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What's in Store for Aytu BioScience's (AYTU) Q4 Earnings?

Zacks Equity Research

Investors’ focus will be on the sales performance of Natesto and the newly added products ZolpiMist and Tuzistra XR when Aytu BioScience, Inc. AYTU reports fourth-quarter fiscal 2019 results.

The company’s earnings record has been dismal so far, having witnessed a negative surprise in two of the last three quarters while surpassing expectations in one. The average three-quarter miss is 40.95%. Meanwhile, in the last reported quarter, Aytu BioScience came up with a positive surprise of 18.03%.

Shares of Aytu BioScience have soared 67.8% so far this year versus the industry’s decline of 3.4%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Aytu BioScience’s top line mainly comprises product revenues from the sale of Natesto and license revenues.

Natesto is the only FDA-approved nasal gel of testosterone for men with hypogonadism (low testosterone). The drug contributed to the lion's share of revenues in the sequential quarter, driven by high patient acceptance of Natesto. The company expects continued growth of the drug and an increase in total prescriptions in the upcoming quarterly release. Notably, in 2016, Aytu BioScience acquired the exclusive rights from Acerus Pharmaceuticals to commercialize Natesto nasal gel in the United States.

ZolpiMist (zolpidem tartrate oral spray), which is approved for the short-term treatment of insomnia, also made a solid revenue contribution in the previous reported quarter. Also, the drug has promising activities in the ex-U.S. markets as Aytu BioScience submitted a regulatory filing to the Australian Therapeutic Goods Administration through its global partner SUDA Pharmaceuticals in the last reported quarter. The company owns an exclusive right to ZolpiMist in the United States and Canada.

Last year, Aytu BioScience acquired Tuzistra XR, the only 12-hour codeine-based antitussive syrup approved by the FDA. This drug too is off to a good start with the company launching Tuzistra XR through its sales-force in the earlier reported quarter. However, during the conference call in the fiscal third quarter, management stated that its sales-force will focus more attention on ZolpiMist and de-emphasize Tuzistra as the cough season winds down.

We expect management to provide an update on all the above events on the upcoming investors’ call.

Additionally, Aytu BioScience’s Mioxsys is a novel, rapid semen analysis system, which has the potential to become a standard of care for treating male infertility caused by oxidative stress. The company primarily markets Mioxsys in the ex-U.S. markets as it is already approved in Canada, Australia, Mexico and across the EU. Mioxsys is doing quite well and consistently makes an outstanding progress in developing the global market with meaningful revenue contribution. We expect this trend to continue in the to-be-reported quarter as well given the increasing awareness and the wide use of Mioxsys.

Earnings Whispers

Our proven model does not conclusively show that Aytu BioScience is likely to beat estimates this earnings season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Aytu BioScience has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of 41 cents each. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Aytu BioScience currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, its 0.00% ESP in the combination makes surprise prediction difficult for the stock.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Aytu Bioscience, Inc. Price and EPS Surprise

Aytu Bioscience, Inc. Price and EPS Surprise

Aytu Bioscience, Inc. price-eps-surprise | Aytu Bioscience, Inc. Quote

Stocks That Warrant a Look

Here are some biotech stocks that you may want to consider as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

Adverum Biotechnologies, Inc. ADVM has a Zacks Rank of 3 and an Earnings ESP of +4.40%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alder BioPharmaceuticals, Inc. ALDR has an Earnings ESP of +13.33% and a Zacks Rank #2.

Adaptimmune Therapeutics PLC ADAP is Zacks #3 Ranked and has an Earnings ESP of +1.84%.

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