Good morning, ladies and gentlemen, and welcome to Veru Inc's Investor Conference Call. All participants will be in listen-only mode. [Operator Instructions] After this morning's discussion, there will be an opportunity to ask questions. Please note that this event is being recorded. The statements made on this conference call that are not historical in nature are forward-looking statements. Such forward-looking statements reflect the company's current assessment of the risks and uncertainties related to our businesses. Our actual results and future developments could differ materially from the results or developments in such forward-looking statements. Factors that may cause actual results or developments to differ materially include such things as the risks related to the development of the company's product portfolio, risks related to the ability of the company to obtain sufficient financing on acceptable terms when needed to fund development and company operations, risks related to competition, government contracting risks and other risks detailed in the company's press releases, shareholder communications and Securities and Exchange Commission filings. For additional information regarding such risks, the company urges you to review its 10-Q and 10-K SEC filings. I would now like to turn the conference over to Dr. Mitchell Steiner, Veru Inc's Chairman, CEO and President. Please go ahead, sir.

Thank you, operator, and good morning. This is Dr. Mitchell Steiner, Chairman, President and CEO of Veru Inc; and joining me are Michele Greco, CFO and CAO; and Phil Greenberg, Executive Vice President, Legal and Chuck Todd, CEO of The Female Health Company Division. Thank you for joining our call. Veru is a urology and oncology biopharmaceutical company focusing on prostate cancer and prostate cancer supportive care medicines. Today, we will update you on the clinical development of our drug pipeline and the commercialization of our products, as well as provide financial highlights for the first fiscal quarter 2019. Our strategy is to eventually be known as the prostate cancer company. Rather than focusing on one drug class or one research platform, we aspire to be disease-focused by providing a continuum of care for prostate cancer patients. Prostate cancer is becoming a chronic disease with new challenges as the prostate cancer develops resistance to current drugs and progresses and as the patient suffers from the long-term side effects of these treatments like bone loss and fractures, hot flashes, loss of libido and erectile dysfunction, loss of muscle strength and frailty. Accordingly we’re dedicated to the development and commercialization of products to address unmet medical needs for prostate cancer treatment and supportive care. The markets for prostate cancer treatment and prostate cancer supportive care are well established as a multibillion dollar markets, and given our core expertise and the number and type of drugs in our pipeline, we are uniquely position to understand, develop, and commercialize medicines for these unmet medical needs of prostate cancer patients. Veru has now advanced into human clinical trials all of our current drug product candidates in prostate cancer. We’re enrolling an open label Phase 1b/2 clinical trial to VERU-111, a novel selective oral anti-tubulin inhibitor…

Thank you, Dr. Steiner. Soon after joining the company last year, it became apparent that the seven quarters of declining unit sales was due to the fact that the FC2 internal condom was positioned primarily as a public sector product thus subject to the unpredictable purchasing habits of our large public sector customers and the availability of public donor funds. It became clear that a fresh approach was desperately needed to deliver more and consistent revenue and margin growth. First, we needed to find a way to increase and further diversify the customer base for both ex-U.S. and U.S. public sector sales. Second, we needed to find a way to capitalize on with the minimums FC2 sales in the U.S. by creating the structure to allow for both FC2 U.S. prescription and public sector sales to thrive. Last year we created separate business unit for the Female Health Company and staffed it with a small dedicated management team. I have the privilege to be the CEO of this new business unit. I’ve over 35 years of sales and marketing and operational experience creating new markets that allowed my previous companies to become the leaders in their industry. Task was taking a fresh approach to the FC2 sale strategy, I felt that with the proper positioning we could access new high value sales channel by targeting the explosion of telemedicine companies that focus on women’s health. I am pleased to report that during this last year we started to see the results of this new strategy. Fiscal Q1 2019, showed solid revenue and gross profit growth. Let’s review the FC2 sales by the Female Health Company Division for fiscal Q1, 2019. Net revenues were up 146% to $6.4 million from $2.6 million in the prior-year first quarter. The Division reported FC2…

Thanks, Chuck. Great. So we just heard about our immediate revenue results and expectations. How do we plan to continue this revenue growth trajectory? We will do so by executing on our plans, the near term drug revenue to our urology specialty pharmaceutical division, which is developing low cost, near term pharmaceuticals using an expedited regulatory pathway known as a 505(b)(2). The three drug products currently in clinical development are tadalafil/finasteride fix combination tablets, TADFIN and Tamsulosin XR capsules and sprinkles. Tadalafil/finasteride combination tablets treat symptoms of BPH and shrinks the size of the prostate in men who have large prostates as well as treating erectile dysfunction. Whereas, Tamsulosin treats the immediate symptoms of BPH and men with smaller prostates. While we’re still making progress with Tamsulosin XR capsules and sprinkles, we have achieved a major and important milestone for our urology specialty pharmaceuticals program. This is the wisdom of moving multiple products to development having multiple shots on goal. We have completed a successful bio availability and bio equivalency clinical trial for the company's proprietary tadalafil and finasteride combination tablet for BPH. TADFIN combination tablet combines to the most popular medicines, tadalafil and finasteride, they are currently prescribed separately to treat low urinary tract symptoms caused by an enlarged prostate. The code administration of tadalafil and finasteride has been shown to be clinically more efficacious in treating BPH symptoms then finasteride alone. Our TADFIN combination tablet is proprietary and is designed to improve patient compliance and safety. According to the FDA approved labeling tadalafil which is also known CIALIS, a PD-5 inhibitor is approved to treat both BPH and erectile dysfunction. And finasteride which is called PROSCAR is a 5 alpha-reductase inhibitor is approved to treat symptoms of BPH, prevent the progression of BPH, reduce the risk of acute…

Thank you, Dr. Steiner. This quarter we experienced an increase in the public sector volumes in the U.S. prescription business. As Chuck mentioned, the increase in the public sector volumes is without tenders and orders from our two main customers, Brazil and South Africa. For the first quarter of fiscal 2019, the FC2 unit sales totaled 7.4 million compared to 4.4 million units in the prior year first quarter, an increase of 68%. Net revenues for the first quarter totaled $6.4 million compared to $2.6 million in the prior year quarter; an increase of 146%. Gross margin was 73% for the first quarter compared to 51% for the prior year quarter. The increase in gross margin is driven primarily by the increase in the U.S. prescription business. Operating expenses decreased by $3.1 million to $5.7 million compared to the prior year quarter of $8.8 million. Included in operating expenses in the prior year quarter is the $3.76 million charge related to the settlement of the Brazilian receivables in December of 2017. Excluding the settlement agreement, the increase in operating expenses of $700,000 is primarily driven by the increased research and development costs of $400,000. During the quarter we incurred $1.1 million of interest expense, net of a gain for the change in the fair value of the derivative liabilities related to the synthetic royalty financing we entered in March of 2018. For the quarter we recorded a tax expense of $92,000 compared to a tax benefit of $3.2 million in the prior year quarter. The effective tax rate for this quarter of 4.5% is due to recording evaluation allowance against the net operating loss generated for quarter in the U.S. The company has net operating loss carry forwards for U.S. federal tax purposes of $33.2 million with $14.4 million expiring…

Thank you, Michelle. As we have completed at least one month into Q2 fiscal year 2019, the revenues are strong and seems to be shaping up quite nicely for the quarter. In summary, we are poised to see open labeled efficacy and safety data for VERU-111, our oral anti-tubulin inhibitor for refractory metastatic castration resistant prostate cancer as well as top-line clinical results for the Phase 2 clinical trial evaluating zuclomiphene for the treatment of hot flashes caused by androgen deprivation therapy during the first half of 2019. The NDA for TADFIN will be submitted later this year with an expected approval and launch in 2020. We had a strong financial quarter and have significantly advanced our clinical programs. We are committed to driving shareholder value by becoming known as the prostate cancer company and by providing a continuum care for prostate cancer patients. With that I'll now open the call to questions. Operator?

Thank you, Dr. Steiner. [Operator Instructions] And your first question this morning will be from Kumar Raja of Brookline Capital Markets. Please go ahead.

Congratulations Mitch on all the execution. The first question on bisindole, obviously your dose escalating from 4.5 milligram and it goes up to 45 milligram. So at what dose do we expect to see responses and in terms of the side effect profile maybe you can talk a little bit about, what is your expectation in terms of the side effects compared to what we typically see with chemo?

Sure. So let me answer the question on, first of all, good to hear your voice. Thank you for asking the question. So the first part of the question is really related to VERU-111 which is our oral anti-tubulin and at the Phase 1B, which is what you're referring to is a 3 plus 3 design, where we dose escalate these oral doses in three patients at a time. And the three patients at a time will get every day seven days an oral dose of our drug followed by two weeks throughout the holiday and that's called a cycle. And then they'll go back seven days and then two weeks off, seven days and two weeks off. So every time we say that that's a cycle. And so, as you rightly pointed out 4.5 milligrams a day for seven days is the first dose and we can basically double. So we'll go 4.5 to 9, 9 to 18, 18 to -- actually not double, go by nine and then it goes to 27 and then it goes to 36. So it will go by 9. And so the question becomes where do we expect to see activity? Well, in our preclinical models it looks incredibly potent and what I mean by that it looks like somewhere around five nanomolar in concentration is where we expect to see activity. And if you look at the safety data that we did 28-day safety data, we gave the drug every day in rats and dogs where we were able to see that even in some of the lowest doses, we were able to see that we were able to achieve concentrate...ssssss ------- able to see that we were able to achieve concentrations in the blood that would be sufficient to start seeing…

Okay, great. Thank you.

Thank you.

The next question will be from Yi Chen of H.C. Wainwright. Please go ahead.

Thank you, for taking my question. My first question is just to clarify, do you expect the FC2 prescription business revenue to have more fluctuation at all from quarter-to-quarter and how much revenue do you expect you would see from the public sector within this fiscal year?

So, I'll answer the first question and the second, I don’t know if I can answer the second one but I'd -- correct, we're not giving guidance but I'll come back and give you some thoughts. So, as Chuck Todd said in his comments, that one of the beauties of having the ratio change in public sector versus U.S. prescription business is that we could even out these fluctuations. We're not expecting fluctuations in the U.S. prescription business, we're expecting it to continue to grow and not go down and up and down and up and so from quarter-to-quarter and year-to-year that's important. In fact, we also believe because of the growth, so we'll now contribute more and more of the total revenue, meaning the total revenue of the U.S. ex-U.S. public sector versus U.S. prescription, so that as it becomes bigger and just like a year ago was 5%, now it's 40% U.S. prescription business. The marginality closer to 50% to 60% then you're going to be able to predict forecast in a much better way which historically we were not able to do because it's a lumpy business. So, we're feeling pretty good that we should see -- we should be on a clearer and less lumpy trajectory. In terms of revenues in the public sector, what we can say is everything that we've mentioned so far in Q1, did not include the African tender, as you know we've won 75% of that tender and that 75% of that tender at least for this year should reflect about 30 million units or roughly about $10 million and everything is timing, so I don’t know how much that will come in over the next three quarters but we also picked up Brazil. And that wasn’t in the numbers before and so that also can come into the second and third quarter of this fiscal year. So, we are expecting to see a substantial increase in our revenues in public sector, in addition to seeing the growth of the FC2 U.S. prescription business.

Thank you. My follow-up question is to launch taxane in 2020, how many sales reps would you lead?

Good question. So, we have taken the position that our cash is dear and that we should be using our money to continue to fund the clinical development of our prostate cancer pipeline. So, we've taken the position that we do not want to invest in a salesforce and in marketing cost. So, we have already begun discussions both in the U.S. and ex-U.S. for potential partners. In the ex-U.S. which is the easier one, we've since October have been engaged with multiple companies across Europe and South America and Canada and Mexico and particularly focusing on getting partners that could potentially pay in upfront, use their money to get it to the regulatory bodies in those areas and then we'll get a nice royalty. So, that is in progress. In the U.S. the strategy is the same. If we were able to get a significant royalty on the product that really represents a profit share. Then that's pretty damn good because that basically means that your base will be able to even year one start seeing revenue coming in and profits coming in because you're not paying for marketing and sales and that somebody else use their money to pay for marketing and sales and we just take the money. So, as you know in most models, you have to build in a loss for year one and year two because you're paying for your salesforce until they're able to generate enough revenue to turn a profit. Using this approach, we don’t have to put up the upfront money to build the marketing and sales structure and we also will be able to realize that revenue right away because we're not putting money up against that. So, that's why in my comments, I made the comment that if you take the FC2 and the PREBOOST revenues, which will continue to be strong for 2019 and 2020 you see the launch and the approval of the taxane, it could be incremental increase in growth as opposed to now all of a sudden having to stop and use that same money to do marketing and sales pay or launch.

Thank you.

The next question will be from Peter McMullen of Peter McMullen Consulting. Please go ahead.

Hello, Dr. Mitch and congratulations.

Thank you, Mr. Peter.

When do you expect to start shipping to South Africa and Brazil and related to that how we're going to avoid the past Brazilian no pay issues?

So, it's a good question. So, the first question is, as we mentioned in our comments that second quarter, second fiscal year quarter and third fiscal year quarter is when the Brazilian and the South African -- will be coming in.

Okay.

And so, South Africa probably closer to third quarter but we just don’t know. But the good news is that everything is actively going forward, are working, starting to put the orders in. And all things you would expect with these large tenders and which we, you know we've won a lot of it. In terms of your questions related to Brazil, as you know we got burnt. We had when we took the company management over and the Aspen Park Pharmaceuticals was purchased by the Female Health Company, one of our first things that we would test was trying to figure out what to do with the receivables and which was $14 million. We were able to get about $7 million or $8 million of that and then the government went crazy again. And as you know it was a very volatile time in terms of the socialist government that was in place in Brazil. And so, we had to make a decision and that decision was to go ahead and factored receivables so that we get something because we could get nothing. And that was a good move because a year later nothing was coming to any of the people that were waiting for their accounts receivables to be paid. So, that was a hindsight that was a good move for us to get money and to cut our roses. Now, how do we avoid that going forward? And the answer is we've been excellent partner, Semina is our partner or distributor in South America particularly Brazil. And so, we have now basically asking for more upfront to lease cover our cost, so we're never going to be in a situation where risk for basically having given them product and having that product cost this money to provide it to them. Michele, do you want to add a couple of comments to that?

Yes. We're going to be paying like 60% of the total price within about 45 days of the product being shipped. And then the remainder within a set number of days after it's delivered to the government. The other thing is there's been a change in the government regime in Brazil and there is a whole new outlook towards being pro supportive of business. And we were caught last time between a change in the government. And so, the new government wasn’t honoring the contracts and paying the bills of the old government. This is a whole clean slate. They've awarded the tender and they're supportive of the whole process.

Thank you.

Thank you.

[Operator Instructions] I'm showing no additional questions, we will conclude the question and answer session. I would like to turn the conference back over to Dr. Mitchell Steiner for any closing -- would you -- I'm sorry -- for any closing remarks.

Thank you, operator. I appreciate you joining us on today's call and I look forward to updating all of you on our progress at our next Investors Call. Thank you.

Thank you, Sir. A digital replay of the conference will be available beginning approximately at noon eastern time today February 13th by dialing 18773447529 in the U.S. and 14123170088 internationally. You will be prompted to enter the replay access code which will be 10128045. Please record your name and company when joining. The conference has now concluded. Thank you for attending today's discussion. At this time you may disconnect your line. Once again, the conference has concluded, you may disconnect your line.