Aytu BioPharma, Inc. (AYTU) on Q2 2024 Results - Earnings Call Transcript

Operator: Greetings. Welcome to the Aytu BioPharma Fiscal 2024 Q2 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Roger Weiss. You may begin. Roger Weiss: Good afternoon, everyone and thank you for joining us for Aytu BioPharma's fiscal 2024 second quarter financial and operational results conference call for the period ended December 31, 2023. Joining us on today's call is Aytu's CEO, Josh Disbrow; and the company's Chief Financial Officer, Mark Oki. At the conclusion of today's prepared remarks, we'll open the call for a question-and-answer session. I'd like to remind everyone that today's call is being recorded. A replay of today's call will be available by using the telephone numbers and conference ID provided in the press release and issued earlier today. Finally, I'd like to call your attention to the Safe Harbor Disclosure regarding forward-looking information. The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations and future potential operating results of Aytu BioPharma. Although management believes these statements are reasonable based on estimates, assumptions and projections as of today, these statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risks, uncertainties and other factors, including but not limited to, the factors set forth in the company's filings with the SEC. Aytu undertakes no obligation to update or revise any of these forward-looking statements. With that said, I'd like to turn the event over to Josh Disbrow, Chief Executive Officer of Aytu BioPharma. Josh, please proceed. Joshua Disbrow: Thank you, Roger and welcome, everyone. I'm extremely pleased to be speaking with you today following the release of our fiscal '24 second quarter financial results. Which culminated in our first quarter of positive operating income in company history. This is clearly quite an achievement and a significant inflection point for a business that incurred more than $100 million consolidated loss from operations in fiscal '22. Also another key accomplishment during the quarter was positive adjusted EBITDA of $5.1 million, up from $0.7 million last year. Further, this is now our sixth out of the last 7 quarters with positive adjusted EBITDA for our Rx segment. Equally important, our cash balance remained steady at $19.5 million, compared to $20 million at the end of the September quarter, all to all a very strong quarter. The strategic initiatives we've undertaken to reposition Aytu as a growing and operating profitable specialty Pharma company focused on commercializing novel prescription therapeutics are clearly working. I'll remind you that this repositioning started in October of '22, when we indefinitely suspended our clinical development programs and continue with the wind down of our Consumer Health segment which we announced in mid-calendar '23. These 2 parts of our business were a drain on cash and masked the strength of our Rx segment which has been growing nicely and has been profitable from a segment perspective. With the Consumer Health segment almost completely wound down which should be completed around the end of June, the go-forward Aytu business will be highlighted by our rapidly growing ADHD portfolio which just posted record quarterly revenues of $16.6 million, up 49%, compared to Q2 of last year. And our Pediatric portfolio focused on Poly-Vi-Flor and Tri-Vi-Flor, 2 complementary prescription fluoride-based multivitamins, as well as carbonate ER, an extended-release carbinoxamine based antihistamine suspension indicated to treat allergic conditions for patients 2 years and older. On the whole, our Rx segment reported Q2 revenue of $18.7 million, up from $18 million last year, gross profit margin of 78%, up from 72% last year. Rx segment adjusted EBITDA of $5.5 million, up from $3.1 million and Rx segment net income of $0.7 million. With continued prescription growth anticipated, coupled with further margin improvement, driven by our ongoing operational improvements, we believe the future financial profile of Aytu looks strong. To expand on the financials in more detail, let me run through a key few points within both our ADHD and Pediatric portfolios, starting with ADHD. As I mentioned, our ADHD portfolio experienced a 49% year-over-year increase in net revenue, during the second quarter to an Aytu record of $16.6 million. ADHD portfolio prescriptions grew an impressive 14.5% over the second quarter of last year. The growth in net revenue in Scripps was driven by strong sales force execution, a significant increase in prescribers of our ADHD brands, improved gross to net due to program and coverage improvements, along with continuing to leverage our innovative Aytu RxConnect platform which we believe is best-in-class. On the topic of RxConnect, some of you may have seen an op-ed piece that are recently authored in medical economics, discussing prescription drug pricing transparency to help address it expose the opaque pricing system that surrounds U.S. prescription drugs. Our transparent drug pricing plan works directly through our 1,000-plus RxConnect partner pharmacies, nationwide to deliver our products at out-of-pocket costs lower than if our prescriptions were to flow through regular way retail pharmacies. It is taking bold action like companies like ours, along with real commitment to provide patients with access options through programs like RxConnect. It is our charge to ensure predictability of out-of-pocket costs for the patients who need our products and through our innovative RxConnect Patient Support platform, we are leading real change. Our team remains committed to ensuring predictable clear out-of-pocket costs for our novel products. In addition to our strong operational execution, the trends we've talked about the past few quarters within the ADHD market continue to persist, including the evolving supply disruptions for generic Adderall IR and ER in various methylphenidate products and several stimulant products being discontinued all together as of late. Articles and Broadcast test news reports aired as recently as this week are highlighting the issues which continue to negatively impact patients across the country. Currently, 3 drug manufacturers are reporting shortages of generic Adderall XR and now 5 generic manufacturers have discontinued their Adderall XR generics altogether. This is as of last week. As it relates to extended release methylphenidate as of the end of January, 8 manufacturers were reporting shortages of ER methylphenidate, while 3 have discontinued their methylphenidate products. While supply has been constrained, the system is also stressed on the demand side of the equation as we continue to see an increase in new ADHD diagnoses of both children and adults with the FDA forecasting, yet more prescription growth this year. As these market-wide supply challenges have continued, we've done an exceptional job meeting the demands of patients, having maintained supply to meet the growing demand for Adzenys and Cotempla. As a reminder, Adzenys, the only approved extended-release ODT amphetamine for the treatment of ADHD and is approved as bioequivalent to Adderall XR. So our brand is well positioned to continue to capture additional market share, as the extended-release amphetamine shortage remains ongoing and supply means remains rather very unpredictable. Cotempla is the only approved extended-release ODT methylphenidate for the treatment of ADHD and it competes against Concerta and other extended-release methylphenidates. Again, several of which are being discontinued. We view the ongoing ADHD supply eye situation is one that will likely to continue for the foreseeable future in some form or fashion. And with that, a continuing opportunity for more and more patients and prescribers to get experience with both Adzenys and Cotempla. It is becoming increasingly apparent that the success we have achieved to capture increased market share is due to 2 key factors: one, our manufacturing teams focus on meeting increased demand, while simultaneously working to transition to our new CMO; and two, our commercial team's strong execution and ability to showcase the benefits of our brand, while also effectively leveraging Aytu RxConnect. I couldn't be more proud of the tremendous execution of our team to meet the needs of patients that have been so desperately seeking solutions during this time of market turmoil in ADHD. Transitioning now to Pediatrics which as a reminder, represents about 11% of our total second quarter Rx segment revenues. Similar to what we discussed last quarter, our Pediatric portfolio net revenues in scripps were impacted primarily by customer ordering timing, as a result of payer changes. We've made great progress during the quarter, expanding our customer base, having recently implemented multiple commercial initiatives and have also seen some unstacking of the distribution channel which has resulted in Poly-Vi-Flor shipped units being up significantly for the month of January, when looking at it versus December of '23. This is a very good sign; we're excited to see it. There's still work to be done. But based on what we're now seeing, we believe the trend in the Pediatric portfolio is, in fact, heading in the positive direction. And despite the soft Pediatric revenue for the quarter, we're very pleased to see a very healthy Rx segment adjusted EBITDA of $5.5 million for the quarter. So to wrap things up before I turn it over to Mark, it's been our objective to transition Aytu away from a multipronged operation which included not only our Rx segment but also our Consumer Health segment and pipeline development programs, both of which generated negative cash flows. To a highly focused pharmaceutical company that can grow and achieve profitability. While we have been Rx segment adjusted EBITDA positive for 6 of the last quarters -- 6 of the last 7 quarters, witnessed by our trailing 3-quarter company-wide adjusted EBITDA of $15 million, the ability to transition this business to operating income is a tremendous accomplishment. Let me turn the call now over to Mark and then I'll come back to wrap things up before turning it over to questions. Mark? Mark Oki: Josh, thank you and welcome to everyone joining us on this call. Let's dive in and take a closer look at this quarter's numbers, starting with revenue. Net revenue for our fiscal 2024, second quarter was $22.9 million, down 13%, compared to fiscal 2023, second quarter of $26.3 million. And reflects the planned wind-down of the Consumer Health segment. Looking at the segment contributions, net revenue from prescription -- I'm sorry, from Rx product sales in the 2024, second quarter was $18.8 million, up 4% from $18 million in the same quarter a year ago. Within our RX segment, the ADHD portfolio products notched 49% revenue growth to $16.6 million in the 2024, second quarter against $11.1 million in the quarter a year ago. These robust ADHD portfolio revenue gains reflected the ongoing successful execution of our commercial efforts and market share gains, as the ADHD market continues to experience manufacturing and supply chain issues that Josh outlined earlier. Our quarterly ADHD written prescriptions were up 14.5% year-over-year. The second part of the RX segment is the Prescription Pediatric portfolio which again this quarter reflected declines from the timing-related ordering of our prescription multivitamins, following a payer change. Peads experienced a 66% decrease in net revenue to $2.2 million in our 2024, second quarter, compared to $6.3 million in 2023. We are confident that we will be able to reinvigorate the multivitamin revenues to more normalized levels over the next few quarters. Since the second quarter's end, we have been seeing some unslacking of this channel and in return -- and the return of more reasonable channel inventory levels. I want to highlight that even with the impact from this time-based multivitamin issue, we continue to post strong results in our Rx segment. In regard to our Consumer Health segment, as I noted, we are winding down this segment to focus our efforts to improve our profitability and cash flows. For the 2024, second quarter, net revenue from Consumer Health declined 49% to $4.2 million, compared to $8.3 million in the same quarter last year. Our game plan is to sell through all inventory and wrap up Consumer Health operations around June. Overall, as we execute this process, we would expect the segment to generate slightly negative to neutral adjusted EBITDA contribution. Consumer Health contributed a negative adjusted EBITDA of just $280,000, during the second quarter. Consolidated gross margin improved to 71% in the second quarter, compared to 66% in the quarter a year ago. The second quarter gross margin was aided by strong ADHD sales growth enabling improved efficiencies at our Grand Prairie manufacturing facility, coupled with the having of lower margin sales from our now winding down Consumer Health segment. One important note Josh touched on is that our RX segment gross margin was 78%, during the quarter, up from 72% in last year's second quarter. This is a good metric to understand the go-forward business, once Consumer Health is completely wound down. As we have commented on in each quarter, our business's gross margin percentage can and do vary, due to both seasonal and other factors. I want to remind all listeners that while we are revewing the second quarter results, we are operating in the third fiscal quarter, where most consumers of our products have had their annual insurance deductibles reset starting January 1. As such, we expect to experience a greater use of our Aytu RxConnect price protection program which historically has lowered our gross to net margins. Please remember that this is part of our normal seasonality and that those gross to net adjustments are expected to improve throughout the calendar year. Operating expenses, excluding impairment expense, changes in contingent consideration and amortization of intangible assets were $12.5 million in the second quarter of 2024, compared to $20.3 million the same period a year ago. This represents a decrease of 38%, a reflection of our continued focus on reducing costs and winding down the Consumer Health segment. Research and development expense were $524,000, the second quarter of 2024, compared to $1.7 million in the corresponding 2023 quarter. Reflecting a normalized base level, highlighting the absence of any substantive drug development expense consistent with our prior announcements. As you saw in our second quarter 2024 press release and heard in Josh's initial comments, we recorded our first quarterly operating profit. As a CFO, I'm especially pleased to say the words operating profit. The primary focus for this swing in the profitability, where the previously noted growth in the ADHD portfolio, gross margin improvements, along with drops in sales and marketing and general and administrative expenses which produced $2.4 million in operating income, against last year's $6.9 million operating loss. While we generated both in operating profit and income before taxes, we recorded $828,000 of income tax expense, resulting in a $220,000 net loss or $0.04 loss per share for the quarter, compared to a $6.7 million loss or $2.15 net loss per share for the same quarter last year. On top of our pre-tax earnings, we generated a solid positive adjusted EBITDA this quarter of $5.1 million, compared to $727,000 in last year's second quarter. Adjusted EBITDA for the Rx segment was $5.5 million. Cash and cash equivalents on December 31, 2023, were $19.5 million, compared to $20 million on September 30, 2023. We are comfortable with the capital level and believe that our balance sheet provides us with a solid foundation to execute our corporate game plan. As I've noted in prior quarters, we don't give forward guidance. However, we do anticipate that around the end of this fiscal year, we will have exited our Consumer Health segment, as well as continue to move ahead with the outsourcing of our ADHD production. These operational changes plus the expected recovery of our Pediatric sales should position us for a strong end to our fiscal 2024 and a good start to our fiscal 2025. With that, let me turn it back over to Josh. Joshua Disbrow: Thanks, Mark. So as you might imagine, I'm extremely pleased with the results of the second quarter, highlighted by the company's first ever quarter of positive operating income and growing adjusted EBITDA, as the wind down of the Consumer Health segment is completed, combined with the continued growth and operational improvements within our Rx segment, we believe the financial profile of Aytu will continue to become increasingly strong. With the expectation of positive cash flow generation in the quarters to come, coupled with a strong balance sheet of $19.5 million in cash at the end of December, I couldn't be more excited for the future of the company. I want to sincerely thank the entire team at Aytu for their hard work and dedication to delivering for patients, clinicians and our stockholders. It has taken a disciplined approach from the whole organization to get to this point and the management team and I are grateful to our Aytu colleagues for making such tremendous progress. Thank you to everyone participating on today's call. We'll now be happy to answer any questions. Operator? Operator: [Operator Instructions] The first question comes from Naz Rahman with Maxim Group. Naz Rahman: Congratulations on all the progress you made especially over the last couple of years. So obviously, as you talked about it, there's -- the shortage is still ongoing and obviously, manufacturers are sort of exiting this space. What gives you confidence that you could get enough quota for your products? Like how are your conversations with the DEA going? And I guess, do you have a time line of -- for how much -- or for what period of time you have inventory for? Joshua Disbrow: Yes. Thanks, Naz. Good question. And obviously, that's an ongoing challenge. Every company in the stimulant space is facing. I will say the DEA is becoming increasingly accommodating and open to meetings with us, in fact, had a recent meeting with the FDA -- with the DEA rather in a really good dialogue and really good open lines of communication. They certainly want to be helpful. They understand the situation with the shortage. And while that would stand to benefit, not just small manufacturers but large ones, we're confident that the line of communications are wide open and definitely a high level of interest from the DEA and making sure that they don't put anybody out of stock. They recognize the rise in demand, they communicate regularly with the DEA to understand exactly where they think prescription trends are going. And while I have a responsibility to obviously curtail problems like diversion, they don't want to put anybody in the spot, most notably smaller manufacturers. So we're comfortable with the current inventory. We frankly could always use more. We're always in a position to go back and request supplemental API and have been doing that as long as -- frankly, since the beginning and that goes all the way back to prior to the acquisition of Neos. And we've got a great team on the ground, a great team that is operating diligently. We don't have infinite supply but we're comfortable for the foreseeable future and are comfortable that we can continue to get more API, as we need it. And what's important about us is we continue to be very nimble. Obviously, we're a small company. We still are operating in the Grand Prairie facility, as we transition to the contract manufacturers. So we've availed ourselves now of two facilities continue with that transition process, while we still make product in Grand Prairie and what I'll say generally speaking is we're -- we've not stocked out to date and don't have any plans to. Naz Rahman: Got it. That was very helpful. So obviously, your ADHD franchise has seen a lot of growth over the last call -- let's call it the calendar quarter and obviously the fiscal calendar year and the fiscal year too. Could you talk a little bit about how much of that growth or at least what [indiscernible] growth is due to I guess, what percentage growth in prescribers? And how much there is a breadth in -- or how much of an increase you saw like on a per prescriber basis or writing the scripp, like how much more are prescribed writing now versus like last January versus how many more -- how much more prescribers you have that drove the growth? Joshua Disbrow: Yes. Great question. So the prescription growth is being driven by, as you would expect, a combination of established prescribers and new prescribers. New prescribers actually are up about 20% year-to-date, when you look at it versus fiscal '23. And so that pretty well mirrors the level of prescribing. And so what that suggests is that the level of prescribing on a per physician basis is static which is good. It's about what you want to see. They've found a place in their practice for Adzenys and Cotempla, they consistently prescribe it for those types of patients. And I think we've done clearly a better job of getting out there, given the fact that we still have a very, very small share of voice. But the fact that we have increased prescribers by, call it, 18% to 20% after increasing prescribers by about that same percentage year-over-year the last year. So -- and that, as you recall, it's coming off of a much higher baseline. So, great to see that level of prescriber growth, when you've got these products that are somewhat mature. Obviously, very, very competitive category with some generic competition and various constraints mostly by virtue of our size. Keeping in mind that we essentially work with a small commercial team of, call it, 40 or so sales representatives. And very encouraging to see that the word is getting out there. And as those prescribers come on board, they're more or less prescribing at that same consistent level. So we're encouraged by that. Naz Rahman: And sort of on that point and I know we talked about and you discussed there's ongoing charges. But have you seen any impact of generic Vyvanse on your products? Also, have you seen any situations where patients if they were able to get their prior prescriptions or prior stimulus they switched away from your products? Or do you see patients just kind of staying on Aytu's products? Joshua Disbrow: I'll take the second one first. More so staying on our products. You're always going to have patients that for whatever reason to fall back to what they had been on. But we've really held our gains which has been great to see. We've had patients that have moved over from mix salt amphetamine ER and specifically Adderall to Adzenys XR-ODT and really like it -- like not just what they feel clinically. And in fact, some patients will report that they like it better in some ways. Some patients report not necessarily needing a booster dose which sometimes you'll hear about with our L-XR, as much they like the system, they like the program. They like the fact that they can get it predictably, particularly this time of year when deductibles are resetting and it can be very, very unpredictable and unexpected in terms of what you might pay at the pharmacy counter. And so equal parts sort of clinical benefits and how they feel and the service and the overall level of predictability that they're getting. So it's been good to see that level of stickiness. Again, you're never going to have 100% of your patients stay, once they switch to your product. That's just a fact of life. These many of these patients have been on Adderall their entire lives or their entire adult lives. But to see so many sort of come over and stay over that's been very encouraging. And what I'll say about VYVANSE is, it's been a significant issue for patients and prescribers, in pharmacies. A significant number of VYVANSE generics were approved in the low teens. Significant issues just with some of the manufacturers getting quota, so that inhibited their ability to gain any significant share and you cross -- you intersect that with the natural issue around PBMs. They're naturally going to contract for a select number of generics. They're not going to contract with all of those. And so if you have a situation, where you've got VYVANSE in supply, you've got a particular distribution center that has it available from manufacturer A but manufacturer B is the one that has the contract with, say, two of the large PBMs well, that's going to create a natural issue for the product that's physically available. So physical availability does not mean actual availability in this realm. You have to have payers aligned which is one of the things that frankly, we benefit from because we really take payers out of the picture. Obviously, that is not to suggest we don't have coverage. We do have coverage for our products. But even in scenarios where coverage is maybe not -- we don't get full reimbursement or coverage is not optimal. We can still essentially underwrite that prescription. And irrespective of the payer landscape, we can get that prescription filled. So this is all to say, VYVANSE's been quite a bit of noise. There's been quite a bit of hassle and sort of disruption as these multiple generics, again, it's low teen, 13,14 that are out there. It just creates more of an issue for patients which in turn creates more of an opportunity for us to sort of smooth that experience out and give patients an opportunity to get something that's easy, that's predictable. They don't have to play catch up with the pharmacy, figure out which pharmacy has my VYVANSE. And if they have it, is it VYVANSE that my PBM covers and we, again, can cut through all that noise. So that issue and sort of the fiasco that has presented itself around VYVANSE has definitely presented a nice opportunity for our brands. Naz Rahman: Just one last question, if I may. So on this Pediatric business, you said you engaged some initiatives to reaccelerate growth. Could you talk a little bit about what those initiatives are and when we could see the impact those initiatives? Joshua Disbrow: Yes, happy to. So it's really threefold. I would say, first and foremost, is diversification. We had some concentration risk there with some customers and we've now begun in earnest, really diversifying our ordering customers, most notably some of our pharmacy customers to make sure that we don't run the risk of any one pharmacy having too much of our business. And we're starting to see some of that come through in that large customer is now proportionately a smaller part of our business than they were, say, a couple of quarters ago. So we're starting to see that. Equal parts diversification into areas in different geographic areas. So for example, we've begun to move westward and we've put some virtual reps in place to enable us to access physician customers, pharmacy customers in places outside of the traditional non-Floridated areas which are really in the tristate area, New York, New Jersey, Connecticut and then you would add in Pennsylvania. So by getting out into some of the areas out West, California and so forth, while those aren't I would say, per capita or sort of per individual state, as big as maybe the Tri-state area when you add those together and aggregate all of the potential demand in these non-Floridated area, it's a nice opportunity. So we are starting to see some nice movement there, as Mark mentioned and I had as part of my prepared script, we are starting to see some of the unslacking, as we communicated on the last call. It really was a timing issue. Obviously, there's a supply chain that has to sort of be drained before they need to reorder. We did see some nice reorders here in January or back in January and have seen some improved trajectory. I don't want to comment specifically around what that is because it would potentially create sort of a false sense of exactly where it's going to be, not everything is linear. So what I'll say is we've diversified customers, we've diversified geographically and we put in some resources to help us very efficiently tap into some new areas and take advantage of some of the positive payer changes that have actually happened. And in fact, there are some scenarios where we actually picked up coverage. So sort of where one door closes, another couple of doors open up. So -- and in terms of timing, when I think we might start to see some real impact. I'm optimistic that it's in the very near term. I don't want to suggest that we'll see it this quarter for the March quarter in full. But I think we're starting to see enough signs suggest that the multivitamins are starting to recover. Will they get back to where they were? I mean as I said earlier, there's -- on my last call, I think we -- we'll wait and see. I think there's an opportunity to get there sort of as we move out. But in the next couple of quarters or so, I think we'll start to see some improvement in that business. And again, I'll highlight the fact that even with this, the Pediatric business being sort of at its low point, call it, a $2 million quarter, the Rx segment posted a $5.5 million EBITDA quarter was positive net income by itself. And as we continue to wind down of the Consumer business and as Pediatrics rebounds to whatever degree that might be excited to see that $5.5 million potentially improve. So we're happy with how the Peads products are starting to show some improvement but still more work to do. Operator: [Operator Instructions] There are currently no questions in queue. I'd like to turn it back to management for closing remarks. Joshua Disbrow: Thank you, John. Again, I just want to reiterate my thanks to the entire team at Aytu, for all they've done for their hard work and dedication. We really are delivering for patients and clinicians at an important time, particularly as the ADHD category remains really challenged. So my thanks to everybody for putting their best foot forward. We've met demand. We've continued to get more physicians and patients introduced to our ADHD brands and I'm really proud of the progress we're making on the pediatric side of the business, as well as we start to see some recovery there. It has indeed taken a significant disciplined approach from the ground up and the entire organization to get to this point. But we are grateful to our shareholders, grateful to all of our stakeholders and our teammates for getting us to this point. So until next time, we're excited about the progress we're making and look forward to sharing more progress on our next call, after the March quarter closes out. So thanks, everyone, for participating on the call and have a good afternoon and good evening. Operator: Thank you. This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.
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Aytu BioPharma, Inc. (NASDAQ:AYTU) Financial Performance Analysis

  • Aytu BioPharma, Inc. (NASDAQ:AYTU) and its peers face significant challenges in capital efficiency, as indicated by negative ROIC to WACC ratios.
  • The company's ROIC of -13.90% and WACC of 22.77% highlight inefficiencies in capital utilization.
  • Comparative analysis with peers like Co-Diagnostics, Inc. (CODX), AIM ImmunoTech Inc. (AIM), iBio, Inc. (IBIO), and OpGen, Inc. (OPGN) reveals a broader industry struggle in generating returns above the cost of capital.

Aytu BioPharma, Inc. (NASDAQ:AYTU) is a pharmaceutical company that focuses on developing and commercializing novel therapeutics. The company operates in a competitive landscape alongside peers like Co-Diagnostics, Inc. (CODX), AIM ImmunoTech Inc. (AIM), iBio, Inc. (IBIO), and OpGen, Inc. (OPGN). These companies are part of the broader biotech and pharmaceutical industry, which is known for its high research and development costs and the need for efficient capital utilization.

In evaluating Aytu BioPharma's financial performance, the Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC) are crucial metrics. Aytu's ROIC stands at -13.90%, while its WACC is 22.77%. This results in a ROIC to WACC ratio of -0.61, indicating that the company is not generating returns that exceed its cost of capital. This suggests inefficiencies in how Aytu utilizes its capital.

When comparing Aytu to its peers, Co-Diagnostics, Inc. (CODX) has a ROIC of -73.95% and a WACC of 5.14%, resulting in a ROIC to WACC ratio of -14.38. Although still negative, CODX's ratio is the highest among the peer group, suggesting it is relatively more efficient in capital utilization compared to others. However, like Aytu, CODX is also not generating returns above its cost of capital.

AIM ImmunoTech Inc. (AIM) presents a more challenging scenario with a ROIC of -504.92% and a WACC of 5.25%, leading to a ROIC to WACC ratio of -96.25. This indicates significant inefficiencies in capital utilization. Similarly, iBio, Inc. (IBIO) and OpGen, Inc. (OPGN) also show negative ROIC to WACC ratios of -17.36 and -49.94, respectively, highlighting the broader challenges faced by these companies in generating returns that exceed their cost of capital.

Overall, the analysis reveals that Aytu BioPharma and its peers are struggling with capital efficiency, as evidenced by their negative ROIC to WACC ratios. This underscores the need for strategic improvements to enhance profitability and better utilize capital resources in the competitive biotech and pharmaceutical industry.