Veru Inc.

Good morning, ladies and gentlemen, and welcome to Verrues, Inc. Investor Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialists 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, Verrues, Inc.' 's Executive Director. 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 development to differ materially are contained in our 10Q and 10K 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 Stein. Thanks, Chairman, CEO, and President.

Good morning. With me in this morning's call are Dr. Gary Barnett, the Chief Scientific Officer, Michelle Greco, the CFO and CAO, Michael Purvis, the EVP General Counsel in Corporate Strategy, and Sam Fish, Executive Director of Investor Relations and Corporate Communications. Thank you all for joining our call. Vero, Inc. is a late-clinical-stage biopharmaceutical company focused on developing novel medicines for the treatment of breast cancer and for SARS-CoV-2 and other viral acute respiratory distress syndrome, ARDS-related diseases. Our drug development program includes Inovasarm, a selective antigen receptor agonist for the management of advanced breast cancer, and Subizabulin, a microtubule disruptor for the treatment of hospitalized COVID-19 and other viral-related ARDS. The company also has an FDA-approved product, commercial product, the FC2 female condom internal condom, for dual protection against unplanned pregnancy and sexually transmitted infections. The revenue from the sexual health program is being used to partially 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 prioritization strategy, the progress of the breast cancer and viral ARDS drug pipeline, as well as the commercialization of our FC2 product. We will also provide financial highlights for our second quarter fiscal year 2023. This past quarter, we implemented a prioritization strategy to focus our drug development efforts on those drug candidates which we believe have the best opportunity to lead to long-term success and shareholder value creation and conserve cash, including a reduction in personnel and certain other measures to reduce costs further. The refocused research and development strategy includes the following. Plans for ongoing Phase 2b3 study of Inovasarm and Abemacyclib combination in second-line metastatic setting for AR-positive, ER-positive, HER2-negative metastatic breast cancer with the company's clinical trial collaboration partner, Eli Lilly Company, supplying Abemacyclib to... a planned Phase III study of the novus arm and bone-only non-measurable ER-positive HER2-negative metastatic breast cancer, three, plans for continued development of subizobulin in a Phase III confirmatory COVID-19 study in hospitalized moderate to severe COVID-19 patients at high risk for ARDS, and four, a planned Phase III clinical study of subizobulin in hospitalized influenza patients at high risk for ARDS. In addition, The company announced that Vero is reserving subizobulin for clinical development only in infectious disease indications, and accordingly has terminated the Phase 3 veracity trial with subizobulin in prostate cancer. Further, Phase 2 development of Vero 100 asset will be paused with efforts to find a potential suitable development partner to share the costs of such future development. We also sought to sell our Entadfi asset, which was successful, and allowed us to generate additional non-dilutive cash. The company's oncology drug pipeline has two clinical development programs for Novosarm, an oral selective antigen receptor agonist for the treatment of advanced metastatic breast cancer. Novosarm is an oral first-in-class new chemical entity, selective antigen receptor agonist that activates the antigen receptor in AR-positive, ER-positive, HER2-negative metastatic breast cancer, which results in tumor suppressor activity without unwanted masculinizing side effects and changes in hematocrit. Novosarm has extensive non-clinical and clinical experience, having been evaluated in 25 separate clinical studies in approximately 1,450 subjects' dose, including three Phase II clinical studies in advanced breast cancer involving more than 250 patients. In the two completed Phase II clinical studies conducted in women with AR-positive, HER2-negative metastatic breast cancer, Novosarm demonstrates significant anti-tumor efficacy in heavily pretreated cohorts that failed estrogen-blocking agents, chemotherapy, and or CDK4-6 inhibitors, and it was well-tolerated with a favorable safety profile. In preclinical studies, metastatic breast cancer tissue samples taken from patients who have metastatic breast cancer that has become resistant to CDK4-6 inhibitors and estrogen-blocking agents were grown in mice. In these mice, treatment with the Novosarmin combination with a CDK4-6 inhibitor suppressed the growth of human metastatic breast cancer greater than either drug was able to do alone. Interestingly, the CDK4-6 inhibitor treatment caused the metastatic breast cancer tissue to make higher amounts of the antigen receptor, which may explain the observed synergy of combining a CDK4-6 inhibitor with a novus arm, which is, as you know, selective AR agonist. The first clinical development study is a Phase IIb3 clinical study called ENABLER-2 which is a Novus arm plus a bemacyclic combination in treatment with second-line AR-positive, ER-positive HER2-negative metastatic breast cancer. On March 30, 2023, the company met with the FDA to gain further regulatory clarity for the ongoing Phase 2b3 clinical trial design and program. The Phase 2b3 study has been amended to accommodate the FDA's latest recommendations to support a potential registration. In the first stage of the trial, the dose of the Novus arm in the abemacyclic combination is being optimized, and the efficacy and safety of the combination therapy is being assessed in three arms of 40 patients each, abemacyclic plus an ovus arm 9 milligram combination therapy, abemacyclic plus an ovus arm 1 milligram combination therapy, and an estrogen blocking agent as the control arm. The primary endpoint for the stage one of the study is an objective response rate, or ORR, which measures objective tumor responses as partial or complete. ORR is an endpoint that the FDA recognizes as an appropriate surrogate endpoint for clinical benefit for a possible accelerated approval, which is consistent with the new FDA guidance issued on March 24, 2023, entitled Clinical Trial Considerations to Support Accelerated Approval of Oncology Therapeutics. In Stage 2 of the Phase 2B3 study, we plan to enroll approximately 210 subjects in a multi-sensory open-label, randomized, one-to-one, active control clinical study to evaluate the efficacy and safety of a Novosarm plus a Bemacyclob combination therapy versus an alternative estrogen blocking agent, which is either a selective estrogen receptor degrader or an aromatase inhibitor on subjects with AR-positive, ER-positive, HER2-negative metastatic breast cancer who have failed a CDK4-6 inhibitor plus an estrogen blocking agent. So basically, first line. The primary endpoint is progression-free survival, which is used to confirm the ORR findings in stage 1. In January of 2022, VIRU entered into a clinical trial collaboration supply agreement through which Eli Lilly supplies abemacycline, an FDA-approved CDK4-6 inhibitor for the ENABLER2 study. As you can see, the regulatory strategy and the clinical design to the Phase 2b3 ENABLER2 clinical study could yield an accelerated approval from stage one, and a full approval from stage two for the second line of hemocyclope and Novosarm combination treatment of AR-positive, ER-positive, HER2-negative metastatic breast cancer. We anticipate having clinical data for the Phase 2b3 Enabler 2 study in 2024. The second clinical study plans to evaluate a Novosarm monotherapy for the treatment of bone-only, non-measurable, ER-positive, HER2-negative metastatic breast cancers. Bone is the most frequent site of breast cancer metastases, with bone metastases noted in 60 to 80% of metastatic breast cancers. Up to 51% of patients have bone-only, non-measurable breast cancer metastases, and they have very limited therapeutic options. Inovasarm inhibits breast cancer growth and builds and heals bone by increasing both cortical and trabecular bone. Further, Inovasarm increases muscle mass and improves physical function. Both the beneficial... Bone and muscle effects may reduce the skeletal-related events caused by bone metastases. Accordingly, Inovasarm could be a potential therapeutic option for women with bone-only nonmeasurable metastatic breast cancer. We plan to meet with the FDA to discuss the Phase 2b3 Clinical Development Program to evaluate Inovasarm monotherapy in bone-only nonmeasurable metastatic breast cancer. To turn our attention now to the Viral ARDS Infectious Disease Program, ARDS is a form of non-cardiogenic pulmonary edema with diffuse alveolar damage associated with systemic inflammatory conditions. Viruses can cause up to one-third of the community acquired pneumonia, and viruses can trigger the immune system to release an overwhelming amount of inflammatory proteins known as the cytokine storm. The cytokine storm causes tissue damage in the lungs that leads to ARDS. Patients who develop ARDS have a high mortality rate. Virus-induced ARDS remains a significant unmet medical need with limited treatment options. Common viral infections that cause ARDS include COVID-19, influenza, and respiratory syncytial virus, also known as RSV, and other virus infections that may also lead to ARDS and death posing a global public health risk to society include smallpox and Ebola virus. A single outbreak involving any one of these viruses would be an immediate global emergency with limited existing options available for treatment. As ARDS results from the over-exaggerated immune inflammatory response by the patient to a virus infection, rather than direct injury from the virus infection itself, an antiviral agent alone may not be effective. Subisivulin has host-targeted antiviral, and a broad-spectrum anti-inflammatory agent has the potential to address the virus infection and the inflammation caused by the cytokine storm that causes ARDS, multi-organ failure, and death. The company is developing subizobulin for the treatment of hospitalized to moderate to severe COVID-19 patients at high risk for ARDS and death. ARDS remains the most frequent serious complication of severe COVID-19 infection. It has been reported that up to 33% of hospitalized patients with COVID-19 have ARDS, And 75 to 92% of patients admitted to the intensive care unit with COVID-19 have ARDS. The mortality rate of COVID-19 associated ARDS is 45%. And among patients who die from COVID-19, there's a 90% incidence of ARDS. In the current endemic phase, COVID-19 infections is estimated to be the fourth leading cause of death in the United States. COVID-19 is not going away. It has transitioned to a new disease. that will remain with us, like influenza and RSV. The endemic phase for COVID-19 remains deadly, with the latest data from the CDC reporting 1,100 deaths this past week and an average of 4,500 hospitalizations a day. The number of COVID-19 cases is expected to be seasonal, with a rise in midsummer when people gather indoors to get out of the heat, and in the winter when they gather to get out of the cold. As the COVID-19 endemic continues, We also need to remain vigilant and focus on preparedness for the next wave of infections involving new, potentially more dangerous mutated virus strains. In fact, a new mutated strain of Omicron has emerged called Archeris. It's also known as XBB116, and it appears to have high infectivity and pathogenicity. COVID-19 will be a problem for the foreseeable future, and there's a great need for effective therapies, especially for these hospitalized patients with moderate to severe COVID-19 infection at high risk for ARDS. The company has completed a positive Phase II and a positive Phase III COVID-19 clinical trials evaluating subisobulin. The Phase III clinical study was a double-blind randomized placebo-controlled study in 204 hospitalized moderate to severe COVID-19 patients at high risk for ARDS. The primary endpoint was the proportion of patients that died by day 60. And based on a planned interim analysis of the first 150 patients randomized, the independent data monitoring committee unanimously recommended that the study be stopped for clear evidence of clinical efficacy, and they identified no safety concerns. In the interim analysis, treatment was sub-visibular in 9 milligrams once a day. It resulted in a clinically meaningful and statistically significant 55.2% relative reduction in deaths compared to placebo. On May 10, 2022, the company had a pre-emergency use authorization, so that's EUA meeting, with the FDA to discuss the submission of an EUA application for subisibulin COVID-19 treatment. On June 7, 2022, the company submitted a request for FDA emergency use authorization for subisibulin. On July 6, 2022, the company announced publication of the interim efficacy and the full safety clinical results from the Phase 3 COVID-19 study of subisobulin in the New England Journal of Medicine evidence. February 28, 2023, the FDA notified the company that it had declined to grant at that time the company's request for emergency use authorization for subisobulin to treat hospitalized moderate to severe COVID-19 patients. And in communicating its decision, the FDA stated that despite The FDA declined to issue an EUA for sabizabulin at this time. The FDA remains committed to working with the company in development of sabizabulin. Separately, on February 16, 2023, the FDA also provided comments on a confirmatory Phase III study protocol submitted by the company that could support a new EUA request to the FDA. In regard to the study design, the FDA stated that strong considerations should be given to the appropriate timeframes for interim analyses so that should a, quote, strong efficacy signal again be observed, the trial could be stopped in an efficient timeframe, end quote. On April 27, 2023, the company met with the FDA and reached agreement on the design of the Phase III confirmatory COVID-19 clinical trial and the path forward to submit a new EUA application and or NDA. The FDA agreed to a confirmatory phase three randomized one-to-one multi-center global efficacy and safety study that's a visibular 9 milligrams oral daily dose plus standard of care treatment versus placebo plus standard of care treatment in 408 hospitalized adult patients with moderate to severe SARS-CoV-2 infection who are at high risk for ARDS. The patient population for subisobulin will be expanded to include all hospitalized, moderate to severe COVID-19 patients. So that's WHO4, passive low-flow oxygen, WHO5, forced or high-flow oxygen, and WHO6, mechanical ventilation. And there's no requirement to have a comorbidity. The primary efficacy endpoint will be all-cause mortality at day 60. Secondary endpoints include days in the hospital, days in the ICU, days of mechanical ventilation, and a proportion of patients alive without respiratory failure. And an exploratory endpoint will be the presence of long COVID-19 symptoms at day 180. In order to get a potentially efficacious drug to patients in an efficient timeframe, there are two planned interim efficacy analyses that will be conducted. As requested by FDA, the first planned interim analysis will occur when 204 patients, that's 50% of the population, have completed day 60 primary efficacy endpoint. And the second planned interim analysis is expected to occur when 290 patients, which is 71%, have completed the day 60 primary efficacy endpoint, which incidentally is the same timeframe with a similar amount of data as when the interim analysis was conducted for the first phase three study. If either of the interim efficacy analyses meet statistical significance criteria, the trial could be stopped for efficacy. Should the pre-specified primary efficacy endpoint analysis demonstrate a statistically significant effect on all-cause mortality favoring submissive fueling, the company may consider a new request for an EUA and or submission of an NDA, quote, as the company would potentially have two adequate and well-controlled trials for review, end quote. As the program has fast-track designation, Enrolling NDA submission is a possibility for cebizipulin. The Phase III confirmatory COVID-19 clinical trials expect to begin enrollment in the second half of 2023, and the first planned interim efficacy analysis is anticipated to be conducted in 2024. Now, our justification for pursuing a Phase III confirmatory trial in hospitalized moderately severe COVID-19 patients at high risk for ARDS is as follows. First of all, COVID is here to stay. It's a large market size. It's the fourth leading cause of death. There's lack of effective treatment options and high mortality rates in COVID-19 patients who progress to ARDS. Subisibulin has a unique mechanism of action as a host-targeted antiviral and a broad anti-inflammatory agent, and it's viral mutant strain agnostic. As requested by the FDA, the host-targeted antiviral activity, subisibulin, has been reconfirmed with an in vitro self-study done at the University of Rochester. Subisibulin has demonstrated efficacy and safety in previous Phase II and Phase III clinical studies. We have regulatory clarity. The Phase III COVID-19 confirmatory study with two potential interim analyses to assess efficacy of subisibulin earlier. The company may request a new EUA and or an NDA. with this additional data from the Phase 3 confirmatory COVID-19 study. Interestingly, under Section 564 of the Federal Food, Drug, and Cosmetic Act, FDA may continue to issue EUAs, and EUA drugs may be available after the national public health emergency ends today. Clinical evaluation of other drug candidates by competitors had marginal no activity, Thus, there will be less competition for hospitalized COVID-19 patients to enroll into clinical trials. Having a positive first phase 3 COVID-19 study with subvisivulin treatment demonstrating a mortality benefit published in New England Journal of Medicine evidence should also help with patient recruitment into clinical trials. And compared to the first phase 3 clinical study, we plan to conduct a confirmatory phase 3 clinical study in a greater number of clinical sites with approximately 100 sites of compared to 50 clinical sites for the previous Phase III study. Now, as it relates to the current XUS regulatory status, the company believes that it's most likely that all the XUS regulatory authorities, like the FDA, will require some level of new additional clinical data, including from the confirmatory Phase III study before granting emergency, conditional, or other similar authorizations for COVID-19. In April, We submitted a request to the FDA CEDAR, S-D-E-R, to reevaluate the FDA's declination of our EUA for subisibulin through the FDA's formal dispute resolution process, often referred to as the FDA dispute resolution or the FDR process. We will provide more details on the content of our FDR application when we have an FDA response on the next steps. But for now, we can say that our main argument for seeking a reevaluation is that we believe the FDA applied an incorrect standard of review of our EUA, essentially holding our data to the proven safe and effective standard of a new drug application, rather than the proper standard under an EUA application of whether sub-disabutants' potential benefits outweigh its potential risks. And we also believe that this inappropriate standard affected much of the November 2022 Paddock Advisory Committee meeting. Also, we have contrasted the FDA's higher level of scrutiny towards our submissibility EUA with other EUAs that have been granted, including the recent EUA granted for Cohibic for certain late-stage COVID-19 patients. We're now awaiting the FDA's decision on whether to accept our request into the FDR process. We will determine our next steps at that time based on the FDA's response, but we will consider all potential options. We hope to hear this month. but because we're dealing with an EUA and not proceeding under a PDUFA statute like we would if we had filed an NDA, the FDA's timelines are not definite. Our FDR application is a matter of high importance to Viru, and we will update you when the time is appropriate. Now, in order to position sabizabulin as a drug to be used broadly for the treatment of viral ARDS, so in other words, COVID is sort of the hook into ARDS, the company also plans to expand the clinical development of subizobulin for the treatment of hospitalized influenza patients at high risk for ARDS and death. On April 4th, 2023, the company announced positive results from a preclinical study of subizobulin demonstrating robust anti-inflammatory activity with improved outcomes in an H1N1 influenza-induced pulmonary infection mouse ARDS model. H1N1 is the old Spanish flu and now swine flu. and this was conducted by a team of researchers at LabCorp Early Development Laboratories in the United Kingdom. Subisobulin treatment resulted in a statistically significant decrease in the total number of inflammatory cells and a reduction in key cytokines and chemokines in lung fluid. Clinically, subisobulin treatment resulted in a reduction in severity of lung inflammation by histopathology, and there was a dose-dependent improvement in lung function. Oil administration of the 2 mg per kg civizibulin resulted in a reduction of clinical signs and body weight loss associated with H1N1 infection. The company expects to submit the full data set for presentation in the future scientific meetings and peer review publications. These preclinical data suggest that civizibulin has a potential for treatment for hospitalized influenza patients at high risk for ARDS and death. The pathogenesis and mortality rates The hospitalized influenza patients who develop ARDS are similar to COVID-19-associated ARDS, representing a high unmet need and very limited treatment options. According to the CDC, and this is important, influenza burden estimates in the United States were up to 630 hospitalizations and 55,000 deaths in just the last six months. Accordingly, Vera is planning a double-blind, randomized, placebo-controlled Phase III clinical trial evaluating subizobulin in hospitalized adult influenza patients at high risk for ARDS. Moreover, the company is planning to expand the development of subizobulin for smallpox and Ebola viruses under the Animal Rules FDA regulatory pathway. So on April 11, 2023, the company announced positive results from a preclinical in vitro study evaluating the effects of subizobulin against a prototypical pox virus called the vaccinia virus, which demonstrated it's invisible and prevented both the release of the pox virus from infected cells and the spread of the pox virus to healthy cells. And this was conducted by a team of researchers led by Dr. Brian Ward, who's Associate Professor of Microbiology and Immunology, University of Rochester School of Medicine and Dentistry in New York. The company expects to submit the full data set for presentation in future scientific meetings and peer-reviewed publications. Based on the clinical data, preclinical data, The company plans to expand Sibizabulin program to include other serious virus infections that pose a global public health threat to society. Sibizabulin, as a host-targeted antiviral and broad anti-inflammatory agent, may be useful as a novel treatment not only against smallpox and other pox viruses, but it may also reduce the hyperreactive immune response triggered by pox virus that's responsible for severe pneumonia, ARDS, multi-organ failure, and death. The company plans to have pre-IND meetings with the FDA to discuss the animal rule regulatory requirements for assessing the efficacy of subizobulin, the smallpox virus, as well as the Ebola virus. Clinical human efficacy trials of drugs for preventing or treating smallpox and Ebola viruses are not feasible, and challenge studies in healthy subjects are unethical. Therefore, drugs for these indications are generally developed and approved under a regulatory pathway commonly referred to as the animal rule. FDA may grant marketing approval based on adequate and well-controlled animal efficacy studies when the results of those studies establish that the drug is reasonably likely to produce clinical benefit in humans. Now, as for our commercial business, the company's sexual health program consists of FC2, an FDA-approved commercial product for dual protection against unplanned pregnancy and sexually transmitted infections. The company sells FC2 both in the commercial sector and in the public health sector, both in the U.S. and globally. In the U.S., FC2 is available by prescription through multiple telemedicine internet pharmacy channels, as well as retail pharmacies. The company has launched its own dedicated direct-to-patient telemedicine pharmacy services portal platform to continue to drive sales growth. FC2 is also available to public health sector entities, such as state departments of health and 501c3 organizations. In the global public health sector, the company markets FC2 to entities including ministries of health, government health agencies, UN agencies, and non-profit organizations and commercial partners. The company had another FDA-approved product, Entati, which has been asked to write to the Alfield Capsules for use as a new treatment for benign prostatic hyperplasia that was approved by the FDA in December of 2021. On April 19, 2023, the company entered into an asset purchase agreement with Blue Water Biotech. The purchase price for the transaction was $20 million plus $80 million of potential sales milestones based on net revenues of Intafi after closing. I will now turn the call over to Michelle Greco, the CFO and CAO, to discuss the financial highlights. Michelle?