025, there was insignificant income tax expense and $
Section 382 Limitation
Under the provisions of the IRC, substantial changes in the Company’s ownership have resulted in limitations on the amount of NOL carryforwards that can be utilized in future years. NOL carryforwards are subject to examination in the year they are utilized regardless of whether the tax year in which they are generated has been closed by statute. The amount subject to disallowance is limited to the NOL utilized. Accordingly, the Company may be subject to examination for prior NOLs generated as such NOLs are utilized.
As part of the Company’s Section 382 analysis, an ownership change was determined to have occurred in March 2022 at a point in time when the Company had a net unrealized built-in gain. As such, the NOL generated during that period has been allocated and the post-change NOL (approximately $
The Company had federal net operating losses of $
As of June 30, 2026, the Company had various state NOL carryforwards. The determination of the state NOL carryforwards is dependent on apportionment percentages and state laws that can change from year to year and impact the amount of such carryforwards.
The Company notes there is diversity in practice regarding the treatment of deductions or loss carryforwards that are expected to expire unutilized. Generally, it is not appropriate to use zero as an applicable tax rate and rather, a DTA should be recorded at the applicable tax rate and a valuation of an equal amount would be provided. However, under certain circumstances it may be appropriate to follow an alternative approach and use a zero rate to write off the asset against the valuation allowance, reducing the valuation allowance and gross DTAs disclosed. The Company considered both accounting viewpoints and determined it would present its NOL carryforwards gross with a full valuation allowance and not apply a zero rate to NOL carryforwards expected to expire unutilized.
In review of the Company’s consolidated deferred position, excluding NOLs and other tax attributes, the Company is in a net DTA position and therefore all NOLs are being fully valued and not utilized against a net DTL.
The provision for income taxes consisted of the following:
| Year Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| (in thousands) | ||||||||
| Current: | ||||||||
| Federal | $ | ( | ) | $ | ( | ) | ||
| State | ||||||||
| Income tax expense | $ | $ | ||||||
Income tax expense resulting from applying statutory rates in jurisdictions in which the Company is taxed (federal and various states) differs from the income tax expense in the consolidated financial statements. A reconciliation of the United States federal statutory income tax rates to the Company’s effective tax rate is as follows.
| Year Ended June 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| (in thousands, except tax rate) | ||||||||||||||||
|
| $ | ( | ) | % | $ | ( | ) | % | ||||||||
| State income taxes, net of federal benefit | ( | )% | ( | )% | ||||||||||||
| Stock-based compensation expense | % | ( | )% | |||||||||||||
| Change in valuation allowance | ( | ) | % | ( | )% | |||||||||||
| Innovus sale adjustment | ( | )% | ||||||||||||||
| Permanent differences | ||||||||||||||||
| Gain on derivative warrant liability | ( | )% | % | |||||||||||||
| Other permanent differences | ( | )% | % | |||||||||||||
| Other | ( | )% | ( | )% | ||||||||||||
| Income tax expense | $ | ( | )% | $ | ( | )% | ||||||||||
For the year ended June 30, 2026, state taxes in Tennessee and Texas made up the majority (greater than 50%) of the state income taxes, net of federal benefit.
Deferred income taxes arise from temporary differences in the recognition of certain items for income tax and financial reporting purposes. The approximate tax effects of significant temporary differences, which comprise the deferred tax assets and liabilities, are as follows:
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (in thousands) | ||||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforwards | $ | $ | ||||||
| Interest | ||||||||
| Accrued rebates | ||||||||
| Capital loss carryforward | ||||||||
| Research and development credits | ||||||||
| Stock-based compensation expense | ||||||||
| Intangible assets | ||||||||
| Accrued expenses | ||||||||
| Section 174 capitalization | ||||||||
| Inventory | ||||||||
| Lease liability | ||||||||
| Fixed assets | ||||||||
| Other | ||||||||
| Total deferred tax assets | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net of valuation allowance | ||||||||
| Deferred tax liabilities: | ||||||||
| ROU asset | ( | ) | ( | ) | ||||
| Total deferred tax liabilities | ( | ) | ( | ) | ||||
| Net deferred tax liabilities | $ | $ | ||||||
The Company has recorded a valuation allowance of $
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The Company has no accrued interest related to its uncertain tax positions as they all relate to timing differences that would adjust the Company’s NOL, interest expense carryover or research and development credit carryover and therefore do not require recognition. As a result of these timing differences, as of June 30, 2026, and 2025 the Company had gross unrecognized tax benefits related to uncertain tax positions of $
A tabular roll-forward of the Company’s gross unrecognized tax benefit related to uncertain tax positions is below.
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (in thousands) | ||||||||
| Beginning balances | $ | $ | ||||||
| Decrease resulting from current period tax positions | ( | ) | ( | ) | ||||
| Increase resulting from current period tax positions | ||||||||
| Ending balances | $ | $ | ||||||
The change in the Company’s gross unrecognized tax benefits relates to filed method changes with the IRS for the tax return year ending June 30, 2025. Additionally, certain of the Company’s acquired legal entities pre-acquisition tax years are subject to the same general statute of limitations, resulting in its tax years back to being subject to examination.
The income tax expense (benefit) allocated to continuing operations and discontinued operations for the years ended June 30, 2026, and 2025, were as follows:
| Year Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| (in thousands) | ||||||||
| Continuing operations income tax expense | $ | $ | ||||||
| Discontinued operations income tax benefit | ( | ) | ||||||
| Income tax expense | $ | $ | ||||||
See Note 20 - Discontinued Operations for further detail on the Company’s discontinued operations related to the wind down and divestiture of its Consumer Health business.
For the year ended June 30, 2026, cash payments for income taxes of $
The One Big Beautiful Bill Act
The enactment of the One Big Beautiful Bill Act (the “OBBBA”) includes significant provisions, such as the permanent extension of certain expiring provisions of the TCJA, allowing for accelerated tax deductions for qualified property and research expenditures, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in calendar year 2025 and others implemented through calendar year 2027. The income tax provision considers the impacts to the Company’s deferred tax assets and liabilities on the consolidated balance sheet as of June 30, 2026, including deferred tax assets for interest, fixed assets and section 174 capitalization.
Note 14 - Stockholders’ Equity
The Company has
On September 26, 2024, the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on October 15, 2024. This shelf registration statement covers the offering, issuance and sale by the Company of up to an aggregate of $
In June 2025, the Company raised gross proceeds of $
Note 15 - Equity Incentive Plan
2023 Equity Incentive Plan
On May 18, 2023, the Company’s stockholders approved the adoption of the Aytu BioPharma, Inc. 2023 Equity Incentive Plan (the “2023 Equity Incentive Plan”), which replaced all previous plans. For the 2023 Equity Incentive Plan, the stockholders approved (a)
Stock options granted under the 2023 Equity Incentive Plan and previous plans typically have contractual terms of
Stock Options
During the year ended June 30, 2026, stock options were granted. As of June 30, 2026, there was $
During the year ended June 30, 2025,
Stock option activity during the year ended June 30, 2026, is as follows:
| Weighted- | ||||||||||||
| Average | ||||||||||||
| Weighted- | Remaining | |||||||||||
| Number of | Average | Contractual | ||||||||||
| Options | Exercise Price | Life in Years | ||||||||||
| Outstanding at June 30, 2025 | $ | |||||||||||
| Granted | $ | — | ||||||||||
| Forfeited/cancelled | ( | ) | $ | — | ||||||||
| Expired | ( | ) | $ | — | ||||||||
| Outstanding at June 30, 2026 | $ | |||||||||||
| Exercisable at June 30, 2026 | $ | |||||||||||
The following table details the options outstanding as of June 30, 2026, by range of exercise prices:
| Weighted- | |||||||||||||||||||||
| Average | |||||||||||||||||||||
| Remaining | |||||||||||||||||||||
| Weighted- | Contractual | ||||||||||||||||||||
| Range of | Number of | Average | Life of | Number of | Weighted- | ||||||||||||||||
| Exercise | Options | Exercise | Options | Options | Average | ||||||||||||||||
| Prices | Outstanding | Price | Outstanding | Exercisable | Exercise Price | ||||||||||||||||
| $1.69 | $ | $ | |||||||||||||||||||
| $1.73 | $ | $ | |||||||||||||||||||
| $1.84 | $ | $ | |||||||||||||||||||
| $2.53 - $290.00 | $ | $ | |||||||||||||||||||
| $ | $ | ||||||||||||||||||||
Restricted Stock
During the year ended June 30, 2026, the Company granted a total of
During the year ended June 30, 2025, the Company granted a total of
Restricted stock activity under the 2023 Equity Incentive Plan is as follows:
| Weighted- | ||||||||
| Average Grant | ||||||||
| Number of | Date Fair | |||||||
| Shares | Value | |||||||
| Unvested at June 30, 2025 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited/cancelled | ( | ) | $ | |||||
| Unvested at June 30, 2026 | $ | |||||||
As of June 30, 2026, there were
Restricted Stock Units
For the years ended June 30, 2026, and 2025, the Company did grant any restricted stock units and there were remaining unvested restricted stock units as of June 30, 2026.
Stock-based compensation expense related to the fair value of stock options, restricted stock and restricted stock units were included in the consolidated statements of operations as set forth in the below table:
| Year Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (in thousands) | ||||||||
| Cost of goods sold | $ | $ | ||||||
| Research and development | ||||||||
| Selling and marketing | ||||||||
| General and administrative | ||||||||
| Total stock-based compensation expense | $ | $ | ||||||
Note 16 - Warrants
The Company has engaged in several different types of equity financings throughout its history, some of which have resulted in the Company issuing warrants and prefunded warrants. Equity classified warrants are valued using a Black-Scholes option pricing model at issuance and are not remeasured. Liability classified warrants are carried at fair value using either the Black-Scholes option pricing model or the Monte Carlo simulation model. Outstanding warrants that are classified as derivative warrant liabilities in the consolidated balance sheets are marked to market at each reporting period, with the change in the fair value recorded as a gain or loss on remeasurement and reported as a component of cash flows from operations (see Note 12 - Fair Value Measurements for further detail).
The Company determined that public equity offerings completed in June 2023 and June 2025 whereby the Company issued certain warrants and prefunded warrants (collectively, the “June 2023 and June 2025 Warrants”) to certain institutional investors (the “Investors”) included certain stockholder approval language relating to beneficial ownership blockers and Nasdaq Capital Market LLC ownership blockers (the “Blockers”) creating ambiguity that required the Company to classify the June 2023 and June 2025 Warrants as liabilities rather than equity in its financial statements based on applicable authoritative guidance in FASB ASC Topic 480, Distinguishing Liabilities from Equity and ASC Topic 815, Derivatives and Hedging. The Company and the Investors agreed to make changes to the Blockers to address the unintended accounting treatment in order to provide for equity classification going forward and agreed to amend the June 2023 and June 2025 Warrants.
On March 31, 2026, the Company and the Investors, as applicable, entered into (i) an Amended and Restated June 2023 Tranche A Warrant (“Amended 2023 Tranche A Warrant”), (ii) an Amended and Restated June 2023 Prefunded Warrant (“Amended 2023 Prefunded Warrant”) and (iii) an Amended and Restated June 2025 Prefunded Warrant (“Amended 2025 Prefunded Warrant”), pursuant to which the Company canceled the previously issued June 2023 and June 2025 Warrants and issued to the Investors, as applicable, an Amended 2023 Tranche A Warrant, an Amended 2023 Prefunded Warrant and an Amended 2025 Prefunded Warrant, with revised Blockers. Under the Blockers that were included in the June 2023 and June 2025 Warrants prior to their amendment on March 31, 2026, it was unclear whether the Company’s stockholders could vote to amend or change the Blockers. The amendments clarified that the Blockers could not be amended or modified by a vote of the Company’s stockholders. As a result, the Company concluded that the amended warrants met the requirements for equity classification. Accordingly, the related derivative warrant liabilities of $
The number of warrants and prefunded warrants outstanding as of June 30, 2026, is as follows:
| Remaining | |||||||||||||||
| Number | Contractual | ||||||||||||||
| Description | Outstanding | Exercise Price | Life in Years (5) | Type | Classification | ||||||||||
| January 2022 Warrants (1) | $ | Warrant | Liability | ||||||||||||
| March 2022 Warrants (1) | $ | Warrant | Liability | ||||||||||||
| August 2022 Warrants (1) | $ | Warrant | Liability | ||||||||||||
| June 2023 Tranche A Warrants (2) | $ | Warrant | Liability | ||||||||||||
| Amended 2023 Tranche A Warrants (2) | $ | Warrant | Equity | ||||||||||||
| Amended 2023 Prefunded Warrants (3) | $ | N/A | Prefunded Warrant | Equity | |||||||||||
| Amended 2025 Prefunded Warrants (4) | $ | N/A | Prefunded Warrant | Equity | |||||||||||
| Total outstanding June 30, 2026 | |||||||||||||||
| (1) | Each of these warrants is exercisable at any time for |
| (2) | In June 2023, the Company issued these tranche A warrants to purchase |
| (3) | As discussed above, on March 31, 2026, a total of |
| (4) | In June 2025, the Company raised gross proceeds of $ |
| (5) | None of the Company’s outstanding prefunded warrants has an expiration date. |
Outstanding warrants that are classified as derivative warrant liabilities in the consolidated balance sheets are marked to market at each reporting period (see Note 12 - Fair Value Measurements for further detail).
A summary of warrant activity, excluding prefunded warrants, during the year ended June 30, 2026, is as follows:
| Weighted- | ||||||||||||
| Average | ||||||||||||
| Weighted- | Remaining | |||||||||||
| Number of | Average | Contractual | ||||||||||
| Warrants | Exercise Price | Life in Years | ||||||||||
| Outstanding June 30, 2025 (1) | $ | |||||||||||
| Equity classified warrants expired | ( | ) | N/A | N/A | ||||||||
| Outstanding June 30, 2026 (2) | $ | |||||||||||
| (1) | The number of warrants, excluding prefunded warrants, outstanding as of June 30, 2025, is comprised of |
| (2) | The number of warrants, excluding prefunded warrants, outstanding as of June 30, 2026, is comprised of |
A summary of prefunded warrant activity during the year ended June 30, 2026, is as follows:
| Number of | Weighted- | |||||||
| Prefunded | Average | |||||||
| Warrants | Exercise Price | |||||||
| Outstanding June 30, 2025 | $ | |||||||
| Prefunded warrants exercised (1) | ( | ) | $ | |||||
| Outstanding June 30, 2026 | $ | |||||||
| (1) | During fiscal 2026, a total of |
Note 17 - Restructuring Costs
As part of the Company’s previously announced restructuring activities related to the wind down and divestiture of the Consumer Health business and the closure of the Grand Prairie, Texas manufacturing site, the Company has incurred expenses that qualify as exit and disposal costs under U.S. GAAP. These include severance and employee benefit costs as well as other direct separation benefit costs, right of use asset impairment charges, fixed asset and other asset impairment charges, accelerated depreciation of fixed assets, contract termination costs, and inventory write-downs. Severance and employee benefit costs primarily relate to cash severance. Restructuring costs associated with the Consumer Health business are recorded within the net income (loss) from discontinued operations, net of tax in the consolidated financial statement of operations (see Note 20 - Discontinued Operations).
The expense associated with the closure of the Grand Prairie, Texas manufacturing site such as severance and employee benefits and exit and disposal activities are included in restructuring costs in the consolidated statements of operations. There have been no inventory write-downs associated with this closure.
Note 18 - Commitments and Contingencies
EXXUA Exclusive Commercialization Agreement
On June 5, 2025, the Company, entered into the Commercialization Agreement with Fabre-Kramer, pursuant to which the Company acquired certain rights and obligations in connection with the commercialization of EXXUA in the United States. As consideration for the Commercialization Agreement, the Company made an upfront cash payment of $
The Commercialization Agreement can be terminated at any time upon mutual agreement between the Company and Fabre-Kramer. Either party can terminate the Commercialization Agreement at any time upon written notice for a material default or breach if the material default or breach is not cured within (1)
Pediatric Portfolio
The Tris Karbinal Agreement grants the Company exclusive right to distribute and sell Karbinal in the United States. The initial term of the agreement was
Operating Leases
In June 2024, the Company entered into a forward-starting operating lease agreement to lease office space in Berwyn, Pennsylvania from the owner of the office space that the Company was renting that same space under a sublease arrangement. The Company determined that it is an operating lease, and that lease commencement occurred in July 2024. The initial lease termination date is July 31, 2030, and under the lease agreement the Company has -year renewal option to extend the lease through July 2035. Undiscounted minimum monthly rent payments average approximately $
In May 2023, the Company entered into an operating lease agreement to relocate its principal office to Denver, Colorado. The initial lease termination date is March 31, 2029, and under the lease agreement the Company has -year renewal option to extend the lease through March 2034. Undiscounted minimum monthly rent payments average approximately $
Legal Matters
Granules Paragraph IV
On October 31, 2024, the Company received a Paragraph IV Certification Notice Letter (the “Notice Letter”) from Granules Pharmaceuticals, Inc. (“Granules”), stating that it intends to market a generic version of Adzenys before the expiration of all patents currently listed in the FDA’s publication of approved drug products with therapeutic equivalence evaluations (the “Orange Book”). The Notice Letter states that Granules’ NDA for the generic version of Adzenys contains a Paragraph IV certification alleging that these patents are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use or sale of the generic version of Adzenys. On December 11, 2024, the Company filed a patent infringement lawsuit against Granules which triggered a stay precluding the FDA from approving Granules’ NDA for a generic version of Adzenys for up to 30 months or entry of judgment holding the patents invalid, unenforceable, or not infringed, whichever occurs first. On January 7, 2025, Granules submitted an answer to the complaint. This litigation is ongoing, with trial originally scheduled to begin on December 7, 2026, now rescheduled to January 12, 2027. The Company plans to vigorously enforce its intellectual property rights related to Adzenys.
Revive Investing
The Company had been named as a nominal plaintiff in a lawsuit by two shareholders against Armistice Capital Master Fund, Ltd (“Armistice”), entitled Revive Investing, LLC. et al v. Armistice Master Fund, Ltd. et al, Case 1:20-cv-02849-CMA-TPO, in the United States District Court for the District of Colorado, contending that Armistice was liable for short swing trading profits in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, for certain trades it made in Company stock in 2019 and 2020 and must disgorge those profits to the Company. That matter proceeded to trial before a jury, which on January 29, 2025, returned a verdict finding no liability. On March 6, 2025, the plaintiffs filed an appeal in the United States Court of Appeals for the Tenth Circuit. As with the original case, regardless of the outcome, this case will not have a materially adverse effect upon the Company’s financial condition, results of operations, or cash flows.
Note 19 - License Agreements
Teva
On December 21, 2018, the Company and Teva Pharmaceuticals USA, Inc. (“Teva”) entered into an agreement granting Teva a non-exclusive license to certain patents owned by Neos by which Teva has the right to manufacture and market its generic version of Cotempla under an abbreviated new drug application (“ANDA”) filed by Teva beginning on July 1, 2026. The ANDA was approved by the FDA on June 19, 2020.
Actavis
On October 17, 2017, the Company entered into an agreement granting Actavis Laboratories FL, Inc. (“Actavis”) (which is now owned by Teva Pharmaceutical Industries Limited) a non-exclusive license to certain patents owned by the Company by which Actavis has the right to manufacture and market its generic version of Adzenys under its ANDA beginning on September 1, 2025. The ANDA was approved by the FDA on June 22, 2023.
Note 20 - Discontinued Operations
On July 31, 2024, after the wind down of operations, the Company entered into a definitive agreement to divest its Consumer Health business to a private, e-commerce focused company. The divested business encompassed the established e-commerce platform, certain inventory and associated consumer brands, intellectual property, external workforce and contracts, and provided for the Company to receive contingent consideration payments on certain future sales of former Consumer Health business products.
The accounting requirements for reporting the Consumer Health business as a discontinued operation were met when the wind down and divestiture was completed on July 31, 2024. Accordingly, the accompanying consolidated financial statements for all periods presented reflect this business as a discontinued operation. There were no assets or liabilities classified as discontinued operations on the accompanying consolidated balance sheets as of June 30, 2026 and 2025. The Company elected to record the contingent consideration portion of the arrangement when the consideration is determined to be realizable and, therefore, the Company did not record a contingent consideration asset at the transaction date.
There was
| Year Ended | ||||
| June 30, | ||||
| 2025 | ||||
| (in thousands) | ||||
| Net revenue | $ | |||
| Cost of goods sold | ( | ) | ||
| Selling and marketing | ( | ) | ||
| General and administrative | ( | ) | ||
| Recognized contingent consideration | ||||
| Loss on divestiture | ( | ) | ||
| Income from discontinued operations before income taxes | ||||
| Income tax benefit | ||||
| Net income from discontinued operations, net of tax | $ | |||
Note 21 - Subsequent Events
The Company evaluated subsequent events for potential recognition or disclosure in the consolidated financial statements through September 22, 2026, the date the consolidated financial statements were issued and included in this Annual Report on Form 10-K. Other than the matters described below and elsewhere in this Annual Report, the Company concluded that there were no subsequent events requiring recognition or disclosure in the consolidated financial statements.
Cotempla Authorized Generic
Pursuant to the Company's license agreement with Teva, Teva's right to manufacture and market an authorized generic version of Cotempla commenced on July 1, 2026 (see Note 19 - License Agreements for further detail). The Company is unable to estimate the financial effect on future net revenue at this time.
Eclipse Incremental Advance
In July 2026, the Company repaid in full the remaining $
No other events have occurred subsequent to June 30, 2026, and through the issuance date of these consolidated financial statements that would require recognition or disclosure in the consolidated financial statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining adequate “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rules 13a-15(e) and 15d-15(e) under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2026. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2026, at reasonable assurance levels, in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Accordingly, we believe that the financial statements presented in this Form 10-K present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented herein.
Inherent Limitations on Effectiveness of Internal Controls over Financial Reporting
Our management team, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple errors or mistakes. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data.
Changes in Internal Control over Financial Reporting
There have been no changes to our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the fourth quarter of fiscal 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act). The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that:
| ● |
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
| ● |
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and |
| ● |
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that have a material effect on the financial statements. |
Because of the inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of the changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2026. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 framework).
Based on management’s assessment and those criteria, management concluded that the Company maintained effective internal control over financial reporting as of June 30, 2026.
Grant Thornton LLP, the independent registered public accounting firm that audited the Company’s financial statements included in this Annual Report, was not required to issue an attestation report on the Company’s internal control over financial reporting.
Rule 10b5-1 Trading Plans
During the quarter ended June 30, 2026, of our directors or executive officers (as defined in Rule 16a-1 under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as those terms are defined in Item 408 of Regulation S-K).
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
The information required by this Item is to the information provided in the Company’s Definitive Proxy Statement on Schedule 14A for the 2027 annual meeting of stockholders, to be filed within 120 days from June 30, 2026.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is to the information provided in the Company’s Definitive Proxy Statement on Schedule 14A for the 2027 annual meeting of stockholders, to be filed within 120 days from June 30, 2026.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this Item is incorporated by reference to the information provided in the Company’s Definitive Proxy Statement on Schedule 14A for the 2027 annual meeting of stockholders, to be filed within 120 days from June 30, 2026.
ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item is incorporated by reference to the information provided in the Company’s Definitive Proxy Statement on Schedule 14A for the 2027 annual meeting of stockholders, to be filed within 120 days from June 30, 2026.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is incorporated by reference to the information provided in the Company’s Definitive Proxy Statement on Schedule 14A for the 2027 annual meeting of stockholders, to be filed within 120 days from June 30, 2026.
ITEM 15. EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
(a)(1) and (a)(2) Financial Statements
The following documents are filed as part of this Annual Report:
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Report of Independent Registered Public Accounting Firm (PCAOB ID 248) |
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(b) Exhibits
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Description |
Registrant’s |
Date Filed |
Exhibit |
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| 2.1 |
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8-K |
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09/18/19 |
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2.1 |
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| 2.2 |
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8-K |
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10/15/19 |
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2.1 |
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| 2.3 |
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8-K |
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12/10/20 |
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2.1 |
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| 3.1 |
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8-K |
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06/09/15 |
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3.1 |
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| 3.2 |
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Certificate of Amendment of Certificate of Incorporation, effective June 1, 2016. |
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8-K |
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06/02/16 |
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3.1 |
| 3.3 |
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Certificate of Amendment of Certificate of Incorporation, effective June 30, 2016. |
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8-K |
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07/01/16 |
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3.1 |
| 3.4 |
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Certificate of Amendment of Certificate of Incorporation, effective August 25, 2017. |
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8-K |
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08/29/17 |
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3.1 |
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| 3.5 |
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Certificate of Amendment to the Restated of Certificate of Incorporation, effective August 10, 2018. |
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8-K |
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08/10/18 |
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3.1 |
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| 3.6 | Certificate of Amendment to the Restated Certificate of Incorporation, effective May 20, 2020. | 10-K | 09/26/24 | 3.6 |
| 3.7 |
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Certificate of Amendment to the Restated Certificate of Incorporation, effective December 8, 2020. |
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8-K |
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12/08/20 |
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3.1 |
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| 3.8 |
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Certificate of Amendment of Certificate of Incorporation, effective March 22, 2021. |
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8-K |
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03/22/21 |
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3.1 |
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| 3.9 |
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Certificate of Amendment of Certificate of Incorporation, effective January 6, 2023. |
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8-K |
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01/25/23 |
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3.1 |
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| 3.10 |
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8-K |
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05/09/22 |
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3.1 |
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| 4.1 |
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8-K |
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03/04/22 |
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4.1 |
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| 4.2 |
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8-K |
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03/04/22 |
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4.2 |
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| 4.3 |
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8-K |
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08/10/22 |
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4.1 |
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| 4.4 |
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8-K |
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08/10/22 |
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4.2 |
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| 4.5 |
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S-1/A |
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06/05/23 |
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4.10 |
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| 4.6 |
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S-1/A |
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06/05/23 |
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4.11 |
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| 4.7 |
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10-K |
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09/27/22 |
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4.9 |
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| 4.8 | Form of Prefunded Warrant. | S-1 | 06/02/25 | 4.13 | ||||
| 10.1 |
8-K |
10/03/19 |
10.1 |
|||||
| 10.2 |
8-K |
12/10/20 |
10.3 |
|||||
| 10.3 |
8-K |
03/22/21 |
10.2 |
|||||
| 10.4& |
10-Q |
02/14/22 |
10.3 |
| 10.5 |
10-Q |
05/11/23 |
10.1 |
|||||
| 10.6& |
8-K |
06/18/24 |
10.1 |
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| 10.7 |
8-K |
06/18/24 |
10.2 |
|||||
| 10.8 |
Second Amended and Restated Revolving Note dated June 12, 2024. |
8-K |
06/18/24 |
10.3 |
||||
| 10.9& | Amendment No. 6 to Loan and Security Agreement dated June 20, 2025, between the Borrowers and lenders party thereto and Eclipse Business Capital LLC as agent. | 8-K | 06/23/25 | 10.1 | ||||
| 10.10& |
10-Q |
02/14/22 |
10.3 |
|||||
| 10.11 |
10-Q |
05/11/23 |
10.2 |
|||||
| 10.12 |
Registration Rights Agreement dated January 26, 2022 between Aytu and each of the warrant holders. |
10-Q |
02/14/22 |
10.5 |
||||
| 10.13& |
10-Q |
02/14/22 |
10.6 |
|||||
| 10.14 |
S-1/A |
06/05/23 |
10.42 |
|||||
| 10.15 |
S-1/A |
06/05/23 |
10.43 |
|||||
| 10.16 |
10-K |
09/06/18 |
10.31 |
|||||
| 10.17& |
License, Development, Manufacturing and Supply Agreement, dated November 2, 2018. |
10-Q |
02/07/19 |
10.2 |
||||
| 10.18 |
First Amendment to Asset Purchase Agreement with Cerecor, Inc., dated November 1, 2019. |
8-K |
11/04/19 |
10.1 |
||||
| 10.19 |
8-K |
12/02/19 |
10.1 |
| 19.1 | Statement of Insider Trading Policy. | 10-K | 09/26/25 | 19.1 | ||||
| 21.1* |
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| 23.1* |
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Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm. |
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| 24.1* |
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| 31.1* |
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| 31.2* |
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| 32.1** |
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| 97.1† | Executive Compensation Clawback Policy. | 10-K | 09/26/24 | 97.1 | ||||
| 101 INS* |
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XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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| 101 SCH* |
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Inline XBRL Taxonomy Schema Linkbase Document. |
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| 101 CAL* |
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Inline XBRL Taxonomy Calculation Linkbase Document. |
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| 101 DEF* |
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Inline XBRL Taxonomy Definition Linkbase Document. |
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| 101 LAB* |
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Inline XBRL Taxonomy Labels Linkbase Document. |
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| 101 PRE* |
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Inline XBRL Taxonomy Presentation Linkbase Document. |
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| 104* |
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| † |
Indicates a management contract or compensatory plan or arrangement. |
| # |
The Company has received confidential treatment of certain portions of this agreement. These portions have been omitted and filed separately with the SEC pursuant to a confidential treatment request. |
| & |
Pursuant to Item 601(b)(10) of Regulation S-K, portions of this exhibit have been omitted as the registrant has determined that (1) the omitted information is not material and (2) the omitted information would likely cause competitive harm to the registrant if publicly disclosed. |
| * |
Filed herewith. |
| ** |
Furnished herewith. |
None.
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| |
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|
AYTU BIOPHARMA, INC. |
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| Date: September 22, 2026 |
By: |
/s/ Joshua R. Disbrow |
| |
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Joshua R. Disbrow |
| |
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Chief Executive Officer |
| |
|
(Principal Executive Officer) |
We the undersigned directors and officers of Aytu BioPharma, Inc., hereby severally constitute and appoint Joshua R. Disbrow and Ryan J. Selhorn, and each of them singly, our true and lawful attorneys, with full power to them, and to each of them singly, to sign for us and in our names in the capacities indicated below, to file any and all amendments to this Annual Report on Form 10‑K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorneys‑in‑fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys‑in‑fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated, on September 22, 2026.
| Signature |
|
Title |
| |
|
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| /s/ Joshua R. Disbrow |
|
Chief Executive Officer and Director |
| Joshua R. Disbrow |
|
(Principal Executive Officer) |
| |
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| /s/ Ryan J. Selhorn |
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Chief Financial Officer |
| Ryan J. Selhorn |
|
(Principal Financial and Accounting Officer) |
| |
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| /s/ John A. Donofrio, Jr. |
|
Chairman |
| John A. Donofrio, Jr. |
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| |
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| /s/ Carl C. Dockery |
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Director |
| Carl C. Dockery |
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| |
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| /s/ Abhinav Jain |
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Director |
| Abhinav Jain |
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| |
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| /s/ Vivian H. Liu |
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Director |
| Vivian H. Liu |
|
|
Exhibit 10.36
TERMINATION
OF THE
LICENSE AND DISTRIBUTION AGREEMENT
This Termination of the License and Distribution Agreement ("Termination Agreement") is made and entered into as of June 23, 2026 (the "Effective Date"), by and between Aytu BioPharma, Inc., with a business address of 7900 E Union Avenue, Suite 920, Denver, CO 80237, (“Aytu”), and Lannett Company, Inc., 1150 Northbrook Drive, Suite 155, Trevose, PA 19053, together with its Affiliates (“Lannett”). Aytu and Lannett are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, Lannett and Aytu are parties to the License and Distribution Agreement, effective as of May 11, 2022, and amended on July 6, 2023 and July 17, 2025 (“Metadate Agreement”) whereby Lannett transferred its New Drug Application 021259 (the “NDA”) for methylphenidate hydrochloride extended-release capsules, FDA-approved under the brand name Metadate CD®, (the “Product”) to Aytu, as well as licensed the Metadate CD trademark® to Aytu;
WHEREAS, following the transfer, Lannett then licensed the NDA from Aytu for the purpose of Lannett’s Manufacture and Commercialization of an Authorized Generic pharmaceutical product containing extended-release methylphenidate hydrochloride, and Aytu and Lannett entered into a distribution relationship, whereby Lannett supplied to Aytu for distribution by Aytu the branded extended-release methylphenidate hydrochloride pharmaceutical product; and
WHEREAS, the Parties now desire to revoke the transfer of the NDA to Aytu, thereby transferring the NDA back to Lannett, to terminate the Metadate Agreement in its entirety and to set forth the Parties’ respective rights, obligations, and responsibilities upon and following such termination.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
|
1. |
Capitalized Terms. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to them in the Metadate Agreement. |
|
2. |
Definitions. |
|
a. |
"Adverse Event" means any adverse event, side effect, injury, toxicity, or sensitivity reaction associated with the use of a Product, whether or not determined to be attributable to such Product, including any event requiring reporting to the FDA or other Regulatory Authority. |
|
b. |
“Confidential Information" means all confidential and proprietary information of a Party, whether disclosed under the Metadate Agreement or this Agreement, including trade secrets, know-how, technical data, business information, and regulatory filings. |
|
c. |
"Inventory" means all finished units of the Product in the possession or control of Aytu, as of the Effective Date. |
|
d. |
"Product” has the meaning set forth in the Recitals herein. |
|
e. |
"Product Complaints" means any communication from a healthcare professional, patient, consumer, or other person that contains a complaint, inquiry, or concern regarding the identity, quality, purity, safety, or efficacy of a Product. |
|
f. |
"Regulatory Authority(ies)" means the FDA and any other federal, state, local, or foreign governmental or regulatory authority with jurisdiction over the development, manufacture, marketing, distribution, or sale of pharmaceutical products. |
|
g. |
"Regulatory Materials" means all NDA, supplemental NDA, annual reports, adverse event reports, Manufacturing and Controls supplements, regulatory correspondence, promotional materials subject to FDA review, and all other submissions, filings, and communications with any Regulatory Authority relating to the Products. |
|
h. |
“Releasees” has the meaning set forth in Section 6 hereof. |
|
i. |
“Releasors” has the meaning set forth in Section 6 hereof. |
|
j. |
“Royalty Report” means a written report provided by Aytu to Lannett for a Quarter showing: |
|
(a) |
the gross sales of Product sold by Aytu during such calendar quarter and the calculation of Net Sales of the Product from such gross sales; |
|
(b) |
the royalties, payable in U.S. Dollars, which shall have accrued under this Agreement based upon such Net Sales of Product; |
|
(c) |
any reductions to or deductions from payments taken by Aytu in accordance with the Agreement. |
|
3. |
Termination of Metadate Agreement. |
|
a. |
Termination of Metadate Agreement. Notwithstanding anything to the contrary contained in the Metadate Agreement, Lannett and Aytu hereby agree to revoke the transfer of the NDA and to terminate the Metadate Agreement, effective as of the Effective Date, subject to the continuing obligations set forth below. (“Termination”). |
|
b. |
No Further Obligations. Except as provided in Sections 3(c) and 6 below, and notwithstanding anything to the contrary contained in the Metadate Agreement or permitted by law, all rights, liabilities and obligations of the Parties with respect to the Metadate Agreement shall be terminated as of the Effective Date. |
|
c. |
Survival. Notwithstanding the termination of the Metadate Agreement, the following provisions of the Metadate Agreement shall survive such termination to the extent provided therein or as modified by this Agreement: Article VI, Article VII, Article VIII, Article IX, Article X, Sections 11.4(b)-(e), Article XII and Article XIII, provided that the terms of this Agreement shall control in the event of any conflict. |
|
4. |
Revocation of NDA; Termination of Rights and Licenses. |
|
a. |
Revocation of Transfer. Upon Termination, the transfer of the NDA to Aytu is hereby revoked and Lannett shall assume title and all rights thereto. |
|
b. |
Cessation of Distribution Rights. As of the Effective Date, Aytu shall cease placing Purchase Orders with Lannett and shall have no further rights to distribute, market, promote, offer for sale, sell, or otherwise commercialize the Product, except as provided in Subsection 6(a) below. |
|
c. |
Termination of Licenses. All licenses granted from Aytu to Lannett and from Lannett to Aytu under the Metadate Agreement, including any license to use the Licensed Mark and the licenses to use any Confidential Information or other Intellectual Property Rights of the other Party relating to the Product, are hereby terminated as of the Effective Date, except for Aytu’s limited right to use the Licensed Mark to sell the Inventory, as provided in Subsection 6(a) below. |
|
5. |
Termination of Pharmacovigilance and Quality Agreements. The Safety Data Exchange Agreement effective June 8, 2022 (“Original SDEA”) and the Quality Agreement dated May 13, 2026, both entered into by the Parties in connection with the Metadate Agreement, shall also be terminated as of the Effective Date, except to the extent that there are continuing obligations which by their nature shall survive beyond the termination thereof. Such continuing obligations shall continue in place until they have been fully performed. |
|
6. |
Existing Inventory; Royalty Reports; Payment Reconciliation. |
|
a. |
Existing Inventory. The Parties agree that following Termination, Aytu may continue to sell and distribute its existing Inventory of the Product currently in its possession, at its sole and exclusive discretion. |
|
b. |
Royalty Reports and Royalty Payments to Lannett. Following Termination and until the Quarter after the last of the Inventory has been sold and accrued, Aytu shall continue to provide Royalty Reports to Lannett in accordance with Sections 6.1 and 7.1 of the Metadate Agreement within forty-five (45) days of the end of each Quarter. Payments of those royalties shown to have accrued by each report shall be due and payable by Aytu to Lannett fifteen (15) Business Days after the date such report is due. |
|
7. |
Mutual Release. The Parties, including each of their predecessors, successors, assigns, officers, directors, employees, trustees, attorneys, parents, subsidiaries and Affiliates (collectively, "Releasors" fully, finally and forever release, relinquish, acquit and discharge each other and each of their predecessors, successors, assigns, officers, directors, employees, trustees, attorneys, parents, subsidiaries, Affiliates, customers, suppliers and distributors (collectively, "Releasees") of and from, and covenant not to sue, not to assign to any other entity a right to sue and not to authorize any other entity to sue any Releasee for, any and all claims, losses and causes of action of every name and nature, both at law and in equity, known or unknown, suspected or unsuspected, accrued or unaccrued, that (i) exist as of the date of this Termination Agreement in relation to the Metadate Agreement, including all rights and obligations of the Parties thereunder, except (i) any non-monetary obligation under the Metadate Agreement which by its terms survives termination and (ii) with respect to the future Royalty Reports and payments under Section 6 hereof. It is the intention of the Parties that, except as to the sections identified in this paragraph and Section 3(c) above that survive termination, the Metadate Agreement shall be deemed terminated and null and void. The release shall also not prevent or impair the right of any Party to bring a proceeding to enforce the terms of this Agreement. |
|
8. |
Regulatory Considerations. |
|
a. |
Regulatory Transfer. |
|
i. |
At Aytu’s sole cost and expense, it shall: |
|
(a) |
within five (5) business days, file the required transfer letter with the FDA in the form required thereby, to acknowledge the transfer of the NDA from Aytu to Lannett (“Aytu Transfer Letter”). |
|
(b) |
Within five (5) business days of the Effective Date, provide Lannett with copies of all Regulatory Materials in its possession or control, including but not limited to: |
|
- |
the NDA, all correspondence with Regulatory Authorities relating to the Product, and any promotional materials submitted to the FDA. |
|
- |
All Adverse Event reports from its safety database in applicable format, Product Complaints, and medical information inquiries, together with supporting documentation; |
|
- |
All customer lists, distribution records, and sales data for the Product; |
|
- |
All recall and field corrective action records; and |
|
- |
All contracts with third-party distributors, wholesalers, and service providers relating to the Products (to the extent assignable or transferable). |
|
ii. |
Within five (5) days of Lannett’s receipt of the Regulatory Materials from Aytu per 8a.i(b) above, Lannett shall file a transfer letter with the FDA, in the form required thereby, to effectuate the transfer of the NDA from Aytu to Lannett (“Lannett Transfer Letter”). |
|
b. |
Transfer of Regulatory Responsibility. As of the date of the Lannett Transfer Letter and except as otherwise provided in the Original SDEA, all regulatory responsibility for the Product, including but not limited to, responsibility for maintaining the NDA, regulatory compliance, and all communications with Regulatory Authorities, is transferred to and assumed by Lannett as the Applicant Holder including any Regulatory Authority meeting as might be required for the Product. |
|
c. |
New Pharmacovigilance Agreement. Notwithstanding certain obligations that continue under the Original SDEA, the Parties agree that they will work together in good faith to promptly enter into a new Safety Data Exchange Agreement (“New SDEA”), which shall take effect upon Termination and cover the distribution and sale of Inventory under Section 6 hereof. The New SDEA will address, among other things, reporting of Adverse Events and Product Complaints of which Aytu becomes aware. |
|
d. |
Communication with Regulatory Authorities. Following Termination and pursuant to the New SDEA, Aytu shall promptly forward to Lannett any correspondence or communications from any Regulatory Authority or any other documentation received by Aytu relating to the Products. |
|
e. |
Record Retention. Notwithstanding the transfer of copies to Lannett, Aytu shall retain any copies of originals relating to the Product for the longer of: (a) ten (10) years from the Effective Date; (b) the period required by applicable law or regulation, including 21 C.F.R. § 314.81; or (c) the period during which such records may be relevant to any pending or threatened litigation, investigation, or regulatory proceeding. Aytu shall not destroy such records without providing Lannett with thirty (30) days' prior written notice and an opportunity to obtain copies. |
|
f. |
Access to Records. Lannett and its authorized representatives (including Regulatory Authorities) shall have the right to access and copy Aytu’s retained records relating to the Product upon reasonable advance notice during normal business hours for purposes of regulatory compliance, pharmacovigilance, litigation, or other legitimate business purposes. |
|
g. |
Continued Assistance. Aytu will continue to provide reasonable technical or other assistance to Lannett upon Lannett’s request, in order to effectuate the transfer of the NDA to Lannett. |
|
9. |
Confidential Information. |
|
a. |
Return of Confidential Information. Within thirty (30) days after the Effective Date, each Party shall return to the other Party all Confidential Information of the other Party in its possession or control, including all copies, reproductions, summaries, analyses, or extracts thereof, in any form or medium, whether tangible or electronic. Notwithstanding the foregoing, each Party may retain one archival copy of the other Party’s Confidential Information solely for purposes of determining its ongoing obligations under this Agreement and applicable law, provided that all such retained Confidential Information shall remain subject to the confidentiality obligations set forth in this Agreement. |
|
b. |
Confidentiality of Termination Agreement. Each party agrees that the terms and conditions of this Termination Agreement constitute Confidential Information of both Parties and shall not be disclosed to any third party without the prior written consent of the other Party, except (i) as required by applicable law, regulation, or court order, (ii) to such Party's attorneys, accountants, financial advisors, and other professional advisors who have a legitimate need to know and are bound by confidentiality obligations, (iii) to such Party's affiliates, lenders, investors, and potential acquirers who have a legitimate need to know and are bound by confidentiality obligations, or (iv) as necessary to enforce such Party's rights under this Agreement. |
|
10. |
Miscellaneous. |
|
a. |
All Other Actions. The Parties agree to take any other action that may be necessary to effectuate the terms of this Termination Agreement. |
|
b. |
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of Delaware, without regard to its conflicts of law principles. |
|
c. |
Jurisdiction and Venue. Each party irrevocably submits to the exclusive jurisdiction of the state and federal courts located in Delaware for the purposes of any suit, action, or other proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. Each party irrevocably waives, to the fullest extent permitted by law, any objection it may now or hereafter have to the laying of venue in any such court and any claim that any such court is an inconvenient forum. |
|
d. |
Entire Agreement. This Agreement, together with any exhibits, schedules, and attachments hereto, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written, between the parties with respect to such subject matter, including the Metadate Agreement (which is hereby terminated in its entirety as of the Effective Date, except as expressly provided herein). |
|
e. |
Amendments and Waivers. No amendment, modification, or waiver of any provision of this Agreement shall be effective unless in writing and signed by both parties. No waiver of any right or remedy hereunder shall be deemed a waiver of any other right or remedy or a waiver of the same right or remedy on any subsequent occasion. |
|
f. |
Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect, and such invalid, illegal, or unenforceable provision shall be reformed or construed to the extent possible to give effect to the intent of the parties. |
|
g. |
Assignment. Neither party may assign, transfer, or delegate any of its rights or obligations under this Agreement without the prior written consent of the other party, and any attempted assignment, transfer, or delegation without such consent shall be null and void; provided, however, that either party may assign this Agreement without the consent of the other party (i) to an affiliate of such party, or (ii) in connection with a merger, consolidation, sale of all or substantially all of such party's assets, or similar transaction, provided that the assignee assumes all obligations of the assigning party under this Agreement. |
IN WITNESS WHEREOF, the parties have executed this Termination Agreement as of the Effective Date.
| AYTU BIOPHARMA, INC. | LANNETT COMPANY, INC. | |||
| By: | /s/ Josh Disbrow | By: | /s/ Michael Block | |
| Name: | Josh Disbrow | Name: | Michael Block | |
| Title: | Chief Executive Officer | Title: | Chief Business & Corp. Development Officer | |
Exhibit 21.1
SUBSIDIARIES OF AYTU BIOPHARMA, INC.
|
Name of Subsidiary |
State Jurisdiction |
|
|
1. |
Aytu Therapeutics LLC |
Delaware |
|
2. |
Cherry Creek Therapeutics, Inc. |
Delaware |
|
3. |
Neos Therapeutics, Inc. |
Delaware |
|
4. |
Neos Therapeutics Brands, LLC |
Delaware |
|
5. |
Neos Therapeutics, LP |
Texas |
|
6. |
PharmaFab Texas, LLC |
Texas |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our report dated September 22, 2026, with respect to the consolidated financial statements included in the Annual Report of Aytu BioPharma, Inc. on Form 10-K for the year ended June 30, 2026. We consent to the incorporation by reference of said report in the Registration Statements of Aytu BioPharma, Inc. on Forms S-1 (File Nos. 333-271556, 333-287728 and 333-287825), on Forms S-3 (File Nos. 333-235548, 333-236599, 333-239010, 333-259862, 333-265479 and 333-282347) and on Forms S-8 (File Nos. 333-205462, 333-236598, 333-255325 and 333-272897).
/s/ GRANT THORNTON LLP
Denver, Colorado
Exhibit 31.1
AYTU BIOPHARMA, INC.
Certification by Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Joshua R. Disbrow, certify that:
|
1. |
I have reviewed this report on Form 10-K for the year ended June 30, 2026, of Aytu BioPharma, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a—15(e) and 15d—15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a—15(f) and 15d—15(f)) for the registrant and have: |
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities particularly during the period in which this report is being prepared; |
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
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a) |
All significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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Date: September 22, 2026 |
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By: |
/s/ Joshua R. Disbrow |
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Joshua R. Disbrow |
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Chief Executive Officer |
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(Principal Executive Officer) |
Exhibit 31.2
AYTU BIOPHARMA, INC.
Certification by Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Ryan J. Selhorn, certify that:
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1. |
I have reviewed this report on Form 10-K for the year ended June 30, 2026, of Aytu BioPharma, Inc.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a—15(e) and 15d—15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a—15(f) and 15d—15(f)) for the registrant and have: |
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a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities particularly during the period in which this report is being prepared; |
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b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
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a) |
All significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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Date: September 22, 2026 |
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By: |
/s/ Ryan J. Selhorn |
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Ryan J. Selhorn |
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Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S. C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I Joshua R. Disbrow, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that, to my knowledge, the Annual Report on Form 10‑K of Aytu BioPharma, Inc. for the fiscal year ended June 30, 2026, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 10‑K fairly presents, in all material respects, the financial condition and results of operations of Aytu BioPharma, Inc.
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Date: September 22, 2026 |
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By: |
/s/ Joshua R. Disbrow |
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Joshua R. Disbrow |
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Chief Executive Officer |
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(Principal Executive Officer) |
I Ryan J. Selhorn, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that, to my knowledge, the Annual Report on Form 10‑K of Aytu BioPharma, Inc. for the fiscal year ended June 30, 2026, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 10‑K fairly presents, in all material respects, the financial condition and results of operations of Aytu BioPharma, Inc.
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Date: September 22, 2026 |
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By: |
/s/ Ryan J. Selhorn |
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Ryan J. Selhorn |
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Chief Financial Officer |
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(Principal Financial and Accounting Officer) |