Good morning, ladies and gentlemen, and welcome to Veru Inc. Investors Conference Call. [Operator Instructions]. I'd now like to turn the conference call 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 its business, operations, finances and development and product portfolio. Such forward-looking statements are subject to known and unknown risks and uncertainties, and our 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 our 10-Q and 10-K SEC filings. I'd 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; Michael Purvis, EVP, General Counsel and Corporate Strategy; and Sam Fisch, Director of Investor Relations. Thank you for joining our call. Veru is a late clinical stage oncology biopharmaceutical company with a focus on developing novel medicines for the management of 2 of the most prevalent cancers, prostate cancer and breast cancer. We're also committed to developing an effective drug therapy for COVID-19, which is a Phase 3 program. We invest cash generated from our Sexual Health commercial business into the clinical development of our potentially high-value oncology and COVID-19 drug candidates. This morning, we will discuss the progress of our late clinical stage prostate cancer and breast cancer drug programs as well as sabizabulin Phase 3 study for the treatment of COVID-19. We will then provide financial highlights for our record third quarter fiscal year 2021. Veru anticipates having 4 registration clinical trials in prostate cancer, breast cancer and for COVID-19 and 2 potentially registration-enabling clinical trials in breast cancer, up and running by the end of the calendar year 2021 to a total of 6 pivotal or potentially pivotal studies. 2 of these, Phase 3 VRACITY study in prostate cancer and the Phase 3 COVID-19 clinical study have already commenced. We have been very busy executing on this bold plan, and you will see that we're making significant progress. In our prostate cancer clinical program, the company has initiated is enrolling two clinical trials, a Phase 3 VERACITY study to evaluate sabizabulin for the treatment of metastatic castration and androgen receptor targeting agent resistant prostate cancer and a Phase 2 dose-finding clinical study for VERU-100, a GnRH antagonist 3-month long-acting depot delivery formulation for androgen deprivation therapy of advanced hormone-sensitive…

Thank you, Dr. Steiner. As Dr. Steiner indicated, we're having another great year. In December, the company sold PREBOOST for $20 million. In February, the company completed an equity raise, which resulted in $107.9 million in net proceeds after deducting underwriting commissions and costs. And in the third quarter, the company achieved record level net revenues and gross profits related to the sales of FC2. For the first 3 months of fiscal year 2021, our net revenues were $45.6 million, surpassing $42.6 million in net revenues for the entire fiscal year of 2020. We have already achieved a record year for net revenues versus any prior full fiscal year after only 3 quarters. Let's start our highlights with third quarter results for the 3 months ended June 30, 2021. Overall, net revenues were up 71% to $17.7 million from $10.3 million in the prior year third quarter due to the growth of our FC2 U.S. prescription business. The company reported significant FC2 sales growth and its prescription business with net revenues up 150% to $13.5 million from $5.4 million in the prior year third quarter. Gross profit rose 113% to $13.9 million or 79% of net revenues compared to $6.5 million or 63% of net revenues in the prior year third quarter. The increase in gross profit and gross margin is driven primarily by increased sales in our U.S. FC2 prescription business. Operating expenses for the quarter increased to $16.7 million compared to the prior year quarter of $7.9 million. Research and development costs were $11.2 million compared to $4.4 million in the prior year quarter due to the commencement of several new phases in our clinical trials. The operating loss for the quarter was $2.9 million compared to $1.4 million in the prior year quarter. In the prior year,…

Thank you, Michelle. Our company's fundamentals are strong. We have enjoyed another strong record financial quarter with also another record for U.S. FC2 prescription revenues, which has allowed us to significantly advance our clinical programs. Based on year-to-date performance, we'll have a record year in revenue, with the robust performance of the commercial business, plus the prospects for additional future revenues in TADFIN, coupled with our strong cash position, we believe that we'll be able to substantially invest in the continued clinical development of our prostate and breast cancer drug pipe-- product candidates as well as sabizabulin COVID-19 Phase 3 clinical study. We plan to continue to generate robust growing revenues for our sexual health business. We have successfully transformed our company into a late clinical stage oncology biopharmaceutical company supported by growing revenue from our cash-generating sexual health business. We have already-- we are already currently enrolling or plan to enroll a total of 6 pivotal or potentially pivotal studies this calendar year for major indications and large market opportunities. To summarize, in the prostate cancer clinical program, the company has initiated and is enrolling 2 clinical trials. Prostate cancer remains a very serious cancer as it is the second leading cause of cancer deaths in men. The drug product candidates that we're developing over 2 important indications. First, VERU-100, GnRH antagonist depot delivery formulations for androgen deprivation therapy of advance hormone sensitive prostate cancer has attributes to address the commercial limitations of other androgen deprivation treatments. The Phase 2 dose-finding clinical study is enrolling, and we expect to report results in the second half of the calendar year, and the Phase 3 clinical study has already been agreed upon by FDA, is expected to be initiated shortly thereafter. The second major indication of market opportunity takes advantage of…

[Operator Instructions]. Our first question comes from Brandon Folkes from Cantor Fitzgerald.

Congratulations on all the progress. Maybe firstly, just having transformed Veru into an oncology company, you do have a fair month going on. So do you have any sense of urgency to sell the FC2 business just to streamline the company and reinvest those funds? And then along those lines, any change in thinking about whether you may fund the COVID program you sold, given the-- what, once you see the data?

So the first question is, given that we clearly have transformed ourselves into an oncology company, and there's no doubt now with the Phase 3s and the Phase 2bs that we're on track with two the major cancers in areas that are large markets. So we feel very, very good about that. But interestingly, we're also-- with the FC2 business, we're looking for strategic options, but these strategic options-- it's been most interesting that we're not in the rise. So the keyword that you used was urgency. So there's no real urgency because, look, it's generated $45 million in the last...

Nine months.

Nine months. And if we stay on track with that same growth, we're say essentially bringing in the amount of money we need to fund all of our clinical trials. And so if you look at it that way, and you look at the cash in the bank, we raised $107 million, we've got $120 million, whatever number, $130 million if we add the accounts receivable, almost to $140 million, so we're not burning through our cash. So we're in a very interesting position that we're in the driver seat to see what we want to do with the asset. So I think-- and by the way, strategic option doesn't always mean sell the business. There can be other things that we can do that can enhance shareholders' value and allow our shareholders to get the best of both world. So we're working through that, no urgency, and it's not taking our eye off the ball, which is to continue to push and execute on the oncology side. As it relates to your second question, when I said relating to COVID-19, and whether or not we're prepared to fund it after we report positive results. So as I mentioned in my prepared remarks, that we have the resources and we have the clinical trial supply, drug supply. So we're going to be able to run the study without losing a beat and so we're not dependent on external funding, or funds for that. If we have successful data, we're going to be in a very interesting position again because even though we have begun to increase the scale-up of sabizabulin because of the multiple trials that are going on, including COVID-19, it's a different level of production that you need to do to get ready for the U.S. population and…

Next question comes from Yi Chen from H.C. Wainwright.

The first question is, the-- has the Delta variant in any way affected the enrollment speed?

Yes. So I'll tell you what-- so the answer is yes, and let me tell you why. So when we started the clinical trial, and you can go back and look at when we said we opened the COVID-19 Phase 3, the United States's contribution to the trial enrollment [Technical Difficulty] and the reason we can't incredibly [Technical Difficulty] is because the rates of hospitalization and death kind of just disappeared. And I have a person that I call in each of these emergency-- excuse me, each of these ICUs to see what's happening because, looks, it's crickets now, it looks like we've lived this thing. And I-- a week ago, I got a phone call from him saying that he's still working on this drug because we're getting slaughtered. So you just have to pick up the newspaper and see that it's gone the other way. So yes, the Delta [Technical Difficulty]. The delta variant is definitely helping us in the U.S. ex-U.S., the Delta variant has already been out there in Brazil and South America, the Brazilian variant is there. South America has been hit extremely hard. And so we're in those countries that continue to look like we did 6 months ago or 4 months ago. And then on top of that, you know the Delta variant is coming. We're hearing from sites across the world that they're getting ready to the Delta variant. So they're seeing what happened in the United States and happening in the United States. So it's taken on an extreme urgency. And as I had mentioned before, the way that sabizabulin works is that it works through interrupting microtubules and microtubules are responsible for pulling the virus from the surface into the nucleus where the coronavirus can replicate. And then once it makes new viruses, the viruses have to be brought to the outside of the cell and released, and our drug works by interrupting that, again, the microtubules, which are required to-- like a highway to bring the virus to the outside of the cell and release it. So we don't care whether it's a blue car or green car or a bus or a truck, the highway is gone, you're not going to be able to move freely in and out. So we're comfortable that we're not going to have an issue like a very specific antibody or a vaccine against the variant. And-- so I think that's going to be the major strength of our compound. So whether Delta variant or Lambda variant or some of these other variants that are coming through, it should not matter. And so I think that puts us in good footing to-- if again, if we replicate the Phase 2 results, to have an effective broad spectrum type of product.

Got it. And then also, sabizabulin should perform the same among those patients that got COVID-19 regardless whether they are vaccinated or unvaccinated. Is that correct?

Yes. But in fairness, it is a good question, in fairness, it's-- and again, we're staying very, very close to this because we're in the middle of this war, so to speak, if you're vaccinated, you tend to have a more mild outcome. And so yes, you're seeing this strange breakthrough. And what's happening is that the unvaccinated are the ones that are really are in the brunt of this particular part of the pandemic. And so if you're unvaccinated, then the Delta variant, you're going to get it, and you're going to get it quickly, but still, it's the same situation, age, comorbidities and the whole bit. And even though we're hearing that a lot of the young people are starting to show up because they didn't get vaccinated. About half of these ICUs are filled with the people that are still older age that didn't get vaccinated. So there's going to be plenty of people that we can try to help through our clinical trial, but more importantly, confirm with our clinical trial is going to support-- clinical trials are going to replicate what we saw in Phase 2. So that's what I would say about the Delta variant.

Got it. Does this slow down the enrollment for the Phase 3 prostate cancer trials?

No, we have not seen that. Interestingly, and I had made this comment before, that with cancer patients, cancer-- I mean, cancer, it's metastatic, it's spreading. And so people are scared. What we did see in the first half when we had the Phase 1b and the Phase 2 ongoing is we did have a few patients that got a little bit nervous about coming into the hospital to get their scans. So they're already in the trial that was enrolled, but they kind of-- we got a little delay here and there when we actually looked with a CT scanner an MRI, but that was more of a rare instance. Most people stayed on track. And so now, I can tell you that sabizabulin Phase 3 is open and enrolling, and we're smack on target, if not a little ahead of target in terms of enrollment. So far, we have not seen that problem. And then get back to your point before about COVID-19, there's no question we're getting a lot of inbound interest for sites in the U.S. before, like I said, it was crickets. We couldn't-- nobody was calling us, nobody was returning our calls. But that's changed dramatically. And so we're hoping that this will get us to the finish line in terms of enrollment.

The next question comes from Kumar Raja from Brookline Capital Markets.

So with regard to the completion of enrollment by the end of the year for the COVID-19 trial, does that take into consideration the recent upticking cases? And also in terms of dosing either orally or by the nasogastric route, do you see any difference in efficacy based on how the drug is being administered.

Right. So nasal-- I'm answering the second question first. So you're asking that sabizabulin in COVID-19 being a capsule or are we finding some problems administering the drug in the ICU setting.

It looks like they can be either administered orally are using the nasogastric tube. So, yeah.

Yes, yes, exactly. So from that standpoint, we have not seen any problem because patients need to get medicines. And so we-- because it's a capsule and it's a powder in the capsule, we've had no problem with administering either orally or through an NG tube. So that's been fine. As it relates to your question about the uptick and meeting our goals. In other words, we said we'd get this thing filled by year-end and then a quiet in the U.S. So I must admit we were getting nervous because we have to have a certain U.S. component in a win way. But now we're not nervous anymore because the U.S. has gone-- I mean just look at the numbers, it was 108,000 new cases on average daily and the hospitalizations are picking up, 2 weeks after the deaths will start picking up. And so it's just-- I mean, we've gotten to a point now, now entering the fourth wave, that we can always predict what's going to happen, and it's not-- other than to vaccinate the patient, the unvaccinated patient is kind of following the playbook. So I would say because of the uptick in cases that we're more likely to reach our goal.

And with regard to sabizabulin as well as enobosarm, with regard to Europe, what's happening in that front? And also, you talked talk a little bit about pharmaceutical partnerships. So how should we think about it? Would it be like just like partnership for Europe? Or maybe a little bit of color on that?

Yes, sure. So we're fortunate that we're going to be in a position in both our breast cancer and prostate cancer programs to be in Phase 3. And because we're in Phase 3, the question then becomes, how are you viewing partnerships. And as you know, the back of the envelope would say that if you piecemeal the relationships, it will decrease the value of the opportunity for a global partner. And so what we're trying to do is, first of all, and we'll take a step back, sabizabulin prostate, we're only running in the U.S. and the enobosarm Phase3, our test study is being done in the U.S. and Europe. And we're also in the process of beginning to have some of the EMA discussions that we will need. And as you know, EMA and with Brexit and everything that understands Britain, so that's gotten a little strange. But our position right now is to execute on the trial, the trials are open label, which means that we have a DSMB that can look at this, and we can continue to execute. But I think the most important thing for us to do is get these things filled, execute on them. We are in constant discussions with large pharma and medium-sized pharma and small pharma across all our programs. And-- but I think the way we're thinking of it, the biggest value that we're going to have to shareholders is to see if we can couple the good Phase 2 data with some good Phase 3 data or some promise of Phase 3 data because it's open label. And to me, that feels like that's going to get us the best value. We have the resources, thanks to our shareholders' support, and we have the resources because of our base business. So I think we're in a very unique position that we can wait it out to get the best position-- get the best deal. So-- but I do believe that at some point, some of our programs are going to be best served with a pharmaceutical relationship. Particularly on the commercial side. And so we're doing exactly as you would expect us to do, and that is having discussions with the largest and the smallest-- the largest, not the smallest, the largest, and the medium. Largest for global and the medium for piecemeal. And-- but our preference is to keep the dialogue going until we get an offer we can't refuse.

Next question comes from Chris Howerton from Jefferies.

I guess just two for me. First, on the FC2, obviously, great to see the continued growth on that program. I guess, I'm curious if you could provide a little color as to what is driving that growth currently? And what is the expectations going into the second half of the year, perhaps like there is some seasonality to the trends that you might expect for contraception, that would be helpful for us to know about. So that's one question. And then the second question, I guess, maybe I missed it, but I'm just wondering when we might expect the Phase 2 portion for the ongoing study in prostate cancer?

Great. So the first question had to do with-- can give you a little bit more color in terms of FC2 growth. And I will tell you there is no seasonality. And as you can tell, it's also completely COVID-19 resistant. So the growth is being driven by-- and this is the beauty of it, we have telemedicine partners that are using their resources to market and sell and bring women seeking birth control to their website, the storefront. It's an incredibly powerful way to go out there and market and sell because if we look at the number of FTEs that are supporting our U.S. business, in fact 3 or 4, and that's generating $30 million, $35 million, if you take out U.S. public-- global public sector. And so it's incredibly efficient for a company like ourselves because then we can use those resources to put back into the company. Now with that said, where we see the growth taking place is we're also seeing that there's a very, very healthy reorder rate with the telemedicine, so it's not-- yes, it's a big blue ocean, and people are starting, but they're coming back. And the reorder rate is very, very healthy. As you know, that won't help the numbers from an exponential standpoint. Also, we're in discussions with other telemedicine groups that are focused on birth control. And because this area is growing, new ones are showing up periodically that we've engaged with. And hopefully, we'll pick up a few more of those. Any time we pick up a few more of those, it really increases the number of prescriptions that we're able to have. And then finally, we're going to look for other ways that we can take advantage of digital, internet channels to sell. And so we've…

That's great. And I guess, I think we've discussed this in the past, but maybe if I can ask, is there any information that you anticipate learning from either the ongoing Phase 1b, obviously, the longer-term follow-up or within the Phase 2 patients that would any way change your current Phase 3 plans? Or do you feel pretty solid about those Phase 3 designs at this point?

I think we feel very solid about the Phase 3 design. I think the reason we're continuing is because if I would have told you that on average, these patients are failing in 3 months, 3.5 months with an alternative androgen receptor targeted agent, and we've got some patients in the Phase 1b, 12 months and now heading into 2 years, that's pretty good. But that doesn't change our Phase 3 design. And then the Phase 2 is also providing us information that we use to help the trial design assumptions and understanding the PFS and that kind of stuff. So I would say that we've learned what we needed to learn in the Phase 1b and the Phase 2, that's the reason we went to Phase 3 because we felt at that point, there was nothing new we're going to learn. And we just can't take the drug away and stop the study. So we have to keep providing drug for the patients that are responding. So no, I think we're on firm and solid assumptions for the Phase 3.

[Operator Instructions]. The next question comes from Alexandra Heller from Oppenheimer.

Congrats on the quarter. Can you walk us through how you see the VERU-100 fitting into the existing treatment landscape for hormone sensitive prostrate resistant cancer and then also your strategic plans for the asset?

Yes. So for VERU-100, the beauty of this compound is that we were able to sit on the side lines and watch how the field has evolved over the last 30, 40 years. And what we've learned is that medical castration is-- nobody wants surgical castration, medical castration is the way to go. And interestingly, in this current landscape with these new drugs that are allowing patients to live longer, such the androgen receptor targeted agents and some of the chemotherapy and the PARP inhibitors, you're finding out that patients are living longer. And in all instances, the base is androgen deprivation therapy. So when we went from 18 months now, you could be double or triple that. And they're on ADT, the whole time. ADT is truly a chronic therapy. And for us to get involved with that, with something that takes advantage of what we've learned. So what have we learned? We learned that the landscape now is that the agonist such as LUPRON, ELIGARD and those kinds of medicines, always-- when you give the injection, you have about 14 days, 2 weeks of high levels of testosterone that then comes down and the castration levels are not as ideal. And-- but yes, that's what we had and it worked. And then the antagonist came along and they shut off testosterone right away, and the patient gets castrated right away, and it turns out that it also lowers FSH, which is thought to be important for cardiovascular events. I mean, LUPRON, if you've had the LUPRON type drug, [indiscernible] showed this in their study that if you had a cardiovascular event and you were put on leuprolide, you have a 1 in 5 chance of having another one. It's pretty high. So I would argue that the GnRH…

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

I appreciate you all joining us on today's call, and I look forward to updating all of you on our progress in our next investors call. Thank you for joining us today.

The digital replay of the conference call will be available beginning approximately noon Eastern time today, August 12, by dialing 1-877-344-7529 in the U.S. and 1-412-317-0088 internationally. You will be prompted to enter the replay access code, which will be 10157539. Please record your name and company when joining. The conference call has now concluded. Thank you for attending today's discussion.