Aytu BioScience (OTC:AYTU) investors are counting on Natesto to lead the way toward profitability. And, while Natesto may indeed deliver AYTU to positive cash-flow status, or even net-profit levels within the next year, not recognizing the next strongest product in the lineup, MiOXSYS, would be like avoiding the obvious...not realizing that MiOXSYS is well deserving of a "best supporting product" nomination. A large number of investors are aware of MiOXSYS, but because Natesto has recently been gaining the lion's share of the attention and is building prescription momentum, bringing the MiOXSYS name to the forefront is well worth the effort, with the intent to demonstrate why the proprietary male infertility diagnostic system may help to revolutionize the way male infertility tests are performed around the world. To understand how MiOXSYS works, and more importantly for investors, how it can benefit the revenue stream at AYTU, a quick review of the merits of MiOXSYS is warranted.
Where MiOXSYS Fits
Does the MiOXSYS system fit into the growing market for male infertility treatment? It sure does. In fact, in the United States alone there are over 4.5 million infertile men. But, on a global scale, that number jumps significantly, with an estimated 50 million or more males diagnosed as infertile. And, once the diagnosis gets made, the testing and treatment program becomes an exhaustive nightmare for patients trying to get a simple diagnosis and treatment plan that is focused and reliable.
But, don't look far, MiOXSYS provides a solution, and when compared to the current procedures in place to diagnose and treat male infertility, MiOXSYS has best-in-class potential. Here is why: Of course, there is a starting point to the entire process, which is when a man is first diagnosed as being infertile, which in clinical speak gets defined as the male attempting to get his partner pregnant via sexual intercourse for at least twelve months with an unsuccessful outcome. Once diagnosed, if the man is eager to address the issue, he visits either a urologist or an IVF clinic to get an assessment as to his fertility status. In most cases, the treating specialist will order a testing algorithm that will set in motion tests that analyze semen quality as well as sperm’s general availability.
The tests performed have been around for quite some time and stay focused mostly on sperm concentration, sperm motility (are they swimming?), and sperm morph, that is, are the sperm's heads, necks, and tails formed correctly to enable useful function. Some things never change, and it's well known that the same tests have been in place for generations using a simple microscope and a lab technician in a urologist’s in-office laboratory. For a problem that can be so emotionally compelling for change, too little attention has been placed on correcting the issues, with the focus mainly being set in the diagnostic aspect of the infertility problem – and mostly on the female side.
Other than maybe using computer generated assistance and AI analysis of semen quality, for the most part, the good 'ole visual analysis is still the most popular means of diagnosis, which is time-consuming, somewhat crude, and less reliable to provide accurate data due to variability in the platform and variability from microscope operator to microscope operator. In fact, estimates point to up to 40% of men having "normal" semen parameters, but unfortunately, get sent to additional testing facilities despite the positive test results. The ‘standard of care’ is simple substandard in terms of truly assessing male infertility.
Where To Next For MiOXSYS?
Now, assuming that a man gets sent for the next battery of testing, they may find themselves in prestigious andrology laboratories at places like the Cleveland Clinic, Tulane University, or even the Mayo Clinic to get a further assessment of what may have been observed as a "normal" sperm analysis from the start. While the additional testing may prove to offer some psychological relief, the chain of events that led the patient there often breaks the urologist patient relationship, leads to significant patient frustration, and may potentially add significantly more questions and issues related to the original diagnosis – all while adding more costs and more potential confusion.
But, patients just don't get sent onward so that high-priced urologists can earn some extra money. The point in the additional testing is that the patient hopefully gets a full analysis that includes "oxidative stress testing," which, by the way, is precisely what MiOXSYS does. In addition to providing the similar benefits, and perhaps even greater analysis, is that patients will not need to travel hundreds or even thousands of miles away for the service, nor will they be forced to pay significant medical fees at a large academic medical center laboratory (where most of the advanced testing takes place). These benefits alone are substantial and point to the reason why AYTU investors should get focused on the promise of MiOXSYS, and consider it a potentially lucrative partner to Natesto. But that's the "why"; what about the "how?"
Oxidative Testing Says What?
Currently, oxidative testing analyzes the oxidative stress of semen, which is the result of too many free radicals building up in the patient's system that eventually overwhelm the body's natural antioxidant defense system. And, as we know from the millions of dollars spent on ad campaigns, antioxidants are good, and the higher the level, the better it is for patients. In contrast, the lower the amount of free radicals in the system, the better it is for the patient, and may consequently lead to more fertile sperm levels.
But, while the oxidative testing may offer a more stringent analysis, the patients are often subjected to the same battery of tests already performed. As most people know, doctors like to work from their own arsenal of test results, so when patients get referred for further analysis to a large treatment center, they can expect to get duplicitous tests at additional cost. Now, while oxidative stress testing may offer insight, it is costly, cumbersome, time-consuming, and requires a PhD or Masters level technologist to perform the test. The tests typically take three hours to complete and must be conducted at high-level academic laboratories.
The problems don't end there. The equipment is expensive, sometimes costing more than $40,000, have to be calibrated and amalgamated to measure semen, and are not FDA approved to provide precise measurements of semen analysis. In other words, the test is offered as an off-label capability of the device but must be tweaked to generate the intended results – and this disables the every day urology practice to run this battery of advanced testing. However, things may soon change, and this is where MiOXSYS can take center stage.
The MiOXSYS Advantage
Leaving behind the need for expensive, clunky and sometimes unreliable results from an oxidative stress device that may not have been properly calibrated or amalgamated, MiOXSYS can perform complete oxidative stress testing in less than four minutes what has historically taken several hours to complete. In addition to the tremendous time saving, the MiOXSYS test requires no specialized training to be administered, can go from box to patient in a matter of minutes, and delivers comprehensive results in roughly four minutes. Along with a complete semen analysis, MiOXSYS comprehensively measures oxidative stress, and when compared to current standard of measurement is a superior provider of reliable information. And when a clinician knows the level of oxidative stress potentially causing the man’s infertility, he or she can direct treatments to lower oxidative stress and increase the chances of a pregnancy.
Knowing oxidative stress can also help determine, in a relative sense, whether the guy’s semen quality is good enough to perform particular fertilization procedures. While labs tend to focus on and measure oxidative stress as part of their battery of tests, in essence, they measure individual antioxidants or single free radicals. Thus, the tests are incomplete, less comprehensive and far less reliable in assessing semen's oxidative environment. MiOXSYS, on the other hand, measures a global parameter called oxidation-reduction potential (ORP), which is a recognized composite measurement of all of the antioxidants and all of the oxidants together which gets assimilated in a single number. Remember, the expensive tests measure a single antioxidant, and MiOXSYS measures them all.
So, looking ahead, why in the world would a urologist need to purchase an expensive machine that provides sketchy results in order to do in-office oxidative stress testing? In short, they shouldn't. If they elect to use MiOXSYS, they are utilizing a single use, disposable sensor for each patient tested. Thus, the test is inexpensive, allows a technician to perform the test, and does not require three to four hours to complete. It takes minutes, and there is no significant capital outlay from the physician. For AYTU, the MiOXSYS system can be quickly accretive and lead to a consistent revenue stream by utilizing the "razor-razorblade" sales model. That is, the urologists continue to buy the particular test sensors designed specifically for use in the MiOXSYS system. Not only is MiOXSYS a winner on the cost-effectiveness front, but it also keeps the doctor/patient relationship ongoing and at the same time relieves the patient and the healthcare system of excessive expense and unnecessary cost.
Marketing MiOXSYS
MiOXSYS received its CE Marking in early 2016 and is available for sale in the EU and other regulated markets. After the CE Marking, Health Canada approved MiOXSYS for sale, as well. Since its broad approval, MiOXSYS has been sold into twenty countries outside of the United States, including Canada, Singapore, Japan, and Korea to name just a few. Admittedly, AYTU has not directed investors to MiOXSYS just yet, as the ramp-up for Natesto has been a prime focus in late 2016 and 2017. However, even with AYTU staging just one to two full-time employees to work on the sales side of MiOXSYS, the results demonstrate promise. Increasing sales attracts attention, and for the MiOXSYS system, sales doubled from the first half to the second half of the year.
For those keeping score, it's clear that the momentum is beginning to take shape for MiOXSYS, following in the footsteps of Natesto. AYTU sold 60 systems last year and is on pace to double sales again during 2017, with expectations to place more than 100 systems around the world. Keep in mind, the system and its components are designed to generate continuous sales, following a similar course as the razor-razorblade sales model for replacement products. Back of the napkin projections show that if AYTU can place 200 systems around the world by the middle of 2018, at product maturity, the system may be able to generate approximately $20,000 in annual revenue through the sale of the disposable components. Extrapolating that $20,000 projection to 200 systems, AYTU's MiOXSYS may be able to generate $4 million in sales on an annual basis. And, that $4 million represents a huge step forward toward increasing shareholder value, as that revenue stream alone would almost eclipse the entire company's valuation at today's prices.
Another factor that should cause investor excitement is that the sales projections are ex-United States distribution, thus if the FDA provides clearance to sell MiOXSYS, the opportunity is substantially increased in term of potential systems sold and revenue generated. And, for those that like additional reassurance that the MiOXSYS is the real deal, six papers have been published in prominent peer-reviewed publications and journals, showing that ORP, the measure uniquely reported by MiOXSYS, provides a detailed, reliable and accurate representation of infertility analysis.
Will MiOXSYS Penetrate The Market?
Whether MiOXSYS gets taken at face value by an investor or whether a patient benefits from the inherent value in the reliable data provided by the MiOXSYS system, the fact of the matter is that MiOXSYS can do something that no other infertility analysis product can achieve. MiOXSYS quickly and inexpensively measures a key underlying cause of male infertility in a simple to use system that eliminates the need for a specialized professional to administer the procedure. MiOXSYS, in simplest terms, is on the verge of bringing infertility testing to the masses and making what was once a test relegated to only the largest, best-resourced hospital labs in the world accessible to the thousands of urologists who treat male infertility on a daily basis. Once MiOXSYS gains momentum, sales should be a recurring stream, and for those that are looking for an additional reason to buy AYTU stock, the reason may be glaringly obvious...MiOXSYS may provide AYTU with another attractive shot on goal.
This article was originally featured on CNA Finance.
The author has no positions nor intent to open any positions in any stock mentioned herein.