Good morning, ladies and gentlemen, and welcome to Veru Inc.'s Investors Conference Call. [Operator Instructions] After this morning's discussion, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Mr. Sam Fisch, Veru Inc's, Director of Investor Relations. Please go ahead.

Good morning. The statements made on this conference call may be forward-looking statements. Forward-looking statements may include but are not necessarily limited to, statements of the company's plans, objectives, expectations, or intentions regarding the company's business operations, finances, and product portfolio. Such forward-looking statements are subject to known and unknown risks and uncertainties, and the company's actual results may differ significantly from those projected, suggested, or included in any forward-looking statements. Risks that may cause actual results or developments to differ materially are contained in the company's 10-Q and 10-K SEC filings. I would now like to turn the conference call over to Dr. Mitchell Steiner, Veru Inc's Chairman, CEO, and President.

Thank you, Sam, and good morning. With me on this morning's call are Michele Greco, CFO and CAO. Dr. Gary Barnette, Chief Scientific Officer; Phil Greenberg, Executive Vice-President, Legal; and Sam Fisch, you've met, Director of Investor Relations. Thank you for joining our call. Veru is a late clinical-stage oncology biopharmaceutical company focused on developing novel medicines for the management of two of the most prevalent cancers, prostate cancer and breast cancer. We continue to invest cash generated from our sexual health commercial business into the clinical development of our high-value oncology drug candidates so, that our current shareholders can realize the maximum value of our oncology biopharmaceutical company. This morning we will discuss another record quarter from our sexual health business, the progress of our prostate cancer and breast cancer drug pipelines, Veru 111 for the treatment of COVID-19, the upcoming NDA submission for TADFIN. And then we will provide financial highlights for a record first quarter of fiscal year 2021. Let's now focus on some of the financial highlights in Veru's sexual health business. We had net revenues in the US FC2 prescription business in Q1 of fiscal year 2020 of $9.1 million compared to $6.1 million in Q1 of fiscal year 2020 which is up 50%. That should be Q1 fiscal year 2021 of $9.1 million compared to $6.1 million in Q1 in the fiscal year 2020 which is up 50%. Gross Profit for Q1 fiscal year 2021 was $10.8 million compared to Q1 fiscal year 2020 of $7.3 million, which is up 49%, operating income was $19.2 million, which includes a gain of $18.4 million on the sale of the PREBOOST business and the adjusted operating income which excludes the sale, the gain on the sale of PREBOOST was $800,000 in Q1 fiscal year 2021, compared…

Thank you, Dr. Steiner. As Dr. Steiner indicated we started the fiscal year with a record-breaking first quarter. On December 8th, the Company sold PREBOOST business for $20 million, $15 million in cash and $5 million in notes receivable due over an 18 month period. The sale of PREBOOST resulted in an $18.4 million pre-tax gain. Overall net revenues were up 38% to a record $14.6 million from $10.6 million in the prior-year quarter, due to the growth in our US FC2 prescription business. The company recorded continued FC2 sales growth in its prescription business with net revenues up 50% to $9.1 million from $6.1 million in the prior year quarter. Net revenues for the public sector business also increased to $4.7 million from $4.4 million in the prior year quarter. Net revenues for PREBOOST through the sale date were $863,000 compared to $153,000 in the prior year quarter. Overall gross profit was $10.8 million or 74% of net revenues compared to $7.3 million or 69% of net revenues in the prior year quarter. The increase in gross profit and gross margin is driven primarily by increased sales in our US FC2 prescription business. Operating expenses for the quarter increased to $10.1 million compared to the prior year quarter of $9.1 million. Research and development costs were $5.7 million compared to $5.3 million in the prior year quarter. The operating income for the quarter was $19.2 million compared to an operating loss of $1.8 million in the prior year quarter, an increase of $21 million. The increase is primarily due to the gain on the sale of PREBOOST of $18.4 million; excluding the gain we had operating income of $780,000 for the quarter. Non-operating expenses were $1.9 million compared to $1.6 million in the prior-year quarter and primarily consisted of…

Thank you, Michelle. We have enjoyed another record financial quarter which has allowed us to significantly advance our clinical programs with the robust performance of the sexual health business, plus the prospects of additional revenue from TADFIN. We believe that we are able to substantially invest in the continued clinical development of our prostate and breast cancer drug product candidates, as well as Veru-111 COVID-19 Phase 3 study. As a consequence, the Company expects to have sufficient resources generated from our sexual health business and existing sources of cash to fund clinical development of all of our currently planned registration clinical trials. We plan to continue to generate robust growing revenues from the sexual health business, which is a standalone business is very valuable. We are expecting another record year in fiscal year 2021 and we could have options to monetize the business as we did with the PREBOOST business. We have successfully transformed our company into a late clinical stage oncology biopharmaceutical company supported by growing revenue cash generating sexual health business. We have a duty to expeditiously advanced Veru-111 into a Phase 3 clinical study in hospitalized patients with COVID-19 with high risk ARDS. If we confirm these promising results observed in the completed Phase 2 clinical study we expect to seek emergency use authorization for this indication. With that, I'll now open the call for questions. Operator?

Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions] First question comes from Brandon Folkes with Cantor Fitzgerald. Please go ahead.

Hi, thanks for taking my questions and congratulations on another good quarter. Mitch, may be just firstly, coming back to COVID-19 a little bit. Can you help us think, how you are thinking about Veru-111 position in the market? and maybe obviously you just try frame which is early to go through Phase 2 trial, but the market opportunity for the Veru-111 there obviously. Well, I think earlier line treatments vaccine. So, how do we, how should we think about that market opportunity for 111 in COVID if we are successful there? And then secondly, we pulled back potential Veru-111 to be effective again mutant strain? do you think the FDA will ask you for an inclusion criteria which includes some of the mutant strain in the Phase 3 trial and then lastly you talk about having the financial flexibility to fund all your program obviously, you've got -- you've got a lot going on, sort of, probably running trials about 600 patients, if my math is correct this year with the manufacturing scale-up of TADFIN, can you just give us some color in terms of how much wiggle room do you have in that statement? Thank you.

Thank you for the question. I'll answer the last question first. It's really more like if you added all our programs together and they -- and they took place over the next 2.5 years, you are probably close to about 250 patients and 300 patients a year, and so that's what, if you do [indiscernible] patients which is really the high end, that's $30 million a year and we're generating more than that from our business. So, I think we got a lot of wiggle room as it relates to funding. So, even though each of these trials have numbers, it's not all coming in this year. They start this year and then we are going to move as quickly as we can to get it done. As it relates -- as it relates to your second question about what the FDA is going to ask us do a mutant strain let me just remind everybody how Veru-111 works, the way Veru-111 works is it disrupts the Microtubule trafficking system within the cell. So, think of it as a highway. And the reason it works both in the phlegm [ph] inflammation and in viral replication is as follows. The virus will bind to the outside of the sale and gets internalize and it just doesn't flow around. It actually gets -- it gets pulled along the microtubules the highway into the nucleus where it makes more virus, and when it makes a whole bunch of new virus it's got -- that payload has to be brought back out to the outside of the cells so, it could be dumped out so it can infect other cells and the way it does that is again the highway. So, the highway will actively transport it, whether it's the virus coming in as…

Great, thank you very much.

Thank you.

The next question comes from Yi Chen of HC Wainwright, please go ahead.

Hi, good morning. Thank you for taking my questions. FC2 sales, could you tell us whether the record quarter was primarily driven by US prescription sales? or it is also driven by FC2 international sales? and do you expect the trend to continue? Thank you.

Michele, would you like to answer that?

Sure. It was primarily driven by the FC2 US prescription sales and both sales increased 50% to $9.1 million from $6.1 million last quarter -- last year same quarter. The global public sector sales also increased, not at the same -- not at the same percentage though so we are seeing increases in both.

Second question, could you comment on your expectation for TADFIN sales once it is commercially launched?

Yes. So, let me just backtrack somebody just remind me, I kept using the number of 100,000 for COVID-19 to make sure everybody understands that 100,000 -- 85,000 to 100,000 hospitalizations a week. Okay, so, that's where that number comes from. So back to your question for TADFIN. The way with FC2 for example, we launched everything through telemedicine. Telemedicine is really a brand new animal right now in terms of the sales channel and the reasons this is a new animal is you end up with numbers that you just didn't expect. So, I'll give you an example. Typically, when you launch a product through traditional specialty pharma sales was which we do not have and we are not investing in the specialty sales force, you end up with some kind of uptick, 300 prescriptions a month and that goes to maybe I mean, it could have some number, but it's not 10s of thousands, not hundreds of thousands and but the power of telemedicine is that you can reach hundreds of thousands in the short period of time because it's all Internet-based and it's all based on how many states that telemedicine company has access to. It's completely a brand new world in that regard and that's why we've been successful with FC2, because we just broke away from the old and just had you know how many details are you making to an OB-GYN office, the CV and sell FC2 that if you go back and look at those metrics a most the single person can do is 4-6 details a day and with internet it's unlimited. It really is an incredible blue ocean. So, our expectations right now is that we just don't know. All we know is that we know that there are approximately 29 million prescriptions, four finasteride when you get into Cialis but if you look at, for example, tamsulosin and finasteride, when you start looking at BPH prescriptions. It's somewhere between 23 and 29 million prescriptions a year and it's a big number. And as you know BPH is prevalent and I can tell you as urologists is a disease that men over 50 will have. So, right now we just don't know. I wish I can give you a number, except I think we are looking at it now we're going to, because of the brand new world we have not given guidance yet in terms of what we think the actual numbers will be. What I will tell you is, it feels big but let us test it.

Got it. Last question; what do you expect to report top line results from the Phase 2 trial of Veru-111 in prostate cancer? And when results come out will that have any impact on the Phase 3 trial? Thank you.

Here we are heading into year two with the Phase 1b. So, I don't know, maybe my druthers will be another year and half from now, right. But I'm just joking. But it's true. And so, I think what we're going to do is just like we are doing with the Phase 1b is we're going to be for it as long as patients are on study and but I can tell you that they are mirroring each other quite well. The Phase 1b and Phase 2 a mirroring each other, meaning that we're seeing PSA declines, PSA responses, partial responses and the Phase 2 is having a complete response. So, you're seeing tumor activity and we're focused on safety, making sure we have the right recommended dose, 63 looks like it's playing out very nicely, and so that's the kind of information you want from your Phase 1b and Phase 2. So, the answer is, there is nothing in the 1b or the Phase 2 at this point because even we combined the information it is so similar that will change the course of how we're thinking about the Phase 3. So, that's why we feel comfortable starting the Phase 3, we do not believe we're going to learn any more information about dose, any more information about the efficacy we expect in that dose, any more information on the safety. And so, if that's the case then what we -- the only thing I would add to that comment, is it the patients that we used in the Phase 1b and the Phase 2 is sicker patients meaning that in the Phase 1b they were allowed to have chemo, 44% in the Phase 1b also got more than one targeted androgen receptor targeted agents that's not our Phase…

Got it. Thank you.

Thank you.

Next question comes from Kumar Raja of Brookline Capital Markets. Please go ahead.

Congratulations on the progress. And thanks for taking my questions. First, with regard to the COVID-19, what kind of impact are you guys seeing in terms of the days these patients are staying in the hospital? are you seeing any impact there? And with regard to FC2 how much inroads do you guys think you have made in terms of the US prescription market? And in terms of the gross margins where do you guys see this going from where you are right now?

Okay. Right. So, I'm going to go backwards. All right. So, the answer to question, how many -- how much inroads, so, we had about I don't know 350,000 prescriptions this past year and we just mentioned, we have 116,000 prescriptions. There is about 40 million women that could take this product so, we're just barely scratching the surface. It is huge, huge of blue ocean for us and all you have to do is to look on the Internet and see how many new sexual health telemedicine groups are opening up. And so, this telemedicine there's tremendous growth in telemedicine right now. And the only way to get to that Blue Ocean is to take advantage of the Internet, the fact that the Affordable Care Act, covers the prescription, the fact that women are no longer, I mean they are not in colleges anymore, they're sitting home using the telephone to order what they need to order including prescriptions and for sexual health. So, we think it's still a blue ocean, we just don't know. We think, we think we can't even tell you how big it can be because of the fact, and the other interesting point is that you know the male condom business compared to the Female condom business were still less than 1%, 2% and with the me too movement and empowerment and this is the only FC2 is the only birth control and sexually transmitted disease protection, dual protection that a women can initiate and control, I think there is real opportunity. Now, the gross margin is dependent on whether we sell ex-US or in US. We have a nice margin in the US and we don't spend money on marketing and selling very minimal. That's all done by the telemedicine groups. So, we expect, as you saw this quarter, we expect to continue to see our gross margins for this product go up as the mix of sales continue to be growing and dominated in terms of the numbers in the US versus ex-US. And so, we are looking forward to that as it relates to the COVID-19 question, what's the impact of hospitalizations and I know we've looked at top line data and I have not seen the hospitalizations.

Yes. So, the patients in our -- this is Gary Barnette. The patients in our study are very sick and obviously hospitalization -- duration of hospitalization is highly variable but when you look at the days on study, days of dosing, specifically, the days of dosing. We do see, and this is capped at 21 days, the placebo group had about a little over 11, average 11 days of dosing. And in the treated group it was a little under nine days of dosing. So, we are seeing and that would correlate the hospitalization, but the topline data that's what we got and have in the top line data. So, I do expect to see some reduction, but due to the variability I'm not sure exactly how strong it will be.

Okay. Maybe finally a question with regard to Veru-111 [ph] interaction with the EMA, where do we stand there. Thanks.

For Veru-111; so, I'll be honest. We've been so focused on US right now that we have not initiated. I think the EMA at this point, I think what we need to do is get our as I mentioned in my comments we've been granted an expedited meeting with the FDA, we already have that on the books, we're getting ready for that. We've already said, our meeting package that we've moved along, and we're looking forward to understanding the Phase 3 design and once we get that up and going, then we can probably reach out to the EMA, but I'll be honest with you, I think if we can get the FDA under control and while that's going on deal with EMA then that will take care 80% of the regulatory authorities across the world that would take one or the other; that's where we are.

Great, thank you.

The next question comes from Leland Gershell of Oppenheimer. Please go.

Hey, good morning. Thanks for taking the questions. Want to ask the question on -- the patients in the -- one who has been prostate cancer studies who has been [indiscernible] because patient able to continue with those reduction or it was just business the patient with the neurotoxin.

There was slight tingling in the fingers that went away with time, still stay on dose. So, did not require a dose reduction and they went away on the high dose and it was just a grade one, sorry, grade one.

Grade one. Got it, okay. And then, the question in terms of positioning of this with the oral taxanes and IV taxane, IV chemo there is obviously the oral formulation you've got the better toxicity profile meeting with some who may say. Well, I'm kind of all that efficacy and I want to see this, I want to use more effective agent upfront and then if 111 is not effective even though it may not be head to head. But if it doesn't appear effective maybe would reserve that for later, even with the earlier Kimmel agents have more tolerability, how would you kind of answer that to somebody who may be made more focused, hard-nosed efficacy comparison.

Yes. So, the way I would answer that is, as you know cancer has become a marathon. So, the issue, there is no longer hitting hardest thing you can hit them with and lose hair and you know, and just be thankful we picked up a couple of days as a surge and we used to do that, everything was radical. So, I think the approach to cancer care now, if you start with things that have right benefit risk profile and you start early and you're getting to choose something that has good efficacy and good safety and then you are going to work your way to the compounds, the agents that have efficacy and worse safety to a point you get to compounds that have some efficacy and maybe very bad safety. So, in this situation the way we see it and the way we're positioning as a pre-chemo agent, is that we just do not require a pre-medication with prednisone and with antihistamines as we not taking up a chair the patients not having to get the last if for GM-CSF support like the neutropenia, and you're not having to manage the toxicities with all kinds of agents, from vomiting on. And so, and the efficacy, again it's not head to head. But if you look at the efficacy of Veru 1-11 compared to some of the IV taxanes and the signals they saw in the Phase 1b setting where comparable for sure without to safety. So, I would say, less than the way that the way to think of it is that we want to be in the pre-chemo space and the best way to be in the pre-chemo space is to have safety that's more like an andro-receptor targeting agent, then having safety is more like a taxane or worse when that I mean the agents all wonderful agents, i will give around but worsening the toxicity could be worse.

Thanks, great progress.

Thank you.

Your next question comes from Peter McMullin of Peter McMullin CSA Consulting. Please go ahead.

Good morning, Dr. Mitch, and congratulations to you and the team for a tremendous progress quick Two questions on FC2, you do have an exclusive in the US, there are competitors out there, what's is there any rumblings that somebody else might try to get FDA approval? And just the second part would be on the international sales with everybody being at home, is were there any tenders coming up of significance that you could comment?

Yes. So, I'm going to have Michele comment on the international sales because she's closer to that. And then as it relates to the US when we're actually hearing no rumblings at this point, in terms of others. As you know because we, because with the market leader in the US and is a lot of brand loyalty and so, we're kind of Coca-Cola and why would anybody want RC? But with that said, there is no rumblings that I know of at this point and we've been watching it very closely. And so, we're still the market leader in the U.S. Ex-U.S., Michele, do you want to comment on tenders and what it's looking like?

Sure. We announced that we won the Brazil tender. So, we're working on supplying that this year, Peter. So, that will be supplied this year and into next fiscal year. And then the South Africa, the tender that we had announced that we won the government has extended the timeline for that. So, instead of delivering product over three years, it's going to be over a five-year timeframe and we're just waiting to see what the ordering is going to be in South Africa. So, that preserves us in those Two main markets.

But nothing outside of that at this point in time?

They're not big tenders in the other countries. We supply that mainly through UNFPA, USAID and now also through DKT, another distributor.

Okay, thank you.

Thank you, Peter.

And the last questioner today will be Brandon Folkes with a follow-up from Cantor Fitzgerald. Please go ahead.

Hey, Mitch. Sorry, just one thing I wanted to follow-up and it's a little bit segues from the last question. Can you just talk about the barriers [ph] to entry on the FC2 business?

Yes, I'll be happy to. So, the barriers entry is, one is we still have patent coverage in the U.S. Although it's just for a couple of more years or so, but we do. Second, even though it's a Class 2 device now instead of a Class 3, it still requires special controls, which means that pregnancy studies, tolerability studies, studies proving that you can prevent STI -- so, there is a whole host of immunogenicity studies and all the stuff and so. This probably in the order of about $6 million to $12 million worth of stuff and it can take you three to six years to do. And so that's a varied [ph] entry. It took us, I don't know, 18 months to build the infrastructure to sell by prescription in the U.S. That's not trivial. So, that has to be done and you have to get all the contracts with the big distributors to do that. We also have brand loyalty, which is also a barrier to entry [ph]. People want the FC2, they know the FC2, by way of the comparison. Ex-U.S. is a ton of competitors. They've been there for many years. But we've always maintain about 90% to 95% market share and that's the wild wild west outside the U.S. And that's because again, brand loyalty. People like it. And the other thing we have that's the only feature that the FC2 has, is night trial [ph] and so, the night trial is stronger and night trial is also hypoallergenic and so, you're not dealing with the latex allergies that you would see, which can occur at 10% of patients, particularly indwelling internal condom as opposed to an external condom. And then you can argue, 'Well, it's just 10%. 90% is fine.' No, you just don't know which 10% it is. So, that's the problem. So, to do a lot of barriers to entry and we've had the product now since the Female Health Company acquired Aspen Park and you could see the sales have gone up. There's a lot of room to grow the asset in the OTC markets and we are working very, very hard also in the U.S. public sector, ex-U.S. publishers [ph]. So the asset is incredibly valuable asset that's growing.

Thanks. That's very helpful.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Dr. Mitchell Steiner for any closing remarks.

Thank you. I appreciate you joining us in today's call and I look forward to updating all of you on our progress at our next Investors' call. Thank you again. Operator?

Thank you. The digital replay of the conference call will be available beginning approximately noon, Eastern Time today, February 10 by dialing 1-877-344-7529 in the U.S. and 1-412-317-0088 internationally. You will be prompted to answer the replay access code which will be 10151507. Again, 10151507. Please record your name and company when joining. The conference call has now concluded. Thank you for attending today's discussion. You may now disconnect.