Good afternoon and thank you for joining us for the Aytu BioScience Second Quarter Fiscal 2020 Business Update Call for the Quarter Ended December 31, 2019. With me this afternoon are Aytu's Chairman and Chief Executive Officer, Josh Disbrow; and Chief Financial Officer, Dave Green. Aytu BioScience issued a press release earlier this afternoon with details of the company's operational and financial results for the fiscal second quarter. A copy of the press release is available on the news page of the company's website at aytubio.com. 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 earnings press release. In addition, a webcast will be accessible live and archived on Aytu's website within the Investors section under Events & Presentations at aytubio.com. Finally, I'd also like to call your attention to the customary safe harbor disclosure regarding forward-looking information. The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations and future potential operating results of Aytu BioScience. Although management believes these statements are reasonable based on estimates, assumptions and projections as of today, February 13, 2020, 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. I'd now like to turn the call over to Aytu's CEO, Josh Disbrow. Sir, the floor is yours.

Thank you, Cynthia. Good afternoon, and thanks for joining our second quarter fiscal 2020 operational update call. This was perhaps our busiest and most productive quarter on record, during which we accomplished a tremendous amount to move forward with our corporate transformation. Also this quarter, we posted the highest revenue in our history, more than doubling our revenue sequentially to $3.2 million for the quarter. Additionally, we completed the Cerecor commercial portfolio asset purchase, and we filed the S-4 proxy statement for the Innovus Pharmaceuticals merger. We also kicked off two co-promotes on top of the Tuzistra co-promote that was announced shortly before the quarter began. Finally, just today, we received the required votes to approve the Innovus acquisition, and we now expect to close that acquisition very soon. With that acquisition soon to be complete, that takes our revenues to over $40 million on a pro forma basis, with planned revenue growth ahead on both the Rx and consumer health business. Without question, this has been the most productive and transformative period in our company's history, but we're still just getting started. As a final part of my introductory comments, I'll also share that the company has engaged a healthcare-focused investment bank to assist in securing non-dilutive financing. Further, on the equity side, we've received a funding commitment from a health care institutional fund with whom we're having active discussions. Now turning to the specifics around our performance. Again, I'm proud to say that we posted our highest revenue in the company's history with $3.2 million, 121% over last quarter and up 77% over the same quarter last year. Importantly, this revenue increase includes only two months of revenue from the recently acquired Cerecor commercial portfolio, given the time of that closing. Thus, in Q2, we had not yet…

Thank you, Josh, and thank you all for joining us. Today, I'll review our financial results for the second quarter of our 2020 fiscal year that ended December 31, 2019. Top line net revenue for Q2 was $3.2 million compared to $1.8 million in Q2 2019 and $1.4 million last quarter. The $3.2 million of net revenue represents a record high for Aytu and growth rates of 77% year-over-year and 121% sequentially. Year-to-date, 2020 net revenue was $4.6 million compared to $3.2 million for the same six-month period last year, a 44% year-over-year increase. Q2 net revenue benefited from two months of sales contribution from the product portfolio we acquired from Cerecor in November of 2019. Gross profit for Q2 2020 was $2.6 million compared to $1.3 million in Q2 2019 and approximately $1.1 million last quarter. Gross profit margin was approximately 81%, a substantial improvement over the 71% gross profit margin reported in Q2 of last year. Operating expenses, excluding cost of goods sold, were $7.5 million for Q2 this year, which was approximately $1.7 million greater than total operating expenses realized in Q2 last year, and $1.7 million greater than the operating expenses last quarter. The increase is due to both absorbing and integrating the former Cerecor commercial team and related transaction costs of approximately $1.2 million, offset by a reduction in force we completed in October, altogether representing a net cost of approximately $2.25 million. Therefore, on an adjusted basis, operating expenses were approximately $550,000 lower this quarter than both last quarter and the year ago quarter on an apples-for-apples basis. The operating loss for the quarter was $5 million compared to $4.7 million in Q1 2020 and $4.6 million in Q2 last year. By adjusting $1.2 million of transaction costs out of operating expense, the operating…

Thank you, Dave. Again, it was an extremely busy and transformational quarter, particularly on the corporate and also on the scientific development front. Natesto had a breakout quarter with respect to its clinical story. On October 17, the company announced positive results from the Natesto’s Spermatogenesis Study, which were presented at the Annual Meeting of the American Society for Reproductive Medicine. Dr. Ranjith Ramasamy, the study’s principal investigator and Director of Reproductive Urology at the University of Miami, presented that over the course of a six-month treatment period with Natesto, hypogonadal men increased their serum testosterone levels while maintaining normal sperm concentration, sperm motility and total motile sperm count. This data readout convincingly separates Natesto from other low T treatments in that men maintain their fertility while taking Natesto, something no other testosterone-replacement therapy has demonstrated. We’re excited about getting these data into the scientific domain, and following that, we’ll look to begin discussions on potential label modification for Natesto. We’ll work in concert with our partners at Acerus to move that initiative forward. Now on to our corporate transformation. In Q2, again, we closed that Cerecor asset purchase of the commercial Rx portfolio. This commercial portfolio generated $12.7 million in revenue for the 12 months ended 12/31 and consists of five novel and differentiated therapeutics. Following the asset purchase, we moved immediately to bring over much of the former Cerecor commercial group and their leader, Matt Phillips. In conjunction with that move, we rationalized multiple low-performing or overlapping legacy sales territories and kept the highest performers across both legacy organizations. With the acquisition of the commercial portfolio, we’ve increased Rx portfolio revenues to $20 million on an annual basis, and we believe more growth is in store. The sales teams have come together as one, as we’ve just concluded…

Thank you. The floor is now open for questions. [Operator Instructions] Our first question comes from Carl Byrnes of Northland Securities. Please state your question.

Great. Congratulations. My first question is, obviously, with the favorable vote today and your comment that you anticipate closing the Innovus transaction imminently, would you – is it safe to assume that, that might be in the next week, two weeks? What sort of brackets can you put around that? And then an additional question relating to cash burn. What would you anticipate going forward in the next six months and 12 months relative to your cash needs? Thanks.

Hi, Carl. Thanks for your question. So yes, we would suggest that it’s certainly within the next week or so. We’re very close, and so we’ll update everyone accordingly, but feel very comfortable with where we are with respect to the transactional process. Obviously, final details to be sort of ticked and tied, but we’re in very good spot to get the Innovus acquisition closed in very short order. With respect to cash need, as I said, we’re – and as David said, where we cut the burn and when you look at it on a true apples-to-apples basis, as Dave very well described, so we’re very comfortable that the burn will continue to come down, particularly as we get on the other side of these deal costs. As I also mentioned, we – so we do have a clear line of sight to profitability, not guiding specifically to when that will be, but increasingly clear view of really when that is. And importantly, I think it’s good for people to know that we have engaged an investment bank on the debt side and begun that process. Again, given this revenue scale, particularly when we get to the other side of the Innovus merger, obviously, that provides a really nice basis for lenders to come in. And suffice it to say, we’re pleased with the interactions we’re having. So that’s what I would say with respect to cash and cash needs. We’ll, obviously, make an attempt and feel good about the non-dilutive aspect of that and would only bring in equity sort of as needed, and obviously, it would be kind of a complement to any debt that come in.

Great, thank you.

Thank you.

Our next question comes from Jeffrey Cohen of Ladenburg Thalmann. Please state your question.

Hi, it’s Jeff Cohen. How are you? Couple of quick questions. Could you talk about the feedback as far as what we know thus far as far as Acerus in the co-promote?

Yes. Good question, Jeff. I’ll, obviously, rely on our partners to the north there at Acerus to give specifics on their next earnings call and as they have the opportunity to engage with investors. But what I’ll say is they’ve obviously started the process and are now fully underway. As we previously announced, we enabled them to get started earlier with an initial subset of representatives that had been selling Natesto that are now really working exclusively for Acerus and will be transitioned over to them. They’re in some nice territories, some productive, very large territories in the Northeast. So that’s where, obviously, the footprint started. They just announced very recently, just this week, that they have secured a significant amount of funding in the form of $18 million in equity that will obviously kick them into high gear with respect to building out the footprint. So they haven’t given specifics publicly, so I’d like to not speak about the exact planned time line other than to say it is now in full gear, full sprint, if you will, and certainly ready to scale. So I think that’s probably sufficient so as not to tread on anything that they want to be kept privately, just on the basis of what they’ll share with investors.

Okay. Got it. And could you talk about some of the key territories which you’re targeting by your co-promotions for Tuzistra and ZolpiMist?

ZolpiMist, again, it’s psychiatry. And in terms of key territories, it’s really – it’s less than – a little less than a dozen key geographies in terms of where they cover. So it’s the large metropolitan areas, primarily in the Northeast, Mid-Atlantic, Southeast over to Texas. So fairly substantial areas from DFW sort of eastward and upward. With respect to Poly Pharmaceuticals, Poly’s footprint is largely in the Southeastern U.S. So really starting in Tennessee and kind of moving southward, and then westward to Texas. Got a very large footprint in Texas, Louisiana and Mississippi. So they’re in what I often refer to as the cough, cold belt. Very entrenched in those markets and very, very extensive experience in calling on high prescribers of antitussives and antihistamines. So they are in some areas where we are. And so we have very diligently carved out targets that are exclusive to Poly, and we’ve retained, obviously, high prescribers as well. And so we’ve sort of partitioned off various offices, such that those are off limits to one party or the other. So we’re not tripping over each other, and we’re truly maximizing the footprint. So – and again, we’re more than doubling – essentially doubling the footprint from our organic or in-house reps to what they have, and they’ve got about 30 reps to our 30-ish or so. So yes, that’s their geographies.

Okay. Perfect. And then one more, if I may. Dave, any look into as far as once everything gets tucked in on Innovus on ramifications to your gross margins, I mean you’ve got pretty healthy gross margins out. Do you expect a little bump more north or south or kind of where we’re expecting?

Well, we got a nice bump this quarter, which is reflective of the Cerecor assets coming on. Innovus gross profit margins are probably not quite as strong as what we realized in the Rx business. So the blend of those will still – will probably be in the range of where we’ve been in the 75% – 70%, 75% range. We hit 80% or a little north of that this quarter, which was nice. But Innovus brings quite a bit of revenue. A little bit lower gross profit margin, but altogether blended, we shouldn’t be too much different from where we’ve been in the past.

Okay. Got it. That’s it for me. Good news. Thanks, again.

Thank you.

Thank you, Jeff.

And gentlemen, there appear to be no further questions at this time. Mr. Disbrow, I will turn the conference back over to you for any closing comments.

Thank you, Cynthia. Thanks, again, for the questions, and thanks to everyone for joining our call today. We appreciate your interest. We’re excited about the future with the company and where we’re moving forward. Look forward to sharing more on our next quarterly call. So with that, I’ll say thanks again, and have a good evening.

Thank you. This does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a great day.