Good morning, ladies and gentlemen, and welcome to Veru Incorporated’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. I would now like to turn the conference call over to Mr. Sam Fisch, Veru Incorporated’s, Executive Director of Investor Relations and Corporate Communications. 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, regulatory interactions, 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, as well as in our press releases from time to time. I would 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 Barnett, CSO; 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 oncology. The company has its commercial sexual health program, called Urev, which includes two FDA approved products: ENTADFI, a new treatment for benign prostatic hyperplasia; and 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 program is being used partially to fund the clinical development of our late-stage therapeutic candidates, which aim to address multi-billion dollar premium market opportunities. This morning, we will provide an update on our COVID-19 sabizabulin clinical program, the clinical development of our oncology drug pipeline, and the commercialization of our products in the Urev program. We will also provide financial highlights for our fiscal fourth quarter and our fiscal year 2022 year-end. First, I will update you on the status of sabizabulin, an investigational drug candidate for the treatment of hospitalized adult COVID-19 patients and high-risk for ARDS. We reported positive results from the Phase 3 COVID-19 clinical trial, which was a double-blind, multicenter, multinational randomized 2:1, placebo controlled study evaluating daily oral 9 milligram dose of sabizabulin for up to 21 days versus placebo in 204 hospitalized moderate to severe COVID-19 patients who had high risk for ARDS and death. Both the placebo and sabizabulin treatment groups will allow to receive standard of care treatment, which could include Dexamethasone, Remdesivir, anti-IL6 receptor antibodies and/or JAK inhibitors. The primary efficacy endpoint of our Phase 3…

Thank you, Dr. Steiner. As Dr. Steiner indicated, once again, we have a lot of ongoing activity at Veru. Now, let's review the results for the fiscal year ended September 30, 2022. Overall, net revenues for fiscal year 2022 were $39.4 million, compared to $61.3 million in the prior year. The U.S. prescription business net revenues decreased to $30.2 million from $46.5 million in the prior year. The reduction is due to some business challenges experienced by our telemedicine customers during the year, which resulted in a slowdown in orders. Net revenue for the global public health sector business was $9.1 million, compared to $13.9 million in the prior year. The decrease in sales in the global public sector during the year is due primarily to 9.7 million units sold to Brazil, and 4.9 million more units sold to South Africa in the prior year for tenders, which have ended and therefore did not repeat in the current year. Overall, gross profit was $30.6 million or 78% of net revenues, compared to $47.9 million or 78% of net revenues in the prior year. The reduction in gross profit is driven primarily by the reduction in sales in our U.S. FC2 prescription business. Operating expenses increased to $113.8 million, compared to the prior year of $53.4 million. The increase of $60.4 million is primarily due to research and development costs, which increased $37.9 million to $70.6 million from $32.7 million in the prior year and the increase in selling, general, and administrative expenses of $22.5 million from $20.7 million in the prior year to $43.2 million in the current year. The increase in research and development cost is due to the increased number of clinical trials. This year, we had four Phase 3 clinical trials and two Phase 2 clinical trials…

Thank you, Michele. COVID-19 cases continue to persist worldwide and hospitalizations and death rates are rising as we head into the winter season. The emergence of COVID-19 variants BQ.1 and BQ.1.1 have contributed to this new surge and these mutated strains have the ability to evade immunity, meaning that these variants can affect anyone, including vaccinated individuals. In fact, for the first time, more vaccinated people than unvaccinated people are dying from COVID-19. This waning immunity is partly because of the new variants, but also from booster vaccine fatigue. Unfortunately, [1,080,000] [ph] Americans have died from COVID-19 to date. A series of recent articles, including one by Ariana Eunjung Cha and Dan Keating published in the Washington Post entitled COVID-19 becomes a plague of the elderly. Reviving a debate over acceptable laws, points out “nearly 9 of 10 deaths are now in people 65 or older, the highest rate since the pandemic began.” With the current standard of care treatment, approximately 300 people are still dying each day. This is unacceptable. We need to do better. We must reduce the risk of death from COVID-19, including in this vulnerable population of individuals over the age of 65, an effective and safe oral therapeutic to treat hospitalized moderate to severe COVID-19 patients with high risk ARDS that prevents death is still desperately needed. We strongly believe that sabizabulin, an oral therapy with dual antiviral and anti-inflammatory properties can serve as this new treatment modality that addresses and overcomes the threat of death that hospitalized moderate-to-severe COVID-19 patients continue to face. While multiple regulatory agencies across the [world view] [ph] sabizabulin as a potential option for emergency used settings, we are eagerly and proactively preparing multiple work streams in the background. For instance, manufacturing drug supply and scale up activities are in place. Our U.S. and international commercial infrastructure is ready to provide access to sabizabulin to hospitalized patients at high risk ARDS and death [if authorized] [ph]. We continue to live in the world facing a public health emergency as we enter the fourth year of the COVID-19 pandemic. In summary, we continue to advance our core late clinical stage breast cancer and prostate cancer programs with three actively enrolling Phase 3 clinical studies. Our legacy sexual health business comprised of two FDA approved products continues to generate revenue, and if authorized, we expect to have substantial near term revenue from sabizabulin 9 milligrams for hospitalized COVID-19 patients and high risk ARDS. With that, I'll now open the call to questions. Operator?

Thank you. [Operator Instructions] Our first question comes from Brandon Folkes from Cantor Fitzgerald. Please go ahead.

Hi. Thanks for taking my questions and congratulations on all the progress. So, I guess no surprise where I'm going to start, but just, you know, I'll ask my, I guess, two questions upfront, because they kind of roll into each other. So, maybe just firstly, can you talk about how much interaction you've had with the FDA post the ad comment anyway to put into context the nature of those interactions? And then secondly, given the proposal to run a potential confirmatory Phase 3 trial, I'm not saying that's going to happen, but just how quickly could you get such a trial up and running provided within the range of maybe, what you're expecting a trial to look like? Maybe what was proposed? And on that nature, I guess, any risk or how should we think about, sort of the one topic of maybe getting U.S. patients, and U.S. standard of care, is there a rush to get it done this winter? Thank you very much.

Okay. So, first question has to do with getting a sense of how much interaction we're having with the FDA post AdCom? And as I said in my prepared comments that we're in contact with the FDA, we are in contact with the FDA on an ongoing basis. And so, this is not radio silence by any means. So, what I can tell you is that we have been actively in communication with the FDA. So, that's an important point because as you know with PDUFA dates, if you don't hear from the FDA, you worry. But we don't have a PDUFA date, but we're hearing from the FDA. So, that's number one. So, what I can tell you, as I said in my prepared remarks, they are continuing to review the EUA post AdCom. As it relates to the question, I believe the question around the Phase 3 clinical trials, I guess your assumption is, if we have to do the Phase 3 not under an EUA, post-EUA, you mean just doing it or with an EUA, it doesn't matter.

It doesn't matter. I'm just trying to think about, if they do ask for additional U.S. exposures, I think, which some of those committee members raised, how quickly can you get that up and running? And does it need to be this winter versus maybe going to the southern hemisphere or having to wait for next year?

Yes. Well, first of all, if you look at the pattern, we had our surge during the summer just like Australia. It doesn't seem so far that COVID is really necessarily following the surge concept of the viruses where they tend to happen based on coming together during the winter months. It appears that you're still going to have it even the summer months when people are going in for air conditioning, I guess, with crowds. But with that said, the strategy this time is to have more clinical sites than just U.S., South America, and Bulgaria. I wouldn't say there's a rush except the fact that the people dying and standard of care. One of the things that works in our favor is that literally thousands of companies have done clinical trials trying to find a drug for COVID-19 and have failed. And now we're down to a handful of drugs that have emergency use authorization, a full authorization that have a modest at best mortality benefit. Remdesivir has no mortality benefit. And as the only antiviral in this setting and the anti-inflammatory agents at best with baricitinib, you're getting at about 5.7% absolute benefit in mortality. And so, there is an unmet need as the FDA said during the AdCom for a new agent. So, I think because we have the data that we have, Phase 3 study, published study, full study to be published, that we have a real opportunity with less noise and competition for patients, more clinical sites and with good scientific data showing the mortality benefit that this trial should enroll much more quickly and our goal is to enroll it as quickly as we can. But the truth in the matter is it still takes about three to six months to get most…

Thanks, Mitch. I appreciate all the color. Definitely makes sense. Congrats on the progress.

Thank you.

Our next question comes from Leland Gershell from Oppenheimer. Please go ahead.

Mitch, thank you for the update and for taking our questions. Just to get into specifics to the extent you're able to with respect to the ongoing FDA discussions, can you say that you are continuing to discuss the design of what may be a confirmatory trial that would be performed under the EUA? Is that a part of the ongoing discussion content?

What I can tell you, which is public, is the FDA stated in their background package that the design that they laid out was agreed upon by the sponsor. So, it's there. And so, that's not the top discussion point because that's been agreed upon. I think I can't say much more than that except right now in the black box of the FDA, they're checking their boxes that they need to check.

Can you comment if there are any particular boxes that are left to check that you're working to check?

I can't say much more.

Okay. And then with respect to the other countries, has there been any change in tender in their interest since the advisory committee and whether there has or not or whether you can comment or not, are you aware of any dependence on what the EUA decision outcome will have in terms of what those ex-U.S. decisions maybe versus independent, it could be independent emergency authorizations and other places irrespective or prior to an FDA decision?

Yes. So, let me see if I can give you some color on that. So, the question is basically, have you noticed any changes in the interactions that we're having with other governments that are reviewing our application based on the advisory committee? And the answer is no. In fact, what we see is intense discussions with other regulatory agencies outside the U.S. To put this in perspective and using Remdesivir as an analog, especially the last six months that was reported by Gilead, almost 52% to 53% of their revenue, they reported I think revenue of $1.9 billion for the first half of the year. It was coming from outside the U.S. and a big bulk of that was coming from Europe. The point I'm trying to make is that when you're looking at the COVID-19 drug, the split of 65% in the U.S. and 35% outside the U.S. doesn't make sense. It's very different. And when you look at that, the major markets then turn out to be Europe, and all the countries that follow Europe. So, if Europe gives you an emergency use authorization similar, than 80% of the countries outside of Europe will use that authorization as part of their review or in lieu with their review, okay, because – and it makes sense. So, if you get U.S., you get Europe, you get both. And those are the major markets you're good to go and have significant revenue, but I will tell you that there has not been at all any change in the interactions that we've had with, as I mentioned in the prepared comments, with multiple agencies, and the multiple agencies remain engaged and active in their review. And so, no, the answer is no. The answer is, it appears to be quite independent. And as I mentioned, the FDA is still reviewing the application. So, I'm not quite sure what to make out of the AdCom.

Okay. And then just one question on the other development programs. Just with our test and veracity, I believe you'd indicated around the time that those trials were getting going that we could see enrollment starting to complete, kind of in this timeframe. Just wanted to ask about enrollment progress with those. And if you do see either of both trials perhaps completing enrollment by year-end or what that timeframe is looking like?

Yes. So, the timeframe still looks like data in [2023] [ph] – end of next year kind of timeframe and they're event driven. And so, enrollment is still consistent with that, but that's all I can say at this point.

Okay, great. Thanks for taking the questions.

Thank you.

Our next question comes from Chris Howerton from Jefferies. Please go ahead.

Hey, good morning. Thanks for taking the questions. I guess, two from me. One would be, with respect to the FC2 and ENTADFI part of your business, what measures are you going to take in your own internal hub to, kind of combat some of the challenges that your partner had for the telemedicine and I guess to give you confidence that that will be a sustainable business? And then I guess I'm just curious if you can give us some more color around liquidity and your cash runway in a scenario where sabizabulin has launched? What would be your cash needs to launch such a drug? And in a scenario where maybe there's a longer delay, how do you see your current cash reserves being deployed against your plan? Thank you.

Okay. Thank you for your questions. So, the first one on FC2 and that part of the business, I'm going to answer and I'm going to have Michele answer the question on liquidity. As it relates to FC2, so, we've had two down quarters, and the telemedicine market, we have two customers that in the telemedicine space that make up a significant portion of that revenue. And they had a down year, we get to have a down year. If you look across telemedicine, you already know you can see that they're still going through some pains right now. With that said, I'm happy to report the way we're handling that to maximize our revenue is threefold. One is to make sure we do everything in our power to have our partners. And I will tell you that indications at this point is that whatever that hiccup was this last two quarters is turning around. So, they're figuring it out as well. And so our expectation is to see an increase in revenue, increase in orders, and wherever that new normal is, they're back. So, they've gone from struggling to headwinds to looks like they, sort of figured it out. And again, time will tell, but it feels good that at least our main customers will get back, which means we will start to see significant revenue come back, but what we didn't sit on our hands, we went ahead and realized that what would be better than depending on customers to buy product from us would be to have a telemedicine hub of our own. And that really has played out very, very nicely because it puts us in control of our destiny. And so, what we've done – what that means is, you have to put all the…

Sure. So, in the event we launched sabizabulin, you know I'd like to point out that our drug spend was around $70 million this year. And slightly over half of that was related to COVID. Our COVID-trial included in that was over 60% of those costs. We're related to building up the material to get our drug ready, so that when we're ready to launch, we have the drug ready. You can see as I noted, we built the team and so we had those expenses that ran through this past year in our fourth quarter. We built the team in the U.S. We put all the vendor contracts in place. We have the people up and going. We have our strategy ready to deliver. So, from a liquidity standpoint, we've already invested in this drug and we're ready to go. We're not going to be needing to get additional liquidity other than what we generate from our business. As Mitch indicated, there's a lot of things that we're doing on the Urev side to get things up and going there and working on increasing some of those revenues. In the event that we don't launch the COVID drug, as the company – as we've demonstrated over the years, we're very good at managing our cash and managing and prioritizing all of our drugs under development. Those are the levers that we have to work on is, you know how quickly we push different drugs through the trial and how much we can slow them down. So, for us from a liquidity standpoint, we're looking good between our balance sheet and what we can get from Urev and how we can manage our business. Liquidity isn't a concern for us, whether we launch the drug or if the drug isn't launched this year.

Thank you.

That's wonderful. Thanks so much.

Thank you.

[Operator Instructions] Our next question comes from Yi Chen from H.C. Wainwright. Please go ahead.

Thank you for taking my questions. When do you expect the FDA to issue its final decision on the EUA application? And do you think it could occur before the end of 2022?

I will tell you that – and you can appreciate this, because I've given up on guessing when the FDA is going to make a decision. Okay? I just – FDA does what the FDA does, and I just scratch my head because we're dealing with an agent that has an incredible mortality benefit. And so, I can't answer that question at all or give you any sense at all because, you know, my guidance initially was that we expect this sooner. And so, it's not – there's a great need out there and even the FDA said so. So this – I just can't give any more color than that. And we just have to look at FDA work through their process. And this is true also for the other regulatory agencies. And – but what I can tell you is that they're all – and they're all sincerely doing their work.

Okay. So, for the fiscal fourth quarter, there appears to be a sharp decline in terms of revenue from FC2. So, could you comment on the current trend of the U.S. prescription for FC2? And how much revenue contribution you expect to get from the launch of ENTADFI going forward? And also, could you also comment on whether the operating expenses will be on the level – on the same level as observed in the fiscal fourth quarter going forward? Thank you.

Yes. So, if you don't mind, may I ask Michele to answer those three questions. The first question being the FC2 decline, and second being related to the contribution, and third related to operating expenses. Relative contributions ENTADFI, and the third one is operating expenses. My color to the first question is, we're already seeing the turnaround. So, we believe that the fourth quarter is going to – is hopefully going to represent the bottom. And now, with all these other levers have been increasing revenue in place plus seeing actual life coming back to telemedicine, it feels like we're going to see more revenue, but I'll let Michele answer. Michele?

Sure. As Dr. Steiner indicated, yes, we're working with our customers. We've added some customers this year and we're projecting that we're going to be seeing a turnaround here. The turnaround is an instant, but the turnaround is coming for the FC2 business, both in the U.S. in the prescription channel. In the global public sector in the U.S., we did add a new distributor this year that's really helping drive those increased sales. And then in the global public sector, in the global public sector, it's a matter of timing related to these tenders, don't always flow a strict cadence [indiscernible] agencies and when that happens. But right now, the South Africa tender is – we're starting to see sales that are coming back under their newest tender. ENTADFI, is going to slowly [Technical Difficulty]. Again, a lot of that is getting some of the back office infrastructure in place and then it's to allocate some money and marketing dollars to spend, to push that launch. And right now, as I indicated in discussing liquidity, we're managing our cash spend. And we're looking at the trade-offs and what we're doing with our cash spend. And so, that's going to be a trade-off, we're going to look at as to how much we're going to put behind marketing spend for ENTADFI versus what we're going to be doing with that cash to spend for a launch for COVID. As far as the level of operating expenses, as Mitch indicated, we [brought on] [ph] Joel Batten and he brought on his team, all primarily in our fourth quarter of 2022. So, the increase in our SG&A expense in the fourth quarter is driven by building out that team. We've started now to build out an international team, but that's just starting. And so, our operating expenses, if we go ahead with the launch are going to be closer to those expenses that you look at in the fourth quarter of this past fiscal year, and to continue there and then to build as we build out a commercial team ex-U.S.

Okay. Thank you.

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

I appreciate everyone who joined us on today's call, and I look forward to updating you all on our progress at our next Investor Call. Thank you.

The digital replay of the conference call will be available beginning approximately noon Eastern Time today, December 5, 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 4646397. Please record your name and company when joining. The conference call has now concluded. Thank you for attending today's discussion.