AYTU BIOSCIENCE, INC (Form: 8-K, Received: 12/02/2019 08:12:13)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 29, 2019

AYTU BIOSCIENCE, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-38247	47-0883144
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

373 Inverness Parkway, Suite 206

Englewood, CO 80112

(Address of principal executive offices, including Zip Code)

Registrant’s telephone number, including area code: (720) 437-6580

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		AYTU		The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

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. ☐

Item 1.01 Entry into a Material Definitive Agreement.

On November 29, 2019 the Aytu BioScience, Inc., (the “Company”) and Acerus Pharmaceuticals Corporation (“Acerus”), both referred herein as “the Parties”, closed the July 29, 2019 Amended and Restated License and Supply Agreement (the “Agreement”) by virtue of entering into a Waiver and Amendment (the “Amendment” to the agreement), both Parties agreed to waive certain conditions to the Agreement that were required before the Agreement could become effective, including the requirement that Acerus raise at least $10 million of gross proceeds of additional capital through one or more series of transactions to occur over a six month period from the signing of the Agreement on July 29, 2019. In addition to closing the Agreement, both Parties agreed for Acerus to assume five current sales employees from the Company as of December 2, 2019. These staff will operate as Acerus employees, but they will remain on the Company’s payroll until the earlier of the date on which Acerus is ready to fully assume the personnel or June 30, 2020. Finally, Acerus agreed to reimburse amounts equaling Acerus’s share of certain regulatory expenses paid by the Company related to the Company’s low testosterone treatment, Natesto®.

The foregoing description of the Amendment is qualified in its entirety by the full text of the Amendment, a copy of which is attached hereto as Exhibit 10.1.

Item 7.01 Regulation FD Disclosure

On December 2, 2019, the Company announced the launch of the company’s co-promotion with Acerus, which is expected to accelerate the growth of Natesto® in the United States. Through this expanded commercial relationship, Acerus has launched a U.S.-based specialty sales force promoting Natesto to urologists and endocrinologists. This agreement significantly increases sales force coverage of targeted testosterone prescribers and puts a higher promotional focus on urologists and endocrinologists. Further, this revised partnership enables the Company to increase its Natesto promotional efforts in primary care and other specialties.

To accelerate the launch of Acerus’ U.S. commercial team, the Company has agreed to transfer five current sales employees to Acerus as of December 2, 2019. These staff will operate as Acerus employees, but they will remain on the Company’s payroll until the earlier of the date on which Acerus is ready to fully assume the personnel or June 30, 2020.

Item 9.01 Financial Statements and Exhibits.

(d) The following exhibit is being filed herewith:

Exhibit	Description
10.1	Waiver and Amendment to the July 29, 2019 Amended and Restated License and Supply Agreement.
99.1*	Press Release issued by Aytu BioScience, Inc., dated December 2, 2019

* A copy of the press release is furnished herewith as Exhibit 99.1 to this Current Report on Form 8-K. The information contained in the accompanying Exhibit 99.1 is being furnished pursuant to Item 7.01 of this Current Report on Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information contained in the press release shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		AYTU BIOSCIENCE, INC.


Date:	November 29, 2019	By:	/s/ Joshua R. Disbrow
			Joshua R. Disbrow
			Chief Executive Officer

Exhibit 10.1

WAIVER AND AMENDMENT

This Waiver and Amendment (this “Waiver”) is made effective as of November 29, 2019, by and between Acerus Pharmaceuticals Corporation, a Canadian corporation, having offices at 2486 Dunwin Drive, Mississauga, ON L5L IJ9, Canada (“Acerus”), and Aytu Bioscience, Inc., Delaware corporation, having offices at 373 Inverness Parkway, Suite 206, Englewood, CO 80112 (“Aytu”). Reference is made herein to the Amended and Restated License and Supply Agreement, dated as of July 29, 2019 (the “Agreement”), by and between Acerus and Aytu. Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in the Agreement.

WHEREAS, Section 2.5(a) of the Agreement provides that the closing of the Agreement and the other transactions contemplated thereby shall take place following the satisfaction or waiver (to the extent not prohibited by Applicable Law) of the conditions set forth in Section 2.5(c) of the Agreement, which requires that Acerus raise at least $10,000,000 of gross proceeds of additional capital through one or more series of transactions occurring prior to the date that is six months after the A&R Signing Date (the “Closing Condition”);

WHEREAS, the Parties desire to waive the Closing Condition, as well as certain other closing deliverables, and to close the transactions contemplated by the Agreement as of November 29, 2019;

WHEREAS, in connection with the A&R Closing, the Parties desire to set forth certain additional amendments and agreements of the Parties relating to, among other things, the Sales Representatives on each Party’s Sales Force; and

WHEREAS, in accordance with Section 15.9 of the Agreement the Parties desire to set forth the waivers, amendments and agreements described below.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1. A&R Closing. The Parties hereby agree to waive as of the date hereof: (a) the Closing Condition set forth in Section 2.5(c) of the Agreement and (b) the requirement set forth in Section 2.5(d)(i)(2) that Acerus deliver at the A&R Closing a certificate certifying that the capital raise has been closed. Accordingly, A&R Closing Date shall occur simultaneously with the execution of this Waiver, and Acerus shall deliver the following deliverables set forth in Section 2.5(d) promptly following the A&R Closing Date and in any event no later than December 6, 2019:

Acerus shall deliver, or cause to be delivered, to Aytu (i) a payment of $[●] to reimburse Aytu for half of specific direct costs that were previously paid by Aytu to Acerus associated with serialization of Product and (ii) a payment of $[●], which is its portion of the 2020 FDA user fee; and

2. Transfer of Regulatory Submissions. Promptly following the A&R Closing (and in any event within ten (10) Business Days thereafter, the Parties agree to cooperate in good faith to execute and submit all letters and documents necessary to transfer the Product NDA to Acerus, in accordance with Section 4.1 of the Agreement.

3. Sales Force Matters.

Employee Transition. In accordance with Section 6.2(c) of the Agreement, the Parties agree that the individuals listed on Schedule 1 attached hereto (the “Transitioned Employees”) will be transitioned to Acerus as of December 1, 2019 in accordance with this Section 3.

Promptly following the A&R Closing Date, Aytu will execute and deliver to each Transitioned Employee a letter, in substantially the form attached hereto as Exhibit A, describing such transition, including the proposed formal transfer of employment to Acerus (the “Transition Letter”). Aytu will use commercially reasonable efforts to ensure that each Transitioned Employee promptly executes a Transition Letter.

ii.

In connection with such transition, from December 1, 2019 until the date on which the Parties and the applicable Transitioned Employee mutually agree to formally transfer such Transitioned Employee’s employment to Acerus, but in no case later than June 30, 2020, (such period, the “Employee Transition Period”), Acerus shall (A) assume commercial responsibility and costs for the sales territories for which such Transitioned Employees are responsible, as listed on Schedule 1, as well as the additional sales territories listed on Schedule 1 for which a Sales Representative is not currently assigned, and (B) assume sole responsibility for management direction and hiring and firing decisions regarding such Transitioned Employee. The Parties intend that during the Employee Transition Period the Transitioned Employees will present themselves during Details as representatives of Acerus (or its Affiliate), including carrying Acerus business cards, and will report directly to the applicable members of Acerus’ management team. For clarity, following December 1, 2019, Aytu will ensure that none of its Sales Representatives Detail or otherwise Promote the Product in the sales territories listed on Schedule 1 in the Acerus Sales Channel (as defined in the A&R Agreement).

iii.

During the Employee Transition Period, Aytu shall maintain such Transitioned Employee on its payroll and other administrative plans as an employee of Aytu, subject to voluntary resignation by such Transitioned Employee and Ordinary Course Terminations and Reassignments, as determined by Acerus; provided that, for clarity, in no event shall Aytu terminate employment of or reassign any Transitioned Employee during the Employee Transition Period without Acerus’ prior written consent.

Employee Costs. During the Employee Transition Period, all employment and other direct costs associated with the Transitioned Employees (i.e., meal budget, car reimbursement, travel, etc.) set forth on Schedule 2 (the “Employee Costs”) will be paid for by Acerus on a quarterly basis (in arrears), which amounts will be deducted from the quarterly Acerus Commissions Payments payable by Aytu to Acerus pursuant to Section 7.1(a) of the Agreement. For the avoidance of doubt, the Employee Costs set forth on Schedule 2 are actual costs incurred by Aytu from January through October 31, 2019 (T&E costs) and November 15, 2019 (all other Employee Costs) are illustrative of the expected Employee Costs. Actual Employee Costs for which Aytu will be reimbursed by Acerus are expected to differ based on Transitioned Employees’ actual sales performance, medical and other benefit plan selections for calendar 2020, travel, meal spending, car utilization, etc. following Closing. If the Employee Costs for a given quarter exceed the Acerus Commissions Payment for such quarter, such negative balance will be rolled over to the next quarter; provided, that if Employee Costs exceed Acerus Commissions Payments for three consecutive quarters, any remaining balance payable to Aytu will be paid by Acerus at the end of the next quarter.

Transition Period Activities.

The Parties acknowledge and agree that Schedule 6.2(a) of the Agreement is hereby deleted in its entirety and replaced with the attached Schedule 3.

ii.

In addition to the activities described on Schedule 3, the Parties agree that until the earlier of (1) written notice from Acerus and (2) June 30, 2020, Aytu will continue to provide the following materials and access to Acerus and the Transitioned Employees:

Promotional Materials in amounts and at times consistent with that which was provided to the Transitioned Employees as Aytu employees prior to the A&R Closing Date;

Access to the call reporting and data management tools specific to the Transitioned Employees and their respective customers and territories/region; and

The items set forth on Schedule 4 hereto.

Sales Force Size Requirements.

The Parties hereby acknowledge and agree that the requirements for the Aytu Product-Specific Sales Force set forth in Section 6.3(a)(i)(1) of the Agreement shall be deleted in their entirety and replaced with the following:

“(1) for the first twelve (12) months following the A&R Closing Date, a number of Sales Representatives on a Full Time Basis that is not less than twenty (20) and a mutually agreed number of sales force managers appropriate to manage the Sales Representatives;”

ii.

The Parties hereby acknowledge and agree that the requirements for the Acerus Product-Specific Sales Force set forth in Section 6.3(a)(ii)(1)-(2) of the Agreement shall be deleted in their entirety and replaced with the following:

“(1) at least fifteen (15) Sales Representatives on a Full Time Basis on the date that is the twelve (12)-month anniversary of the A&R Closing Date; and”

For clarity, the Transitioned Employees shall count towards the requirements for the Acerus Product-Specific Sales Force during the Employee Transition Period.

iii.

After the first twelve (12) months following the A&R Closing Date, each Party will be responsible for employing a Product-Specific Sales Force consistent with the requirements set forth in Section 6.3 of the Agreement.

4. This Waiver shall be effective immediately after its due execution by the undersigned. This Waiver may be executed in any number of counterparts, each such counterpart shall be deemed an original instrument, and all such counterparts together shall constitute but one agreement. This Waiver may be executed and delivered by email (.pdf), and upon such delivery the email (.pdf) signature will be deemed to have the same effect as if the original signature had been delivered. This Waiver shall be governed by the internal law of the State of Delaware, without regard to its principles of conflicts of laws.

5. Except for the specific provisions waived or amended herein, the Agreement shall remain in full force and effect and in accordance with its terms. This Waiver shall be limited solely for the purpose and to the extent expressly set forth herein and nothing herein expressed or implied shall constitute an amendment, supplement, modification or waiver to any of other term, provision or condition of the Agreement.

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the parties hereto have executed this Waiver to be executed by their duly authorized representatives, as of the date first written above.

ACERUS PHARMACEUTICALS CORPORATION

By: /s/ Edward Gudaitis

Name: Edward Gudaitis

Title: President and Chief Executive Officer

AYTU BIOSCIENCE, INC.

By: /s/ Joshua Disbrow

Name: Joshua Disbrow

Title: Chief Executive Officer

[Signature Page to Waiver]

Schedule 1

Transitioned Employees and Territories

[Omitted Intentionally]

Schedule 2

Employee Costs*

[Omitted Intentionally]

Schedule 3

Schedule 6.2(a)

Transition Period Activities

[Omitted Intentionally]

Schedule 4

[Omitted Intentionally]

Exhibit A

Form of Transition Letter

Exhibit 99.1

Aytu BioScience Announces Launch of Natesto® U.S. Co-Promotion with Acerus Pharmaceuticals

Acerus Launches U.S. Specialty Sales Force; Sales Team Expansion Nearly Doubles Current Natesto Sales Force

Expanded Commercial Operations Expected to Accelerate Natesto Growth in the U.S.

ENGLEWOOD, CO / ACCESSWIRE / December 2, 2019 / Aytu BioScience, Inc. (NASDAQ: AYTU), a specialty pharmaceutical company focused on commercializing novel products that address significant patient needs, today announced the launch of the company’s co-promotion with Acerus Pharmaceuticals (“Acerus”) which is expected to accelerate the growth of Natesto® in the United States. Through this expanded commercial relationship, Acerus has launched a U.S.-based specialty sales force promoting Natesto to urologists and endocrinologists. Aytu will continue to recognize all Natesto revenue and promote Natesto to all other physician specialties including internal medicine and family practice.

Natesto total prescriptions grew 30% from fiscal 2018 to 2019, and this commercial partnership is expected to accelerate brand growth through joint promotional efforts and a significantly expanded U.S. presence.

The Natesto co-promotion officially closed November 29, 2019 and was effective December 1, 2019. This agreement significantly increases sales force coverage of targeted testosterone prescribers and puts a higher promotional focus on urologists and endocrinologists. Further, this revised partnership enables Aytu to increase its Natesto promotional efforts in primary care and other specialties.

To accelerate the launch of Acerus’ U.S. commercial team, Aytu has agreed to transfer five current sales employees to Acerus as of December 2, 2019. These staff will operate as Acerus employees, but they will remain on Aytu’s payroll until the earlier of the date on which Acerus is ready to fully assume the personnel or June 30, 2020. Aytu will deduct the costs of these sales personnel from quarterly payments otherwise owed to Acerus under the revised agreement, with a final accounting to be done once per year. Throughout 2020, Acerus will be building out a complete US-based specialty sales force and other commercial functions, significantly increasing the number of employees working directly on Natesto in the United States.

As previously announced on July 30, 2019, the companies signed an agreement to expand their commercial partnership and amend and restate the original 2016 Natesto exclusive U.S. license agreement. Under the revised agreement, Aytu will remain the exclusive U.S. supplier of Natesto and retain all rights to revenues generated.

Aytu and Acerus will continue to operate a joint commercialization committee in support of Natesto and will closely collaborate on U.S. brand strategy and commercial initiatives.

Josh Disbrow, Aytu BioScience Chief Executive Officer, commented, “We are excited to be launching our co-promotion with Acerus as they launch their sales team. With a coordinated promotional approach, this nearly doubling of the Natesto commercial footprint stands to substantially accelerate Natesto prescription growth. Acerus’ increased commitment to Natesto, as evidenced by their significant investment in launching a U.S. commercial team, is an important step in the evolution of the Natesto growth story. This development, coupled with the two recently announced payer formulary wins, should substantially accelerate Natesto’s growth trajectory.”

Mr. Disbrow continued, “We’re excited to be working with Acerus to increase our reach to physicians around the country. Additionally, with the recent expansion of Aytu’s therapeutic portfolio that now includes ZolpiMist™, Tuzistra® XR, and the recently acquired six-product portfolio from Cerecor, this enhanced commercial arrangement enables us to employ a more distinct focus on primary care physicians to grow our entire product portfolio, while Acerus increases the promotional focus on Natesto with urologists and endocrinologists.”

Aytu will continue to serve as the exclusive U.S. supplier to purchasers of Natesto, and Acerus will receive performance-based commissions on prescriptions generated by urologists and endocrinologists above specified revenue levels. Acerus will assume regulatory and clinical responsibilities and associated expenses and will serve a primary role in the development of key opinion leaders in urology and endocrinology. Aytu will focus on commercial channel management, sales to wholesalers and other purchasing customers, and will direct sales efforts in all other physician specialties.

The revised Natesto license agreement extends the original agreement by at least three years to the later of 2027, the launch of an FDA approved, AB-rated generic equivalent to Natesto, or the expiration or invalidation of the last to expire Natesto patent.

The payment structure currently in place will be replaced with a pay-for-performance commission incentive structure intended to drive Natesto prescription growth across all physician specialties. All previously agreed upon milestone payments payable by Aytu have been removed. Additionally, Acerus will now pay all annual FDA fees, future clinical trial costs, and all regulatory and pharmacovigilance and compliance-related expenses.

Aytu will continue to book Natesto revenue and will pay Acerus quarterly commissions based on sales from prescriptions generated by urologists and endocrinologists.

About Aytu BioScience, Inc.

Aytu BioScience is a commercial-stage specialty pharmaceutical company focused on commercializing novel products that address significant patient needs. The company currently markets a portfolio of prescription products addressing large primary care and pediatric markets. The primary care portfolio includes (i) Natesto®, the only FDA-approved nasal formulation of testosterone for men with hypogonadism (low testosterone, or "Low T"), (ii) ZolpiMist™, the only FDA-approved oral spray prescription sleep aid, and (iii) Tuzistra® XR, the only FDA-approved 12-hour codeine-based antitussive syrup. The pediatric portfolio includes (i) AcipHex® Sprinkle™, a granule formulation of rabeprazole sodium, a commonly prescribed proton pump inhibitor; (ii) Cefaclor, a second-generation cephalosporin antibiotic suspension; (iii) Karbinal® ER, an extended-release carbinoxamine (antihistamine) suspension indicated to treat numerous allergic conditions; and (iv) Poly-Vi-Flor® and Tri-Vi-Flor®, two complementary prescription fluoride-based supplement product lines containing combinations of fluoride and vitamins in various for infants and children with fluoride deficiency. Aytu's strategy is to continue building its portfolio of revenue-generating products, leveraging its focused commercial team and expertise to build leading brands within large therapeutic markets. For more information visit aytubio.com.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act. All statements other than statements of historical facts contained in this presentation, 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,'' or similar words, or the negatives of such terms or other variations on such terms or comparable terminology. These statements are just predictions and are subject to risks and uncertainties that could cause the actual events or results to differ materially. These risks and uncertainties include, among others: risks relating to gaining market acceptance of our products, obtaining reimbursement by third-party payors, the potential future commercialization of our product candidates, the anticipated start dates, durations and completion dates, as well as the potential future results, of our ongoing and future clinical trials, the anticipated designs of our future clinical trials, anticipated future regulatory submissions and events, our anticipated future cash position and future events under our current and potential future collaboration. We also refer you to the risks described in ''Risk Factors'' in Part I, Item 1A of the company's Annual Report on Form 10-K and in the other reports and documents we file with the Securities and Exchange Commission from time to time.

Contact for Investors:

James Carbonara

Hayden IR

(646)-755-7412

james@haydenir.com

Source: Aytu BioScience, Inc.