Good morning, ladies and gentlemen, and welcome to Veru Incorporated Investor Conference Call. All participants will be in a 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. I would now like to turn the conference over to Mr. Sam Fisch, Veru Incorporated, Executive Director, Investor Relations and Corporate Communication. 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 our 10-K SEC filings, as well as in our press releases from time to time. I'd now like to turn the conference call over to Dr. Mitchell Steiner, Veru Inc's, Chairman, CEO and President.

Good morning. With me on this morning's call are Dr. Gary Barnette, Chief Scientific Officer; Michele Greco, the CFO and CAO; Michael Purvis, EVP, General Counsel and Corporate Strategy; and Sam Fisch, Executive Director of Investor Relations and Corporate Communications. Thank you for joining our call. Veru is a biopharmaceutical company focused on developing novel medicines for COVID-19 and other viral and ARDS related diseases, and for the management of breast and prostate cancers. The company has a commercial sexual health division called Urev, which includes two FDA approved products ENTADFI, a new treatment for benign prostatic hyperplasia and the FC2 female condom, internal condom for the dual protection against unplanned pregnancy and the transmission of sexually transmitted infections. The revenue from the sexual health division is being used to largely fund the clinical development of our late-stage drug candidate assets, which aim to address multi-billion dollar premium market opportunities. This morning we will provide an update on the COVID-19 Sabizabulin clinical program and franchise, the clinical development of our oncology drug pipeline and the commercialization of our products. We will also provide financial highlights for our second quarter fiscal year 2022. While there have been recent emergency use authorizations for antiviral drugs [indiscernible] from Pfizer for the treatment of un-hospitalized patients with COVID-19 with less than five days of symptoms who have relatively lower risk of dying, Sabizabulin in contrast is being developed for hospitalized moderate to severe COVID-19 patients who had high risk of acute respiratory distress syndrome and death. Patients for whom there is currently no clearly effective treatment and the population which [indiscernible] the antiviral agent for Merck did not demonstrate efficacy. Sabizabulin disrupts intra cellular transport of Coronavirus’s along the microtubules. This is a highly conserved biologic process that's required by all variance of COVID-19,…

Thank you, Dr. Steiner. As Dr. Steiner indicated, we're having a great year. Let's start our highlights with the second quarter results for the three months ended March 31, 2022. Overall, net revenues were $13 million compared to $13.3 million in the prior year second quarter. The company reported quarterly sales for its US prescription business of $11.6 million, an increase of 12% from $10.3 million in the prior year second quarter. Overall gross profit was $11.2 million or 86% of net revenues, compared to $10.9 million or 82% of net revenues in the prior year quarter. This was our highest gross margin for any quarter. The increase in gross profit and gross margin is driven primarily by increased sales in our US FC2 prescription business. We saw a decrease in sales in the global public sector during the quarter due primarily to 2.8 million units sold to Brazil in the prior-year period for tenders, which have ended, and therefore did not repeat in the current year. Operating expenses for the quarter increased to $22.9 million compared to the prior year quarter of $12.4 million. The increase of $10.5 million is primarily due to research and development costs, which increased $7.9 million to $15.5 million compared to $7.6 million in the prior year quarter. The increase in research and development costs is due to the increased number of clinical trial. This quarter, we had four Phase III clinical trials and two Phase II clinical trials ongoing. While in the prior year period we had two Phase III clinical trials ongoing. The operating loss for the quarter was $11.8 million, compared to $1.5 million in the prior year quarter. Non-operating expenses were $2.4 million, compared to $1.4 million in the prior year second quarter, and primarily consisted of interest expense and…

Thank you, Michelle. In summary, we continue to advance our deep late clinical stage breast cancer and prostate cancer programs with three actively enrolling Phase III clinical studies and we will continue to grow revenue from our base sexual health business and if authorized the future revenues from Sabizabulin for hospitalized COVID-19 patients at risk for ARDS. Being opportunistic and successful in developing Sabizabulin COVID-19 has led to the most eventful and transformative quarter in Veru's history. We are preparing for the global commercial launch of Sabizabulin nine milligrams for the treatment of hospitalized moderate to severe COVID-19 patients who had high risk for ARDS. We have created an infectious disease franchise for this purpose. This is anticipated to be a worldwide multi-billion dollar opportunity. This will be a real chance for significant near-term revenue for Veru. I would like to directly respond to several criticisms that had been made about the Phase III COVID-19 clinical trial. Concern, number one. The mortality rate is too high in the placebo group. Not true. The placebo death rates in our Phase III study are consistent with what has been reported in the literature for similar patients at day 29. As mentioned previously, at day 29 the death rate in the placebo group in our study was 35%, which is the same death rate as reported in The Lancet publication for May 2021 for the placebo group of similar hospitalized patients, consisting of 2094 patients with the Tocilizumab study. Furthermore, one would expect the death rate in the placebo group at day 60 of our trial to be higher than the day 29 death rate. Concern number two. Death rates were higher in the ex-US clinical sites than for the US clinical sites. Not true. The death rates in the placebo group were…

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

Thanks for taking my questions and congratulations on all the progress. Maybe just sort of two focused on the same thing for me. So you sound very confident on the manufacturing side. Can you just give us some additional detail in terms of how you thought about the addressable market? I guess what capacity do you need to satisfy the FDA on EUA? And then secondly, along those lines, with your partner are you putting any capital at risk for reservation of capacity or anything like that ahead of the EUA? Thank you.

Good. Thank you. So the first question is basically about manufacturing, and so I’m going to answer in two ways. One, I'm going to answer how we -- what we think the patient numbers are going to be if this was a pandemic -- more like an endemic. This doesn't include the surge, it doesn't include a stockpiling, and it doesn’t include any of that. So just this where you have a rule of thumb, a benchmark. So in the United States right now, when we did the analysis we said the hospitalization rate is about 100 -- 1,955 new admissions a day. That number by the way has gone up to 2,597 as I looked at it this morning. About -- but we're going to stick with the lower number, the 1,955. And the number of -- the patients that are hospitalized that were fit with supplemental oxygen, force oxygen or ventilation is about 52% of hospitalizations. And so that means for that week, if you look at it per week, it's about 7,116 patients a week. And so for the month, you're looking at close to 28,464 patients. Okay. And that's before this new surge is becoming. So if you think -- if you say the rule of thumb is that, we've got -- in the US, we've got to hit about 30,000 patients, that will give you a feel for how well we've been able to accelerate our manufacturing. So I'm going to ask Dr. Gary Barnette to give you some insight and how robust our manufacturing is and how we'll be ready. And there is no capital at risk, there is no capital at risk. Go ahead.

Yeah. So we've been planning for this EUA, and right now in the month of July, we would have approximately 50,000 patients worth of drug. This is assuming a patient gets about 12 doses, which is approximately the average number of doses that each patient in the treated group got in our Phase III study. In August, we would have sufficient drug, an additional 100,000 patients and then from September moving forward, up to approximately 250,000 patients worth of drug every 30 days. That we believe that this will satisfy and cover the addressable market in the United States, as well as the rest of world.

And also will hop towards stockpiling, so people can be prepared for the surge. If there is a surge and we're going to -- as you saw with the surge we just had, right now the palm of course that we have is that, people taking home testing. And so we don't really understand where the hospitalizations may peak and we'll just have to watch that. But at this point now assuming that the authorization -- if authorized will happen in sort of mid-summer, then will be ready.

Great. Thanks so much and all the best for the submission.

Thank you.

The next question comes from Chris Howerton with Jefferies. Please go ahead.

Excellent. Thank you so much for taking the questions. And I will also offer my congratulations.

Thank you.

Yeah, so for -- I guess, Mitch, with respect to the Sabizabulin program in COVID-19, I wanted to follow up on the manufacturing question just to kind of understand if there was any inspections that might be required. And I think at least it's a little vague to me in terms of the process of CMC evaluation for an EUA. So I guess if you could just help us understand what procedural steps from your understanding might be happening on the CMC side for the review that would be really helpful.

Yeah. We'll do that. So, Gary.

Yeah. The FDA have to have regulatory rigor in kind of authorization or approval. However, with what we believe to be the accelerated process of the EUA, we believe that that will -- the inspection piece will be minimal, of course, these sites that we're using have a long record with FDA inspections and a history of quality at their sites. So we do believe that as we move forward to the NDA, the FDA will probably do a pre-approval inspection of our facilities. But right now I suspect that they will rely on the long history that they have with these facilities to support the application.

One of the interesting things I was able to take away from the meetings from the FDA is, how they view this process as sort of ultimately getting to a full NDA sort of a rolling process. So rolling process means, if you have an -- if you file -- if you submit an NDA under normal circumstances you have to have everything done, buttoned up, in it goes and the full application comes in 75 days later, they review everything and they tell you, we can review and you can move forward. With the Fast Track designation and with the potential for the EUA it's more along the lines of -- get this thing reviewed as quickly as we can, get to patients as quickly as we can. You can -- during the review process, and during the movement towards a full NDA, you can keep sending new information and additional information -- additional information. So it's really a rolling kind of situation. So so inspections and other things all that have to be done can be done a real-time as opposed to, you have to get everything together and throw it in and then you hold your breath. So we're going to have -- it is going to be a very active process where success one will be the authorization and ultimately success two will be full NDA and then -- and then it’s done then you're ready to go.

Excellent. Well, that's really helpful. Thank you. And then if I may, as a follow-up, what do you think -- how should we be considering pricing for Sabizabulin in the context of COVID-19 and perhaps broader ARDS?

It's a great question. So first of all, I will tell you that the numbers we've used and you'll see on our website is purely assumptions right now. We're doing the formal work to get our arms around what should be the appropriate price. I will tell you something very interesting for ARDS in general. There is no drug on the market that has the reduction in death that this drug demonstrated in our Phase III study. And ARDS is what's killing these patients. And so for the first time it's interesting as it sounds, and people are now recognizing this antiviral anti-inflammatory effect is leading to an unprecedented reduction in death in the ICU and critical care for patients with ARDA, end of story. And if you go back and look they have supportive care just like we do for COVID-19 for other virally induced ARDS and you have other than that they've got some antivirals and we already know antivirals are weak [indiscernible] which is an antiviral that’s being used in the pre-hospitalized setting was -- they had an IDMC meeting, an Independent Data Monitoring Committee meeting and the conclusion in that group -- that committee was, they stoped the study because there's no efficacy. So it's -- they think about ARDS is, the virus triggers this cytokine storm that creates this allergic response, your ling start to fill with fluid to a point they become fibrotic and if it's fill the fluid and the oxygenation goes down, the patient dies. And usually that will happen after you have the viral part. So at some point the viral load doesn't matter. We've already triggers the immune response and the immune response is what's leading to the demise of the patient, almost like a bee sing causing an anaphylactic…

Okay. All right. Well, thanks for those thoughts, Mitch. Really appreciate it. Thank you.

Thank you.

The next question comes from Leland Gershell with Oppenheimer. Please go ahead.

Good morning. Thanks for taking my questions. Mitch, I want to ask, as you prepare for the EUA request submission, and the manuscripts that will detail the fuller data from the Phase III, are there any pieces of data that you are still awaiting to collect from the site sort of compile perhaps viral load data on the patients? And also wanted to ask, if you see -- with the possible that you may see of having the manuscript published prior to what may be the EUA granted by the FDA, which presumably could be sometime in the next few months or over the summer. Thank you.

Yeah. So to answer your question -- the first question is basically what's outstanding. And as I mentioned to you that we're going to have a few -- we just got the data. And it was three weeks ago or something like that. And so there are going to be a few -- when I say say outstanding, it's things like PK and other things that sparse sampling PK and that kind of stuff. What we understand from the submission for the EUA is [indiscernible] as I mentioned in my earlier comment, that's real time. You're allowed to continue to submit information as you get it, so the EUA [indiscernible] what you have, you submit it and then you continue as the data comes from the CRO and you continue to supplement that information while they are doing their review. So that's a really critical point. So that's why we have an aggressive timeline to submit to EUA -- the request for EUA is being in this quarter, because we got what we need. We're going to put it together, we are going to submit it. So from that standpoint we won't hold this up. As it relates to the question about the manuscript, the manuscript is written, it's done. Okay. And so -- and I think that's record time as well. And so, it's in the process of being reviewed and our job is to sit and wait for the peer review process. And that's a little harder to tell, but my guess is, it will be an online publication initially. So it gets out as quickly as possible. And the idea would be, hopefully that it's coordinating in such a way that the manuscript and the EUA authorization happen around the same time, so that you guys can see the information. And -- that's -- we're on track for that.

Great. And just a follow-up, as you see an eventual NDA possibility for Sabizabulin in COVID-19. I wanted to ask, given the performance of the drug in the Phase III population, perhaps there could be similar benefit to non-COVID patients with ARDS, wondering if this encourage you to look into any further clinical development in non-COVID-19 ARDA types of conditions? Thanks.

As I mentioned in my prepared remarks, absolutely, I mean, when I went back and review the literature I was shocked to see that ARDA remains an incredibly important critical care problem. And that the viral induced ARDS is incredibly common, influenza A and RSV are the two big ones that come to mind. Influenza A, which we all can relate to, we've accepted to the endemic, which is roughly 52,000 deaths and about several hundred thousand hospitalizations a year and you have to get a new shot, new booster shot, a new flu shot every year. So that's the model that COVID ends up hitting. And from an endemic standpoint, that's a huge market if we're in an endemic disease. And if we -- and by the way, influenza A virus follows the same life cycle, if you will, as COVID-19. Meaning that, it goes through -- bind to the outside of the cell, it uses microtubules to go into the cell, it uses microtubules to take the new viruses and get it out of the cell, and then of course the cytokine storm is what it triggers that cause ARDS, very similar pathogenesis and pathophysiology as COVID-19. And so, yes, we've already started writing the protocols for the clinical development, so that would be the first one we rollout, because it's so is such an obvious one, and we have something that's different than what's out there. So again, as you can imagine the situation where we’ll allowed standard of care, supportive care versus Sabizabulin plus supportive care. And that would really greatly expand our patient population. And then second, RSV is the other area. And when I gave the numbers in the presentation, it was for RSV not in children, it was RSV in the greater than 65-year-old, and -- but we have to think about children as well as a potential population. And in fact we've been asked to supply a protocol to move this into children by FDA. And so we're going to be clearly responsible and intelligent in doing that. And -- but ARDS is an interesting group to go into. Also because of the anti-inflammatory activities we're getting interest and going after the more aggressive inflammatory diseases where something with this kind of anti-inflammatory/side effect profile could be useful. So stay tuned. I think there is a lot of room for Sabizabulin being an oral agent with this kind of side effect profile to play a role in virally induced ARDS and potentially some of the anti-inflammatory -- some of the inflammatory diseases.

Thank you, Mitch.

Thank you.

The next question comes from Yi Chen with HC Wainwright. Please go ahead.

Thank you for taking my questions. My first question is, once you obtain the EUA for Sabizabulin in the US, how easy would it be to obtain similar authorizations in other countries and territories?

Great question. So if you look at Pfizer, and again, I'm just getting this in the news, as I don't know any secrets, but they have something like 60 EUAs that are been granted. Okay. And so usually what happens is that, the two big regulatory agencies of the world looks to do the work and do what they would do in their own regulatory agencies is US and EU and specifically the EMA. So we get US approval, then about 80% countries will follow that lead and also very quickly expedited an approval in their country. And if you get the EU 80% of the country -- roughly 80% of the countries will do the same, but it may not be the same 80%. And so the goal would be and our strategy is, US and now we're starting in EU and the MHRA, because of Brexit, because Britten is a big market. We've already started that process. We're working in Brazil and the neighboring countries that follow the treaty. So that -- South America and we are looking into South Africa now because that's the most hard hit country and also the country that has the most resources to direct this kind of therapy to their folks. And then, furthermore, again, each of those have regulatory but again US regulatory will go a long way. So we think that if we can get US -- we believe that once we have US regulatory and we're starting the process to get the other countries, at least the information into their system that we should see a series of EUAs after we get the formal EUA authorizations from US.

Thank you. And my follow-up question is, recent news report showed that patients who received Pfizer’s new COVID drug Paxlovid in the outpatient setting, they have symptoms rebound after the treatment, potentially showing that Paxlovid is not such a effective drug. So is that -- do you have any plans to use your drug to capture the patients in the outpatient setting?

Yeah. The answer is yes. We believe Sabizabulin could have activity in the pre-hospital setting, so the general population. The reason we went into the hospitalized setting is, the FDA told us to. So, the FDA said that you're clinical benefit risk ratio would be best in patients that are dying in the ICU and dying in the hospitals. If you can show something there, then that's going -- that would be great. And of course, a lot of drugs tried to do that, a lot drugs have failed or they showed something less than a 5% mortality benefit. And this is the first one that shows a 25% absolute reduction and 55.2% relative reduction in death. So -- but because the mechanism of anti-viral anti-inflammatory we do believe that we can go earlier and it's something to think about in the future. But you raise a good point. And that is, we're still trying to understand rebound phenomenon. So it kind of makes sense if you're some somebody an anti-viral and when you stop the anti-viral you are not curing that patient and we stop the anti-viral then the cells that have the virus in and will start growing again. And so rebound may happen and we're seeing that. And so there is going to be room even in the pre-hospital general population to augment the vaccines. And now the BA$ or BA5 variance coming out of South Africa, again, we always hear this, they always try to scare you to think it's going to circumvent the vaccine and it may. This one looks like it may, but still the vaccine is in the final answer, because people could still pass it, people can still get it. And so it's not uncommon to get COVID-19, and hopefully be less severe, the immunocompromised for patients with severe -- major comorbidities, it's still becoming -- is still a big problem. So, yeah, we could potentially go earlier.

Got it. Thank you.

Thank you.

[Operator Instructions] The next question comes from Kumar Raja with Brookline Capital Market. Please go ahead.

Thanks for taking my questions and also congratulations. So it looks like you need to follow the patients for safety once you have the EUA, what are your expectation in terms of like how many patients or how long they have to be followed for the safety data with regard to the potential NDA filing?

So I'm going to ask Dr. Gary Barnette, our Chief Scientific Officer who handles regulatory to answer that question. So this way you see what the process under the EUA.

Yes. So under the EUAs you are obligated to collect what they call spontaneous reporting of adverse events. And we believe that that is exactly what does follows the normal EUA process. We do that for NDA approved drugs as well. And let’s call it, Med watch form and it's very formal and they submit these things to the FDA and they submit these adverse events, and serious adverse events in the sponsor. Spontaneous reporting in a fully NDA approved product is sparse. I mean, a lot of times the physicians don't comply with that requirement. But under an EUA they follow it pretty well. And then we will of course encourage our investigators or PIs to fall of these things. And so that's what we're planning. We're planning on collecting the standard EUA safety requirements, which is spontaneous reporting of serious adverse events during the EUA, process.

And let me just also remind you that we're very -- this program isn't just about the COVID-19 program. We do have a history with Sabizabulin in our oncology program. So in prostate cancer between the 80 patients in the Phase 1b2 and then in the Phase -- and then in the Phase III I think we are able to count something like 250 patients that have been exposed to nine milligrams or higher, and in some cases, particularly in the cancer products they are getting 32 milligrams a day for three years. So this drug is well tolerated. And so we you add that plus the data from the Phase II and Phase III COVID-19 and we have 199 patients in the Phase III total data set that we have safety data on. And then now you add in after the EUA, during the EUA period, you will in all the spontaneous reporting that will take place -- that, all of that is sufficient and as I said in my comments, we were told that no additional safety clinical trials will be required.

That's great. And in terms of the negotiations regarding stock piling, how is that going to work as the EUAs kind of most through the tunnels?

Well, the good news is, we have been incredibly active with government. We started as you can remember from our comments from the Phase II, we have started discussions with BARDA. We have made some good friends with BARDA. So we talk to BARDA on a regular basis. As you know, they have a tech watch group, many people involve in tech watch and it's like how many agencies.

It's 15 to 28.

Yeah. 15 to 20 agencies that a part of the tech watch and we presented the information. And so -- and then furthermore, our company has hired several lobby groups to also helped us navigate through a government. And so what we are hearing loud and clear is, don't look at what's happening in Congress of the $10 billion. I mean of $33 billion that will be earmarked next year, I mean you can see the reason that Republicans have added Democrats because the states have tons of money that is sitting on that was allocated for COVID and they wanted to spend some of their money. And then there are other budgets that they're allowed to go 5% -- 5% of their budget and move it to something that wasn't originally earmarked. So what we're hearing is, a drug like this, which is a therapeutic that reduces deaths and the last opportunity you have to grab a patient. I mean -- and again let me dream for a moment, if we reach 1 million deaths this year. I mean, 1 million deaths this year from 2.5 years of the pandemic, it's a terrible milestone, but if our drug was available at the beginning of the pandemic, that means 150,000 people could be home right now. I mean, that's like four -- that's like half the population of San Francisco or Seattle. So the discussions we're hearing is, guys, get your EUA. Once the AUA is authorized then it will trigger a series of events that will give government cover to move politically towards the money.

Okay, great. Thanks so much.

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. Thank you, operator. I appreciate you all joining us today -- on today's call. I look forward to updating you all on the progress in our next Investors call. We're very, very excited about our progress with COVID-19 and we look forward to continuing to update you specifically on Sabizabulin. Thank you.

The digital replay of this conference call will be available beginning approximately noon Eastern Time today, May 12 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 8215063. Please record your name and company when joining. The conference has now concluded. Thank you for attending today's discussion.