I'm Josh Disbrow, Co-founder and Chief Executive Officer of Aytu, and it's my pleasure to welcome you to Aytu Biopharma's first-ever investor day. Welcome to all those here joining us in person in New York City, and welcome also to all those joining via the webcast. Great to have you all here. It's an exciting day for Aytu, having just announced the formal and official launch of Exxua just this morning prior to the market open. Really a thrilling time in the company's history as we look at this transformational time and this transformational opportunity that we have as we think about the launch of Exxua, the first and only 5-HT1A agonist and truly a first-in-class treatment for major depressive disorder. Excited to let you know that we've got the sales force now fully deployed.
We're actually out there generating prescriptions as we speak, having already generated a significant number of prescriptions and hearing a lot of enthusiasm from the field. It's truly a unique opportunity for us as Aytu, as we think about the opportunity that is Exxua. Before we get started, some housekeeping items and the obligatory forward-looking statements. Just a reminder that some of us that will be speaking today may be making some forward-looking statements as we progress through the discussion. Further, I'll refer you to Aytu Biopharma's public filings for a complete list of all of our risk factors. Also, since we'll be spending virtually all of our time speaking about Exxua, I'd like to ask that as it relates specifically to Exxua, that you refer to the prescribing information on exxua.com, including the box warning about suicide risk associated with antidepressants, including Exxua in young patients.
Some additional safety information I'll point out, the contraindications for Exxua, and again, I'll invite you to consult the complete prescribing information on Exxua.com. So, without further ado, let's get started. As you've heard, Exxua, or gepirone, is the first and only selective 5-HT1A agonist approved for MDD, major depressive disorder, in adults, and it is approved as a once-daily extended-release tablet. As you'll hear from Dr. Stephen Stahl here shortly, Exxua is an azapirone with a long history of preclinical and clinical development and is a relative of buspirone , as you'll also hear. gepirone has a distinct mechanism of action in that it does not inhibit re-uptake like SSRIs or SNRIs. Again, that will be discussed. It uniquely activates the 5-HT1A receptor both presynaptically and postsynaptically. Much more information will be shared here on Exxua, and so these really are just highlights.
Before we introduce our key opinion leader speakers, let me introduce the management team that's with me here today, including our CFO, Ryan Selhorn, Chief Business Officer and co-founder Jarret Disbrow, Chief Commercial Officer Greg Pizzia, SVP of Scientific Affairs, Dr. Graig Suvannavejh, Senior Vice President of Operations, Margaret Cabana, Vice President of Regulatory Affairs and Quality Assurance, Suzanne Kennedy, and not pictured but with us are two other executives, Vice President of Marketing, Tyler Harrington, and Vice President of Sales, Todd Lambert. And we also have some other members of the Aytu team with us, so thanks to those folks for joining us as well. We're also very pleased to be joined via the web today of three leading authorities in the field of psychiatry who are world-recognized opinion leaders, and we'll introduce those folks here shortly. We definitely appreciate their time.
We appreciate their collaboration with us and their support throughout the pre-launch and throughout the launch of Exxua. Before we get to them, though, just a brief overview of today's meeting objectives. They are multifold. So, first and foremost, with the support of our esteemed panel of experts, we'll discuss 5-HT1A receptor and its clinical importance as it relates to major depressive disorder. We'll also highlight unmet treatment needs and their implications for antidepressant treatment selection in MDD. We'll share Exxua clinical trial data, including efficacy and safety data, and we'll close out with a review of Aytu Biopharma's financials related to both the Exxua license as well as the launch and the plans surrounding the launch. And we'll follow with both the scientific session as well as the business section with Q&A sessions. We'll do two separate Q&A sessions.
Then we'll close out today's session with lunch and a brief meet and greet with the management team that's here. So, without further ado, and to kick things off and get investors well acquainted with the scientific and clinical data, I'm pleased to introduce you to Aytu's Senior Vice President of Scientific Affairs, Dr. Graig Suvannavejh. First, though, a brief background on Suvannavejh. Suvannavejh is a distinguished leader in the medical and pharmaceutical fields whose work has contributed to a Nobel Prize in Chemistry. He previously served with the company from 2015 through the better part of 2021, including as the Director of Medical Affairs with Aytu. And recently, prior to rejoining Aytu, Suvannavejh was Vice President of Medical Affairs for Everly Health, a venture-backed private company in the healthcare space.
His expertise is in directing products, trials, and services within the pharmaceutical and healthcare industries, including medical and scientific affairs, patient advocacy, and partnering with regulatory affairs, business development, and sales and marketing at high-growth companies. Prior to originally joining Aytu in 2015, Dr. Gerwin -Westfield worked for Arbor Pharmaceuticals. He received his PhD in biological chemistry and BS in biology from the University of Michigan and is credited with over 20 peer-reviewed papers, numerous presentations, and professional lectures, and he's won multiple prestigious academic awards and fellowships. So, without further ado, it's my pleasure to have Gerwin come up to introduce our speakers. Gerwin.
All right. Thanks, Josh. I share Josh's enthusiasm and what it means for patients with major depressive disorder and Exxua's launch. I'm pleased to introduce today's esteemed speakers who are renowned, globally recognized experts in psychiatry. These thought leaders have combined for more than 70-plus years of experience with Exxua through the review and approval process. We look forward to continuing these efforts to build a robust publication strategy of Exxua data. I'd first like to introduce you to Dr. Stephen Stahl. Dr. Stahl is an author and professor of psychiatry with expertise in psychopharmacology. Dr. Stahl is a professor of psychiatry at the University of California, Riverside, and at the University of California, San Diego. He's an honorary fellow at Cambridge University and is a senior academic advisor for the California Department of State Hospitals.
He's an author of 600 articles and chapters, 2,000 scientific presentations and abstracts, and 80 textbooks, including the bestselling and award-winning textbooks Stahl's Essential Psychopharmacology and also Essential Psychopharmacology Prescriber's Guide. Dr. Stahl is an internationally renowned clinician, researcher, and teacher in psychiatry with subspecialty expertise in psychopharmacology. He has received numerous awards, including the British Medical Association Book of the Year Award, the A.E. Bennett Award of the Society of Biological Psychiatry, the Distinguished Psychiatrist Award by the APA, the David Mrazek Award in Pharmacogenetics by the APA, and numerous awards for lifetime achievements in psychiatry, including the Aristotle Gold Medal from Greece, an honorary doctorate of science from the Üsküdar University in Turkey, Sapienza University of Rome Award, and excuse me, it's a long list, and the Paykel Lecture from Cambridge University, as well as an honorary doctorate from the University of Cambridge. Dr.
Stahl, thank you for joining us. The floor is yours.
Thank you, Gerwin . Can you all hear me? I'm coming to you from Las Vegas, and welcome to all of you. Can we put up my first slide, please? We're going to talk a little bit about the mechanism of depression and the mechanism of action of the agent Exxua or gepirone. I don't see my slide there yet. Can we put that up?
Or if you allow us to share, I can share, but we can't share our screen either.
So technically.
I think they're trying to pull up the slides for you, Dr. Stahl. One second.
So let me just say, you're talking about one of the 14 or so serotonin receptors, serotonin being a neurotransmitter in the brain, and the 5-HT1A receptor is a target of several agents, but none selectively. Exxua is the first one for depression that targets this selectively. It is actually one of the reasons why some of the agents which augment antidepressant treatment that are famous in the current marketplace, like the atypical antipsychotics, it's one of their possible mechanisms because several of those do share 5-HT1A pharmacology. Let's see. I guess I was going to talk about the biological hypotheses of depression. I still don't see my slides. Basically, for over 50 years now, the idea has been there's something wrong with the brain's neurotransmission in major depressive disorder. It is a problem with monoamines, in that they may very well be depleted. Okay. Slides coming up? No slides.
We can't share either.
We can't share.
If you unblock the no share, then we can bring it up. Turn on sharing.
We're working through some technical issues on the back end. Hold on one second, please.
So basically, if you say that neurotransmission of monoamines, serotonin, norepinephrine, and dopamine are key to the brain's function, they are either actually deficient or functionally deficient. And we know this because one of the final common pathways of essentially all known drugs that treat depression are to enhance one or more of these agents. And so we do think that at least compensating for whatever is wrong in the brain by increasing them is a good thing. Now, some agents are selective, and some of the most famous agents in the marketplace, like the SSRIs, serotonin selective re-uptake inhibitors, and SNRIs, work either just on serotonin or on serotonin and norepinephrine. And as I'll try to show in a very brief schematic, Exxua works directly on serotonin, but also downstream on dopamine.
So it gives you a twofer, a twofer the price of one. It does enhance neurotransmission of two of these critical neurotransmitters. Can you give me the next slide? Next slide. So major depressive disorder is well known to everybody here. I won't spend much time on it. The Diagnostic and Statistical Manual of the APA defines it as either depressed mood or reduced interest, with four of the other symptoms added there altogether, and for almost all day and for at least two weeks. And so it's a broad group of symptoms, and each symptom is thought to be in a different circuit. And those circuits are regulated by those monoamines. So the idea is that inefficient information processing in a circuit will give you one of these symptoms.
Therefore, improving the information processing efficiency with monoaminergic boosters, such as 5-HT1A agonists, should improve the symptom associated with that inefficient circuit. Next slide. Here we've got a cartoon on the left of a neurotransmitter. My gosh, it looks like it's serotonin. I can tell by just looking at it. So the presynaptic neuron on top is throwing its neurotransmitter serotonin at those postsynaptic, funny-looking receptors on the postsynaptic face and having a nice day. On the right, you see fewer little dots of serotonin. You also see an upregulation, or in other words, an increase in those little receptors on both the top presynaptic neuron and the bottom postsynaptic neuron. In some ways, that's thought to be a futile attempt to overcome the deficiency of a neurotransmitter.
And what you might want to know is that the target for this drug is both on the pre- and postsynaptic side. The presynaptic side only has 5-HT1A receptors, and the postsynaptic side has about 14 of them, including the 5-HT1A receptor. On the presynaptic side, that little baby there is a brake. And so if you step on the brake, you reduce serotonin. So if you upregulate those receptors in depression, that's a bad thing because the last thing you want to do is reduce more serotonin. So as we'll show, neurotransmitters cause a downregulation, desensitization of those presynaptic 5-HT1A receptors and allow more juice to come out, and you live happily ever after, is the simplistic point of view. Let's see the next. We'll show you in schematic. There's the 1A autoreceptor. They're upregulated in a disease. And so are the postsynaptic receptors of many types. Next one.
And then what happens is with agonist occupancy of that, you end up having a desensitization. This is actually also how the SSRIs and SNRIs work. But when they do that, they spill neurotransmitter on 14 different receptors. Oh my God. And in doing that, you have a lot of price of doing business, which Dr. Clayton is going to tell you about in detail. And Dr. Correll will tell you about some of the side effect tolerabilities. And one of the secrets of a 5-HT1A agonist is to get the presynaptic downregulation as the mechanism that you want and also to target more selectively just the 5-HT1A receptor on the postsynaptic side. There's some extra serotonin floating around, so you'll get some at all these receptors, but not like with an SSRI, and therefore it changes the tolerability profile. Next slide.
So reuptake inhibitors, which are the first-line treatment and now generic and a source of a lot of first-line treatment and competition in the marketplace, certainly work by boosting serotonin. But as I like to say in my lectures, it's like throwing the brain into a bucket of serotonin, and every wild serotonin receptor in the whole brain, all 14 of them are stimulated. That can't always be good. So you get clinical benefits on the left side, of course. Improved depressive symptoms, or we wouldn't be talking about them. And actually, it improves other things, and they're approved for some anxiety disorders and other disorders. But the price of doing business is on the right.
You have sexual dysfunction, which you'll hear about, some GI upset, sleep disturbance, central nervous system kinds of activation, and basically some mechanisms that are what people don't like about taking these SSRI, SNRI drugs. Next one. Okay. So the presynaptic autoreceptor is on the top, and that little baby is occupied by Exxua selectively. And there is actually a desensitization that occurs because if you have an agonist in a receptor, it will desensitize and downregulate. If you cut your brake cable, what's going to happen? More serotonin is going to come out. And that's actually going to happen. But meanwhile, back at the ranch, look at the postsynaptic side. Next slide. The extra serotonin is coming down, but much more disproportionate will be the stimulation of the postsynaptic 5-HT1A receptor. Why do you care? Well, that's probably where the money is in terms of getting your depression better.
In the next slide, it does a very cool thing downstream, which is to cause dopamine to go up in the brain as well. And dopamine is good for motivation and energy and cognition and things like that, where serotonin tends to be better for mood and for anxiety. And you look at all these funny little places in the brain. The dorsal raphe nucleus is a fancy name for the headquarters of all the serotonin neurons that go everywhere all over in the brain with all those little, I guess, blue-colored neurons. And those blue-colored neurons, depending on which ones are sick and inefficiently operating, depends on the circuit you're going to have and the symptom you're going to have.
Long story short, distributing serotonin and dopamine throughout these circuits improves efficiency of information processing and improves symptoms without the price of doing business of spilling onto all the other serotonin receptors that make it more difficult to tolerate. I think the next one, there's the last slide, or very close to it. So don't we already have this on the market, Dr. Stahl? Isn't it called buspirone? Well, it is important to know that there is another azapirone, which actually has a chemical structure and a mechanism somewhat related. Buspirone, however, has low affinity interactions, less specificity, and not as highly targeted to the 5-HT1A receptor. It does have the need to take it two to three times a day because its half-life is only two to three hours, whereas Exxua is a once-a-day tablet and has decreased the need for anything more than daily dosing.
And part of that's due to the controlled release. That's part of the magic of this agent, but also the doubling of the half-life inherent in the molecule itself from two to three hours to five hours. The other thing is buspirone was never approved for major depression, although anecdotes suggest that adding it to SSRIs was one of the uses of it off label. And as I told you, 5-HT1A agonism is a property of many of the atypical antipsychotics that are also used in augmentation. And so, I think this gives flexibility for Exxua to be used not only as a first-line treatment, as an option to the older drugs, but also even in augmentation. We'll see what happens. Those of us in psychiatry don't like to follow the rules very much, and so we may very well decide to add it to a drug.
I think there's plenty of reason to think that that would be in boosting the efficiency of SSRIs, like many other agents in the marketplace are doing right now. I think the last slide sums it all up. Key takeaways. Major depressive disorder, MDD, is thought to be in part caused by depletion of monoamine neurotransmitters across the brain. Non-selective mechanisms of monoamine reuptake blocking agents, SSRIs, SNRIs, frequently cause treatment-emergent adverse effects. That's put serotonin not only in the places where you want it, but also putting serotonin in the places where you don't want it. Exxua is a highly targeted 5-HT1A agonist with both pre- and postsynaptic actions. The 5-HT1A agonism provides an antidepressant effect without flooding the brain with serotonin, flooding of which can lead to off-target and undesirable side effects.
And therefore, the profile of 5-HT1A selective agonism is different than an SSRI. And so you live happily ever after. Next slide. And we'll get into the meat of the meeting now with Dr. Clayton, and then Dr. Correll will show you the clinical data. Anita, is someone going to formally introduce her? Go ahead.
Yes, I will. Thank you. So, thank you, Dr. Stahl. Next, I'm pleased to introduce Dr. Anita Clayton. Dr. Clayton is the Wilford W. Spradlin Professor in Psychiatry and Neurobehavioral Sciences and Professor of Clinical Obstetrics and Gynecology at the University of Virginia. She has published over 230 peer-reviewed papers. Dr. Clayton has focused her clinical practice and research on multiple psychiatric areas of unmet need, including major depressive disorder, in which she has been a principal investigator for essentially all the new antidepressants since 1991. She has also extensively studied mood disorders associated with reproductive life events in women, sexual dysfunction, and other adverse effects of psychiatric illness in substances and medications. Dr. Clayton has developed and validated several patient-reported outcome measures for investigations or clinical trials of sexual dysfunction or disorders.
She has served on the board of directors for the American Society of Clinical Psychopharmacology as a program committee co-chair for two years and has begun her six-year term as president-elect, president, or past president in 2023. Dr. Clayton co-edited Women's Mental Health, a comprehensive textbook, and authored Satisfaction: Women, Sex, and the Quest for Intimacy for the general public. She is an international leader in female sexual dysfunction and has served in leadership roles in many scientific associations. And finally, she is a distinguished life fellow in the American Psychiatric Association and is a fellow in the International Society for the Study of Women's Sexual Health. Dr. Clayton, thank you for presenting, and the floor is yours.
Thank you, Irwin. Steven's a pretty tough act to follow, but I hope I'm going to be able to do that. So one, we're going to talk about unmet treatment needs, which clearly is true for depression, and then about antidepressants and where we're going from where we are now. Next slide, please. So major depression affects Americans at differing rates, and especially when you break it down by sex, age, and race. You can see here overall, and these are data from 2021, about 8.3% or 21 million Americans experienced a major depression that year. However, you can see that women are almost twice as likely as men to experience that. And we also see it much greater in younger people, basically beginning in late adolescence and until their brain sort of is fully developed. And then it's more recurrent depression that we tend to see after that.
Also, you can see that there's a fairly wide range in terms of various races and ethnicities and occurrence of MDD. But we see higher rates generally in those who are of mixed race or ethnicity and also American Indian and Alaskan Native individuals. Next slide, please. Many of you, I hope, are aware of the STAR*D outcomes. They came out a while ago, but they still have a great deal of value for us. There were four steps. And if you fail to achieve remission in the first step, you move to the second step. Or if you were unable to tolerate the medication, you move to that step. And then failure in the second step, you move to the third step, and then ultimately to the fourth step. And you can see there what the kinds of things were done in each step.
People started off with an SSRI. And you can see that a little better than 35% were in remission, but more than that, 40% did not achieve remission, or they experienced intolerable side effects. That continues on, as you can see, so that there's a decreasing response to subsequent treatments and increasing problems with those people persisting in having continued depressive symptoms. And the rates of remission are decreasing throughout those trials. So, achieving rapid remission with initial treatment is really paramount because untreated MDD can lead to high rates of suicidal ideation, completed suicide, and poor functional outcomes in many individuals. Next slide. We also need to talk about how the specific medications impact tolerability, which also is part of the reason for non-adherence.
Also, quality of life is impaired if people discontinue their medication or are non-adherent, or if they persist in taking the medication, but they have significant tolerability issues and reduced quality of life. So, the rate of relapse is really much lower in people who achieve remission. It's about 15%, though, in the subsequent year of treatment, but it's much higher, and you can see it here, increasing to 60% in non-remission at the end of a year. That's after one treatment. It looks even worse when you look at what happens after people have received four treatments. And unfortunately, a lot of people are being switched from one monotherapy to a second monotherapy to a third monotherapy. And when 50% of patients fail to achieve remission, 50% stop their medications. And that may be due to lack of efficacy, or it may be due to adverse effects.
Many people, even if they achieve symptom remission, do not reach full functional recovery. They continue to have problems in their work, in their social lives, with their families, etc. When left untreated, two-thirds of patients with MDD contemplate suicide, with 10 to 15% ultimately dying by suicide. Next slide, please. I talked about how people are often getting a monotherapy treatment, but that's a switch, right? Patients may decide, "Yes, this isn't working for me," or "I can't tolerate it," and the provider will switch them to another medication. We also need to look at the reasons for switching, why patients choose that. When we look at a large study of over 55,000 outpatients who began antidepressant therapy, they found that 8.6% switched those medications within the first 90 days.
And among young adults with depression, they're not very patient, and they will switch within those first 90 days at a rate over 15%. Moderate or severely bothersome side effects greatly increase the likelihood of medication switching, especially when they occur early in treatment, which is what happens. So you start to see side effects before you see therapeutic benefits. And in an outpatient survey on SSRI use, patients reporting those moderately or extremely bothersome side effects had three times higher odds of switching within three months. And many patients who switch may do so because of these poor tolerance and adverse effects rather than lack of efficacy. Next slide, please. So common antidepressant adverse effects can actually make major depression feel worse to the patients. It's very interesting because about 50% of patients taking an antidepressant and more than that taking an SSRI experience treatment emergent sexual dysfunction.
Now, depression itself can contribute to low libido and other sexual dysfunction, but we see a persistence of that or an increase even in patients who respond to the antidepressant therapy. And things like low libido, reduced arousal, and that would be lack of vaginal lubrication or erectile dysfunction, trouble achieving orgasm, and lack of energy all contribute to concerns about this treatment emergent sexual dysfunction. And we see worsening of depression in people who are not responding and problems in relationships, lower self-esteem, and even suicidality. The other big killer in terms of side effects is weight gain, especially in long-term use. Patients don't like that. They don't want to gain weight, and they don't want to have sexual dysfunction. And this can really further increase the high risk of obesity and cardiovascular disease in patients with major depressive disorder.
We are further contributing to other medical problems in our patients with this strategy. Next slide. It's very interesting. Atlantis and Sullivan actually looked at the relationship between major depression and common antidepressant adverse effects like sexual dysfunction and weight gain. What they found was that major depression increases the risk of experienced sexual dysfunction by 50%-70%. That's what I mentioned earlier. It increases the risk of obesity by 58%. But also, if you're not depressed and you have sexual dysfunction and weight gain, they both increase the risk of depression. For sexual dysfunction, it's by 130%-200%, and for weight gain, it's 55%, respectively. Next slide, please. How does this relate to the positioning of Exua in clinical practice? Exua doesn't have a warning about the risk of sexual dysfunction, unlike many other antidepressants that act on serotonin receptors.
Sexual dysfunction was not reported as an AE with an incidence of greater than 2% versus placebo in the pooled MDD studies. There was no clinically significant increase in body weight. You can see how close those data are between patients receiving Exxua and placebo. Also not seen in long-term extension studies. Next slide, please. One of the things we know about asking people about their sexual functioning is that it helps to use a validated questionnaire. The scoring on that can also be utilized to determine what's going on in terms of sexual function with patients. In the Exxua trials, the Derogatis Inventory for Sexual Functioning that is patient-reported was used, and you can see the data here.
There are elevated rates in all the domains, which you can see are things like thinking about sex and fantasies, arousal and excitement, sexual activity and wanting to participate in that, orgasm and the ability to achieve orgasm, and sexual satisfaction and relationship satisfaction. You can see for men, all of these are positive. But it's sort of a declining rate when you get further and further into these domains. For women, however, loss of thoughts and interest in sex and also problems with arousal are very prominent. And then you see a little bit less of a problem in terms of actually participating in sexual activity. So orgasm and satisfaction are also problematic for our women patients who are taking—sorry, I had this totally backwards. These are positive effects on sexual functioning in men and positive effects of Exxua on sexual functioning in women.
So the greater scores of the DISF-SR indicate greater levels of functioning and satisfaction with Exxua. I can answer questions about that when we get to that. Next slide, please. So to summarize this, in 2021, there were 21 million adults in the U.S. who were living with MDD. Many patients do discontinue or switch their treatments due to bothersome side effects. The safety and tolerability of Exxua has been established in over 1,900 patients, and particularly as it relates to the most distressing adverse effects of sexual functioning and weight gain. And Exxua provides antidepressant efficacy without causing sexual dysfunction or clinically significant weight gain. Thank you.
Thanks, Dr. Clayton. And finally, I'm excited to introduce Dr. Christoph Correll. Dr.
Correll is a professor of psychiatry at the Zucker School of Medicine at Hofstra Northwell, as well as a professor and chair of the Child and Adolescent Psychiatry Department at Charité – Universitätsmedizin Berlin, in Germany. He's completed his medical studies at the Free University of Berlin in Germany and Dundee University Medical School in Scotland and is board-certified in general psychiatry and child and adolescent psychiatry. Since 1997, Dr. Correll has been working and conducting research in New York, and as of 2017, he has begun working in Germany again. Dr. Correll focuses on early identification and treatment of youth and adults with severe mental illnesses, psychopharmacology, clinical trials, epidemiology, meta-analyses, and the interface between physical health and mental health. He has published more than 1,000 articles that have been cited more than 100,000 times, and he has received more than 40 research awards.
Since 2014, he has been listed annually by Clarivate Web of Science as one of the most influential scientific minds and among the top 1% cited scientists in psychiatry, and for 15 topics, he has been ranked expert, and for 23 topics, he has been ranked world expert, which is among the top 0.1% of cited scientists. He has been ranked as the number one world expert in more than 10 areas, including central nervous system agents, psychotropic drugs, schizophrenia, schizophrenia spectrum, and other psychotic disorders, antipsychotics, and delayed action preparations and weight gain. Dr. Correll, thank you, and please go ahead.
Thanks so much, Gorvin, and thank you also, Steve and Anita, for setting the stage so nicely into which I will now embed the Exxua clinical trial data. Efficacy and safety, the two components. We start medications for efficacy. Patients continue medications mostly for safety.
Obviously, they also want to see a benefit. So let's go to the next slide and go through the clinical trial program that led to the FDA approval of the first and only treatment that is a 5-HT1A agonist for the treatment of MDD. So we have study one and study two. Both were eight-week trials that were randomized, double-blind, and placebo-controlled. So standard of care, standard of the delivery of evidence-based treatments. There were flexible doses, but with a fixed force titration, which is important, that we're getting to the right dose. And there were phase three studies in adults with MDD, which is also the indication that Exxua has received. The treatment schedule was an initial dosage of 8.2 milligrams once daily. That was then titrated to 36.3. That's almost double of it. And then that was day four at the end of week one, 54.5.
There was an opportunity, if needed, after an additional seven days, so week two, to go to 72.6 milligrams. Primary efficacy measure was the 17-item Hamilton Depression Rating Scale in one study, and also in the other one, it was the Montgomery-Åsberg Depression Rating Scale. The clinical global impression scale is a very important real-world application of what does the clinician see as an overall improvement and severity of the illness. Next slide. Here is the demographic information about the patients. Very standard for MDD trials, a little bit under 40 in both trials, more females than males, about two-thirds. Dr. Clayton already mentioned that females are more affected by depression for various biological but also environmental factors. First episode, that is interesting, about a third or a quarter.
We want this treatment to be used early because patients might discontinue antidepressants after having had a bad experience, not really trying something else because of weight gain, because of sexual side effects, because of emotional blunting that we haven't talked about, which comes also with this flooding of too much serotonin across the board that Dr. Stahl talked about. But there were also about, and that was the highest proportion of people, a third or 60% of people who had been doing okay after the first treatment but were restarted, in this case on Exxua, to get good care for the next episode because, obviously, we have recurrence of illness. We have recurrence of illness endogenously, but also because patients, because of the side effects, may not continue long-term.
Having an effective treatment that is also very well tolerated might give patients the incentive to actually stay the course and also prevent further relapses. And we know that more relapses, we get more relapses. Next slide. So here is a little bit more information on the primary outcome. Here you can see that Exxua demonstrated statistically significant improvement from baseline in the HAM-D-17 on the primary outcome time point, which was the end of the study in the HAM-D-17 score. And that was statistically and clinically meaningfully relevant, looking at basically halving the score almost from 22 by minus nine and on the other one 24 to minus 10 points.
That was also a placebo effect, but obviously, that is to see whether the treatment and the control setting can beat the overall non-specific effects that happen when patients are in trials, get 10-11 care and a lot of attention. We, as clinicians, patients, and caregivers see the absolute change from baseline to endpoint, but even despite that, there was statistically significant improvement in these two trials. Next slide. Here's the time course of effect. That's obviously something that's relevant and not only at eight weeks, but in this one trial, already from week three onwards, there was a statistically significant improvement over placebo, but again, I want to highlight that in clinical care, we don't compare this against placebo. And by week two, we already had about 50% of the overall improvement.
That's a pretty enormous change early on that patients will perceive and also act on, particularly if they don't have these early side effects that often are a deterrent for patients to continue with treatment. That's study one. Let's go to the next study. And here we see a separation from placebo as early as week four. But again, the difference in the score is about, again, 50% of the about 10-point change by week two. So we can see that there is early improvement that patients will see and perceive. Next slide. Looking at some other outcomes that were measured, we can see that this cuts across the board.
It's not just looking at 17 items, but we can also on the HAM-D, which is a little bit more key toward restoring weight and sleep, which actually favors some of the older treatments where side effects of weight gain and sedation cash in as outcomes. That's not needed for Exxua because there's also very nice separation and even stronger on the MADRS that doesn't weight this strongly toward the side effect overlapping symptoms and signs. We can also look at the larger scale of the HAM-D 20 or a short scale that might actually be amenable to clinical application, the HAM-D 6, and also the CGI-I, which I mentioned is the overall global improvement, which was clinically and statistically importantly showed the improvement, and whenever you have a one-point delta on the CGI-I, that's a categorical improvement from severe to marked, from marked to moderate, moderate to mild, and so forth.
That is clinically meaningful. And we had actually 1.3 points as an average score improvement on the CGI-S. Next slide. There is one way of measuring success, and that is the continuous improvement. But here we're looking at cutoffs. And responder rates are important in clinical care. This is how many patients have at least a 50% reduction on the baseline score. And that was about half of the patients, which is very similar to what we've seen with other approved and well-used antidepressants. And looking at something even more important, and that is remission as early as week eight, meaning patients would not fulfill criteria for MDD anymore and have no more than mild symptomatology. Already about a third of patients achieved that by week eight. And we know that with more time, that actually climbs up even further. Next slide. This is the efficacy portion, very important.
But again, for staying the course and trusting a treatment, patients want tolerability. And as Professor Clayton already mentioned, there may actually not only be an absence of a side effect, not having sexual side effects, but actually an improvement in sexuality, which is something that many patients really long for after a long drought of relationship-enhancing activities because of the rose-colored glasses of being down on oneself, having no motivation, no energy anymore. Now, if that comes back, but there's no sexual interest, that makes it really hard to have this relationship-reinforcing, bonding, social, and also intimacy closeness that people want. So having a treatment that can actually, again, open doors for that is important, even producing resilience factors for not having a relapse because you're able to bond again with partners that have sometimes been really estranged by the depressive illness. Next slide.
I want to point out this, like what Professor Clayton mentioned, these effects are better than placebo. So it's a real effect. Looking at weight gain, who likes weight gain? Very few people. And you know with Semaglutide, this is a huge industry, and people actually feel much better emotionally in terms of their identity, but also their biological effects of not being obese. There's inflammation, oxidative stress that, again, as Professor Clayton mentioned, can feed back into a risk for depression. So not having weight gain, being totally weight neutral compared to placebo is a real plus, and we see that with Exxua. Next slide. There are other side effects that every treatment can have side effects, but they are short-lived and early on, and we can really guide our patients through this because these are generally not marked or severe side effects.
They're mild to moderate, and, where the rubber meets the road, have not led to significant discontinuation rates. So 5-HT1A agonists can lead to dizziness, nausea, insomnia, abdominal pain, and dyspepsia. Those were at least 5% and twice the incidence of placebo, but you can see that this is a time gradient, and we can set the stage with patients, letting them know that. So that goes from about a third of patients by week one to only a fifth by week two, and by the end of week six, it's basically three out of a hundred, but importantly, did it lead to discontinuation? Four patients more out of a hundred discontinued for side effects. So that tells you how well tolerated Exxua was. Next slide. Here is a summary of the side effects that you can also see in the package insert.
So this is at any time patients raising the hand at least once. It doesn't mean that it was continued for many, many days. And I think, again, the 7% versus 3% discontinuation tells us that this is very manageable. Next slide. Looking at the lower occurring side effects, here you see weight increase at enormously low numbers and also no sexual side effects. Next slide. QTc prolongation has been something that has traveled with the 5-HT1A agonism, but actually it's a legacy side effect. What do I mean by that? I mean by that that the immediate release agents that have a much higher peak value and peak drop variation had a problem with that. 18.4 milliseconds and twofold exposure of the maximum recommended dose was found with the immediate release agent that led to its discontinuation. Exua was not discontinued.
Actually, it was introduced to combat that issue by having an extended-release formulation that takes care of that. Now, the FDA is very conservative and has class warnings. So there's warning of, or the, there's no warning for QTc with Exxua, but the recommendation to do an EKG prior and during treatment has to do with the immediate release agent. Now, it's a recommendation, not a necessity, and many of us will and have used Exxua without needing an EKG monitoring. It is in the package insert, but the overall change, which you can also see in the package insert, was very small with Exxua itself, and very few patients actually had a categorical shift that would be relevant. The categorical shifts were actually, in terms of frequency, lower than on placebo, and that tells you how well this is tolerated.
Now we come to the last slide and then to the Q&A. As you've seen, study one and two clearly showed that eight-week primary outcomes were checked off. Exxua was better than placebo with a separation as early as week three in the one study, week four in the other, but clinically meaningful separations from baseline, even at the earliest treatment and measurement time point. There was no signal detected for the treatment-emergent sexual dysfunction or significant weight gain. The QT interval is very well controlled with Exxua. The monitoring is still recommended, but it's more of a legacy recommendation. And very importantly, these side effects were mild to moderate, and discontinuation rates were seven versus 3%, very well tolerated and effective for use in clinical care. So I thank you for your attention. Look forward to the questions.
All right. Thanks for the presentation and the time these world leaders in psychiatry have spent with us preparing these presentations. With the prepared presentations completed, we can now open up the floor for Q&A.
Hi, thanks for the presentation, and thanks for taking my questions. I just have a couple to, I guess, all the doctors. Based on Exxua's profile, what would be the ideal patient profile for you to prescribe the product? Would these be like first-line patients, or would you wait until they have like two or three failures prior to prescribing? You could go whatever order you want.
Anita, you are still mute.
Sorry. I'll speak to that. First off, one of the things we should be doing with patients is finding out what their preferences are in terms of potential side effects to avoid and other problems that they want us to also be sure to take into consideration. And we should be actively asking those questions. And I would say people who don't want to have sexual dysfunction, people who don't want to gain weight, and I'm going to tell you that's going to be the vast majority of your patients. Those are people that we should consider using Exxua fairly early on. And I think that that can be even more pronounced in patients who experienced sexual side effects or weight gain or both on SSRIs or other medications we tend to use early on in the treatment of depression. So I wouldn't wait for multiple failures.
We also know that when you are waiting for multiple failures and trying those, you may, in fact, see emergence of treatment-resistant depression. So don't wait. I would use it early.
Yeah, I would second that the earlier use is better in the trials. There was a whole gamut of different populations, and it worked in them. But avoiding side effects, having good treatment alliance, and ticking off the treatment early on without inducing maybe treatment resistance is really key.
I just have one follow-up question. I believe Dr. Stahl, during his segment on the presentation, said Exxua hits two of the three targets for MDD. I guess to all the KOLs, do you think there's a combination potential with Exxua and other therapy, or would it just make sense to utilize as a monotherapy? Thanks for taking my questions.
Oh, music to my ears. Absolutely, very smart question, very perceptive. Particularly when you introduce a drug, nobody really has an unmet need for first-line treatment because it's already dictated by payers, and so it's a fantasy to think that you're going to get immediately a lot of first-line treatment. What you're going to get is the patients who are not doing well either to switch or augment another treatment, and then if we like it, we will trickle it down to easier and easier patients. That's just the reality of it. This is a made-to-order drug. It doesn't have drug interactions with the other first-line therapies. It's got a lot less side effect baggage than the atypical antipsychotics do when added to the SSRIs. I think that it's tailor-made to be given to people with partial responses or non-responses to other drugs and augmented.
And then I think after six months or a couple of years of satisfactory experience with it, then you use it in easier and easier patients, and it trickles down more towards first line use or monotherapy use. That's just my opinion, but we'll see what happens. Again, in the marketplace, people don't really read labels. They do what the unmet needs are. And I think you're very perceptive in thinking that this might be an augmentation treatment. Good work.
I'll add, if there are questions from the webcast audience, you can type in your question in the ask a question box on the web player. Thanks.
Yeah, Nelson Cox with Lake Street. Dr. Clayton, you referenced a study that showed 8.6% of patients switch medications within the first 90 days and then 17% with young adults. Maybe just open-ended for the group, how do you think about sexual dysfunction and weight gain actually driving patients to request treatment switching, and how early are you seeing those conversations arise?
We have done a number of studies looking at treatment emergent sexual dysfunction, and we used it in healthy controls just to look not at a confound with depression, but relate, and I'm not talking about Exxua. It was a drug that never came to market, but trying to just look at the effect on sexual functioning, and we were measuring it. What we really found was that patients start experiencing sexual dysfunction, or these controls did, within day four and then day six with different phases, and finally day eight and 14. It's an early onset. It's just that people don't really notice it, especially if they're feeling depressed and they have sexual dysfunction as a symptom of their depression. I think it's really critical to talk to patients about this. Patients do have things that they want to avoid.
Sometimes the order is reversed, but I would say both men and women want to avoid sexual dysfunction and weight gain. And other people can put up with side effects that happen early on. You saw that there were decreasing side effects even as the dose was increasing in the clinical trials. And generally, two weeks or so, that really wasn't a problem. So we can get people through those kind of acute adverse effects like dizziness, nausea, which we see almost with every psychotropic. And also, the efficacy was statistically significant before all the highest dose was reached in those trials too. So I think we need to be thinking about it in a really different way that we can see better sexual functioning early, and we can see efficacy even before we get to the highest dose.
Got it. Thank you. And then maybe just to follow up on the earlier question, I think Dr. Stahl might have kind of commented on a little bit, but you had said clinicians should ask patients what their preferences are. Is that generally how the psychiatry community is prescribing these patients?
I would hope so if they want to stay in business, because really, if you're not communicating with your patient and involving them in their care, they may very well not be adherent to treatment, or they may give up on something before it's had time to work, so we certainly are teaching that in our residency program, and our residents and graduates all do that, and we talk about that a lot at big meetings like APA and ASCP and things like that, so I hope that we are moving into that more and more and seeing it straight out of training.
But I think also with this unique profile, the marketing can help that clinicians feel equipped to actually ask about these preferences because they have an agent that sets itself aside. If all the other SSRIs have sexual side effects and the difference is really small, well, what in terms of choice can you give them? So I think choice and preferences is enhanced by having an agent that differentiates.
We have a webcast question here really for the group. Any possibility that Exxua could help Parkinson's disease patients?
That's the question, is most likely because the dopamine story, Steve. Maybe you can address that.
Yeah, I mean, I think it's theoretically possible, but I think that the amount of dopamine that you need in Parkinson's disease, you really have to blast the brain, and this is more like tweaking the brain. And so, it probably is not robust enough. Actually, it turns out that the other azapirone buspirone, actually, if anything, is a bit of an antagonist to dopamine and actually blocks it. And so, the sister drug would certainly be not a good idea in Parkinson's disease. This drug, it might help. You know, the funny thing about Parkinson's disease is they do get depressed, and it's a tough bugger of a depression to treat when you see it concomitantly. And so, we're always looking for something that would be, and I think this is a great kind of segue.
Maybe we should look at Parkinson's depression as the target of this agent as a theoretical interest, but whether it would help the motor side effects concomitantly, let's put it this way, it probably wouldn't hurt, but it probably is not going to be robust.
Yeah. And I'll just add that again, you know, at this time, Exxua is only indicated for major depressive disorder.
It's not specifically indicated for depression in Parkinson's disease, but when Parkinson's patients get major depressive disorder, you can give it. So, I mean, we're playing regulatory games here, and you did a good job there. I'm glad you're going to keep your job. The rest of us can be a little bit more realistic and fewer handcuffs on us. But it would be something you could do from the get-go. And in fact, with a new drug, you're looking for little niches like this where major depressive disorder may have unmet needs from the current treatments as one of the first places to start. So let me be quiet because I've been overly provocative now.
You, Steven?
Surprise.
Hi, I was wondering if you could give a little sense of history of the compound in the studies because my recollection, vaguely under Fabre-Kramer, is that it failed a lot of FDA studies, and I don't know why. I know nothing about those studies. I'm wondering if any of you have any of the history of what was wrong in the study design or the study execution, and were you all consultants to Fabre-Kramer at all or unengaged entirely?
Can I answer that? Because I was actually the presenter of gepirone, the FDA 100 years ago when it went there and was listening to the argument. And it is true there were a lot of trials, and a lot of the trials were what we call failed. They didn't distinguish from placebo. I think there were like 23 trials total, and only two of them were positive. So the FDA said, "Oh, this is damning with faint praise." Let me tell you a secret. If you have idiots running your trials, the drugs don't work. And the idiots running these trials, about 15 or 17 of those studies were immediate release formulations. No duh. You know, if you have peak dose side effects, it's not as tolerable as you would like. And all those studies shouldn't count against this one.
If you look at the controlled release studies, Bristol Myers Squibb had this drug and started down the pathway and quit and stopped trials like about 12 of them in the middle, and of course, they didn't distinguish from placebo. They just stopped it, and then Fabre-Kramer had to pick up the pieces and take it over the goal line. And when they did, the last trials are published in the peer-reviewed literature and in your package. The controlled release formulation of a study that was done and finished actually worked. How about that? I think that, you know, part of this is the FDA doesn't like this drug, and they were doing everything they can to kind of, it was really an amazing FDA advisory committee seeing the bias of the FDA.
And of course, it took a while for them to reverse their position and approve it. So I think there's some interesting background. You could write a novel perhaps based upon some of the craziness that went on behind the scenes. But these guys got it through, and they're going to market it, and it should be a nice contribution to the literature. And it's a good thing that you asked that question because there are rumors about a bunch of trials that failed, but it was a combination of immediate release trials that failed and Bristol Myers Squibb deciding to abandon the drug and quit trials in the middle.
I will say one other thing is that we talked about the DISF being used in the two trials that were positive and looking at sexual functioning, but those studies also involved lots of details about looking at sexual functioning, probably overly so in some of those. And it certainly did look different in terms of sexual functioning, but that may have in fact contributed to other factors that would make a trial fail. So I think that that study design that was heavily loaded with a lot of assessments is usually a problem.
Hi, thanks, doctors. Just a question on the label and how, you know, maybe the real-world experience might differ a bit from some of the labeling requirements. So on the ECG requirements on dose initiation and titration, I know this was a signal that was mostly observed with the IR formulation and not the extended-release formulation. So just curious, in real-world practice, do you think the ECG requirement is going to be an impediment at all to your uptake? And do you think you're actually going to have to conduct these ECGs as patients titrate up in the real world? Thanks.
If it were a requirement, it would be a problem, but it is a recommendation. And therefore, we can choose to execute it or not. And looking at the numbers for the QT prolongation versus placebo, these numbers are actually lower than placebo. So I do not think that clinicians will change their behavior and take an EKG before they prescribe an antidepressant of the modern time, and that will include Exxua. But I wonder what Steve and Anita are thinking about that.
Let me quickly chime in and say this is chapter six of my novel of the FDA's approval of this where they have various ways of actually trying to have retribution against a drug they don't like for some reason, and they put this, they're overwarned, and I think this is people in practice have what we call warning fatigue. We're tired of being overwarned. We would like to be warned for things that are meaningful. I think this will be promptly ignored myself because it's an overwarning, and I think it's basically trying to cripple this drug a little bit with warnings because the FDA had this horrible history with it, but I think that we're smart enough to get past that and to look at that.
My God, if you did a QTc warning, we add drugs with QTc slight increases on top of QTc drugs that have slight increases every day in my practice a dozen times and never get a cardiogram. So I think that it's much ado about nothing, and we won't have a problem with it. What do you think, Anita?
Yeah, well, I came along when tricyclic antidepressants were our staples before the SSRIs, and those did require ECGs and careful monitoring and also blood levels. And those are not done at all now. So people, once you get familiar with a drug, I think it'd be highly unlikely that people would think, "I need to do this." And I agree, a recommendation is not a requirement. And providers need to be aware of that.
All right. It looks like we are good on questions here. So, I'd like to thank our KOLs again for participating in this investor day. And I'd like to hand it back over to Aytu's CEO Josh Disbrow to move forward to the next part of the presentation. Thank you, doctors.
Thanks for having us. Bye. Have a good rest of the day.
Bye-bye.
Thanks so much. Dr. Clayton, Dr. Farrell, Dr. Stahl, pleasure having you all. Appreciate your time, so let's move on with that portion of the investor day now behind us. We'd like to get into the business section, and so we'll have essentially three brief series. We'll have Ryan come up and present the financials around Exxua just to remind you on deal terms and some of the company's core financials. Then I'll get up and kind of have a preview, and then we'll close out with our Chief Commercial Officer, Greg Pizzia, presenting on specifics around the tactical plan and the implementation now that our reps are out there in the field. So, without further ado, let me have Ryan come up and present the financials.
Thank you, Josh, and thanks again, everyone, for joining us today. I'll walk you through our financial position and most importantly, the economics of the Exxua partnership and what it means for near-term cash flow, long-term profitability, and shareholder value. At a high level, we're entering a phase where disciplined execution, strong margins, and well-structured commercial deal converge. Our strategy is focused on capital efficiency, risk-adjusted growth, and predictable cash generation, and Exxua is central to that story. Let me spend a moment on the structure of the Exxua deal because the way we designed the agreement was very intentional. From the outset, it was important for us not to maximize upfront cash but instead enter into a partnership where the majority of the economic value is directly aligned with the performance of the drug.
We believe that that approach best reflects our confidence in Exxua's commercial potential and creates long-term value for shareholders. Accordingly, the upfront component is deliberately modest, with $3 million paid at execution back in June of 2025, followed by an additional $3 million within 45 days of our first anniversary of commercial launch, which payment will now be set for January of 2027. Importantly, that second payment increases to $5 million if net sales exceed $35 million in the first 12 months, ensuring that early commercial success is immediately rewarded. The ongoing economics are primarily performance-based royalties that we pay as Exxua generates revenues. The agreement includes a 28% base royalty on net sales, as well as an amount equal to 3% of net sales less actual cost of goods sold. If cost of goods sold exceeds 3% level, then no additional payment is earned.
If annual net sales exceed $300 million, the royalty rate increases, reflecting shared upside as the product achieves greater commercial success. In addition, the agreement includes milestone payments that begin at $100 million in annual net sales, including a $5 million milestone payment at that threshold, further reinforcing that the bulk of the consideration is triggered only by strong market performance. While royalty rates are reduced upon a certain royalty trigger or following loss of exclusivity, the overall structure ensures that our largest financial obligations only incur as Exxua succeeds, aligning cost, revenue, and shareholder value. Let me turn to the balance sheet and our cash position. As a reminder, our September 2025 cash position, we held $32.6 million in cash, and based on our current projections, we do not expect to require additional capital through profitability.
On a trailing 12-month basis, we delivered an adjusted EBITDA of $6.7 million while maintaining a very modest operating cash burn of just $1.4 million. This highlights our operating leverage in our model and discipline with which we manage the costs. Exua also exemplifies our focus on efficient capital deployment. Our original launch budget was $10 million and has been reduced to about $6-$8 million, driven by execution efficiencies, tighter cost management, and without sacrificing commercial readiness. From a margin standpoint, Exua is expected to deliver gross margins between 66%-68%, inclusive of the royalty payments, which is fully consistent with the company-wide trailing 12-month gross margin of 67.6%. This means we're not trading profitability for growth. We're scaling with margin integrity. A brief word on leverage. As of September 30th, 2025, we had $12.5 million outstanding on our term loan.
Over the trailing 12 months, we successfully reduced our high-interest liabilities by $7.4 million. This strengthens our balance sheet, lowers our interest expense, and increases our strategic flexibility as we move towards sustained profitability. From a capitalization perspective, the company has 23.6 million fully diluted shares outstanding. Of these, three institutional investors collectively own 52.3% of the fully diluted share count. Nantahala Capital Management, Stonepine Capital Management, and Special Situations Private Equity Fund are well-established healthcare-focused firms with demonstrated track record and a long-term investment orientation. In closing, the Exxua agreement reflects our highly disciplined capital allocation strategy. We intentionally structured the deal so that our upfront payment is modest, preserving liquidity, while the majority of our financial obligations, including royalties and milestones, are paid only as the product generates revenues and demonstrates commercial success.
This approach limits our downside risk, maintains our balance sheet strength, and ensures that costs scale alongside performance rather than being front-loaded. Combined with Exxua's attractive gross margin profile, reduced launch investment, and our strong cash position, we believe this structure positions us well for sustainable profitability and long-term shareholder value. We're confident in Exxua's potential and equally confident that this deal structure allows us to pursue the opportunity without compromising financial discipline. Thank you for your time, and I'll turn it back over to Josh.
All right, thanks, Ryan. I didn't feel the need to introduce Ryan, since most of you already know our Chief Financial Officer, and it's a good idea, obviously, to introduce Gerwin, given that he was new to some of you, and prior to introducing Gerwin, I'll give a little bit of his background as well, but yeah, just the last part of the meeting here as we move into the commercial piece. I'll just remind you that, look, first and foremost, you've noticed probably this morning that we put out sort of a formal launch press release, understanding that while we did commercialize the product initially back in December, I'd call that our soft launch, and really, our hard launch or grand opening would really be today, so if you really think about where Exua is in its timeline, I mean, realistically, today is day one.
With the sales force having been fully trained at our national sales meeting in New Orleans last week and us all flying here yesterday, we really do think about this as day one of our launch. When I say day one, that means not just the RX Connect distributors and pharmacies are stocked, but now every pharmacy in America, all 50 states, could access the product, given the fact that all distributors have been loaded, all of their distribution centers have been fully loaded, and ultimately, any pharmacy in America could have the product either later today or tomorrow, worst case, day after tomorrow, but realistically, within 24 hours, so distributors, wholesalers, nationwide stock, physicians fully getting aware and already generating prescriptions, which has been exciting to see.
One of the things you'll see from Greg, and that I'll reiterate, is that this will be, while a very, very effective launch, we will make it markedly efficient in that we're not going to overspend. We're not going to spend ahead on the promise. We're going to spend as cash flow and profitability dictates. And we think that's responsible. We think we've got adequate capital to enable that. And ultimately, the proof will be in the launch trajectory, which we're starting to see. Before I hand it over to Greg, I'll just remind you of what we really view as distinct positioning. I think you've heard it from our three speakers, and you've heard it from myself and Ryan if we've had individual meetings or presentations at investor conferences. But truly, Exxua satisfies a really unique need and opportunity.
One of truly very few novel products, if you think about the products that are out there today. When you think about the mechanism of action of being a full agonist, presynaptically, partial agonist, postsynaptically, specifically to the 5-HT1A, that truly is unique. Again, the first and only 5-HT1A agonist indicated for MDD. And when you think about mechanism of action as just a singular element of differentiation, really, only although you could claim anywhere close to a novel mechanism. And frankly, that's a combination of two old drugs that have been around since for the better part of two generations. So that having been said, Exxua truly is novel.
Even if you look at Auvelity as somewhat of a comparator in the context of potential, that's a product that essentially has just booked $500 million a year when you get into its kind of third full calendar year of commercialization. While we're not necessarily guiding investors or shareholders to that number, it gives you, I think, a glimpse into the enormity of the market and the enormity of the opportunity. Beyond the calling card around MOA, which doctors, by the way, do gravitate towards, when psychiatrists hear about a specific receptor and they hear about the 5-HT1A, like that, they get it. They understand it. They understand the importance of it. They understand the importance of the singularity of the 5-HT1A. That's important.
But truly, the calling card, just to reiterate and sort of double down and triple down, is the fact that sexual dysfunction and the clinically insignificant weight gain and frankly, no weight gain that's associated truly separates it from these other medications, as you can understand. And that again, by being dosed once daily, you would even say it's got differentiation and a benefit over Auvelity, which is dosed twice a day. So, we like to show this slide because, frankly, I think it makes it very clear how and why we expect to win and why Exua is so unique. So, with that said, I'll give you a brief introduction to Greg so he can come and give you some details around the commercial launch.
Greg has served as our Chief Commercial Officer since January of 2022, having come out of the Neos merger where Greg served at Neos as vice president of commercials since June of 2020. He previously served at Neos as vice president of commercial strategy and market access. That was from November of 2018 to June of 2020. Prior to that, as executive director of channel strategy and access program. Greg has served in commercial roles of increasing responsibility over his 20-year-plus career, including sales, marketing, distribution, channel, commercial operations, managed markets, new product training, new product planning, and so forth. Prior to Neos, he was with Aqua Pharmaceuticals. Prior to that, he was with Arbor Pharmaceuticals, Logenex, and started his career in sales with Endo Pharmaceuticals.
Greg also recently served on the board of directors for Evoke Pharma, a publicly traded specialty pharma company that was just acquired by QOL Medical back in December. And Greg, like it or not, holds a BS from Rutgers University and an MBA from Argosy University. So Greg, I'll have you come up and take the floor from here.
Excellent. Thank you, Josh. And hello, everybody. Pleasure to join you here and review the commercial approach and strategy for Exxua as we dial in our approach to maximizing the market opportunity in front of us here. And let me start by saying that the overarching theme of what we'll discuss today around the Exxua launch is that we will be efficient with our spend from a relative spend perspective, but we will be very focused on our approach to ensure that we have a comprehensive focus to drive prescriber activation. With that said, we'll be placing a heavy emphasis on our sales force. And with that team, we set very clear territory performance expectations around territory productivity with a high level of urgency around prescriber activation, prescriber growth, which is supported by an incentive comp plan that we believe will motivate those individuals to perform and exceed expectations.
In addition to our Aytu sales team, we're investing in efficient and rapidly scalable initiatives. Specifically, these initiatives we believe will help reach and broaden awareness for key customers and help support our in-person promotion efforts with the intention of generating early customer leads. Additionally, we plan on leveraging a new novel rolling CSO model, which will enable us to scale our in-person promotion over time. And that will be based upon product performance and generation of cash flow, as Josh and Ryan have mentioned earlier. With these augmentations of our in-house team of roughly 40-plus sales professionals, we're confident that we can effectively cover the very significant major depressive disorder waterfront. And on a non-personal front, a highly targeted media plan will be employed to the degree we can and within a compliant manner.
But a large takeaway here is that our promotional efforts will be targeted and comprehensive in nature. With regards to patient access, currently, we're leveraging our best-in-class AytuRxConnect network, referred to as AytuRx Connect. And we recently achieved full retail supply, as Josh mentioned, through the national wholesalers. This enabled broad-based product availability at pharmacies throughout the United States. That said, we'll continue to reinforce with customers that Aytu is committed to an ideal patient access experience and the lowest possible patient out-of-pocket costs when receiving their prescriptions from an AytuRx Connect pharmacy. However, if a physician or a patient chooses to get their Exxua prescription filled at a non-network pharmacy, that option is fully available with our broad distribution that we've achieved. Also, building broad-based awareness to our novel new chemical entity will be critical within the medical community. And Dr.
Graig Suvannavejh, who's everyone's met here earlier, has been rapidly building out our KOL network, as well as a strong publication and medical conference plan. In fact, Aytu has already attended its first scientific conference in November of 2025, and the 2026 calendar itself is filling up fast, and it'll be a very productive and busy year with our first full year of commercial availability on the market, so Josh alluded earlier to our approach of focus, efficiency, and customer familiarity in all that we do from a launch perspective, and this is exactly how we've planned our sales force targeting efforts. Our footprint covers roughly 140 million major depressive disorder prescriptions written in the last 12 months.
Our sales team is currently focused on a subset of prescribers, roughly 5,500, that are high-value psychiatry prescribers that have written roughly 18.5 million prescriptions during that same timeframe. This subset of prescribers will earn our highest level of focus, specifically at launch. They were selected directly by our sales team following the completion of a comprehensive customer profiling exercise using both subjective and objective inputs. First and foremost, we are focusing on highly productive prescribers of antidepressants, specifically SSRIs and SNRIs, which comprise roughly 65% of the entire major depressive disorder market. These are also widely prescribed and tend to be associated with the adverse events that make Exxua an ideal next therapeutic option.
This largely goes without saying, but for sake of completeness, we're starting with those prescribers who have high potential in the MDD therapeutic class and high level of patient switching. Second, we are focused on these psychiatry practices with a higher likelihood to prescribe brands such as Auvelity and Trintellix. Psychiatrists are prolific prescribers of branded medications and currently contribute over 50% of all branded MDD prescriptions to the market. This prescribing behavior, we believe, serves as a strong proxy and likelihood to prescribe a new medication such as Exxua. And third, we are focused on Aytu familiar customers or those psychiatry practices actively prescribing existing Aytu medications within the RxConnect network. We believe this highly focused approach that starts with our most familiar customers will serve us well. And importantly, we've already had some quick wins demonstrating this approach is working.
So what we've discussed, we're deployed in a very rational manner here with a roughly 40-plus person sales force. And we position them well across a large cross-section of the United States, in addition to having a strong RxConnect overlap in coverage. As mentioned earlier, this footprint covers roughly 140 million MDD prescriptions written in the trailing 12 months. And our sales force has also been deployed with an eye towards expansion as our performance dictates. So as we get Exxua growing at the rate that we fully expect, we plan on strategically expanding the number of total territories significantly higher than we exist today in our current footprint. Earlier, I mentioned our rolling CSO model, which we are extremely excited about.
We anticipate this model, which I will refer to as delivering rapid and scalable territory activation, will provide Aytu with a strategic advantage as we scale our sales team based upon real-time Exxua opportunities and performance. We believe that the CSO highly empowering profile and the sales representative's opportunity for growth in a professional way align nicely to Aytu's patient-driven culture, and rounding it out, we have a virtual sales team that will be tasked with building broader access and awareness to Exxua beyond our in-person promotional efforts. They're expected to deliver roughly 20,000 customer contacts during the initial launch phase, and we believe this initiative will help activate not only white space prescribers, but it'll help inform our future sales force scaling plan. Now, AytuRx Connect is our platform, which is built in-house, proprietary in nature, and we refer to it as a best-in-class access program.
And this will play a vitally critical role as we launch Exxua. In addition, it will continue to support our on-market assets and products from an Aytu standpoint. For some background, we initially discovered and developed the RX Connect program in early 2019, and it was driven off several guiding principles. The first was offering predictable coverage for patients and prescribers, guaranteeing 100% commercial coverage for these commercially insured patients, regardless of their individual plans. And what this means, essentially, is it removes the patient and prescriber uncertainty and allows them to focus on making the right therapeutic decision for the patient and not for their insurance plan. Second, we focus on creating a hassle-free environment for both patients and for prescribers. And we do this by removing certain obstacles that exist for branded medications at retail pharmacies, such as ensuring product availability, so patients can initiate therapy without delay.
As practices become busier, their ability to prescribe a branded medication with minimal rebound noise, as we like to say, it becomes challenging, and we seek to effectively blunt that noise with RX Connect. Third, providing affordable access for commercially insured patients by guaranteeing a capped out-of-pocket copay maximum. For Exxua, commercially insured patients with valid prescriptions will pay up to a maximum of $50 for their prescriptions, regardless of their individual insurance coverage, when that prescription is sent to a participating RX Connect pharmacy. We are confident that creating the most ideal experience for the patient and the prescriber will support a successful launch of Exxua. Since inception, we've made countless enhancements and improvements to the RX Connect program, and that's based upon insights gained from the over 1 million prescriptions dispensed by RX Connect pharmacies.
These insights underpin our approach to payer contracting to ensure we achieve optimal patient approval outcomes that are balanced with favorable Aytu economics. Real-time data will continue to guide our strategic approach to Exxua contracting for the roughly 60% of commercially insured patients suffering from major depressive disorder. The roughly 40% of remaining major depressive disorder patients are Medicare and Medicaid, and this will be a segment that we will focus on, specifically due to some of the early favorable coverage that we've seen following the launch of Exxua, so for clarity, we are not pursuing first-line use for Exxua, and our contracting approach will be aligned accordingly. Our launch coverage is expected to be very similar across the payer base, as recently launched MDD products have played out in the market.
In summary, the launch of Exxua will be highly focused, with a heavy lean towards a well-informed expansion of promotional resources as cash flow allows. And this is fully intended to support future growth of our prescriber base, leading to further brand adoption and growth. So hopefully, this commercial overview was helpful, provided a little bit of additional color and context to our mindset and our approach. And I appreciate your time. Now I'll turn it back over to Josh for any additional questions that may exist.
All right. Thanks, Greg. Hopefully, that provides you a good backdrop and some more specificity into the plan as we commercialize, and again, today's day one, as I said, and excited to be really upon the formal launch with all distributors fully loaded and the sales force fully trained and out there canvassing their territories today. So that's the prepared portion of the investor day. I'm going to have the gentlemen have spoken, so Gerwin, Greg, and Ryan, I'll come up. Happy to take your questions. Just for a reminder, for those of you on the webcast, drop those questions in the question box, and we'll read those off, and obviously, if you're here in the room, feel free just to raise your hand, and we'll get a microphone to you. No questions are off limits, and obviously, feel free to dig as deeply as you'd like to.
Without further ado, yeah, we'll open it up for Q&A.
Hi, I'm Alvaro from Maxim. Just a couple of questions. Thanks for the presentation, by the way. So, I know it's early days, but of the scripts written, could you kind of give more color on what the prior auth process has been like? Have you seen a lot of prior auths or pushback? And have the prior auths been approved first pass, or has there been a lot of back and forth? And do you know what the success rate is on the prior auths? Because as far as I understand, it's like early days, one or numbers.
Yeah, great question, Alvaro. I would say of our initial prescriptions, which we're not talking a significant number at this point, smaller sample size, the mix first and foremost is we're running at probably 75% commercial, remaining 25% government, right? The remaining 25%. There have been a handful of prior authorizations as well. We do have a program that we just fully implemented for Exxua through our third party. We have prior authorizations as of last week that have been submitted. We have not received the insurance outcome yet as far as approved or not approved. So very early on, but that's something we're actively monitoring.
Got it. And a follow-up question. On the target patient population, on the government insurance side, do you know what quantity of patient that represents? How many patients are on government plans versus commercial plans, and what the relative opportunity there is?
Yeah. So looking at the total MDD market itself, roughly 60% are commercial, and the remaining 40% are government. There's a very small sliver of cash pay. But we believe the government segment creates a pretty significant opportunity for Exxua based upon the early coverage that we've seen. But that number is roughly 40% of total scripts.
Hi, Alex Silverman at AWM. What do you expect the reps at Auvelity and some of the others to counter-detail you? What do you expect their argument to be?
I'll start that, and Greg can fill it in. Yeah, I think, first of all, if they're doing that, we have a good problem on our hands because we've become relevant, and we've sort of potentially offset some of those patients. Speculation, but probably obvious. I mean, they'll point to the label and some of the things that the FDA, as Dr. Stahl has said, sort of maybe aggressively sort of saddled the product with around QT, and they'll sort of try to create some stir around, "Oh, you have to get this ECG, and isn't that a big hassle?" And think about all these cardiac issues.
We'll very quickly and relatively easily handle that because we've got the cardiac safety, and frankly, that becomes probably a relatively near-term plan to get something published and in the public domain around the fact that it is a very safe drug from a cardiovascular standpoint. So I think if we were to guess, we would say that, and they would also play up the dizziness to suggest that it's a big issue.
That having been said, if Auvelity tries to weigh into the dizziness issue, they're going to have an issue because they have a very high rate of dizziness, and it's nothing, as we hear, it's nothing like the dizziness that you see in the actual clinical trials, which truly is a transient lightheadedness that goes away in less than a minute, as opposed to Auvelity, where physicians, psychiatrists specifically, will report of patients walking down the hallway back to see them at their appointment, sort of wobbling. So if I had to guess, I would say they're going to hit hard on the ECG. But again, just to bring it back to the first point, that'll be a great problem to have if they think that we're a nuisance. Would you guys add anything to that? No, nothing else to add.
Okay. And then just a very quick question for Ryan. $60 million down from $10 million, is that new information today, or did I miss that back whenever you reported?
No. So we haven't reported Q2 yet. We'll report that in about two weeks. But this is new. Yeah, we've been constantly assessing it and looking at kind of where are we gaining cost efficiencies, or is it just timing? And it looks like we've gained some cost efficiencies there.
And if I recall, some of that $10 million was going to be one-time in nature for the launch, and some of it was going to be permanent. How do you think about the six to eight?
Yep, a little bit less on the one-time in nature costs. So those are coming in a little bit less. The ongoing is pretty consistent with what we expected because they're mostly sales reps and such.
Yeah, Nelson Cox with Lake Street. Greg, you mentioned expanding the sales force strategically. How should we think about that magnitude of expansion over time?
I would say first and foremost, when we built the plan for the sales force footprint, it's several multiples larger than where we are here today. And as Ryan mentioned, Josh mentioned as well, our focus is on overall efficiency, right? Where are we? Instead of gambling for a geography, we wanted to place folks in the most ideal markets based upon some of the learnings of recently launched MDD products there. So, our current number is slightly over 40. We're 44 territories here today. Our initial plan is to build it up to north of 100 territories. Roughly 125 is what we've planned for. But it really comes down to our ability to execute, to drive demand, and to drive cash flow here at Aytu before we do pull the trigger there. Our mentality is not to go all or nothing in.
We're not going to go from 40 all the way up, right? We've got a very unique rolling CSO models we mentioned earlier, which gives us some flexibility to go to basically step into geographies that we've already mapped and make an investment there to ensure, one, you've got the right representative, and we're seeing the right market uptake of the medication before rolling those individuals into a full-time employee here at Aytu as well. So, we're going to be very, very mindful, very data-driven with making those decisions. But that's the plan at this point, Nelson.
Gotcha. And then given your target list is 100% aligned with RxConnect, are there any high decile prescribers that you could capture that are not aligned there today yet?
Yeah, absolutely. So, when you look from a geographical perspective, we've got full coverage here. We're running in the 60% range of new targets or targets that we're focusing on that are sending medications for Aytu brands today, in particular the ADHD products we have, to an RxConnect pharmacy. Those folks that are not aligned or not, excuse me, not currently sending prescriptions there tend to be more of the government side of insurance. So those are newer to our kind of call plan basket, and those are the folks that have been vetted by our sales team. So, at this point, overall, like I was saying, 60% of these doctors are sending medications already. They know who we are. They trust our medications. More importantly, they trust Rx Connect, which tends to come across as a, "This is too good to be true," right?
So, they've gone beyond that hurdle. They've got confidence in it. Now they're really focused on making that right therapeutic decision and not worrying what happens after I send this prescription. So, room to grow for sure.
Hi, Nelson. Once again, I understand it's early days, but for the scripts written, do you have a sense of how many of the patients are treatment naive versus switches? I assume they're mostly switches. And on that point, do you know what they're switching from? What kind of feedback or comments have you heard?
So, good question. I would say it's too early, truly. A lot of the data sources that we subscribe to are similar ones that you subscribe to. Symphony Health is one in particular. And when you look at switching data, we don't get that on a monthly basis. So essentially, a month after that first month is complete is when we'll understand the switching component there. So that's just something that's a little too early that we, at least what we can see from an objective data standpoint, we can hear subjectively from our representatives and some of our pharmacies that these are patients switching from SSRIs or SNRIs.
Got it. And if I may, to follow up on the Auvelity question earlier, have you heard or got any feedback from physicians regarding Exxua versus Auvelity, like if one is preferred versus the other thus far? Have you heard of any, I guess, positive comments toward Exxua versus Auvelity thus far?
You know, I'd say early on, you're going to hear all different types of feedback and comments, right? And that's when we're in the early trial phase. So, I would say we need a little more clinical experience with prescribing at this point before we develop a high level of confidence in where Exxua will fit from a positioning standpoint. There are certain attributes immediately from a once daily versus a twice a day dosing, right, that I think are intriguing for customers. But being that new novel MOA for the product, being a new chemical entity, I think those things are intriguing folks. And now it comes down to what's that prescribing experience and what's the patient response from Exxua treatment. So, a little too soon to determine, I would say, on that.
Thanks, guys. In terms of free drug program, I guess early on in the launch, apologies if I missed this, I guess while some of these access decisions are still being made, do you have any free drug program or bridging program available to patients sort of in the early stages of launch, and how do you think that could help contribute to growth going forward?
Yeah, great question on that. The answer is yes, and agree fully, if you create many challenges upfront for a clinician and a patient to get access to the drug, the perception of does it work or not is going to be impacted, unfortunately. How we've designed the program for RxConnect, there is a titration pack for a 14-day titration pack of therapy. When those prescriptions are sent to our RxConnect pharmacies and they've got commercial insurance, that's free for the patient for the titration pack, guaranteed. So, we've seen good uptake and movement on that. In addition, when they titrate to effect to land on a remaining or hopefully one step closer to a finalized dosage strength, within RxConnect pharmacies, we're guaranteeing that month one plus month two of therapy are covered for $0 regardless of the insurance outcome there.
So, we want to create an environment where we can accelerate uptake and utilization, but more importantly, gather, I think, a healthy clinical experience that's not influenced or biased by payer action or challenges just getting access to the medication itself.
Hi, this is Vishal from Bard Associates. So, Josh, you had a slide where you compared the drugs against the features of the drug, like side effects and everything, which was great. So, it visually what KOLs and everybody was saying. Is there a similar chart or if you had to map these drugs against what payers care about and how do these drugs, the factors, if you were to line up the factors on the top, and how do these various drugs rank in relation to those factors?
Yeah, I can start, and then Greg can play clean up here. I would say, generally speaking, no, and in a perfect world, they would because you would hope that the payers have a real concern for efficacy, safety, the parameters that actually dictate how a psychiatrist in this case would prescribe. I mean, the reality is it's cost all the time, and so the reality is we do fully expect for patients to have to have failed an SSRI or two or maybe even three just on the basis of their cost containment strategies.
That having been said, if you were to sort of lay it side by side with, again, the things that physicians are most concerned about, if you were to, not directly answering your question, but what goes into, say, a prior authorization decision is going to be a letter of medical necessity that lays out, for example, a patient has had problematic side effects in the form of either weight gain or sexual dysfunction or could be a number of things. But if you were to force rank those two, they would consistently and are consistently in almost every psychiatrist's top five of issues, and that's what they would send through. And that is ultimately what I think will win the day in whether it's through a first pass prior authorization or a second level or even an appeal. That's ultimately, I think, what will enable it.
Yeah, again, in a perfect world, the payers would, for lack of a better word, care. They just don't, which is why RxConnect is such a powerful tool for us to be able to cut through all that noise and ensure that patients are getting the first two and a half months of trial, get them up to that effective dose, and potentially on that effective dose for maybe even a full two months. And at that point, the prior authorization may be even easier to get through because now the patients on therapy. It's a preferred therapy. They want to continue the patient's care on that therapy. And so now it might be able to go through. So, didn't really answer your question, but the reality is that's the way the PBMs and the payers like it.
They want it to be an opaque box of a mess, and that's what it is. But I don't know if you'd add anything to that, Greg.
Yeah, thanks, Josh. I think first we're actively engaged with payers to understand what that dynamic of rebate range looks like, which is a great thing for a product launch. And what I'll tell you as well is the approach that they are and likely will apply to us is what they've done to other products recently launched, right, as recently as Auvelity several years back. And Josh really nailed it, which is the uptake, the demand, I think, really dictates what the contracting will look like at the end of the day.
And that's why we're excited with the programs we have in place to really accelerate that uptake and demand earlier and prove out that Exxua can provide clinical differentiation even within a very large category such as major depressive disorder. So we're optimistic, and I think we're being realistic with contracting as well, but it's an ongoing dialogue that we continue to have.
Just one thing to kind of close out the thought, slightly different, but just to augment it. One of the things that we're going to be and have been very conscientious about is net pricing as it relates to the landscape of the payer coverage. Meaning, if you look at the commercial piece, obviously that's a large segment. That's over half of it, as Greg said, it's 60%. This other big chunk is this 40% that's government. The government rebate is relatively standardized on the Medicaid side. That's essentially manufacturers pay a flat 23.1% rebate off of WAC. And they always get "best price," as the government does in most sectors, well, for that reason, we're going to be very, very judicious in how we think about commercial rebating so as not to trip that best price.
The second that Greg, for example, signs an agreement with a commercial payer like Aetna, if it's below that 23.1%, it resets that entire 40% book of business down to that lower price. That's a blunt instrument that we do not want any part of. We're going to have to really be very, very surgical in thinking about how we do want to contract and only in circumstances where we are virtually guaranteed that the paper that we sign with the PBM is actually worth the paper that it's printed on. Only then will we do it. We'll just ask that folks, our guiding principle really will be that. By the way, Axsome, the marketer, manufacturer of Auvelity, they've been very conscientious to do the same thing.
As we understand it, have no more than one commercial contract because they too have a big chunk of that commercial business that they pay that relatively limited rebate for, so just as an overlaying guiding philosophy around how we'll think about payer contracting. Okay, well, with that, I think we are wrapped up on the Q&A piece, and so I'll thank these gentlemen for spending time with me up here, and we appreciate all of your time. For those of you, I think you're all investors, have been, will be, again, if you're not, so thanks for coming. Thanks to all those that participated via the webcast. We were excited to do this. I couldn't be more thrilled with where we are. It's been an arduous six-plus-month process from the date of signing to where we are today.
And I'll just say that the team has really pulled a rabbit out of a hat. What we've done in six-plus months, many companies take, frankly, years to do. That's not hyperbole. That's the truth, particularly large pharma companies. So a lot has happened in a short period of time. This is an opportunity that we think stands to truly transform the company. And we're at the very earliest days of seeing what Exxua can do first and foremost for patients, but very importantly for us and for our shareholders as we think we're at an inflection point. So thanks for your support. Thanks for your questions. And we're here when you need us and you have questions. And we do plan to report our fiscal Q2, which is our December quarter, as Ryan said, in the next couple of weeks.
And so we'll look forward to sharing those numbers with you then. And we're often running with Exxua. So thanks again for your time.