AYTU Bioscience – AYTU
Thoughts on today’s market action… Be cautious of words that begin with ‘T’! Fortunately for long term share holders, this may bring quality buying opportunities for companies who continue to exhibit decent, upbeat fundamentals as these will be the companies that will benefit the most from price appreciation once a comfortable buying atmosphere returns.
Turning now to discuss a new pick opportunity that I’ve been watching for a few months now. Aytu Bioscience is a commercial stage biotech company that has been posting some impressive revenue growth numbers over the last few quarters. Your resources for researching company financial records will reflect this statement. Aytu has multiple commercial products that are addressing several billion dollars markets globally.
I like this company’s prospects for growth for one main reason and that is their products market revenue potential. Take their acquired ‘Low T’ drug Natesto; it has a clear advantage over the dominant products in the market today and if Natesto could quickly capture even 1% of the approximate $1.76 billion dollar testosterone replacement therapy market, I believe that would be significant revenue for Aytu. And other products under their helm may also present this similar opportunity for growth.
Although I do like the growth expectations, there’s some concern with cash burn. Above average compensation increases and third party contracts add to the burn rate. I’m predicting by their current rate and increase in outstanding share counts, a need to raise cash may come as early as the fourth quarter of this year. This need may be delayed however if the record revenue growth can continue over these next couple quarters.
It goes with out saying, I recommend you take a look at this company to formulate your own opinion. If management executes well on their strategy, an opportunity to see 100% share price growth is attainable in the next year. I have started purchasing stock as I believe $1.70 is the consolidation point before returning to head up. We’ll see if this pans out and look forward to updating you in the future.