Veru Inc.

Good morning, ladies and gentlemen, and welcome to Veru Inc.' 's Investors Conference Call. All participants will be in listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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 Fish, Veru Inc.' 's Director of Investor Relations. Please go ahead.

Good morning. The statements made on this conference call that are not historical in nature are forward-looking statements. Such forward-looking statements reflect the company's current assessment of the risks and uncertainties related to our businesses. Our actual results and future developments could differ materially from the results or developments in such forward-looking statements. Factors that may cause actual results or developments to differ materially include such things as the risks are related to the development of the company's product portfolio. Risks are related to the ability of the company to obtain sufficient financing on acceptable terms we need to fund development and company operations. Risks relate to competition, government contracting risks, and other risks detailing the company's press releases, shareholder communications, and securities and exchange commission filings. For additional information regarding such risks, The company urges you to review its 10Q and 10K SEC filings. I would now like to turn the conference over to Dr. Mitchell Steiner, Baru Inc.' 's Chairman, CEO, and President.

Thank you, Sam, and good morning. With me on this morning's call are Michelle Greco, CFO and CAO, Phil Greenberg, Executive Vice President, Legal, and you've met Sam Fish, Director of Investor Relations. Thank you for joining our call. We have made several important and exciting announcements this morning. It's been a busy quarter. We actually released two separate press releases this morning, our earnings release and an update on our oncology drug pipeline. This morning, we will discuss these new announcements and its impact on Vera's business strategy, the clinical development of our drug pipeline, and the commercialization of our products. We will also provide financial highlights for our record fourth fiscal quarter and record year-end fiscal year 2020. Bureau has made the transformation into a late clinical stage oncology biopharmaceutical company focused on developing novel medicines for the management of two of the most prevalent cancers, prostate cancer and breast cancer. We continue to invest cash generated from our sexual health commercial business into the clinical development of our high-value oncology drug candidates so that our current shareholders can realize the maximum value of our oncology biopharmaceutical company. In fiscal year 2017, the year that the female health company acquired Aspen Park Pharmaceuticals to create VIRU, the annual revenues were $13.7 million. And this year, I'm pleased to report that we had a record year of $42.6 million in revenue. In fact, we expect fiscal year 2021 revenue generation will continue to grow robustly for what could be another record year. We accomplished this great and significant company milestone because we set a new commercial strategy for FC2 and launched Preboost. We focused on creating an FC2 commercial sector in the U.S. and in the U.S. we launched FC2 as a prescription product to retail pharmacies and partnered with multiple telemedicine and internet pharmacy partners. We decreased our reliance on the global public sector which was volatile and inconsistent. We launched Preboost which is marketed online in the United States through a distributor arrangement under the Roman Swipes brand name by Roman Health Ventures Incorporated. Roman is a leading telemedicine company that sells men's health products via the internet website www.getroman.com. Preboost is also marketed in the US through Bricks and Mortar retail channel by Playboy Enterprises International as Playboy's Intimate Wife. Now, let's focus on some of the financial highlights on Viru's commercial segment, which is made up of FC2, pre-boost romance wives, playboy intimate wives, and drug commercialization costs. We had net revenues in the United States FC2 prescription business in Q4 fiscal year 2020 of $8.7 million compared to $4.7 million in Q4 fiscal year 2019, which is up 87%. Net revenues for fiscal year 2020 were $42.6 million compared to $31.8 million in fiscal year 2019, which was up 34%. In fact, gross profits for fiscal year 2020 was $30.8 million compared to fiscal year 2019 of $21.7 million, which was up 42%. Operating loss was $14.7 million, which includes a $14.1 million impairment non-cash charge. Operating loss before adjustment for impairment was only $600,000 for all of fiscal year 2020, compared to the loss of $6.4 million in fiscal year 2019. In fact, the operating profit for Q4 fiscal year 2020 before adjustment for impairment was $2.8 million. Our compound annual growth rate since fiscal year 2017 has been 46%, and we're still growing this segment of our business. In fact, to give you a sense of our growth trajectory, for all of fiscal year 2019, we sold 159,000 units of FC2 in the U.S. prescription market, while in fiscal year 2020, we sold 342,000 units of FC2 in the U.S. prescription market, an increase of 115%. I'm pleased to report that we announced today that we sold our pre-boost business to Roman Health Ventures for $20 million, further strengthening our financial balance sheet. The sexual health business continues to generate record revenues, and we expect robust and growing revenues from the sexual health business for another record year in fiscal 2021, which further enhances its potential value as a standalone business. If the company were to decide to monetize this asset like we did with pre-boost, to streamline the company into a pure oncology biopharmaceutical company with significant cash resources. Tadfin, which is tadalafil 5 milligrams, finasteride 5 milligrams combination capsule, is being developed to treat lower urinary tract symptoms caused by benign prostatic hyperplasia. The company had a successful pre-NDA meeting with FDA, and the required one-year stability testing on three manufacturing commercial batches is being completed. Consequently, we expect to submit the NDA for Tadfin in early calendar year 2021 with a launch, if approved, via telemedicine channels in late 2021. This will be another near-term source of additional revenue for Viru. Consequently, I am pleased to report that based on current clinical development plans, we expect that the company will have sufficient resources generated from our sexual health business and existing sources of cash to fund the clinical development of all of the oncology drug programs that I will discuss without the need for new equity financing through the end of fiscal year 2022. By progressing our own pipeline and recently acquiring the worldwide rights to a phase three ready novel breast cancer drug, Vero has made the transformation into a late clinical stage oncology biopharmaceutical company focus on developing novel medicines for the management of two of the most prevalent cancers globally, prostate cancer and breast cancer. Prostate cancer is the most commonly diagnosed cancer in men with an estimated 191,930 new cases and 33,330 deaths expected for 2020 in the United States. One in nine men is expected to develop prostate cancer in a lifetime. Prostate cancer has become a chronic disease with new challenges as prostate cancer develops resistance to current drugs and spreads through the body, and as the patient suffers from the long-term side effects of prostate cancer treatments, like hot flashes, bone loss and fractures, loss of libido, erectile dysfunction, loss of muscle strength and frailty. Breast cancer is the most commonly diagnosed cancer in women, with an estimated 276,480 new cases and 42,170 deaths expected for 2020 in the United States. One in eight women is expected to develop invasive breast cancer in their lifetime. There are many different types of breast cancer with diverse clinical molecular characteristics. The most common type is hormone receptor positive, where estrogen is one of the main drivers of breast cancer proliferation, tumor progression, and metastasis. Consequently, treatments that target the estrogen receptor are the mainstay of breast cancer therapy, but unfortunately, almost all women will eventually develop resistance to endocrine therapies, and alternative treatment approaches will be required, including IV chemotherapy. Another form of breast cancer that occurs in 15% of all breast cancers is called triple negative breast cancer. Triple negative breast cancer does not have an estrogen receptor or progesterone receptor, and does not make something called human epidermal growth factor 2, also known as HER2. And as a consequence, triple negative breast cancer is an endocrine-resistant, aggressive cancer that grows and spreads faster than hormone-receptive positive breast cancers. Triple negative breast cancer also develops resistance to the currently used chemotherapy drugs like taxanes. And as such, alternative treatment options for triple negative breast cancer are very limited. Accordingly, We are dedicated to the development and commercialization of drug candidates to address unmet medical needs for prostate and breast cancer management and for which we have made great progress. We are excited to advance our prostate cancer drug candidates, VIRU 111 and VIRU 100, as well as our breast cancer drug candidates who recently acquired Anobisarm and a new additional indication for VIRU 111 into registration clinical studies. VIRU anticipates the potential for four registration clinical trials for four oncology indications commencing in calendar year 2021. In prostate cancer, the company continues to make strong clinical progress, advancing VERA-111 as a treatment for metastatic castration and antigen receptor targeting agent-resistant prostate cancer, and VERA-100 for antigen deprivation therapy for advanced prostate cancer. First, an update. VIR-111 for the treatment of men with metastatic castration-resistant prostate cancer who have also become resistant to the androgen receptor targeting agent. VIR-111 is an oral first-in-class new chemical entity that targets, cross-links, and disrupts the alpha and beta tubulin subunits of microtubules to disrupt the cytoskeleton. We're calling it a cytoskeleton disruptor. VIR-111 is being evaluated in an open-label Phase Ib and Phase II clinical studies in men with metastatic castration and antigen receptor targeting agent-resistant prostate cancer, and the Phase 1B clinical study completed the enrollment of 39 men and is ongoing. The Phase 1B study has yielded promising efficacy and safety clinical results. Based on the Phase 1B study results, the recommended Phase 2 dose is 63 milligrams oral daily continuous dosing for 21 days. Daily chronic drug administration appears to be feasible and safe. At the recommended phase two dose, there were no reports of neutropenia, neurotoxicity, or grade three diarrhea. The efficacy results show PSA declines in responses, as well as objective and durable tumor responses. Furthermore, the median treatment duration without cancer progression in men who have had at least four cycles of VERA-111 is greater than 11 months. We still have patients on the study. In September of 2020, The Phase II clinical study completed the enrollment of approximately 40 men with metastatic castrate-resistant prostate cancer who have also become resistant to an androgen receptor-targeting agent such as abiraterone, enzalutamide, or apalutamide, but prior to proceeding to IV chemo. Although the study is still ongoing, daily chronic drug administration appears to be feasible and safe. At 63 milligrams daily continuous dosing, There were no reports of neutropenia, single report of minor neurotoxicity, and manageable cases of diarrhea. Like the Phase 1b, we have observed efficacy results, including PSA declines and responses, as well as objective and durable tumor responses. We plan to report the results of the Phase 2 study in the first half of 2021. As we have already enough safety and efficacy data to select a dose for Vero 111 and to proceed to a Phase 3, The company had an FDA meeting in July of 2020 and received positive input from FDA on the pivotal Phase III trial design for VIR-111. The company received regulatory clarity that the indication of treatment in men with metastatic castration-resistant prostate cancer who have failed one androgen receptor targeting agent but prior to IV chemotherapy was acceptable. that an open-label randomized study using an alternative androgen receptor targeting agent as an active control is reasonable, and that the primary endpoint may be radiographic progression-free survival. By allowing radiographic progression-free survival as a primary endpoint, the sample size of the Phase III clinical study could be potentially around 200 men. The Phase III pivotal clinical study will evaluate VERA111 for men with metastatic castration-resistant prostate cancer who have become resistant to one androgen receptor targeting agent and will be called the VERACITY Phase III study. The company anticipates starting the VERACITY Phase III study in the first quarter of calendar year 2021. Next, I will update you on VERA100 as an androgen deprivation therapy for palliative treatment of advanced prostate cancer. VERA100 is a novel proprietary long-acting gonadotropin-releasing hormone, GnRH antagonist peptide, three months of subcutaneous depo formulation, designed to address the current limitations of commercially available androgen deprivation therapies, also known as ADT. Androgen deprivation therapy is currently the mainstay of advanced prostate treatment, used as a foundation of treatment throughout the course of the disease. Furthermore, ADT is continued as other endocrine chemotherapy or radiation treatments are added or stopped. Specifically, Vero 100 is a chronic long-acting GnRH antagonist peptide administered at a small volume, three-month deep post-subcontinuous injection without a loading dose. Vero 100 is expected to immediately suppress testosterone with no testosterone surge upon initial or repeated administration. A concern that occurs with currently approved luteinizing hormone-releasing hormone agonists used for ADT. There are no GnRH antagonist depot injectable formulations commercially approved for treatment beyond one month duration. The phase two study to evaluate Vero 100 dosing is anticipated to begin early in the first quarter of calendar year 2021. And the registration phase three study in approximately 100 men is anticipated to start in the second half of calendar year 2021. We have been opportunistic, and we added a new late clinical stage breast cancer drug pipeline, which includes Inovus Arm and VIRU-111. So Inovus Arm is a selective antigen receptor targeting agonist being developed for the treatment of antigen receptor positive, estrogen receptor positive, and HER2 negative metastatic breast cancer, but prior to IV chemotherapy. VIRU has exclusively in-licensed full worldwide rights to Inovus Arm from the University of Tennessee Research Foundation and the Ohio State Research Foundation. Inovus Arm is an oral, first-in-class, new chemical entity, selective androgen receptor targeted agent. Our first indication for the clinical development of Inovus Arm will be for the treatment of ER-positive, HER2-negative, metastatic breast cancer, but prior to IV chemotherapy. Inovus Arm, by targeting the androgen receptor, which is present in up to 90% of advanced hormone receptor-positive breast cancers, represents the first new class of targeting endocrine therapies in advanced breast cancer in decades. Inovasarm has extensive non-clinical and clinical experience, having been evaluated in over 25 separate clinical studies in more than 2,100 subjects, including five prior Phase II clinical studies in advanced breast cancer involving more than 250 patients. Inovasarm binds to the androgen receptor in breast cancer tissue to inhibit AR, ER-positive cancer cell proliferation and tumor growth. This is seen in Phase II human clinical studies as well as in animal models. Unlike testosterone, Inovasarm cannot be aromatized to estrogen. Inovasarm has additional selective clinical properties that it could have potential benefit in women with hormone receptor positive metastatic cancer. More specifically, preclinical studies have shown that Inovasarm builds and heals cortical and trabecular bone with the potential to treat hormone treatment-induced osteoporosis and skeletal-related cancer events. Inovasarm has also been shown to build muscle, to reduce fat, to improve physical function in clinical studies involving elderly subjects and patients with cancer cachexia, including breast cancer. Furthermore, the tissue selectivity of a novus arm also results in a favorable side effect profile with no virilization, that's facial hair and acne, no increase in hematocrit and no liver toxicity. The science supporting the efficacy of a novus arm and targeting the androgen receptor and hormone receptor positive advanced breast cancer will eminently be published in Nature Medicine by an independent group of breast cancer experts. In the two Phase II clinical studies evaluating Inovus arm in an advanced AR-positive, ER-positive HER2-negative breast cancer, Inovus arm as an oral endocrine therapy demonstrated significant anti-tumor efficacy in heavily pretreated cohorts and was very well tolerated with a favorable side effect profile. The first Phase II clinical study, G200801, was a single-arm study evaluating a 9-milligram oral daily dose of Inovus arm in a heavily pretreated endocrine-resistant cohort of 22 patients with AR-positive, ER-positive, and HER2-negative advanced breast cancer. The patients participating in the study, on average, had three previous lines of endocrine therapy, and 68% had previous chemotherapy. The clinical benefit rate at six months was 35.3%. The six-month Kaplan-Meier estimate for radiographic progression-free survival was 43.8%. Inovus arm was well-tolerated without evidence of virilization, no increases in hematocrit, and no liver toxicity. The second Phase II clinical study, G200802, was a two-arm study evaluating 9 milligrams and 18 milligrams of Inovus arm daily oral dosing in 136 women with ER-positive HER2-negative advanced breast cancer. The patients in this study were also heavily pretreated, having failed an average of four endocrine treatments, and 88% have received prior chemotherapy. The primary investigator for the study was Dr. Beth Overmoyer, founder and director of the Inflammatory Breast Cancer Program at Dana-Farber Cancer Institute in Boston, Massachusetts, and assistant professor of medicine at Harvard Medical School. The completed phase two study results will be presented as a spotlight presentation at the San Antonio Breast Cancer Symposium tomorrow, December 10th at 2.15 p.m. by Professor Carlo Palmieri, Professor of Translational Oncology and he's a medical oncologist in the University of Liverpool. The abstract is number 811 and it's entitled The Efficacy and Safety of the Novus Arm, a Selective Angio-Receptor Modulator to Target Angio-Receptor in Women with Advanced ER-Positive, AR-Positive Breast Cancer final results from an international Phase II randomized study. Overall, these metastatic breast cancer clinical studies for the novus arm and heavily pretreated subjects with hormone receptor-positive breast cancer strongly established the relevance of targeting the androgen receptor with a selective androgen receptor agonist both for efficacy and safety and with additional other benefits. Owing to its high tissue selectivity, Inobisarm increases muscle and physical function, decreases fat, improves bone strength, and lacks the androgenic adverse effects including virilization, liver toxicity, increases hematocrit. By targeting the androgen receptor and hormone receptor positive metastatic breast cancer, Inobisarm introduces a novel endocrine therapy to patients with breast cancer that have exhausted endocrine therapies targeting the estrogen receptor but prior to IV chemotherapy. The company met with FDA in October of 2020 to discuss the Inovus arm clinical breast cancer program. The FDA has agreed to the phase three registration clinical trial study to evaluate the efficacy and safety of Inovus arm versus an active control, which will be either Examestane or Tamoxifen, physician's choice, for the treatment of metastatic ER-positive HER2-negative breast cancer in approximately 240 women that have failed a nonsteroidal aromatase inhibitor, anastrozole or letrozole, fulvestrin, and a CDK4-6 inhibitor. The Phase III study will be called the ARTEST study, A-R-T-E-S-T study. The primary endpoint is radiographic progression-free survival. The pivotal Phase III open-label randomized active control study is anticipated to commence in the first half of calendar year 2021. It should be noted that Inova's arm has strong intellectual patent protection with U.S. composition of matter patents that expire in 2029 with a potential for a five-year patent extension for an NCE to 2034 and with method of use patents that will expire as early as 2033. Inova's arm is a large market opportunity as it represents the first new class of targeted endocrine therapy in hormone-receptive positive advanced breast cancer in decades. Novosone targets the endocrine receptor in ER-positive HER2-negative metastatic breast cancer as a potential second-line and or third-line oral daily dosing endocrine therapy option in breast cancer patients that have exhausted endocrine therapies targeting the ester receptor but prior to IV chemotherapy. The global annual market for an oral agent in an ER endocrine-resistant setting is expected to be $6 billion. Next. We have made a decision to advance VERA-111 into a Phase IIb clinical study for the treatment of taxane-resistant metastatic triple negative breast cancer. As I mentioned, metastatic triple negative breast cancer is an aggressive form of breast cancer that's present in approximately 15% of all breast cancers. This form of breast cancer does not express the estrogen receptor, the progesterone receptor, or HER2, and is resistant to endocrine therapies. The first line of treatment usually includes an IV taxane chemotherapy. Almost all women will eventually develop taxane resistance. Overexpression of peak glycoprotein pumps that cancer drug back out of the cancer cell to avoid cancer cell death, and this is a common mechanism that results in taxane resistance in triple negative breast cancer. VIR-111, on the other hand, is an oral cytoskeleton disruptor. cannot be pumped out of the cancer cell by peak glycoprotein drug resistance protein. Preclinical studies in human triple negative breast cancer grown in animal models demonstrate that Vera-111 significantly inhibits cancer proliferation, migration, metastasis, and invasion of triple negative breast cancer cells and tumors that have become resistant to paclitaxel, which is a taxane. In fact, a poster is being presented this morning at 9 a.m. Eastern. at the San Antonio Breast Cancer Symposium virtual meeting on the preclinical efficacy data entitled, Vera-111 as an Orally Available Tubulin Inhibitor Suppressing Both Taxane-Sensitive and Taxane-Resistant Triple Negative Breast Cancer. And this is going to be presented by Dr. Wei Li from the University of Tennessee Health Science Center. Using the safety information from the Phase 1B and Phase 2 Vera-111 Prostate Cancer Clinical Studies, and a total of 80 men, we will meet with the FDA in the first half of calendar year, of calendar 2021, to discuss the phase two clinical trial design for possible accelerated approval for VIR-111 versus active control triodality for patients with taxane-resistant triple negative breast cancer, making the proposed trial a potential registration trial. The phase two B clinical studies plan to commence in the second half of calendar year 2021. And as I mentioned, this would represent a second major clinical oncology indication for VIR-111. The number of new U.S. breast cancer cases in 2020 totaled 276,480, with triple negative breast cancer accounting for 10% to 15%, approximately 41,472 patients. The majority of women will receive IV chemotherapy, including taxanes. Almost all of these women will develop taxane resistance. and will be a candidate for VERA-111. The annual U.S. market for taxane-resistant metastatic triple-negative breast cancer is estimated to be over $1 billion. The company's other indications include VERA-111 for the treatment of SARS-CoV-2 in subjects at high risk for acute respiratory distress syndrome. So VERA-111 is being evaluated in a Phase II clinical trial to assess the efficacy of VERA-111 in combating COVID-19 to prevent ARDS. Vera-111, by targeting microtubules, may have broad antiviral and strong anti-inflammatory effects, including the potential to treat cytokine release syndrome that's associated with high COVID-19 mortality rate. Vera is currently enrolling a double-blind randomized placebo-controlled Phase II clinical study, evaluating daily doses of Vera-111 18 milligrams versus placebo for 21 days in 40 hospitalized patients who tested positive for SARS-CoV-2 virus and are at high risk for ARDS. The primary endpoint is the proportion of patients that are alive and without respiratory failure at day 22. Secondary endpoints include the measured improvements in the WHO disease severity scale, which is an eight-point ordinal scale and captures COVID-19 disease symptoms and signs including hospitalization to progression of pulmonary symptoms to mechanical ventilation as well as death. We expect Enrollment to be completed this month. If the clinical results of the Phase 2 clinical trial are positive, the company intends to apply for grant funding from third-party agencies. And as you know, COVID-19 is now worse than ever, and no effective treatments have been found. As for Zuclomifene and the other drugs that are not in the oncology treatment drugs, now that we have four late clinical stage studies, For three drugs and four premium oncology treatment indications, the company has to even further focus and reprioritize resources to maximize shareholder value. So, clomiphene citrates and oral non-soil estrogen receptor agonists being developed to treat hot flashes, a common side effect caused by ADT in men with advanced prostate cancer. The company is planning an end-of-phase two meeting with FDA and will assess the next steps after that meeting. In light of the promising progress of the prostate cancer and breast cancer late clinical stage programs to achieve the company's strategic objectives, we do not plan to further develop Tamsulosin DRS, Vero 722, and Vero 112 drug candidate assets. I will now turn the call over to Michelle Greco, CFO, CAO, to discuss the financial highlights. Michelle?