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 and 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 finance – financing on acceptable terms, we needed to fund developments 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 reviews 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, I’m the Chairman, President and CEO of Veru, Inc. and joining me are; Michele Greco, CFO and CAO; and Phil Greenberg, Executive Vice President, Legal. 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 commercializations of our products as well as provide financial highlights for the third fiscal quarter 2019. We are delivering on our strategy to be the prostate cancer company. We are 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 multi-billion dollar markets and given our core expertise and the number and type of drugs in our pipeline, we are uniquely positioned to understand, develop and commercialize medicines with these unmet medical needs of prostate cancer patients. Here's a brief update on the advancement of the prostate cancer drug pipeline. We have made significant progress with the enrollment of our open label, Phase 1b/2 clinical trial with VERU-111, a novel proprietary first-in-class oral selected antitubulin agent for metastatic castration resistant prostate cancer patients who have also become resistant to novel androgen blocking agents enzalutamide or abiraterone, but prior to IV chemotherapy, also referred to as sort of the pre-chemotherapy or the chemotherapy naive stage. In other words, the open label Phase 2 clinical trial will target those patients whose prostate cancer has progressed, but before they're offered IV taxane chemotherapy. The pre-chemotherapy space in men who have failed a novel androgen blocking agents is currently the fastest growing unmet medical…

Thank you, Dr. Steiner. Let's start with our third quarter results for the three months ended June 30th, 2019. FC2 unit sales totaled $10.9 million, up 9% over the prior year third quarter of $10 million. Net revenues were up 77% to $9.7 million from $5.5 million in the prior year third quarter. The company reported FC2 sales growth in its prescription business, with net revenues up more than tenfold to $4.4 million from $400,000 in the prior year third quarter. Net revenue for the public sector business was $4.9 million, compared to $5.1 million in the prior year third quarter. Gross profit was up a 114% to $6.6 million from $3.1 million in the prior year third quarter. Gross Margin increased to 68% from 56% in the prior year third quarter. The increase in gross margin is driven primarily by the increase in the US prescription business. These financial results reflect modest shipments under the new tender orders from South Africa. We've previously announced that we won 75% of the South African tender, representing up to a 120 million units over three years for the total tender. This translates to approximately 30 million units per year for our company, and potentially $10.4 million in revenue per year for a total of approximately $30 million over three years. We started shipping these new orders from South Africa during the third quarter. We will be shipping more South Africa orders during the fourth quarter of this fiscal year. Operating expenses for the quarter increased by $374,000 to $8.4 million compared to the prior year third quarter of $8 million. Included in the prior year third quarter operating expenses is $227,000 related to the settlement agreement we entered into with our Brazilian distributor during December 2017. Excluding the settlement, the operating expenses…

Thank you, Michele. We have enjoyed another strong financial quarter, which has allowed us to significantly advance our clinical programs. In fact, we now have had four strong quarters showing revenue growth in the commercialization of our products. Furthermore, as we have completed at least one month in Q4 fiscal year 2019, the revenues continue to be strong. With the improving performance of the commercial products and the strengthening balance sheet, we believe that we have been able to substantially invest in the continuous clinical development of our prostate cancer drug product candidates, as well as to submit NDAs and if approved, commercially launched TADFIN which would provide even more revenue, adding to the already-grown revenues from our Female Health Division, and from PREBOOST/Roman Swipes. We anticipate a steady flow of important positive news of Veru over the next few months to one year. We expect to report open label efficacy and safety clinical results, the Phase 1b and Phase 2 clinical trials with VERU-111. Our oral tubulin inhibitor for metastatic castration and novel androgen blocking agent resistant prostate cancer, as well as started Phase 3 study. We report clinical results with the Phase 2 clinical trial, evaluating zuclomiphene for the treatment of hot flashes caused by androgen deprivation and to have started a Phase 3 study. Submit the NDA for TADFIN and expect approval and commercially launch the product following FDA review. Complete GMP manufacturing of clinical supply of VERU-100, submit the IND and commence the Phase 2 clinical trial. We secured our partnerships with some of our drug products and finally, we continue to demonstrate robust growing revenues for our commercial products, FC2 and PREBOOST/Roman Swipes. We are committed to driving shareholder value by becoming the prostate cancer company and providing a continuum of care for prostate cancer patients. With that, I now open the call to questions. Operator?

Thank you, sir. Ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instructions] Our first question is from Brandon Folkes of Cantor Fitzgerald. Please go ahead.

All right, thanks for taking my questions and congratulations on the progress during the quarter. One on VERU-111. Having dosed to six cohorts to-date, you mentioned you’re going to continue to dose into easy toxicity. So I just want to clarify, could there be additional doses beyond the 45 dose?

Yes. So the protocol allows us to continue to go up. And as you know, there's really, as I mentioned in the call, there's really - there's three parts to the study. First one is dose escalating at one week on and two weeks off. And so, in that and then let me lay off the three and then I'll take what we're doing. So track one is, these cohorts come in three at a time and they go from 9.5 to 4.5. At second cohort, second part of the study are the patients that do not progress they get to stay on the drug and they switch over to two weeks on one week off, and a three cycles later this still not progressing. They're holding on, then we can go to three weeks on continuously. Okay, so that's the third. So looking at the first track, which is just dose escalating at one week on two weeks off, yes, we are allowed to continue to go up. So at 45, it shows no dose limiting toxicity, we go to 54 and that shows no dose limiting toxicity, we go to 63. But in the background, the patients that have not progressed are allowed to keep going. So you could see we’re like hitting this thing, I mean because there's no dose limiting toxicity, we're able to give a lot more drug. And if we can give a lot more drug, then as you know, in this class of agents with the anti-tubulins, more drug is better. And that's been shown over and over, the reason that can't give more drug is the toxicity so high. So this bodes incredibly well for an oral agent. And so this Phase 1b is going to be able to provide information not only on dose, but also on schedule, meaning, how often you able to give it? So I'm excited about that part of it. So you're absolutely right, we will continue to raise the dose in three cohorts at a time. At the same time, we're going to be allowing the patients to the lower doses to go from one week on to two weeks off to two weeks on one week off to three weeks on, no time off. So we're going to get that information. And interestingly, the final thing that we’ll be able to pull from this study for those patients that don't progress is what's really happening with progression-free survival. And so we know for this patient population based on the literature, that their progression-free survival is about 3.5 months. And so, what that means is that, these are sick patients. And so we're very encouraged by these early results.

Okay, thank you very much. And maybe just want to follow-up and so just to confirm, we would only get data at the end of the study, so essentially, yeah, the longer we don't get data for perhaps –

Not necessarily.

Depends.

Not necessarily. So my thinking is that, as we start moving towards this – you can have a study and because it's open label, we can provide data, okay. So the idea is that, at the scientific meetings and particularly on the calls, I'll be able to update you. But we are starting to target some of the scientific meetings to present the dataset, and even though will be partial because we haven't reached toxicity. You'll be able to see at least what we're seeing, and particularly on the safety side, because that's why we do the 1b, and we're just not seeing neutropenia, we're just not seeing neurotoxicity. We're not seeing liver function issues, but yet we are seeing PSA stabilizations, we are seeing PSA reductions. So you're in the window for activity, but we're not seeing the safety. So the answer is, yeah we could see the Phase 1b data as I mentioned in the call sooner.

Thank you, sir. Our next question is from Kumar Raja of Brookline Capital Markets.

Thanks for taking my question. So one more on VERU-111. So in terms of the PSA stabilization and the reductions, at what doses and at what time points do you see that? And also in terms of the 21-day cycles, what are you seeing there? Or do you see patients continue to move forward there? And at what doses are you seeing that?

Yeah, good question. So what I can tell you is that, we – and I mentioned this on the previous call is that, we even at the lowest doses, which is the 4.5 and the 9, we're seeing the stabilizations and reductions. So it appears this drug is active, okay. As it relates to your question about the 21-day cycle. So where we are now as these patients, almost all of these lower dosed patients are moving into the 14-day on and one week off were just starting patients that are moving to the 21-days on and continuous, because if we think about it, if you do three cycles at one dose, and then you switch to three more cycles of the second schedule, and then you do – you move on, you're looking at 9 weeks and that is 18 weeks. So that's 4 – with that 4.5 months. So, they're getting past the 3.5 months, which is what you would have expected a progression-free survival. So we're just starting to see the 21-day cycle 21 days – yeah, 21 day drug on cycle. And there's not much I can say much more than that, but I can tell you so far for the 14 days on and one week off with as I said in my comments, my former comments, we're not seeing a neurotoxicity and neutropenia or liver function changes.

Okay, and how quickly can you move to the Phase 2 part once the Phase 1 is done? And also for the zuclomiphene Phase 2 data, what would you consider a homerun?

Yeah, good question. All right. So you can just snap two questions here, so I'll answer them. So for VERU-111, because we've already pre-cleared and I think it’s the best way to say we've pre-cleared the Phase 2 design with the FDA, then literally, there is no – nothing that has to be done except that we picked a dose and we can immediately expand into the Phase 2. So when we hit a dose limiting toxicity, the way that works is, you take another three patients at that dosage you saw the toxicity and you're looking to see whether in six patients, what is that rate, and that will inform you to your Phase 2 dosing. So that would - you'll have a little – once you get your toxicity, you have at least a month there before you can go to your Phase 2, because you've got to double check the toxicity, that makes sense. As it relates to zuclomiphene, great question. So and as you know, we've been thinking about it, so what makes this study a little different is, you'll see in the literature that estrogens can reduce hot flashes by 80 – 70% to 80%. But what the literature does is, it combines all of the types of hot flashes. In other words, you can have mild hot flashes, you can have moderate hot flashes, you can have severe hot flashes, moderate means, you just feel warm – Assuming, mild means, you just feel warm. Moderate means, you feel warm and you sweat and severe means, you feel warm, you sweat and you have to stop doing whatever activity that you're doing, okay. The FDA does not – even the loser has an 80% reduction, the FDA views as clinically meaningful that you have to…

Thank you, sir. [Operator Instructions] Our next question is from Yi Chen of H.C. Wainwright. Please go ahead.

Thank you for taking my question. Looking at the operating expenses in the third quarter, the period that it was meaningful and higher than the second quarter. So how should we look at the R&D and SG&A expenses going forward?

Good question. So I'll answer the big picture and then I'll have Michele also provide some comments. As you know, we have three programs, and we have been budgeting for those clinical developments for those three programs and as we had mentioned that, given the current budget, we're going to be able to, with the revenues coming in existing sources of capital, be able to make it to the end of 2020. And certainly beyond that the revenues continue to go up. So from that standpoint, the way to think of it is that, we're still on track to be able to manage our business, given where we are now. However, one of the things that's very interesting is, now we're starting to see some very promising signals of just data from the cancer program and we look at the aggregate hot flash data with the safety and in the degrees of hot flash benefits that we're seeing in the aggregate data and now we've also added VERU-100, which is a GnRH antagonists long-term depot, and the FDA is telling us, all you have to do is a 60 patient study and a 100 patient study, you can do on the market, there may be an opportunity based on this to potentially increase some of our spend. But at this point, now, the way to think of it immediately, would you like to answer that, Michele?

Yes. As I mentioned in my comment, looking back when you compare this period to the last period, whether it's for the quarter or for the nine months, we did hit some unusual items in there which we did separate out. And our expenses, they're not as predictable for the research and development, you can't just look at this quarter and try to determine that this quarter is indicative of what the next quarter is going to be for research and development. Because as Mitch said, we're continuously progressing these drugs. And so costs change depending on which phase of the program you're in. And as far as the selling and administrative expenses, we did have a change in the sales strategy. So we're starting to see the impact or therefore the reduction and looking at our expenses. So our expenses are getting a little bit more normalized, but there again, there are different things and facts and circumstances that change, I would say that, they're a little bit more in line with what you're seeing here in our third quarter, to be experiencing in the fourth quarter.

Thank you.

Thank you.

Thank you very much. The next question is from [indiscernible]. Please go ahead.

Yes. Good morning. This maybe a question for Michele. I'm sorry, if I missed this earlier. Could you flesh out the net cash provided by financing activities in the nine months in the cash flow statement, please?

Sure.

Approximately $9 million?

So that was - $9.1 million was the public offering we did in October, $3.6 million relates to sales of shares under the Aspire agreement and $200,000 related to stock option exercises, and then, we had a payment under total payments under the synthetic royalty of $4 million.

Thank you.

Thank you, Dave. Next question.

Thank you very much. Next question is from Natalie Hurtig. Please go ahead.

Hello, Mitch. This is actually Steve Dearholt [ph]. And my question is in concern of you mentioned the value of having a safe drug. Do you anticipate being able to use this VERU-111 and other types of cancers? Are you thinking about that for your future? And maybe even licensing that for with other drug companies?

Yes. So Steve, thank you for the question. And absolutely. So let me – and this kind of gets to a little bit of why I was saying, because of the promising information that we're seeing. Our job is to increase the value of the asset, and to ultimately provide the VERU-111 not only again increase shareholder value, but to get to the patient that needs a drug. And if you have a drug that's an antitubulin, antitubulin is traditionally have been incredibly toxic. But we know if you give more, it's better. Well, antitubulins is not a prostate-specific targeted mechanism. And just happen to be in prostate cancer is very effective. And in prostate cancer, you can look at PSA, which is a fast way to get a read and whether you're seeing the activity. But there are so many cancers today that are sensitive to antitubulin like taxanes and ixabepilones and vinca alkaloids, that we would very much consider sooner rather than later, to expand into other like tumor types, because that will show the value of the job. So to give you an example, Medivation, which was sold to Pfizer, $14 billion, their job is only prostate cancer drugs, and a site that was sold to Novartis for $2 billion plus, only a prostate cancer drugs. Cougar and Aragon both were sold to J&J of about $1 billion apiece, only prostate cancer drugs. So if you were able to show that your prostate cancer drug and you had activity outside of prostate, then I think it will really truly increase the value of the drug and increase the likelihood of a significant partnership. Because, then you're thinking about blowing it out into multiple tumor types, which we should be doing. With that said, I think, as a small company, we can take on the task of additional Phase 2s with small numbers of patients that show signals, just like we're doing in prostate, and with that very little investment, I think it will increase the value of the opportunity. So this is different. We stuck with prostate, because that's our - as I say stick with your knitting that you know, but on the other hand, it's very clear that this could be a major oncology product. And even in the field of IV chemo, and the whole field of medical oncology, oral agents are taking over, patients just don't want to sit in chairs anymore and get IV chemo, they can get something orally at home or he can manage the dose by just decreasing the number of tablets and keeping the patient by having spent eight hours in the fusion chair. And you have less toxicity than these other agents, particularly neurotoxicity and neutropenia. This is knock on wood, it's looking very attractive.

Okay, thank you.

Thank you.

Thank you. The next question is from Peter McMullin. Please go ahead.

Good morning, Dr. Steiner. Speaking to you from the Toronto International Airport. Congratulations on a lot of the cylinders working properly yet. My question would be that what's keeping you awake these days at night? You know, what could go wrong, could go wrong?

Yeah, it’s a good question. So when you look at base business, the first thing – the thing that worries you for the FC2 business, PREBOOST, but I’m not worried about, that's growing and as you know, and it's an exclusive and getroman is good. As it relates to FC2, we break into public sector and FC2 prescription business. What keeps me up at night in the public sector, which I think would mitigated with the FC2 prescription business, is that the public sector even though we have about 90% market share, there - just as anticipated, competition is coming in and pricing has to come down, all the things that we've predicted and the reason why we did the transaction with a Female Health Company has come to beat. And so, here we are now, if we did not diversify, as the Female Health Company Board had done, we will be in a whole hell of trouble, if you look at our numbers, you can see that everything grew except the number of units this last quarter in the public sector, and we're getting less for those units in the public sector. So what keeps me up at night – keeps me up at night was sort to solve that problem by having a more robust US business. And so in fact, we've been able to, and I think we're on the track guys to have the best revenue year that the Female Health Company now Veru has ever had. So I'm pretty excited about that. As it relates to the drugs, drug development, when you’re putting a poison in a patient that hasn't seen before. And so literally every day you wake up wondering, what you're going to see, the longer you go, and the higher the dose…

About to call my flight, so like I worked in One Click One, the judge dismissed the lawsuit and I guess they had 30 days to appeal. Is there any continuing issue there?

Yeah, as we saw from the press release, that they dismissed everything, and it's completely dismissed. And the other side always has a chance to appeal. And at this point now, to our knowledge, they have not. And so that's all we can say at this point. But if you look at it, everything that case was based on the judge that said no, and dismissed it. So we feel pretty good. And we've got a good case and so far every step of the way. It's been in our favor. So we're feeling pretty good.

I also want to want to add - okay, thank you, Peter.

Thank you. The next question is from Shawn Boyd of Next Mark Capital. Please go ahead.

Good morning. Can you hear me, okay?

Yes, perfectly.

Right. Just wanted to go back to FC2 for a second. The US prescription sales? Well, I mean, congratulations on the growth in both measures, there that the public sales and the prescription sales, but on the prescription sales in particular, that growth. Can you help us just a little bit on how you're penetrating that and sort of maybe for those of us newer to the story, what you're targeting? How big can that be? And maybe just some parameters to think about as we [indiscernible] here and then go into 2020?

Yeah, so first of all, if you're new to the story, one other things that we did is, we took advantage of the Affordable Care Act, the Affordable Care Act, now almost nine years ago, when it was enacted, basically said that female contraception which the female condom is number 12 on the list, that insurance companies were mandated to pay for the product with no co-pay. And the drug was at that point – the product FC2 is at that point was a Class 3 medical device. It's now it's been downgraded to a Class 2 medical device, but hasn't changed anything. We still have essentially the largest market share in that product. What we did as we said, what, if this is can be paid for by insurance companies, then we need to make it available by prescription, making available by prescription doesn't just mean you say you're available by prescription. So we spent first year and a half, creating the infrastructure and making sure that 98% of retail pharmacies actually had the product that we packaged it in 12 packs so that it makes sense for a woman that wants to get it, that had all the right codes, it was in the Compendium, it was truly a prescription product. Then we went out to six different channels by which the which I'll just tell you two of them. One was by traditional marketing and selling with a Salesforce, Salesforce at 12 and then we had an independent contracting Salesforce of 80 and then we decided to see what would happen if we hooked into telemedicine and telemedicine until a pharmacy, is where it took off. So as you would imagine, if you want to do marketing and selling like a drug, you got to pay bonuses…

Thank you, sir. The next question is from [indiscernible]. Please go ahead.

Hi, can you hear me?

Yes.

Good. I wondered if you could talk a little bit about your partnering and licensing strategy going forward. For instance, when do you think it would be viable to start looking at those discussions?

So I can tell you from my experience, that when you see a company all of a sudden announce this good news on their drug development program. And then all of a sudden, two or three weeks later, do a big pharma deal. It didn't happen in two to three weeks. What typically happens is that, you begin talking to large pharmaceutical companies, 18 months, 12 months, before you think you're going to be announcing that news. And you do that, because you want to keep them up-to-date, some of them will sign non disclosure agreements, and they'll come in and look at the data, most companies at least in our situation, we would hold them off, because our thinking is, we want, we're going to have more value for the shareholder, the more that we have data. And but you just can't engage in the last minute and expect it just takes time. So we have already started the process now over the last year, year and a half of talking to large pharmaceutical companies that you would expect, would be very interested in a product like VERU-111. Particularly if we can be used after their product, with their product or before their product. And they're already committed to the $6.5 billion revenue getting now in 2018, they can do everything they can do to protect that. And so we're on the radar for VERU-111, Zuclomiphene, the same thing. We've already started discussions for about a year to 18 months, VERU-100 is new, we just announced that one so that one we haven't done much with. TADFIN, for the last 18 months we've been extremely active outside the US, trying to secure our partner, that has been moving very, very nicely. In the US, our strategy is they hold on to it for we’re potentially launching through telemedicine, so that we don't have to have a marketing and sales group. But we can use that money to continue to support our clinical development and invest in our clinical development. So from that standpoint, I would say that we've already started doing what one should do to be able to secure the partnership in a very efficient and expedited way at the time we have good news.

What do you think the minimum hurdle is to have a deal for VERU-111? Would it be Phase 2 data?

I think if we do a good Phase 1b, which we are, which means, it's the patients that are intended to be your patient groups. So it's not like a healthy volunteer group, which we never do with cancer product. So the patients that we're treating 1b are going to be basically the same patients that we will be treating going forward. The Phase 2 is important, because now you take that dose, and you expand it into more patients. So I would say that the maximum value for the company would be to an open label, okay, which means you don't have to wait until the end and you're not getting to get a postcard that says, this is the data it’s open label. So from that standpoint, I think you're correct, I think the maximum value that we can get to this asset right now would be the Phase 2 data with prostate. If the Phase 1b looks good, and we decide to expand and accelerate the other tumor types, then I think the deal will look even more attractive if we can show activity in other tumor types in addition to prostate, all which can be done in a small number of patients in a Phase 2 setting.

Thank you very much, sir. Ladies and gentlemen, that then concludes the question-and-answer session. I would now like to turn the conference back over to Dr. Mitchell Steiner for any closing comments.

Thank you. Thank you. I appreciate you – I appreciate everybody joining us on today's call. I look forward to updating all of you on our progress at our next investors call. Thank you.

Thank you, sir. Ladies and gentlemen, the digital replay of the conference call will be available beginning approximately noon eastern time today, August 8th, and you can access that by dialing 1877-344-7529 in the US, and 1412-317-0088, internationally. You will be prompted to enter the replay access code which will be 101-339-620. Please record your name and company when joining. Ladies and gentlemen, the conference call is now concluded. Thank you for attending today's discussion. And you may now disconnect your lines.