Miami Beach, May 29, 2019 (Issuewire.com) - Aytu BioScience (NasdaqCM: AYTU) stock is performing well, with YTD share prices consolidating its more than 150% gain in price heading into June. The move has been led by its flagship product, Natesto®, a best-in-class nasally administered testosterone replacement drug that is earning an increasing share of physician attention based on both its clinical performance and safety profile. And, although Natesto® helped to drive the more than 291% increase in revenues during the third quarter of FY2019, the company's two other FDA-approved drug products, Tuzistra® XR, and ZolpiMist have also been making their presence known and provided meaningful revenue contributions to the surge as well.
However, those gains may just be the beginning, and recent news supports the likelihood that revenues may be inclined to grow further after investors recently learned that beyond the three drugs already contributing to a growing revenue stream for AYTU, a fourth product is strengthening its global market position and is soon expected to increase its revenue contributions significantly - MiOXSYS®.
MiOXSYS® Adds UK Support
The news began to flow for MiOXSYS® in May when investors were provided new insight into AYTU's promising rapid semen analysis diagnostic device that is attracting attention and commentary from leading physicians who believe that MiOXSYS® can become the standard of care diagnostic system designed to manage male infertility caused by oxidative stress. The quarterly address marked the first time in roughly two quarters that AYTU has provided a detailed update for the system, guiding investor expectations higher for the MiOXSYS® device to secure additional placements in a global market. The remarks provided during the company's recent earnings call were substantiated in late May when AYTU announced that MiOXSYS®, its first-in-class seminal oxidative stress test for the assessment of male infertility, is now available in the United Kingdom.
That news adds fuel to the engines of the company's fourth revenue-generating product and may provide additional ammunition to support the thesis that AYTU will likely continue to post record-setting revenue increases in the coming quarters. Investors have rightly noted that if AYTU can post record-quarters with three products, having a fourth added to the mix likely cements sustainable double-digit growth. Additionally, with Ladenburg Thalmann and Northland Capital both updating coverage targets higher as the Natesto® market and Spermatogenesis Study are expected to produce powerful catalysts, the revenue models used to project future cash flow and share price valuation may again be revised higher as they include higher expected revenue contributions from MiOXSYS®. As it stands, the analysts have a median price target of $7.00, with ranges between $4 -$10 per share within the next 12-months.
MiOXSYS® Can Disrupt A Significant Market
First, it should be understood that the device is already being commercialized and enjoys considerable endorsements. MiOXSYS® (the Male Infertility Oxidative System) is CE marked and cleared by Health Canada, Australia's TGA, and Mexico's COFEPRIS. Moreover, MiOXSYS® is the first-ever cleared advanced in-vitro diagnostic test that assesses seminal oxidative stress, a significant cause of male infertility.
Furthermore, MiOXSYS® is already approved for sale and commercialized in markets outside of the United States and has been capitalizing on its status as a CE Marked product. But, more value is expected from its May announcement, which indicated that the UK market is also embracing the benefits of the device to effectively treat a large population of men that become infertile due to levels associated with oxidative stress. And there's more.
Beyond those markets, AYTU is actively pursuing an even broader commercial presence for MiOXSYS® and is in the process of finalizing plans to initiate U.S.-based clinical trials in pursuit of 510(k) medical device clearance by the FDA. Now, with MiOXSYS® developing into an important revenue-generating asset, management has positioned AYTU to optimize its entire portfolio of revenue-generating products by leveraging off of managerial expertise that has proven its ability to bring to market leading brands in specialized, multi-billion dollar markets. Although the work on the MiOXSYS® growth strategy has been quiet, the recent updates offer fresh expectations into another one of AYTU's novel, market-disrupting products.
More Expansion News For MiOXSYS®
The growth of MiOXSYS® has been quiet but steady, and the recent news announcing the acceptance into the UK follows prior reports that the Australian Therapeutic Goods Administration granted market approval to the MiOXSYS® system for inclusion on the Australian Register of Therapeutic Goods. The support from each country validates the value of MiOXSYS® as a viable and reliable tool in the diagnostic assessment of semen quality for patients undergoing male infertility evaluation.
These recent marketing approvals are targeting large markets. In Australia, for instance, it is expected that MiOXSYS® can be an effective and reliable device to measure the one in six couples in Australia that suffer from infertility, with an estimated 50% of the cases attributed to male factor infertility. In the UK, approximately one in seven couples struggle to conceive. Moreover, in that market, most couples pay for some or all their fertility-related medical care, with one in ten spendings between £30,000 to £100,000 for infertility treatments. Among those couples unable to conceive, infertility is partially or wholly attributable to male factor infertility in approximately 50% of cases. Of those cases, male factor infertility can remain undefined in 30% to 50% of patients. The benefit of the MiOXSYS® system is that it can quickly identify particular causes specific to oxidative stress - a major factor in undefined infertility. Thus, instead of patients facing a long road of misdiagnosis and expensive, unreliable results, the MiOXSYS® device can instead provide consistently accurate and actionable answers quickly.
The increase in global regulatory approvals further lays the framework for AYTU management to expedite its strategic plans to develop targeted opportunities in the Australian and UK markets, with management guiding toward a strategic model of adding distribution partners that can further introduce and penetrate key markets for MiOXSYS® clinical use in the coming quarters. AYTU believes that by securing accretive licensing agreements, MiOXSYS® can grow into a significant revenue-generating product that targets an important market to replace an unreliable medical practice.
Like its other pipeline products, MiOXSYS® has its benefits. It is not expected to face regulatory pressures and is, at the same time, gaining physician attention as a solution that provides the most comprehensive, state-of-the-art diagnostic designed to generate results almost immediately. And, in most instances, the test can be administered by an office technician, an important distinction from current testing practices that often require well-trained professionals and several hours spent in a large medical laboratory, or even days of analysis before providing the patient with test results. However, even after a lengthy process, the current standard of care often misses the levels of oxidative stress that is associated with infertility, making the time and expense associated to alternative testing relatively useless.
MiOXSYS® Is Transformative To Current Standard of Care
Beyond its advantages in speed and accuracy, the MiOXSYS® system offers a solution from the need of expensive and sometimes bulky set-ups that have historically produced unreliable oxidative stress level results, often generated from these now antiquated systems not being correctly calibrated or amalamated from clunky, unapproved equipment. The MiOXSYS® System is intended for use in conjunction with standard semen analysis parameters (ejaculate volume, total sperm, sperm concentration, total motility, progressive motility, and morphology) as an aid to assessing semen quality. The system is targeting adult males typically between 21-45 years old.
For practitioners, investing in the latest and most efficient device, MiOXSYS®, will help to alleviate practice disruptions, limiting unreliable oxidative stress level results associated with the lack of appropriate system maintenance on competitive machines. Beyond generating reliable data, the MiOXSYS® system can provide complete oxidative stress testing quickly, a significant advantage to what has historically taken several hours to complete - and days or weeks to get results. The MiOXSYS® test requires no specialized training for administration, can go from box to patient in a matter of minutes, and provides a comprehensive set of results in less than five minutes. The results not only offer a complete analysis of semen by providing a reliable measure for oxidative stress levels. The importance of determining oxidative stress levels is critical to the clinician, who can target specific treatments to lower oxidative stress and increase the chances of pregnancy.
Complimenting its ease of use is its performance showing high specificity 88% and PPV 97% under the latest edition of the WHO parameters for identification of normal and abnormal semen analysis, providing accurate detection for better patient management and treatment goals related to fertility.
The Impact Of A Successful Launch
For AYTU investors, management has guided toward an achievable goal, which is to place an estimated 200 MiOXSYS® systems worldwide by the end of 2020. Currently, 141 systems are in use, with 6 of them set by AYTU's distribution partners. As the placement strategy takes effect, management expects that each system may generate roughly of $20,000 per year each at maturity, totaling an estimated revenue run rate of more than $4 million in annual sales. Utilizing the razor-razorblades sales model, AYTU, or its licensed partners, would provide the disposable components required for each test, allowing the MiOXSYS® system to continuously generate revenue with a low cost, high-margin business model.
Investors are also taking note that while these projections would deliver a substantial spike in the revenue run rate, at the present time, they do not include the potential from United States distribution. Management knows this better than anyone, which is why they made a point to announce that they are working toward a successful 510(k) medical device FDA approval, which would increase the market opportunity substantially. And, for those that doubt the effectiveness of the MiOXSYS® system, no less than six papers have been published in prominent peer-reviewed journals and publications that substantiate the system's value for providing a detailed, accurate, and reliable representation of infertility analysis.
For AYTU and their investors, the most recent UK expansion serves as another stepping stone toward a worldwide placement with game-changing technology. Acknowledging that company management is cultivating significant growth rates for Natesto® units sold and its prescriber base, as well as developing significant sales channels for Tuzistra® XR, and ZolpiMist, investors should also look to the company's developing products, like MiOXSYS®, to deliver even more revenue to the company.
Growth Toward More Records For AYTU?
The prior four quarters have been exciting times for both AYTU and its investors. But, going forward, the opportunities look stronger than ever. The company has roughly $15 million in cash, is experiencing record growth from its flagship product, Natesto®, and has recently announced market-moving news from its codeine-based antitussive, Tuzistra® XR and from its oral-spray sleep-aid, ZolpiMist. Both products are enjoying strong growth, fueled by recent funding news for Tuzistra® and by significant licensing agreements for ZolpiMist.
However, with MiOXSYS® also making headlines, the expectations for overall company growth is heightened. Like its other products, the MiOXSYS® system offers potential best-in-class qualities, which could ultimately pin it as the standard of care for measuring oxidative stress levels in men. Furthermore, global agreements are already in place to expand its presence, and the recent news out of Australia may invigorate the interest and expedite additional worldwide approvals. Moreover, as AYTU progresses through the U.S. regulatory processes, a final authorization may bring with it substantial commercialization opportunity for MiOXSYS® in the states.
Currently, shares in AYTU are consolidating around the $1.90 level, despite a harsh market environment for small-cap biotech stocks. However, with a low share float, coupled with significant institutional ownership, the path of least resistance for the shares may be higher in the short, medium, and long term time frames.
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Perceptive Advisors
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Miami Beach, Florida
Source :Perceptive Advisors
