On March 9, pharmaceutical company Aytu Bioscience Inc. (NASDAQ: AYTU) posted a 52-week low of $0.34 per share. The next day, the stock reached a 52-week high of $2.99. That’s pretty startling, even for small biotech companies that are known for big share price swings.
The new high came following Aytu’s announcement of a licensing agreement for exclusive North American distribution rights for a coronavirus test kit manufactured by China’s Zhejiang Orient Gene Biotech.
The licensed COVID-19 IgG/IgM Rapid Test is a solid phase immunochromatographic assay used in the rapid, qualitative and differential detection of immunoglobulin G (IgG) and immunoglobulin M (IgM) antibodies to the 2019 novel coronavirus (SARS-CoV-2) in human whole blood, serum or plasma. The kit is a point-of-care rapid test that reports results in two to 10 minutes.
Again, like many biotech firms that see a big gain following a product announcement, Aytu issued an at-the-market offering of 16 million shares of common stock. The offering priced at $1.25 per unit for one share of common stock plus an associated warrant carrying a one-year term exercise price of $1.25. The stock closed at $1.35 on March 11.
Shares topped $2 again on April 27, following the announcement of yet another deal. Now may be a good time to review what’s happened over the past six weeks.
Getting the Rapid Test to Market
Aytu does not report first-quarter earnings until the middle of May, so details on how its deal for the COVID-19 IgG/IgM Rapid Test won’t be available for a few more weeks. The company submitted a notice of commercialization of the test kit to the U.S. Food and Drug Administration (FDA) on March 23. Under the FDA’s emergency use authorization rules, the company could begin distributing the test kits as soon as it wanted to.
The first 100,000 tests arrived on April 1, and Aytu said it expected another 500,000 within two to three weeks. The Denver Police Department purchased the first 2,750 test kits, intending to use them to screen the city’s first responders. On April 15, Aytu said it had sold out the first 100,000 tests and was awaiting delivery of the additional 500,000, and it increased the size of a third order to 1 million tests.
On April 23, Aytu announced a licensing agreement with Singapore-based Biolidics for exclusive U.S. distribution rights to Biolidics’s COVID-19 IgG/IgM Rapid Test. The Denver-based company will purchase 500,000 tests and has committed to purchasing a minimum of 1.25 million tests in the first three months of the agreement.
There’s More to Aytu Than Test Kits
On April 20, Aytu signed an exclusive license with Cedars-Sinai to develop and commercialize the Healight as a potential coronavirus treatment. To advance the development of Healight, Aytu signed an agreement with Sterling Medical Devices on April 27.
The Healight technology administers intermittent ultraviolet (UV) A light by means of a novel endotracheal medical device. Aytu noted that preclinical findings indicate Healight’s significant impact on eradicating a wide range of viruses, including coronaviruses, and bacteria.
Dr. Mark Pimentel, who led the research team at Cedars-Sinai said:
Our team has shown that administering a specific spectrum of UV-A light can eradicate viruses in infected human cells (including coronavirus) and bacteria in the area while preserving healthy cells. … Based on our findings we believe this therapeutic approach has the potential to significantly impact the high morbidity and mortality of coronavirus-infected patients and patients infected with other respiratory pathogens.
Sterling and Aytu will be seeking an FDA determination on an expedited regulatory process that would enable near-term use of the technology as a coronavirus intervention for critically ill intubated patients.
Aytu has moved very quickly, both to execute agreements for products that can have an impact on the COVID-19 pandemic and to raise the capital it will take to provide a return on investment. The first hint at how successful the company has been will be quarterly results due next month.
Because any financial benefits of Aytu’s whirlwind of activity since early March won’t begin to pay off until this quarter, the company needs to lay out what it can about performance still to come.
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