8-K

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): January 26, 2022

AYTU BIOPHARMA, 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 January 26, 2022, Aytu BioPharma, Inc. (“Aytu” or the “Company”) entered into a Loan and Security Agreement (the “Avenue Capital Agreement”), by and among Neos Therapeutics, Inc., Neos Therapeutics Brands, LLC, Neos Therapeutics, LP, Neos Therapeutics Commercial, LLC, PharmaFab Texas, LLC (collectively, the “Neos Obligors”), Aytu Therapeutics, LLC, Innovus Pharmaceuticals, Inc., Semprae Laboratories, Inc., Novalere, Inc., Supplement Hunt, Inc., and Delta Prime Savings Club, Inc. (collectively with Aytu, the “Aytu Obligors” and, together with the Neos Obligors, the “Obligors”), as borrowers, Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund II, L.P., as lenders (the “Avenue Capital Lenders”), and Avenue Capital Management II, L.P., as administrative agent (the “Avenue Capital Agent”). Pursuant to the Avenue Capital Agreement, the Avenue Capital Lenders (i) provided a term loan (the “Avenue Capital Loan”) in the principal amount of $15 million, at an interest rate of the greater of prime and 3.25%, plus 7.4%, with a three-year term, consisting of 18 monthly payments of interest only followed by equal monthly payments of principal and accrued interest (with interest-only period being extended up to 36 months contingent upon the Obligors achieving certain milestones) and (ii) permitted the Avenue Capital Loan proceeds to be used towards the full repayment of the Obligors’ obligations (the “Deerfield Debt Obligations”) under that certain Facility Agreement, dated as of May 11, 2016 and as thereafter amended (the “Deerfield Facility Agreement”), by and among the Aytu Obligors, Aytu Consumer Health, Inc., the Neos Obligors and Deerfield Private Design Fund III, L.P. and Deerfield Partners, L.P., as the lenders thereunder. In connection with entering into the Avenue Capital Agreement (i) the Obligors granted a security interest in substantially all of their assets in favor of the Avenue Capital Agent on behalf of itself and the Avenue Capital Lenders in support of the repayment of the Avenue Capital Loan and related obligations, (ii) Avenue Capital Agent and Avenue Capital Lenders consent to the first priority liens granted by the Neos Obligors in favor of Eclipse Lender (as defined below) in support of the repayment of the Eclipse Loan (defined below) and (iii) the Deerfield Debt Obligations have been repaid and performed in full (other than contingent indemnification obligations that expressly survive the termination thereof). The foregoing description of the Avenue Capital Agreement is not complete and are qualified in its entirety by reference to the Avenue Capital Agreement, which Aytu intends to file with its upcoming Quarterly Report on Form 10-Q.

As consideration for entering into the Avenue Capital Agreement, Aytu issued warrants to the Avenue Capital Lenders exercisable for $1,050,000 shares of the Company’s common stock at per share exercise price equal to $1.21 (subject to adjustment) (the “Warrants”). Under the terms of the warrants, a selling shareholder may not exercise the warrants to the extent such exercise would cause such selling shareholder, together with its affiliates and attribution parties, to beneficially own a number of shares of common stock which would exceed 19.99% of our then outstanding common stock following such exercise, excluding for purposes of such determination shares of common stock issuable upon exercise of the warrants which have not been exercised. The Warrants are immediately exercisable and expire on January 31, 2027. The Warrants were issued in reliance upon the exemption from the registration requirements in Section 4(a)(2) of the Securities Act of 1933, as amended.

In connection with the issuance of the Warrants, Aytu entered into a Registration Rights Agreement dated January 26, 2022 providing for the registration of shares of the Company’s common stock issuable upon conversion of the Warrants issued to the Avenue Capital Lenders. The Registration Rights Agreement provides that the Company will use its best efforts to cause a registration statement to be declared effective under the Securities Act of 1933, as amended (the “Securities Act”) within 243 days of the date of the Registration Rights Agreement (or, in the event of a full review by the Securities and Exchange Commission, within 273 days) and shall and shall use its best efforts to keep such registration statement continuously effective under the Securities Act until the date that all registrable securities covered by such registration statement have been sold.

In connection with the Avenue Capital Agreement, the Obligors entered into a Consent, Waiver and Amendment No. 2 to Loan and Security Agreement, dated as of January 26, 2022 (the “Eclipse Consent, Waiver and Amendment”), by and among the Obligors, Eclipse Business Capital LLC (f/k/a Encina Business Credit, LLC), as agent, and the lenders party thereto (agent and such lenders, collectively, the “Eclipse Lender”). Pursuant to the Eclipse Consent, Waiver and Amendment, the Eclipse Lender (i) consents to the Aytu Obligors joining as obligors to the loan facility provided by the Eclipse Lender (the “Eclipse Loan”), (ii) consents to the Obligors entering into the Avenue Capital Agreement, (iii) extends the maturity date of the Eclipse Loan to January 26, 2025, (iv) removes the requirement for the Obligors to comply with the ongoing fixed charge coverage ratio financial covenant applicable to the Eclipse Loan, (v) consents to the first priority lien granted by the Aytu Obligors in favor of the Avenue Capital Agent on behalf of itself and the Avenue Capital Lenders in support of the repayment of the Avenue Capital Loan, (vi) reduces the availability under the Eclipse Loan from $25 million to $12.5 million (subject to an increase of the availability block

from $1 million to $3.5 million), (vii) consents to the full repayment by the Neos Obligors of the obligations under the Deerfield Facility Agreement and (viii) makes certain other modifications to conform to the Avenue Capital Agreement and to reflect the consummation of the transactions thereof, in each case subject to the terms and conditions of the Eclipse Consent, Waiver and Amendment.

The foregoing description of the Eclipse Consent, Waiver and Amendment is not complete and is qualified in its entirety by reference to the Eclipse Consent, Waiver and Amendment, which Aytu intends to file with its upcoming Quarterly Report on Form 10-Q.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.

The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference

Item 7.01 Regulation FD Disclosure.

The Company issued a press release on January 31, 2022 announcing the transactions described herein, which is attached as Exhibit 99.1 to this report.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit	Description
99.1*	Press release dated January 31, 2022
104	Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document)

* In accordance with General Instruction B.2 of Form 8-K, the information in the press release attached as Exhibit 99.1 hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, 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 BIOPHARMA, INC.
Date: January 31, 2022	By:	/s/ Mark Oki
		Mark Oki
		Chief Financial Officer

EX-99.1

Exhibit 99.1

Aytu BioPharma Completes $15 Million Debt Refinancing

Englewood, CO, January 31, 2022 – Aytu BioPharma, Inc. (Nasdaq: AYTU), a pharmaceutical company focused on developing and commercializing novel therapeutics, today announced that it has entered into an agreement with the Avenue Venture Opportunities Fund, L.P., an affiliate of Avenue Capital Group, to refinance the company’s existing senior secured loan facility.

“We are pleased to partner with Avenue Capital and enhance Aytu’s overall financial position,” said Josh Disbrow, chief executive officer of Aytu BioPharma. “By mid-2022, we expect to begin our registrational study of AR101 in patients with vascular Ehlers-Danlos Syndrome, while advancing our sham-controlled study of Healight, our investigational endotracheal light catheter for use in patients with SARS-CoV-2. This financing further enables us to focus on our primary mission of creating value for patients and shareholders through the advancement of our pipeline and growth of our commercial business.”

Under the new financing agreement, Aytu is borrowing $15 million at an interest rate of the greater of prime and 3.25%, plus 7.4% and is using the proceeds to refinance its previous credit facility with Deerfield Private Design Fund III, L.P. and Deerfield Partners, L.P. The new facility with Avenue Capital provides a three-year term, consisting of 18 monthly payments of interest only followed by equal monthly payments of principal and accrued interest. The interest-only period may be extended to up to 36 months contingent upon Aytu achieving certain milestones. There are no minimum revenue or cash balance financial covenants in connection with the agreement. In addition, under the terms, Aytu issued the Avenue Venture Opportunities Fund warrants to purchase shares of its common stock equating to 7.00% of the principal amount.

About Avenue Venture Opportunities

The Avenue Venture Opportunities Fund seeks to provide creative financing solutions to high-growth, venture capital-backed technology and life science companies. The Avenue Venture Opportunities Fund focuses generally on companies within the underserved segment of the market created by the widening financing gap between commercial banks and larger debt funds. For additional information on Avenue Capital Group, which is a global investment firm with assets estimated to be approximately $11.9 billion as of December 31, 2021, please visit www.avenuecapital.com.

About Aytu BioPharma, Inc.

Aytu BioPharma is a pharmaceutical company with a portfolio of commercial prescription therapeutics and consumer health products, and a growing therapeutics pipeline focused on treating rare, pediatric-onset disorders. The company’s pediatric prescription products include Adzenys XR-ODT® (amphetamine) extended-release orally disintegrating tablets (see Full Prescribing Information, including Boxed WARNING) and Cotempla XR-ODT® (methylphenidate) extended-release orally disintegrating tablets (see Full Prescribing Information, including Boxed WARNING) for the treatment of attention deficit hyperactivity disorder (ADHD), as well as Karbinal® ER (carbinoxamine maleate), an extended-release carbinoxamine (antihistamine) suspension indicated to treat numerous allergic conditions, and Poly-Vi-Flor® and Tri-Vi-Flor®, two complementary fluoride-based prescription vitamin product lines containing combinations of fluoride and vitamins in various formulations for infants and children with fluoride deficiency. Aytu is also building a therapeutic pipeline, which includes AR101 (enzastaurin), a PKCβ inhibitor in development for the treatment of vascular Ehlers-Danlos Syndrome (VEDS). VEDS is a rare genetic disease typically diagnosed in childhood resulting in high morbidity and a significantly shortened lifespan, and for which there are no currently approved treatments. AR101 has received Orphan Drug designation from the U.S. Food and Drug Administration. To learn more, please 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 press release, 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. All statements other than statements of historical facts contained in this presentation, are forward-looking statements. 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: the company’s financial position, the future growth potential of our commercial portfolio, the anticipated start dates, durations and completion dates and the potential results of ongoing and future clinical trials, the safety and efficacy of our prospective treatments and the anticipated future regulatory submissions and events related to those prospective treatments. We also refer you to (i) the risks described in ''Risk Factors'' in Part I, Item 1A of Aytu's Annual Report on Form 10-K and in the other reports and documents it files with the Securities and Exchange Commission and (ii) the Risk Factors set forth in Aytu's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the SEC.

# # #

Contact:

Chelcie Lister

THRUST Strategic Communications

(910) 777-3049

chelcie@thrustsc.com

XML

Document and Entity Information	Jan. 26, 2022
Document and Entity Information [Abstract]
Document Type	8-K
Document Period End Date	Jan. 26, 2022
Entity File Number	001-38247
Entity Registrant Name	AYTU BIOPHARMA, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-0883144
Entity Address, Address Line One	373 Inverness Parkway
Entity Address, Adress Line Two	Suite 206
Entity Address, City or Town	Englewood
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80112
City Area Code	720
Local Phone Number	437-6580
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	AYTU
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0001385818
Amendment Flag	false