Form 425 AYTU BIOSCIENCE, INC Filed by: AYTU BIOSCIENCE, INC
Filed by Aytu BioScience, Inc.
Pursuant to Rule 425 under the Securities Act of
1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company:
Aytu BioScience, Inc. (SEC File No. 001-38247)
Aytu BioScience Announces Definitive Agreement to Acquire Innovus
Pharmaceuticals
Acquisition Gives Aytu Timely Entry into Growing Consumer
Healthcare Market with a Portfolio of Over 30 Products that
Generated $24M of Revenue During Past Four Quarters
Combination Will Create Specialty Rx and Consumer
Pharma
Company with Revenue of $31M
New Products, Robust Cross-Selling, and Operational
Efficiencies
Designed to Accelerate Time to Profitability
ENGLEWOOD, CO & SAN DIEGO, CA / ACCESSWIRE / September 12, 2019
/ Aytu BioScience, Inc. (NASDAQ: AYTU), a specialty
pharmaceutical company focused on commercializing novel products
that address significant patient needs and Innovus Pharmaceuticals,
Inc. (OTCQB: INNV), a specialty pharmaceutical company
commercializing, licensing and developing safe and effective
consumer health products, today announced that the companies have
signed a definitive merger agreement whereby Aytu will retire all
outstanding common stock of Innovus for an aggregate of up to $8
million in shares of Aytu common stock, less certain deductions, at
the time of closing. This initial consideration to Innovus common
shareholders is estimated to consist of approximately 4.2 million
shares of Aytu stock. Additional consideration for up to $16
million in milestone payments in the form of contingent value
rights (CVRs) may be paid to Innovus shareholders in cash or stock
over the next five years if certain revenue and profitability
milestones are achieved.
Innovus
generated more than $24 million in revenue in the four quarters
ending June 30, 2019.
Through
this combined entity, Aytu will expand into the $40 billion
consumer healthcare market with a portfolio of over thirty consumer
products competing in large
therapeutic categories including diabetes, men’s health,
sexual wellness and respiratory health. This expanded product line
broadens Aytu’s portfolio beyond prescription therapeutics to
enable wider revenue distribution, reduced seasonality associated
with Aytu’s seasonal antitussive product line, and higher
revenue from an expanded base of proprietary products.
Combined,
Aytu and Innovus generated more than $31 million in revenue over
the preceding four reported quarters ending June 30, 2019. This
business combination provides increased revenue scale and enables
operational synergies that can be leveraged to accelerate the
combined company’s growth and path to
profitability.
Josh
Disbrow, Chief Executive Officer of Aytu BioScience, commented,
“Through this business combination we have taken a very
timely step into a large, rapidly growing segment of the healthcare
market. Over the past two years, significant investment has been
made in the areas of consumer wellness, telemedicine, and online
health, so it’s the right time for Aytu to enter this
high-growth market. Further, consumers are increasingly taking
control over their healthcare decisions and, particularly for
common conditions, over 90% of the time patients are self-treating
with over-the-counter options in advance of receiving care from a
prescriber. By adding a consumer unit to Aytu’s already
growing prescription business, we increase our exposure to the
broader patient market while continuing to grow our portfolio of
novel prescription products.”
Mr.
Disbrow continued, “This will make Aytu a fully-integrated
specialty pharmaceutical company addressing patient needs in both
prescription and non-prescription categories. Innovus President
& Chief Executive Officer, Bassam Damaj, Ph.D. and his team
have developed a robust product line and have more than doubled
revenue since 2017, so I’m thrilled about the prospect of our
combined growth plan as the Innovus business becomes the newly
created Aytu Consumer Health business unit.”
Initially,
the company expects to operate the commercial aspects of the
Innovus consumer business separately from Aytu’s prescription
business, while rationalizing general and administrative expenses
through the removal of Innovus’ public company costs and
redundant administrative and operational processes, along with the
reduction in overhead, administrative and facilities
costs.
The
prescription product portfolio will continue to be primarily
commercialized through the existing Aytu sales force, while the
consumer health products will continue to be primarily
commercialized via Innovus’ proprietary Beyond Human®
marketing platform. However, both lines of business are expected to
benefit from opportunistic cross-selling such that some consumer
products may be marketed in the physician office setting by
Aytu’s sales force, while the marketing of the prescription
products may be bolstered through various online and
direct-to-consumer marketing initiatives. It is expected that the
two segments will leverage administrative and operational
efficiencies following the integration of the two
companies.
Dr.
Bassam Damaj, Ph.D., President & Chief Executive Officer of
Innovus Pharmaceuticals, stated, “This is an exciting
inflection point for Innovus and our shareholders as we combine
with Aytu to strengthen our market position and provide a growth
platform for the company and our products. We are looking forward
to helping build Aytu into a world-class healthcare company, and
I’m personally excited about continuing on as the President
of the Aytu Consumer Health business unit. With the combined
strength of our companies, we believe we can more rapidly grow our
novel OTC medicines and supplements while developing additional
consumer healthcare products as we grow, thus adding value to the
newly-expanded Aytu BioScience.”
Under
the terms of the merger agreement, Aytu will issue to Innovus
shareholders a combination of stock and contingent value rights
(CVRs), subject to the achievement of certain milestones, for up to
$24 million. The number of shares to be issued will be determined
based on a formula that adjusts the initial $8 million purchase
price for various deductions, such as amounts owed from Innovus to
Aytu under a promissory note (currently $1 million principal
amount), payments to be made to warrant holders (above a
threshold), changes in Innovus liabilities and working capital, and
other adjustments. The CVRs provide additional value of up to $16
million if revenue and profitability milestones over the next five
years are met.
The
board of directors of both companies have approved the terms of the
merger transaction which is subject to the approval of both
companies’ shareholders. At the time of signing, Aytu had
collected voting agreements supporting the merger transaction that
represent approximately 35% of current shares outstanding. Innovus
has thus far collected voting agreements supporting the transaction
that represent (at the time of signing) approximately 17% of shares
outstanding.
Aytu expects to retire Innovus
warrants where warrant holders have cash-out rights that would be
triggered by the merger. The cost of doing so is estimated to be
$1.1 million, paid in a combination of cash and stock. More
information about the planned merger, along with the Definitive
Merger Agreement, will be available in a Current Report on Form 8-K
to be filed with the Securities and Exchange
Commission.
The
transaction, which is expected to close as early as Aytu’s
second fiscal quarter of 2020 (quarter ending 12/31/19) and is
subject to customary closing conditions and regulatory
approvals.
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 Natesto®, the
only FDA-approved nasal formulation of testosterone for men with
hypogonadism (low testosterone, or "Low T"). Aytu also has
exclusive U.S. and Canadian rights to ZolpiMist™, the only
FDA-approved oral spray prescription sleep aid. ZolpiMist is
indicated for the short-term treatment of insomnia characterized by
difficulties with sleep initiation. Aytu recently acquired
exclusive U.S. commercial rights to Tuzistra® XR, the only
FDA-approved 12-hour codeine-based antitussive syrup. Tuzistra XR
is a prescription antitussive consisting of codeine polistirex and
chlorpheniramine polistirex in an extended-release oral suspension.
Additionally, Aytu is developing MiOXSYS®, a novel, rapid
semen-analysis system with the potential to become a standard of
care for the diagnosis and management of male infertility caused by
oxidative stress. MiOXSYS is commercialized outside of the U.S.
where it is a CE Marked, Health Canada cleared, Australian TGA
approved, Mexican COFEPRAS approved product. Aytu is planning
U.S.-based clinical trials in pursuit of 510k de novo medical
device clearance by the FDA. 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.
About Innovus Pharmaceuticals, Inc.
Headquartered
in San Diego, Innovus Pharmaceuticals is an emerging over the
counter (“OTC”) consumer goods and specialty
pharmaceutical company commercializing, licensing and developing
safe and effective non-prescription medicine and consumer care
products to improve men’s and women’s health and
vitality. The Company is dedicated to being a leader in developing
and marketing new OTC medicines and branded Abbreviated New Drug
Application (“ANDA”) products. The Company is actively
pursuing opportunities where existing prescription drugs have
recently, or are expected to, change from prescription to
OTC.
No Offer or Solicitation
Communications
in this news release do not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval with respect to the proposed transaction or
otherwise, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. Communications in this
news release do not constitute a notice of redemption with respect
to or an offer to purchase or sell (or the solicitation of an offer
to purchase or sell) any security of Innovus.
Additional Information and Where to Find It
In
connection with the proposed transaction between Aytu and Innovus,
Aytu and Innovus will file relevant materials with the Securities
and Exchange Commission (the “SEC”), including an Aytu
registration statement on Form S-4 that will include a joint proxy
statement of Aytu and Innovus that also constitutes a prospectus of
Aytu, and a definitive joint proxy statement/prospectus will be
mailed to shareholders of Aytu and Innovus. INVESTORS AND SECURITY
HOLDERS OF AYTU AND INNOVUS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE FILED WITH
THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and
security holders will be able to obtain free copies of the
registration statement and the joint proxy statement/prospectus
(when available) and other documents filed with the SEC by Aytu or
Innovus through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with the SEC by
Aytu will be available free of charge on Aytu’s internet
website at https://irdirect.net/AYTU under the heading “SEC
Filings” or by contacting Aytu’s investor relations
contacts at (646) 755-7412 or [email protected]. Copies of the
documents filed with the SEC by Innovus will be available free of
charge on Innovus’ internet website at
https://innovuspharma.com/Investors/ under the heading “SEC
Filings” or by contacting Innovus’ investor relations
at [email protected].
Certain Information Regarding Participants
Aytu,
Innovus, and their respective directors and executive officers may
be considered participants in the solicitation of proxies in
connection with the proposed transaction. Information about the
directors and executive officers of Aytu is set forth in its Annual
Report on Form 10-K for the year ended June 30, 2018, which was
filed with the SEC on September 6, 2018 and its proxy statement for
its 2019 annual meeting of shareholders, which was filed with the
SEC on February 25, 2019. Information about the directors and
executive officers of Innovus is set forth in its Annual Report on
Form 10-K for the year ended December 31, 2018, which was filed
with the SEC on April 1, 2019 and its proxy statement for its 2019
annual meeting of shareholders, which was filed with the SEC on
April 30, 2019. Other information regarding the participants in the
proxy solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the joint proxy statement/prospectus and other relevant materials
to be filed with the SEC regarding the proposed transaction when
they become available. You may obtain these documents (when they
become available) free of charge through the website maintained by
the SEC at http://www.sec.gov and from Investor Relations at Aytu
or Innovus as described below.
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. 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. All statements other than statements of
historical facts contained in this presentation, are
forward-looking statements, including but not limited to any
statements regarding the expected timetable for completing the
proposed transaction, the results, effects, benefits and synergies
of the proposed transaction, future opportunities for the combined
company, future financial performance and condition, guidance and
any other statements regarding Aytu’s or Innovus’
future expectations, beliefs, plans, objectives, financial
conditions, assumptions or future events or performance. 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: failure to obtain the required votes of Innovus’
shareholders or Aytu’s shareholders to approve the
transaction and related matters, the risk that a condition to
closing of the proposed transaction may not be satisfied, that
either party may terminate the merger agreement or that the closing
of the proposed transaction might be delayed or not occur at all,
the price per share utilized in the formula for the initial $8
million merger consideration may not be reflective of the current
market price of Aytu’s common stock on the closing date, the
failure to meet the revenue and profitability milestones that
trigger the CVRs such that Innovus shareholders never realize value
from the CVRs, potential adverse reactions or changes to business
or employee relationships, including those resulting from the
announcement or completion of the transaction, the diversion of
management time on transaction-related issues, the ultimate timing,
outcome and results of integrating the operations of Aytu and
Innovus, the effects of the business combination of Aytu and
Innovus, including the combined company's future financial
condition, results of operations, strategy and plans, the ability
of the combined company to realize anticipated synergies in the
timeframe expected or at all, changes in capital markets and the
ability of the combined company to finance operations in the manner
expected, regulatory approval of the transaction, 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 AYTU Investors:
|
Contact
for INNV Investors:
|
James
Carbonara
|
Randy
Berholtz
|
Hayden
IR
|
Investor
Relations
|
(646)
755-7412
|
(858)
249-7865
|
|
|