Good morning, ladies and gentlemen, and welcome to Veru Inc.'s 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 call over to Mr. Sam Fisch, Veru Inc.'s Executive Director, Investor Relations and Corporate Communications. Please go ahead, sir.

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, the Chief Scientific Officer; Michele Greco, Chief Financial Officer and Chief Administrative Officer; Michael Purvis, General Counsel and Executive Vice President of Corporate Strategy; and Sam Fisch, Executive Director of Investor Relations and Corporate Communications. Thank you for joining our Q2 fiscal year 2025 earnings call. Veru is a late clinical-stage biopharmaceutical company focused on developing novel medicines for the treatment of cardiometabolic and inflammatory disease. Our drug development program consists of two clinical-stage drug candidates, Enobosarm and Sabizabulin. Enobosarm and oral selective antireceptor modulator, SARM, is being developed as a novel drug that makes GLP-1 receptor agonists weight reduction more tissue selective, but preserving lean mass muscle or causing, creating fat loss in older patients, who are overweight, who have obesis. Sabizabulin is an oral microtubule disruptor. It's being developed as a broad anti-inflammatory agent to reduce vascular plaque inflammation to slow the progression, and promote the regression of atherosclerotic cardiovascular disease. This morning, we will focus our update only on our obesity program. As defined by FDA, obesity is a disease of excess body adiposity or fat. Therefore, the medical objective to treat obesity by weight reduction drug or drugs in combination should be to reduce excess body fat, not lean mass, in order to improve the mobility and mortality associated with obesity. GLP-1 receptor agonists have been shown to produce significant weight loss in patients who overweight who have obesity. Unfortunately, the weight loss is tissue non-selective, with the indiscriminate loss of both fat and lean mass. As the total weight loss up to 50% of the total weight loss is attributable to lean mass, we must do a better job at getting rid of fat tissue only. Let's face it, no one wants to…

Thank you, Dr. Steiner. Let's review the results for the three months ended March 31, 2025. Research and development costs increased to $3.9 million from $3 million in the prior quarter. The increase is due to expenses related to the company's enobosarm Phase 2b quality clinical study for higher quality weight loss. Selling, general and administrative expenses were $5.2 million compared to $5.9 million in the prior quarter. The decrease is primarily due to a decrease in share-based compensation. We recognized a gain on sale of NTIA assets of $974,000, while there was none in the prior quarter. The gain represents nonrefundable consideration received related to promissory notes due to Veru. The bottom-line results for continuing operations was a net loss of $7.9 million or $0.05 per diluted common share, compared to a net loss of $8.7 million or $0.06 per diluted common share in the prior year's quarter. Net loss from discontinued operations, net of taxes related to the FC2 female condom business, which was sold on December 30, 2024, was $49,000 or $0.00 per diluted common share, compared to a net loss of $1.3 million or $0.01 per diluted common share in the prior quarter. The net loss from discontinued operations during the current quarter represents changes in an estimate made at the time of the FC2 business sale, while the net loss for the prior year quarter represents the operations of the FC2 business during that period. Now, turning to the results for the six months ended March 31, 2025. Research and development costs increased to $9.6 million from $4.6 million in the prior period. The increase is due to $6.4 million in expenses related to the company's enobosarm Phase 2b quality clinical study for high-quality weight loss during the 6 months. Selling, general and administrative expenses…

Thank you, Michele. And with that, I'll now open the call to questions. Operator?

Thank you. Ladies and gentlemen, at this time, we'll begin the question-and-answer session. [Operator Instructions]. And your first question today will come from Dennis Ding with Jefferies. Please go ahead.

Good morning. This is Anthea on for Dennis. Thank you for taking our questions. Could you talk a little bit more about how you're thinking about your cash balance in runway, specifically what options are you exploring to fund the Phase 3? And is there potential to partner out the program? Thank you.

Yes. Thank you for the question. So, hopefully, you heard loud and clear that we have enough cash to last us into the fourth quarter, calendar quarter. That gives us plenty of time to get through these catalysts. Part of what we're trying to do is to get the full appreciation and value understood by investors and others, based on the clinical data and other information that's coming out. So, very -- so, as I mentioned, so we're expecting this quarter to have the unblinded safety data for the Phase 2b quality clinical study, the top-line efficacy and safety data for the enobosarm extension study will come out this quarter as well. Q3, we have regulatory clarity because that's when we'll have the meeting with the FDA on the Phase 3 program. Remember that dictates how much money, how big the study is. So, it's kind of premature to see how much cash we're going to need for the clinical study, until we know exactly what the FDA agrees to. We have an idea, but again, we need to get clarity. And so, that will help dictate how we're thinking and what to do. And then, we're expecting Phase 1 bioavailability bridging data if you will for the novel modified release oral enobosarm formulation. So, these are all value-generating opportunities. With that said, yes, I think the approach would be to go for non-dilutive funding, and non-dilutive funding would be best from either a partnership, a partnership-type act partnership or more from a large pharmaceutical company, of which we are in active discussions. And the reason we're in active discussions is because we have Phase 2b data that uniformly have we been told by key opinion leaders, we've been told by the Scientific Advisory Board, we've been told by every…

Got it. Thank you.

And your next question today will come from Gary Nachman with Raymond James. Please go ahead.

All right. Thanks for all the updates, and good morning.

Good morning.

So, Mitch, for the Phase 2b extension maintenance study, review what outcomes would be considered a success, in terms of the magnitude of benefit on weight loss and muscle mass for enobosarm versus placebo after stopping the GLP-1. Does it need to be stat sig or just show a positive trend? And is that, if you could just say, if the data is imminent or if it will be later in the quarter, if you could narrow that at all and then I have a follow-up.

Okay. Fair enough. So, we're not laughing. You want to know the exact timing of the date of release. And I'll see if I can give you some more clarity. So, as you know, the study is powered on the Phase 2b quality study, which is the formal first 168 patients, 16 weeks, lean body mass being the primary endpoint. So, the way to think of the extension study is almost like a safety study. And what happens when you stop with GLP-1? So, it will be more descriptive, but it's telling a real story about the working hypothesis that muscle is important. And so, the idea, so if you can consider it successful, we already know that we maintain lean mass with enobosarm, and we burn more fat mass going into it. And we also know that the placebo group, meaning semaglutide alone, is acting just like you would expect semaglutide to act in other studies. So, the step one, study, with semaglutide at 68 weeks, there was a 40% reduction in, there was for the total weight loss, 40% was lean and 60% was fat. We saw 32% lean and 68% fat at 16 weeks. So, the placebo group is acting just like we expect from the published New England Journal of Medicine article, step one. So, the expectation is that the placebo arm, which now without semaglutide and without enobosarm, will act similarly, which we expect to see fat regain. Remember, fat is the enemy. We have to pause for a moment. When we deal with weight loss and obesity, it's all about what happens to fat going through the process, meaning that if fat comes back and you get fat regain, that's bad. So, fat regain is what we're trying to blunt, and with fat regain…

Okay. That's helpful. And then, just in terms of the Phase 3 study, understanding that you still have to meet with FDA, what's your best guess on how big you think it'll need to be? And are you leaning towards using the three milligram, six milligram or both doses, and also doing it just for older patients? And then just quickly, any potential concerns with tariffs? So, where is enobosarm sourced and manufactured, if you can comment on that, thinking ahead, particularly for the modified formulation? Thanks.

Yes. Gary will now answer the question about tariffs because he's got a better handle on how we're making the formulation where it's sourced. But to answer your first question, the expectation is that the primary endpoint for the trial will be in older patients. We picked older patients because older patients have a different risk benefit. I think is important because it's a call to action. And the risk benefit is that, if patients have a decline in function, that actually means something. That means something in terms of balance, gait difficulties, mobility, disability, falls and fractures, mortality. I mean, you can dip into entire literature. So, that tells you kind of sets up nicely why physical function is important. With that said, the primary endpoint of your Stair Climb is 24 weeks. If you do the power calculations, that ends up being about and then back up. I don't know whether you use three or six yet. It feels like three, but we got to get the full data set to see, because three does a great job on lean, but six does a great job on fat, but three does a good job on fat too. So, we're still debating that, but put that aside for a moment. There will be one dose. So, one dose we'll take forward. And so, it will be one dose versus, semaglutide plus semaglutide and or tirzepatide. We're thinking now we'll probably do both. Why? Because there's only two drugs on the market right now, GLP-1s that are commercial. And so, it makes sense if we want to be using combination with either one, we should probably have data on both of them and stratify the Phase 3, so that we pre-specify that we're going to analyze the data with semaglutide group and tirzepatide group separately. And I think that would be very helpful. All the rest of the companies, even though there's 120 companies working on this, on obesity products, right now, the tirzepatide and semaglutide are way ahead. And so, by the time our Phase 3 is completed, those are still going to be the market leaders that we'll have to approach. So, with that said, we believe that the numbers will be something like 200 patients per arm. So, a total of approximately 400 patients, randomized for the Phase 3. Gary Barnett, can you answer the question about tariffs and whether we have concerns about sourcing and that could potentially affect enobosarm price.

Yes, we at this point, we don't foresee anything significant. Obviously, there potentially could be something come up, but the cost of goods of an open source is relatively low. So, we believe we'll be in good shape regarding tariffs.

Okay. Great. Thanks a lot.

And your next question today will come from William Wood with B. Riley. Please go ahead.

Thank you for taking our questions and congratulations on a very nice quarter and very promising results. Everyone looking ahead to those. Maybe just wanting to tease out a bit more on what you might have seen already on safety. Understanding it's blinded to date, you did say that you haven't seen any significant differences compared to what you're expected or expecting, based on the previous studies. So, just to sort of help us out and set a bar, maybe you could provide some color on what your expectations are for the safety, based on these prior studies and how we should be interpreting this, in terms of just the general safety, but maybe specifically on these liver tests?

Yes. So, I think maybe the best way to answer is to go head-on with liver and because people are saying that SARMs have from the literature -- SARMs in general, which data comes from the recreational use of SARMs at doses 10 times to 20 times higher. So, if we're at 3 milligrams, the given dose of 30 milligrams, which is 10 times higher up to 75 milligrams, which is up to 20 times higher. So, go take an Advil and then next day, take 21 of them, see how you feel. So, the problem is that it's uncontrolled, don't know who's making it, it's made by a Chinese or Indian company. So, even in that case, the real-world data looks pretty good, in terms of liver safety comparative, for example, alkylated anabolic androgens, which has also been abused in the past. I put abuse aside. From our clinical studies, which we have a database of about 1,600 patients, we saw a rate of ALT increase of about 1.8% or something like that in the placebo group and about 3.4% or something like that in the enobosarm group, and that's like in 500 patients per group. And what we see is very, very characteristic of what you see with the testosterone type product, not the alkylated testosterone that we modified to make it oral and has been the problem. But if you take regular testosterone, we're probably more similar to that where you see slight increases, mild increase in ALT in a few subjects, always goes down either on drug, mostly almost always on drug, unless the patient stops the study for some reason, and it goes down to normal. We've never seen anything related to function, meaning bilirubin increases, alkaline phosphatase increases, procoagulation issues. So, in other words,…

Yes, I think you summarized it correctly, and that's exactly what we've seen in previous studies. From a, if you go away and expand out of liver, we don't see any significant serious adverse events, and we're not seeing that in this particular study either. So, it's the safety in aggregate is consistent with the studies that we've conducted previously.

One interesting thing is GLP-1s also affect ALT, but same way. Elevations have come down with time. And so, the adaptation and tolerance approach and they're widely used, and that's true for tirzepatide and for semaglutide. So, again, we're not seeing anything inconsistent with what we've seen before, which we've been saying. I think what will be different is when we provide the full data safety dataset, you'll see what's happening in each category. Semaglutide alone versus semaglutide plus three, plus six. Is that helpful?

Very helpful. I appreciate that very extra detail there, Mitch. So, just one more, actually from us. It looks from everything sort of that you presented so far, the FDA has sort of provided two pass towards two shots on goal or two pass towards regulatory improvement. You can sort of go after functional improvements or potentially go after metabolic improvements. It looks like you're sort of, at least initially, overwhelmingly targeting functional data, obviously, with your very nice positive Stair Climb, also as your primary endpoint for in Phase 3. I was curious, though to how you're seeing sort of the other path, if you feel that that would be open to enobosarm. Also, I don't think we've seen too much data on that. And so, how do you see sort of these two-alternate pass towards regulatory improvement? And will we or what should we be expecting as far as sort of the metabolic tests from the Phase 2b quality coming up here shortly?

Yes. So, let me just, so let me tell you how I'm seeing it from a standpoint of PAS. So, the first thing to say, let's talk about enobosarm for a second. So, enobosarm has consistently shown lean body mass maintenance improvement in other patient populations, and we've shown the same thing in this patient population. We've shown reductions in fat in other populations, older patients. Again, we've shown the same thing in this patient population. We have not seen the individual data with some of the metabolic parameters, but some of the metabolic parameters have looked for are LDL, insulin resistance and HbA1c. We've seen in our previous studies, LDL is maintained or slightly lower, triglycerides go down. This was enobosarm in other populations. And we've also seen insulin resistance get better. So, HOMA-IR got better, HbA1c, I'm not quite sure on that one, but my guess is, it got better. Maybe Gary knows. In this study, we're measuring, we're not measuring HOMA-IR in the Phase 2b, but we are measuring HbA1c and LDL. And so, from a metabolic standpoint, we're going to be additive, I believe, to what you see with the GLP-1. Now, let's take a step back. And what we do differently, of course, is we have, in addition to muscle mass being metabolic, we also have muscle mass being physical function. And that's been the hardest one for other drugs like myostatin inhibitors to show. And so, and part of that is because the angina receptor is a time-tested receptor. And we know, all you have to do is look at the real-world literature. People they maintain muscle, they burn fat, they improve their performance. And so, it is a performance drug. There's no question about it, but FDA is asking it to be a…

Appreciate that color. I'll hop back in the queue, but definitely on the lookout for the imminent data and congratulations again for a very nice quarter.

Thank you.

[Operator Instructions] And your next question today will come from Yi Chen with H.C. Wainwright. Please go ahead.

Good morning. This is Eduardo on for Yi. Just a quick question again on the Phase 3 trial. You mentioned adding tirzepatide and I'm curious what your thoughts are there. There's some anecdotal evidence that tirzepatide skews a little bit more towards fat loss instead of lean mass. I'm curious how you're planning around that in your trial design, potentially. If you're losing more less lean mass, right, you might need a little bit more patients in that group to power a difference. I'm curious how you're thinking about that in trial design?

Yes, we've -- Yes. So, if you go back and look at the data, you'll see the following. To my surprise, until I saw the data, tirzepatide loses about the same amount of muscle, lean mass as semaglutide and the data comes from the step one study for semaglutide, where I think it's about 6.8 -- at 68 weeks, with 6.8 kilograms of lean that's lost. And so, remember, it's with the lean, not so much with the fat is, it's how much lean you're trying to preserve for function. And so, 6.8. And if you go back and look at the tirzepatide data, and you have to look in the supplemental tables, I was able to find the number at 72 weeks. Remember, 72 weeks is good to have a different titration period, and so, it gets to 72 weeks. It was about 6.2 kilograms. So, the difference between the lean mass loss at approximately a year plus is similar. So, I think that the functional issues tirzepatide is going to have will be pretty much similar to what we found with semaglutide. With that said, we're going to power the study, based on those numbers and stratify the subjects, based on whether it's tirzepatide or semaglutide, so we don't mix apples with oranges, if that makes -- I think the apples are going to look very much like oranges in this study, but to be purist, we could keep them separate. Gary Barnett, do you want to add to that?

No, that's right. There will be stratification on which, and we'll make sure they're equal between the treatment groups. So, that difference will wash out or will be accounted for in the randomization. And of course, the type of GLP-1 that they'll be on will also be one of our covariates in the ANOVA, in the final statistical analysis.

Got it. Thanks a lot. It's really helpful.

Thank you.

And your next question today will come from Leland Gershell with Oppenheimer. Please go ahead.

Hey, good morning. Thanks for taking our question. Just wondering, Mitch, the industry has been investing a fair bit in the development of potential therapies for the side effect of the GLP-1s, vis-à-vis, the myostatin blockers and so forth. Wondering, if in the work you've done to look at the differences between ANOVA and perhaps those strategies. Are there any concerns you may have that those may show any benefits that may supersede or be differentiated from ANOVA, as we await the remaining data from the Phase 2? Thanks.

Great question. So, let's, I'll begin with what I think makes us different and I'll end with what I think makes us different. Look, what makes us different is oral and their IV or subQ and the whole space is moving. Even if all things are equal, things are moving in the direction of oral treatments for chronic weight management. And all the GLP-1 containing agents have the degree of lean mass loss. Nobody is going to disagree that older patients are at risk because they have less muscle mass to begin with. And it's not a percent thing. 25% of a small amount of muscle is still a big amount. And so, the older patients, even big pharma, will tell you, are the ones that most at risk that we need to keep an eye on. With that said, I think the myostatin inhibitors are going to have to overcome a problem in their development, which has been showing physical function benefits and physical function benefits by objective measurements of muscle function. And I'm not talking about 6-minute walk test because 6-minute walk test should get better if you lose weight, because 6-minute walk test is cardiovascular. That's why they'd use 6-minute walk test, for example, for pulmonary artery, hypertension drugs and that kind of stuff. But muscular dystrophy, for example they use for muscle quality, they use Stair Climb and those kinds of tests. So, I'm not, I think the challenge is, I think they're going to show a greater loss of fat. I think they're going to show a preservation of lean. But because lean doesn't translate necessarily to function, then they're going to have to make better, which means they're going to have to look at LDL, they're going to have to look at HbA1c, they're…

Great. Thanks very 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.

I appreciate everyone who joined us on today's call. And I look forward to updating all of you on our progress on our next Investors call, and stay tuned for the numerous catalysts that will be coming out over the short-term. Thank you. Bye now.

The digital replay of the conference call will be available beginning approximately 12:00 p.m. Eastern Time today, May 8, by dialing 1877-344-7529 in the United States and 1412-317-0088 internationally. You will be prompted to enter the replay access code, which will be 7682749. Please record your name and company when joining. The conference call has now concluded. Thank you for attending today's discussion.