Aytu BioScience, Inc. (NasdaqCM:AYTU) entered into definitive merger agreement to acquire Neos Therapeutics, Inc. (NasdaqGM:NEOS) for $37.8 million on December 10, 2020. Under the terms of agreement, Neos will merge Aytu in an all-stock transaction. Upon the effectiveness of the merger, Neos stockholders will be entitled to receive 0.1088 shares of common stock of Aytu for each share of Neos common stock held, after taking into account the one-for-ten reverse split of Aytu's common stock that was effected on December 8, 2020. As part of the transaction, Aytu has agreed to provide Neos with access to up to $5 million cash for working capital needs for the period prior to the closing of the Merger. In addition, upon closing of the Merger, $15 million in principal of Neos's existing senior secured debt facility with affiliates of Deerfield Management will be repaid, and Deerfield has agreed to allow the remaining debt under the facility to remain outstanding with the combined company following the Merger. Indebtedness under Neos's existing ABL agreement with Encina Business Credit will also remain outstanding. The transaction will result in Aytu stockholders retaining approximately a 70% ownership interest in the combined entity with Neos stockholders retaining 30% ownership interest. Neos Therapeutics will continue to survive, and Aytu BioScience will retain its name and continue to trade under NASDAQ: AYTU. As of January 27, 2021, it was reported that upon merger closing, combined company will be renamed Aytu Biopharma, Inc. In the event of termination, Neos Therapeutics shall pay to Aytu BioScience a sum of $2 million and Aytu BioScience shall pay to Neos Therapeutics a sum of $2 million.

The combined company will be led by Josh Disbrow, as Chief Executive Officer and management comprised of individuals from both companies.  The combined company will be headquartered in Englewood, Colorado. The Board of the combined company will consist of six members designated by Aytu and two members designated by Neos, including Neos Chief Executive Officer and Director Jerry McLaughlin and Neos Director Beth Hecht. The transaction is subject to certain approvals by both Aytu and Neos stockholders, approval of listing on the Nasdaq, Form S-4 shall have been declared effective by the SEC under the Securities Act, the satisfaction of other customary closing conditions. The Boards of Directors of both companies have approved the transaction. The Neos Board recommends that Neos stockholders vote in favor of the transaction. Aytu BioScience and Neos Therapeutics will hold their respective Special Meetings of stockholders related to proposed merger on March 18, 2021. As of March 10, 2021, Institutional Shareholder Services Inc. recommended Neos Therapeutics stockholders to vote in favor of the transaction on special meeting of stockholders. The transaction is expected to close in second quarter of 2021.

Nolan S. Taylor, Troy M. Keller and Brooke S. Johnson of Dorsey & Whitney LLP acting as legal advisor and Cowen and Company, LLC acting as financial advisor and provided fairness opinion to Aytu. MTS Securities, LLC acting as financial advisor and provided fairness opinion and Joseph C. Theis, James A. Matarese and Andrew H. Goodman of Goodwin Procter LLP acting as legal advisor to Neos. The Proxy Advisory Group, LLC acted as information agent and Issuer Direct Corporation acted as transfer agent for Aytu. MacKenzie Partners, Inc. acted as information agent and American Stock Transfer & Trust Company, LLC acted as transfer agent for Neos. David Schwartzbaum, Todd Mortensen, and Juliana Moraes Liu of Covington & Burling LLP acted as legal advisor to Cowen and Company, LLC.

Aytu BioScience, Inc. (NasdaqCM:AYTU) completed the acquisition of Neos Therapeutics, Inc. (NasdaqGM:NEOS) on March 19, 2021.