In a Dec. 20 research note, analyst Jeffrey Cohen reported that Ladenburg Thalmann initiated coverage on Aytu Bioscience Inc. (AYTU:NASDAQ) with a Buy rating and a $3.75 per share price target. In comparison, the company's current share price is $0.78. "We believe that Aytu BioScience should be valued in comparison with other innovative technological companies within the medical technology and biotechnology sectors and more specifically based on multiples to revenue at some time in the future," he added.
Cohen described this specialty pharmaceutical company's focus, strategy and opportunities. Aytu develops and globally commercializes products for hypogonadism, male infertility and insomnia. Specifically, it sells three products approved by the FDA and for which is has U.S. licenses: Tuzistra XR, a prescription cough medicine; Zolpimist, an insomnia remedy in an oral spray form; and Natesto, a nasal gel for men with hypogonadism, or low testosterone.
Aytu currently is evaluating Natesto's impact on men's health and reproductive system in a clinical trial that is underway. It is slated for completion in H1/19, after which final data will be released. "The interim data provide an additional benefit, beyond reduced concern of transference, to support utilization of Natesto as compared to alternative treatments," indicated Cohen.
Aytu is pursuing FDA approval of another product, MiOXSYS, which it sells in Canada, Australia and Mexico. It is an in vitro diagnostic test to measure oxidative stress in men with infertility. "We believe the company will continue to actively search and pursue various acquisition and licensing opportunities going forward," Cohen noted.
The company's strategy has been to concentrate on therapies for "conditions that can be assessed by primary care physicians and specialists," Cohen described. Aytu markets and sells its products through its domestic sales force of about 35 people and a network of distribution partners in roughly 50 countries, which it continues to bolster.
Aytu's current products are part of "large addressable markets of approximately $6.5Ė7 billion," into which the biopharma can expand by leveraging its "established commercial infrastructure," Cohen explained.
Further, these specific markets are growing, presenting additional opportunity for Aytu. For example, the testosterone replacement therapy market is expected to reach $3.4 billion by 2022. The sleep aid market, both prescription and over the counter, is anticipated to reach $101.9 billion by 2021. The cold and cough market is forecasted to reach $3 billion in solely the U.S. As for Aytu and its revenue overall, Ladenburg Thalmann estimates it will generate about $30.9 million in 2022.[NLINSERT]
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Disclosures from Ladenburg Thalmann, Aytu BioScience, Inc., December 18, 2018
ANALYST CERTIFICATION: I, Jeffrey S. Cohen, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report, provided, however, that:
The research analyst primarily responsible for the preparation of this research report has or will receive compensation based upon various factors, including the volume of trading at the firm in the subject security, as well as the firmís total revenues, a portion of which is generated by investment banking activities.COMPANY SPECIFIC DISCLOSURES
Ladenburg Thalmann & Co. Inc. makes a market in Aytu BioScience, Inc.
Ladenburg Thalmann & Co. Inc. has managed or co-managed a public offering for Aytu BioScience, Inc. within the past 12 months.
Ladenburg Thalmann & Co. Inc received compensation for investment banking services from Aytu BioScience, Inc. within the past 12 months.
Ladenburg Thalmann & Co. Inc had an investment banking relationship with Aytu BioScience, Inc. within the last 12 months.