Veru Inc. Price & Performance (VERU)

Overall preclinical data from the in vitro, in vivo inflammatory studies show that SABISI pill in treatment suppress all the cytokines and chemokines tested And in Phase II and Phase III pulmonary inflammation, COVID-nineteen clinical studies, sapuzivir has demonstrated broad anti inflammatory activity. Safety database consists of two sixty six dose patients of previous subizumab clinical development programs. The company's decision to explore this major cardiometabolic indication was based on the significant unmet medical need to treat inflammation in our atherosclerotic cardiovascular disease the large global market opportunity, the current clinical and safety subisubilant database of two sixty six patients the high probability of success given that sabisibulin's drug mechanism of action is similar with colticine strong intellectual property position and is consistent with the company's focus on cardiometabolic diseases. Furthermore, company believes subizumab may be evaluated in small Phase two dose finding proof of concept study to assess the progression of coronary atherosclerosis in patients using the primary endpoint of coronary plaque volume composition measured by coronary CT angiography imaging. Company decided to pursue the Phase II clinical study company plans to partner with the Colorado Prevention Center in Aurora, Colorado. And the Lundquist Institute in Torrance, California. [indiscernible] and Nephrology Center for Drug Evaluation and Research in December 26, 2024.

The indication for discussion was the use of bisabulin the slow progression of promoter regression of atherosclerotic disease in patients with coronary artery disease. The FDA agreed there remains an unmet medical need based on disease pathophysiology and concurred with the general design of the small Phase two study using coronary CT angiography imaging as a primary endpoint. The FDA also requested the company conduct chronic non clinical toxicology animal study to support the [indiscernible] The chronic non clinical animal studies are expected to be completed and a new IND for the proposed indications expected to be submitted by the first half of calendar twenty twenty six. VERU currently has sufficient drug substance to supply the proposed Phase two clinical study. Comment on the FC2 female condom sale. As 12/30/2024, we sold our FC2 female condom business to an affiliate of Riva Ridge Capital Management, El LP, and New York City based investment management firm for $18,000,000 Subject to adjustment as set forth in the purchase agreement, which Michelle Greco will discuss in a few moments. The monetization of the FC2 business allows Veru to be a pure biopharmaceutical company, focusing focusing its additional non dilutive resources on the execution and development of its promising late stage clinical pipeline.

I will now turn the call over to Michelle Greco, CFO, CEO to discuss the financial highlights. Michelle? Thank you, Doctor. Steiner. As Doctor. Steiner indicated, on 12/30/2024, Veera sold the FC2 female condom business to Clear Future Inc. The purchase price was $18,000,000 in cash subject to adjustment as set forth in the purchase agreement for the transaction. Net proceeds from the sale of the FC2 female condom business were after selling costs and other purchase price adjustments but before a change of control payment of $4,200,000 owed to SWK Holdings LLC pursuant to a residual royalty agreement for a twenty eighteen eighteen financing transaction. The loss on the sale of the FC2 female condom business is approximately $4,200,000 The difference between the estimated net proceeds of $16,400,000 and the total carrying value of the FC2 business of $20,600,000 On 12/30/2024, the carrying value of the F female condom business comprised primarily of deferred income tax assets of $12,300,000 Accounts receivable of $4,600,000 and inventory of $3,400,000 partially offset by accrued expenses and other liabilities of $1,500,000 Liabilities associated with the residual royalty agreement which totaled $9,900,000 at 09/30/2024, were extinguished. The sale of the FC2 female condom business represents a change in strategy allowing the company to focus all of its efforts exclusively on drug development and also affects how we present our operations financial results.

In our financial statements, all direct revenues, costs and expenses related to the FC2 female condom business are classified within the loss from discontinued operations net of tax in the statements of operations. Let's review the results for the three months ended December 31, 2024. Research and development costs increased to $5,700,000 from $1,700,000 in the prior quarter. The increase is due to $4,300,000 in expenses related to the company's Enovosarm Phase 2b quality clinical study for higher Selling, general and administrative expenses were $5,200,000 compared to $6,700,000 in the prior quarter. The decrease is primarily due to a decrease share based compensation and a decrease in headcount from '23 to '22. We recognized a gain on the sale of NTFE assets of 6 and $95,000 compared to a gain of $918,000 in the prior [indiscernible] Which is based on non refundable consideration received related to promissory notes due to Vero. In conjunction with the sale of the FC2 Female Condom business, we recorded a gain on extinguishment of debt of $8,660,000 related to the termination of the residual royalty agreement. This represents the difference between the change of control payment of $4,200,000 and the net carrying amount of the extinguish debt of $12,800,000 which included an embedded derivative for the change of control provision if fair value of $4,700,000 The bottom line result for continuing operations was a net loss of $1,800,000 or $0.01 per diluted common share compared to a net loss of $7,700,000 or $0.08 per diluted common share in the prior year's quarter.

Net loss from discontinued operations net of taxes related to the F business was $7,100,000 or $0.05 per diluted common including the $4,200,000 loss on the sale of the FC2 business, compared to a net loss of $609,000 or $0.01 per diluted common share in the prior quarter. The increase in the net loss from discontinued operations of $6,500,000 is due to the loss on the sale of the FC2 female condom business and the increase in the loss from the change in fair value of derivative liabilities of $3,100,000 partially offset by an increase in gross profit of $400,000 and a decrease in selling, general and administrative expenses of $500,000 Now looking at the balance sheet. As of 12/31/2024, our cash cash equivalents and restricted cash balance $26,600,000 compared to $24,900,000 as of 09/30/2024. At 12/31/2024, there was $354,000 of restricted cash related to the sale of the FC2 female condom business. Our net working capital was $22,000,000 on 12/31/2024, compared to $23,400,000 on 09/30/2024 Veru. The company is not profitable and has negative cash flow from operations. We will need additional capital to support our drug development candidates. Based upon the company's current operating plan, our cash as of the issuance date of these financial statements not sufficient for the company to fund operations for the next fifteen months.

However, we currently have sufficient capital to take the company to the end of the calendar year, which is well beyond the data readout for Novosarm Phase two quality extension study. During the three months ended 12/31/2024, we used cash $11,300,000 for operating activities. Compared with $6,000,000 used for operating activities in the prior period. We generated cash from investing activities of $17,200,000 for the three months ended 12/31/2024, while there was none generated in the prior period. The cash generated relates to proceeds from the sale of the FC2 female condom business of $16,200,000 proceeds of $700,000 from the sale of the Antadhi assets and proceeds of $400,000 from the sale of Avant Kinetics Securities. We used cash in financing at of $4,200,000 related to the change of control payment to SWK pursuant to the residual royalty agreement which terminated in conjunction with the sale of the FC2 female condom business. In the prior period, we generated $37,000,000 from financing activities. On 12/18/2023, we completed an underwritten public offering of our common stock, which included the exercise in full of the underwriters option to purchase additional shares. Net proceeds to the company from this offering were approximately $35,200,000 after deducting underwriting discount Now I'd like to turn the call back to Doctor.

Steiner. Doctor. Steiner? Thank you, Michelle. So we've gone over the company progress, clinical progress and financial highlights. With that, I'll now open the call to questions. Operator?

Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. Our first question today will come from William Wood of B. Riley. Please go ahead.

All right. Thanks. To everybody. Appreciate you taking your questions and obviously congratulations on the very nice quarter and the results. Thank you.

I guess, maybe first off, if I could, for the extension trial, I'm just kind of curious what the rollover of patients from the induction to the maintenance portion is And maybe if you could provide any color on why patients may be [indiscernible] Yes. So I'm going to ask Doctor. Gary Barnett, our Scientific Officer to answer the question of basically asking for the dropout rate who didn't go go on to the extension study and then he'll answer that for you. And he'll tell you the number one reason why they dropped down. Gary Veru?

Yes. Hello. As Mitch has said previously, the dropout rate in the study is about thirteen percent and it continues to be that. So about thirteen percent of the randomized subjects did not reach the end will not reach the extension, etcetera. The most common reason for dropping out of the study or discontinuing the study is GI side effects, which as we all know associated with GLP-one RA themselves. So relatively expected what we're seeing. And our And I assume the potential difference between placebo versus treatment isn't disclosed yet and we'll get that information more at the end.

That is correct. That will be in the final announce of the study, especially the safety status right now remains blinded. Right. And then one quick last one.

You've been saying you're now saying second quarter for the induction I'm sorry, for the the maintenance readout. I'm just curious, I believe you were saying sort of more April, maybe even early May. Have these been has this been now pushed out a little bit more or are you just or relatively no changes here?

It's relatively no changes. I just yes, so we're guiding second quarter but nothing has changed. I mean twelve weeks of twelve weeks or twelve we know and the last patient went out in December. Reported exactly as we told you we're going to do for the Phase one for Phase 2b quality and twelve weeks can't shorten that and you can't make that longer. So the time span that we need after the twelve weeks when the last patient comes out of studies just literally scrubbing the data and getting the tables, listening to the figures, and that kind of stuff.

Yes, that makes sense. I appreciate you taking our questions. I'll hop back in queue.

Thank you.

Our next question today will come from Gary Nachman of Raymond James. Please go ahead. Hey, guys. Good morning. This is Dennis Reznick on for Gary Nachman A couple of questions from us.

First, talk a little bit more about your thoughts going to the extension trial data in the second quarter.

What are you hoping to show and what is the bar for success, particularly on the weight regain following the GLP-one discontinuation? Can you remind us what your assumptions are for the placebo arm And then what are your expectations for the Inovus arm arm? And then I've got another follow-up.

Yes. So the way to think of the the maintenance study is no one has actually I'll say it a different way. It's an exploratory extension where we're trying to show that enobasorvastatin has the ability to hold on to muscle. And then the working hypothesis is that muscle if you hold on to muscle, you should not see the rebound weight gain, which is fat. The muscle is not the issue, the muscles depleted. So it's all about fat. And the regain that patients get, it's all fat. So the way to think of the extension for just twelve weeks, it's not the wait, as much as it's the fat. Because fat tracks weight. So it's purely an adiposity play. So for the NovoZ arm holds muscle, so you have more muscle in that twelve week period of time, so you can burn more fat. And Novosarm itself as you saw the six milligram group had a 46% further reduction in fat compared to tamaglutide alone.

So it's a fat burner. So what we want to show this is what people are afraid of is that rebound weight gain is all fat. So we want to so we were focusing most of our thinking around can we stop that rebound fat reheating.

And or maybe even show you more fat loss because it Novus on burns fat as it goes forward. So I'm going to have Gary Barnett, our Chief Scientific Officer, add a few comments to that.

Yes.

So So as you know, when you take away the GLP-one, appetite returns and we've seen that in the studies with we do expect weight gain and we specifically expect fat gain in the placebo group. And it's going to be interesting see exactly how Innovusarm can minimize that fat regain while maintaining the muscles or the lean mass in this case. So that's what we expect to see. Obviously, the data will bear bear out exactly and we're looking forward to that results here coming in second quarter.

Yes.

So if we can show we can blunt the fact potentially blunt the way regain, but if you focus on fat and hold muscles constant, that's what you gain weight with the fat.

So I think the focus on fat, fat, fat because we're using body composition as our endpoint.

Okay, great. That was super helpful. And then just another couple of quick follow ups. For the safety monitoring committee that met earlier this week, can you talk specifically about what kind of patient safety data they looked at, how far out it went into? And then now that you just had a little bit more time with the sixteen week data, are you finding anything notable within the patient sites or the patient background characteristics that is abnormal that should be called out? Thanks so much guys.

Yes, good question. So to answer the second question and I'll have Gary answer the first question on what kinds of data that they Independent Data Monitoring Committee see. But in terms of your question, remember, we only got top line data. So there's not much additional stuff talk about. I mean the baseline characteristics with group characteristics we don't have individual data. So the top line data we're going to get the full data set, the individual data set when the studies unblinded then at that point we can go through and look and see It's not so much what's abnormal and what's normal. I mean, big questions for me is going to be which groups did the best, which groups did the worst, how do you think about that as you go forward with your Phase three program? What additional information you can learn about gender and things of that sort And so I think we're going to get a lot more information we just don't have. But the top line data because it's kind of think of it as an interim look, and then the study continues, we've got a very set set set set of data, if that makes sense.

But Veru there's not much more to say at this point. Except that we're extremely excited about the outcome because it answered the questions we wanted to answer. And remember, Novusarm in five other studies is a three milligram dose particularly because that's what Bridge says to this study. We never study above three milligrams in muscle studies. We've done it in multiple [indiscernible] Guess what, it worked again. So we this is unambiguous. We definitely can improve and stop the loss of lean mass. What was also exciting is also confirmed the ability to burn fat in a patient population on a GLP-one. So that was exciting. And third, are you able to keep the lean mass get rid of more fat, to a point of the 399% the total weight you lost was fat. And 1% less than 1% mass and you still have the same weight loss at sixteen weeks. And finally, we showed the physical function matters in these patients and that we were able to show there's a problem. And that forty two point six percent of patients on semaglutide alone is sixteen weeks. [indiscernible] greater than ten percent decline in Veru climb, which is like eight to ten years of your aging. [indiscernible] So I mean, that to me that's a home run and that really helps us think very positive positively about our program going forward because it's better to fix a problem than try to have better HP HbA1c or better insulin resistance and we expect to see all of that, but better, better meaning that GLP-one does a great job with that.

So you have to make it better than GLP-one. Whereas the GLP-one does affect function. In a negative way, we make it better. But in terms of the data for the IDMC, Gary, what kind of what does the IDMC see?

Yes, they see individual patient data, individual safety data, all the way down to again to the patient level, they see it broken out within the traditional tables and they also see the dose, so the randomization scheme.

The data that this particular IDMC saw was up to a cutoff of 12/20/2024, which included all subjects had had passed through or completed the day January and then some additional data in the extension was included in this review. So they review down to the individual patients with the patient demographics and background and medical history history and con meds and they get all that information. And also including their treatment assignments.

That's super helpful. Thanks guys and congrats on all the progress.

Great. Thank you.

The next question will come from Dennis Ding of Jefferies. Please go ahead. Good morning. This is Anthea on for Dennis. Just a couple of questions from us. [indiscernible] given the oral formulation that you're working on the new one, is there a potential for it to be combined with oral GLP-one as a fixed dose combo?

I'm curious if you've looked into that and if you could pursue a partnership on that. And then on Sabine, colchicine, I believe works through HSCRP reduction. So can you just remind us percent reduction they get and what sipizabulin does And given your current cash position, your confidence that FH2 would be feasible? Thank you.

All right. So I have a clarification on your second question. So what did you say Colfaxin's mechanism was?

HSCRP reduction. C reactive protein.

Oh, I got you. So you're talking about I got you, got you, got you. That's the sense of the CRP So CRP is a nonspecific inflammatory protein. [indiscernible] that nonspecific inflammatory protein is a result of broad anti inflammatory activity. And so yes, so got it, got it, got it, got it, got it. Okay. So So the first question about oral formulation, In the oral formulation, the expectation is and we know from the Novus arm that Novus arm is a very nice oral product highly bioavailable And so yes, we're working on new oral formulations and modify release. But we can be easily combined with an oral GLP-one. And so yes, that has come up with some of our discussions because people feel that a fixed combination dose makes the most sense, particularly if you ask the question, what are we trying to do? So if we think about GLP-one, it creates a hypocaloric state. The hypocaloric state allows your body to non selectively lose fat and muscle [indiscernible] state and incomes in Novosarm and just in NovoZyme telling Mussel to take on the to steal the calories and take it from fat. Allows you to hold on to muscle and in that low calorie state and burn more fat.

So if you want to make the GLP-one better, better add a Novus arm and that to me is a definition of a new generation obesity product. So the answer is yes.

Because we're all and if you look at our competition, The only other one that was oral was no no longer pursuing activities. But the other ones IV is up to you. And function has physical function has been very difficult to show. We've shown over and over physical function. Again, we hit our physical function. This study. So if you want to do a fixed combination, make the drug make the GLP-one more tissue selective, and have the functional benefit I think it will be very attractive. And so yes, it's come up As it relates to sipicipate, I'm telling you that all our assays that we've done preclinically coltosine is used as a positive [indiscernible] What's different is sabisibil is a different kind of molecule. So not substrate for peak glycoprotein or three eighty four. That plays a bigger role in the drug drug interactions that can happen. The colchicine, as you know, has a very low therapeutic index. Narrow therapeutic index. And if you have a drug drug interaction, you can push colvacine levels to toxic levels And that's one of the reasons why it's not picked up widespread use. Yes, CRP, high sensitive CRP is a measurement that you would use peripherally in these patients.

Which sapidivulin should easily do the same thing given that all the cytokines and chemokines that we've measured have statistically significant reductions both in vivo and in vitro. So we measure the actual cytokines that cause C reactive protein to go up. C reactive protein against CRP. High sense of the CRP. With that said, because we don't have the drug drug interactions and this is the excitement around [indiscernible] One of the things that people are thinking about is you want to take patients with atherosclerotic disease and suppress the lipid as much as possible. It's all about suppressing LDL. But once you suppress LDL, there's still a lot of risk left to a point it it. Heart disease, in particular ischemic MIs is still the number one killer.

So there's still residual risk. And they believe that inflammation is the reason for that. So that's why Colesign got approved. And but the problem is you can't get colzicine with a lipid lowering drug because the drug drug interactions would statins. So imagine a subizibulin you don't have to convince anybody that we have the same mechanism as colt inflammatory standpoint but it becomes a safety play.

I'm a urologist and this reminds me of the days when abiravirone and ketoconazole were being developed. Ketoconazole was in old drug that's been shown to reduce in castrate males and they were given to patients with advanced prostate cancer but it had side effects.

Abareto came in and had a better safety profile and it's not generic and a pharma company owned it and had long IP, became a blockbuster. So it's okay sometimes to come in not be innovative and be the first anti inflammatory agent for for coronary artery disease, but to be one that has a same mechanism of action but a different safety profile and oral and proprietary makes it very, very attractive meaning that your high high probability probability of success with the efficacy and it will play out. And especially if you do a small study like we're thinking about the Phase II where plaque measurements like CT coronary angiography can be give you the information you need to move forward. So that's what we're excited about. In her comments, we have enough cash to access in the end of the year. The end of the calendar year, so that's the December. [indiscernible] Sorry, if I could ask a follow-up on that. Sure. Is there a numerical HSGRP reduction that's been measured patients with coronary artery disease and treated a patient to see what happens to CRP. What we have done is [indiscernible] [indiscernible] If I could also ask how are you thinking about IL-six and the seventy percent to ninety percent HSCRP reduction profile in ASCVD Yes.

So IL-six, as you know, is not oral, right? Right. It's injectable. And so our expectation is that IL-six is one of the many cytokines that's responsible for the inflammation related to coronary artery disease. And this reminds us of the same babble we had with COVID. IL-six versus [indiscernible] a much better job where we had a reduction of 50% and these other agents were more like 5%. So I do think that inflammation is not one cytokine. And if you have a pan cytokine approach, which is what culturing does and what Sibesibulin does, that should be much more effective than a single knocking out a single cytokine in this particular disease. Got it. That's really helpful. Thank you so much.

Our next question today will come from Leila Gershell of Oppenheimer. Please go ahead.

Hey, good morning. Thanks for the updates. Mitch, as you've been studying NovoZARM in the older population, obviously those at risk of sarcopenic obesity. And seeing the data you have, obviously Veru encouraging.

Just wondering if your thoughts as you take the compound forward into registration, if you'll include a means to study it maybe in a broader population of people who are not as old given that there is also maybe risk of muscle loss. During weight loss? Thank you.

Good question. So first, the statistics. It turns out, as I mentioned, that twenty two percent of the population based on Medicare Veru the age of sixty forty two percent of those patients could benefit from weight reduction drug, if it's overweight or obese.

And a third of them have true sarcopenic obesity. So that's a big, big market, okay? Big market. Now the question is how about outside that market? Turns out if you look at just forget age, the data shows that thirty one million Americans have sarcopenia, and [indiscernible] So that presumably includes the patients who are younger. And so the idea is from a clinical benefit risk profile, mostly is to treat patients have a problem. And the older patients are more likely because as you know, we didn't screen for Sartre we just took over the age of 60 and still forty two point six percent of those patients had a greater than ten percent decline in GLP-one. So this is actually showing you with seracline tests that patients were in trouble.

And people Veru talking about it. But if you do a six minute walk test and endurance test, that's different. But if you do a test that's focusing on leg muscles and muscles that are important for what they call explosive force, getting out of a chair, getting out of a tub, going upstairs that's different. And those are the muscle types it's called type two muscle that goes away with age. And so when you treat with an elvisar and testosterone type product, you build back the type two muscle. And that's why you see function. So there's a difference between taking an endurance runner and an older patient mean, the endurance runner is not going to be able to lift heavy weights like a bodybuilder, but they can certainly run six miles a 10 miles or whatever.

So we focus primarily on the activities of daily living that matter to pay patients. But with that said, the FDA has told us that a drug of this nature would have benefit in younger patients as well. So if that's the case, Gary Barnett, who's on the call has a strategy to address that. In our Phase three. [indiscernible] Gary, do you want to talk about that?

Yes. Obviously, if the FDA asked for a more broader age population and if we deem it appropriate. What I would do is I would design a study with powered with statistical power on efficacy on the older population and include the younger population as but do a subgroup as the primary, meaning older over 60, the group we just ran with the additional and safety data generated in the younger population to support broadening the label if appropriate.

Great. Thank you. And just a follow-up question. Just wanted to confirm that when VERUDA is report the extension data from the second part of the quality study coming up in a few months, if you'll also be including the full complement of the safety observations from both parts of the Yes. So to make sure I understand the question, so when the study is unblinded, and we're reporting the Phase 2b extension study, will we be reporting the full safety data set? Is that the question?

Yes, that's right.

Yes.

Yes, the answer is yes.

Okay, great. Thanks for taking the questions.

Ladies and gentlemen, this concludes our question and answer session.

I would like to turn the conference back over to Doctor. Mitchell Steiner for any closing remarks.

Great. Thank you. I appreciate everyone who joined our call today.

And I look forward to updating you on our progress and excited about the prospects of Inovus arm, not only in patients in the Phase 2b study with also the extension study And again, thank you all for being on the call. Approximately noon Eastern Time today, February 13 Veru, by dialing 704-4529 in The U. S. 317-0088 internationally.