Neos Therapeutics (NEOS) skyrockets 70% on Aytu Bioscience merger

Shares of Neos Therapeutics (NEOS) skyrocketed 70% on the news that Aytu Biosciences (AYTU) is going to acquire the company. Both AYTU and NEOS stock has risen from the news and I expect them to continue rising.

The surviving company will be Aytu Biosciences, shareholders of Neos Therapeutics will be receiving 0.11 AYTU shares per 1 NEOS share. Current CEO Josh Disbrow will continue to lead with NEOS’ CEO Jerry McLaughlin joining the company’s Board of Directors.

Once merger has been complete, NEOS stockholders will own 30% of the merged company. It’s also worth noting that the stock trade offer values the deal at $44.9 million based on the 10-day volume-weighted average price of AYTU stock on Wednesday.

This is a truly transformative transaction, elevating the newly combined company to a $100 million revenue, leading specialty pharmaceutical company positioned for what we expect to be an accelerated path to profitability, continued revenue growth and further business diversification, the combination of Neos with the Aytu business further increases our footprint in an attractive pediatric medicine market, following our acquisition of the Cerecor pediatric Rx assets late last year. This transaction is an excellent strategic fit with our market expansion plans and we believe creates strong stockholder value.

Josh Disbrow, CEO of Aytu Bioscience

Josh Disbrow continued saying:

This transaction increases Aytu’s addressable market, adding the large and growing ADHD market, with 75.1 million scripts written annually. Importantly, and despite the impact of COVID-19 on this market, Neos’ ADHD product growth significantly outpaced the overall ADHD market in the third quarter of 2020, with Adzenys XR-ODT prescriptions growing by 9.9 percent and Cotempla XR-ODT prescriptions growing by 6.5 percent. Expanding into ADHD with Neos is the ideal embodiment of Aytu’s strategy to build a portfolio of best-in-class prescription therapeutics and consumer health products competing in large markets.

Josh Disbrow, CEO of Aytu Bioscience

Here’s what NEOS CEO Jerry McLaughlin had to say:

I firmly believe Aytu BioScience is the right partner to continue the exceptional work our team has done to build the ADHD franchise into what it is today and to continue the development of NT0502 for the treatment of sialorrhea. By leveraging the respective commercial infrastructure of Neos and Aytu, including complementary sales call points and our best-in-class patient support program, Neos RxConnect, we expect continued growth of the product portfolio. After a thorough evaluation of strategic alternatives, the Board of Directors of Neos believes that this merger represents the highest-potential value creation opportunity for Neos stockholders.”

Jerry McLaughlin, CEO of Neos Therapeutics

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Jay Lorrence
Jay Lorrence

Investor of 12 years and Managing Editor of Money Midnight, a news outlet focused on highly profitable investment ideas and bold underground research.

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