Date: 18-Sep-2019

Aytu BioScience Announces Definitive Agreement to Acquire Innovus Pharmaceuticals

Aytu BioScience, Inc., a specialty pharmaceutical company focused on commercializing novel products that address significant patient needs and Innovus Pharmaceuticals, Inc., 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, menís health, sexual wellness and respiratory health. This expanded product line broadens Aytuís portfolio beyond prescription therapeutics to enable wider revenue distribution, reduced seasonality associated with Aytuís 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 companyís growth and path to profitability. Josh Disbrow, Chief Executive Officer of Aytu BioScience, commented, ďThrough 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 itís 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 Aytuís already growing prescription business, we increase our exposure to the broader patient market while continuing to grow our portfolio of novel prescription products.Ē