Veru Inc.

Good morning, ladies and gentlemen, and welcome to Veru Inc.' 's investors conference call. All participants will be in listen-only mode. Should 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 call over to Mr. Sam Fish. Veru 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 developments that 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 to Dr. Mitchell Steiner, Chairman, CEO, and President.

Good morning. With me on this morning's call are Dr. Gary Barnett, the Chief Scientific Officer, Michelle Greco, the Chief Financial Officer, Chief Administrative Officer, Michael Purvis, Executive Vice President, General Counsel of Corporate Strategy, and Sam Fish, Executive Director of Investor Relations and Corporate Communications. Thank you for joining our call. Vera is a late clinical stage biopharmaceutical company focused on developing novel medicines for the treatment of advanced breast cancer and for acute respiratory distress syndrome related to viral lung infections. Our drug development program includes Zinovastarm, a selective antigen receptor agonist, for the treatment of second-line hormone receptor-positive HER2-negative metastatic breast cancer, and Sibizabulin, a microtubule disruptor for the treatment of hospitalized COVID-19 and other types of viral-related ARDS. The company also has an FDA-approved commercial product, the FC2 female condom, internal condom, for the 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. We've had a very busy and productive third quarter fiscal year of 2023. This morning, we'll provide an update on the clinical development of breast cancer and viral ARDS drug candidates, as well as the good progress on the commercialization of our FC2 product. We'll also provide financial highlights for our third quarter fiscal year of 2023. Now, as a regard to our oncology program, the company's oncology drug pipeline is focused on the clinical development of Inovus Arm for the treatment of metastatic breast cancer. Inovus Arm is a different and new class of endocrine therapy for advanced breast cancer. Inovus Arm is an oral, new chemical entity, selective antireceptor agonist, that activates the androgen receptor, an androgen receptor-positive, estrogen receptor-positive HER2-negative metastatic breast cancer to suppress tumor growth without the unwanted masculinizing side effects and increases in hematocrit typically seen with androgens. And Novosarm has extensive non-clinical and clinical experience, having been evaluated in 25 separate clinical studies in approximately 1,450 subjects' doses, including three Phase II clinical studies in advanced breast cancer involving more than 250 patients. In the two Phase II clinical studies conducted in women with antigen receptor-positive ER-positive HER2-negative metastatic breast cancer, the Novus arm demonstrates significant anti-tumor efficacy in heavily pre-treated cohorts that failed estrogen blocking agents, chemotherapy, and the CDK4-6 inhibitors, and it was well-tolerated with a very favorable safety profile. The current standard of care for first-line treatment of ER-positive HER2-negative metastatic breast cancer is treatment with a CDK4-6 inhibitor in combination with an estrogen-blocking agent. Once the patient progresses while receiving this combination therapy, and if there's no specific genetic mutations are detected, the FDA-approved treatment choices are limited to either another estrogen-blocking agent or chemotherapy. As up to 90% of ER-positive HER2-negative metastatic breast cancers also have the antigen receptor, We're developing Inovasarm, a selective angio-receptive targeting agent, as another but very different hormone therapy for second-line treatment of ER-positive HER2-negative metastatic breast cancer. In preclinical studies, metastatic breast cancer tissue samples taken from patients who have ER-positive HER2-negative metastatic breast cancer that has become resistant to CDK4-6 inhibitors and estrogen-blocking agents were grown in mice. In these mice, treatment with Inovasarm in combination with a CDK4-6 inhibitor suppressed the growth of the human metastatic breast cancer greater than a CDK4-6 inhibitor alone. Interestingly, the CDK4-6 inhibitor treatment caused the metastatic breast cancer tissue to make higher amounts of antireceptor, which may explain the synergy of combining CDK4-6 inhibitor with Inovasarm and selective AR agonists. Further, Inovasarm treatment alone was also effective in suppressing the growth of CDK4-6 inhibitor, an estrogen-blocking agent-resistant human metastatic breast cancer tumors in mice. We're conducting a Phase III clinical Enabler II study, which enobis our monotherapy or in combination of bemacyclic, which is in CDK4-6 inhibitor, versus an estrogen-blocking agent, which is the active control, as a second-line treatment for AR-positive, ER-positive, or G-negative metastatic breast cancer. On March 30, 2023... accompanied with the FDA to gain further agreement on our Phase III clinical trial design and program. The Phase III study has been amended to accommodate the FDA's latest recommendations to support the registration of Inovasarm as a second-line treatment for patients with AR-positive, ER-positive, HER2-negative metastatic breast cancer who have tumor progression while receiving a CDK4-6 inhibitor plus an estrogen-blocking agent, in other words, first-line. The Phase III Enabler II study has recommended two stages. In stage one of the phase three study, the objectives are to optimize the dose of Inobisarm in the combination with abemacyclob and to assess the efficacy of Inobisarm as a monotherapy. In the clinical trial design of stage one, we will enroll 160 patients into five treatment arms of 32 patients each. The arms are as follows. Estrogen blocking agent, which is the active control, abemacyclob and Inobisarm nine milligram combination therapy, abemocyclo plus inovus arm 3-milligram combination therapy, abemocyclo plus inovus arm 1-milligram combination therapy, and inovus arm 9-milligram monotherapy. Primary endpoint for the stage 1 is an objective tumor response rates, also referred to as ORR. We are currently producing clinical supply of 1-milligram and 3-milligram inovus arm capsules for the additional dose optimization arms, which is expected to be available early next quarter. The stage one initial run-in enrolled three patients to assess the safety and pharmacokinetics of abemacyclib plus Inovasarm 9 mg combination. In this run-in portion, there were no drug-drug interactions between abemacyclib and Inovasarm, and there were no new safety findings. Further, the early preliminary clinical results show two partial responses, one stable disease in the first three patients based on local assessments, and all patients are or were on study for over nine months. By way of reference, the objective tumor response rates are about 4% for the estrogen blocking agent alone in similar patients as reported in the scientific literature. In stage two of the phase three study, we plan to enroll approximately 200 subjects in a multi-center open-label randomized one-to-one active control clinical study to evaluate the efficacy and safety of the Novosarm with and without abemacyclib therapy, depending on the outcome of the stage 1, versus an alternative antigen-blocking agent in subjects with AR-positive, HER2-negative breast cancer who have progressed while receiving a CDK4-6 inhibitor plus an estrogen-blocking agent. Again, first line. The primary endpoint for the stage 2 of the phase 3 study is progression-free survival. Our current plan is to have the phase three stage one clinical results by late 2024 or early 2025. If a Novus arm monotherapy or a Bema cyclic plus a Novus arm combination therapy compared to an estrogen blocking agent, which is the active control, demonstrates significant improvement in ORR, which is considered a surrogate endpoint for clinical benefit, then the company plans to meet with the FDA to consider an accelerated approval regulatory pathway based on the clinical data from the stage one portion of the phase three study. whereas the Stage 2 portion of the Phase 3 clinical study will serve as the confirmatory study with progression-free survival as the primary endpoint. In January 2022, Vera entered into a clinical trial collaboration and supply agreement through which Eli Lilly supplies abemacycline for the enabler to Phase 3 clinical trial. Now let's turn to our viral ARDS infectious disease program. The company is developing subisobulin 9 milligrams, which is both a host-targeted antiviral and broad anti-inflammatory properties, as a two-pronged approach to the treatment of hospitalized patients with viral lung infections at high risk for ARDS and death. The company has completed a positive phase 2 and a positive phase 3 COVID-19 clinical studies that have demonstrated that subisobulin treatment resulted in significant mortality benefit in hospitalized moderate to severe patients with COVID-19 viral lung infections and high risk for ARDS. As viruses that cause lung infections and ARDS do so in a similar way, the company believes that sabizabulin has the potential to be a treatment for all types of viral-induced lung infections, not only SARS-CoV-2, but also influenza A or B, respiratory syncytial virus, also known as RSV, and other viruses in hospitalized patients on oxygen who are at high risk for ARDS. plan to meet with the FDA in September to expand the patient population of the agreed upon phase three confirmatory COVID-19 study into a phase three study to treat hospitalized adult patients who have any kind of viral lung infection who are on oxygen support and at risk for ARDS. The way to think of it is COVID-19 represents one of many respiratory viruses that cause lung infections, pneumonia, that may progress to ARDS and death, for which we've already conducted a successful phase three study Demonstrating a mortality benefit was the visibulin treatment. The phase three 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 a proportion of patients that died by day 60. And based on the 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 benefit, and they identified no safety concerns. In the interim analysis, treatment with subisobulin 9 mg once daily 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 EUA meeting with the FDA to discuss the submission of an EUA application for subisobulin COVID-19 treatment. On June 7, 2022, at the request of the FDA, the company submitted a request for FDA emergency use authorization for Subicibulin in adult hospitalized moderate to severe COVID-19 patients at high risk for ARDS and death. On February 28, 2023, FDA notified the company that had declined to grant the company's request for emergency use authorization. In communicating its decision, the FDA stated that despite the FDA declining to issue an EUA for Subicibulin at this time, the FDA remains committed to working with the company in the development of subisobulin. Separately, at the FDA's advisory committee meeting, the FDA's statistical efficacy summary of our Phase III clinical study was presented in their slide 88 of the FDA's presentation and was as follows. The study met the statistical criterion for stopping at the interim analysis. Data in all 204 subjects completing the study indicated treatment benefit for all-cause mortality at day 60. Results robust to missing data assumptions. Exploratory analysis indicate minimal impact of baseline imbalances in timing of enrollment or duration of standard of care. And there was a positive numerical trend consistent across subgroups defined by age, baseline WHO category, region, and standard of care use at baseline. 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 to evaluate subisobulin treatment of hospitalized moderate to severe COVID-19 patients who had risk for ARDS and the path forward to submit a new EUA application and or an NDA. The FDA agreed to a confirmatory Phase III randomized one-to-one multicenter efficacy and safety study of subisobulin 9 mg oral daily dose plus standard of care versus placebo plus standard of care in 408 hospitalized adult patients with moderate to severe SARS-CoV-2 infection with high-risk ARDS. The indication, in other words, the patient population for subisobulin, will also be expanded to include all hospitalized moderate to severe COVID-19 patients. In other words, WHO-4, which is passive low oxygen, WHO-5, forced high-flow oxygen, and WHO-6, mechanical ventilation, without a requirement for a comorbidity. The primary efficacy endpoint would be all-cause mortality at day 60. Secondary endpoints include days in the hospital, days in the ICU, days on mechanical ventilation, and the proportion of patients alive without respiratory failure, and an exploratory endpoint, which would 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, Two planned interim efficacy analyses will be conducted. The first planned interim analysis is expected to occur when 204 patients, which is 50% of the population, has completed the day 60 primary efficacy endpoint. And the second planned interim analysis is expected to occur when 290 patients, that's 71% of the patient population, have completed the day 60 primary efficacy endpoint. If either of the interim efficacy analyses meet the statistical significance criteria, the trial could be stopped for efficacy. Should the pre-specified primary efficacy endpoint analysis demonstrate statistically significant effect on all CARs mortality favoring subizobulin, the company may consider a new request for an EUA or a submission of an NDA as the company would potentially have two adequate and well-controlled trials for review. As the program has fast-track designation, enrolling NDA submission is a possibility for subizobulin. Now, sabizabulin does have activity against influenza A. So on April 4, 2023, the company announced results from a preclinical study of sabizabulin demonstrating robust anti-inflammatory activity with improved outcomes in the H1N1 influenza-induced pulmonary inflammation mouse ARDS model. And this was conducted by a team of researchers at LabCorp Early Development Laboratories in the United Kingdom. Sabizabulin treatment resulted in a statistically significant decreased in a total number of inflammatory cells and a reduction of key cytokines and chemokines in lung fluid. Clinically, subisobulin treatment resulted in a reduction in severity of lung inflammation by histopathology and a dose-dependent improvement in lung function. As for our case, we're expanding the indication to all types of viral lung infections in ARDS. Well, viruses cause up to one-third of community-acquired pneumonia. and viral infections can trigger the immune system to release an overwhelming amount of inflammatory proteins known as a cytokine storm. A cytokine storm causes tissue damage in lungs that lead to ARDS, and patients who develop ARDS have a high mortality rate, as ARDS results from the over-exaggerated immune inflammatory response by patients to the virus infection, rather than by direct injury from the virus itself. An antiviral agent alone may not be effective. Cibizobulin is a host-targeted antiviral and broad-spectrum anti-inflammatory agent. It has the potential to address the virus infection and the inflammation caused by the cytokine storm that causes ARDS, multi-organ failure, and death. Now, we're in the middle of a summer surge for COVID-19, and another one is expected in the fall and the winter. In the current endemic phase, COVID-19 infection is estimated to be the fourth leading cause of death in the United States in 2023. ARDS remains a 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 the patients who die from COVID-19, there's a 90% incidence of ARDS. As the COVID-19 endemic continues, there's also a need to remain vigilant and focus on preparedness for the next wave of infections involving new viral strains. COVID-19 will be a problem for the foreseeable future, and there's a need for effective therapies, especially for these hospitalized patients with moderate to severe COVID-19 infection and high rates for ARDS. Further, the influenza burden estimates, according to the Center for Disease Control and Prevention in the United States, was up to 638. hospitalizations and up to 55,000 deaths in the past nine months. RSV was responsible for 177,000 hospitalizations and 14,000 deaths among 65 years and older adults in the United States. Interestingly, the pathogenesis and the mortality rates for hospitalized influenza and RSV adult patients who have viral lung infections are and who develop ARDS are similar to the COVID-19-associated ARDS. Patients with viral lung infections who are on oxygen support and who are at risk for ARDS represent a high unmet need and a potentially large market opportunity with very limited treatment options. Viral-induced pneumonia and lung infection is the leading cause of hospitalization in the U.S., according to the American Thoracic Society. So although we have reached agreement with the FDA for the design of the Phase III confirmatory COVID-19 clinical trial, we believe that given the changing COVID-19 landscape, the need for an agent like Sibisabulin that has the potential to provide mortality benefit in all types of viral lung infections that could lead to ARDS and death, and viral lung infections and ARDS that are a serious unmet medical need, the company now plans to meet with the FDA again. to reach agreement on the design of the proposed expanded Phase III confirmatory study, evaluating subisobulin 9 milligrams for the treatment of hospitalized adult patients who have viral lung infection on oxygen who had high-risk ARDS and death, regardless of the type of virus, and to confirm that the completed positive Phase III COVID study that we've already done and the proposed Phase III for all viral ARDS study Together, it will be sufficient to submit an NDA for the broader indication for the treatment of all hospitalized adult patients with viral lung infections on oxygen support and high-risk ARDS. The FDA has granted a meeting with VIRU in September of 2023. We will provide an update on the viral lung infection ARDS program after we meet with FDA and have appropriate clarity on this proposed study. Now, if we reach agreement with the FDA, we will not pursue the Phase III confirmatory COVID-19-only study or the influenza A or B-only study. Now, the clinical precedent that informed us of this potential change in the regulatory and clinical strategy was actually set by AstraZeneca. AstraZeneca has begun enrolling a Phase III efficacy and safety of tozoracumib in hospitalized patients receiving standard care for all types of viral lung infections requiring supplemental oxygen. And it's listed in clinicaltrials.gov, NCT 05624450. The primary endpoint is the proportion of patients that die or progress to invasive mechanical ventilation by date 30. And toziracumab is an anti-inflammatory, anti-IL33 antibody that inhibits the IL family of cytokines. Now, interestingly, in hospitalized COVID-19 patients on supplemental oxygen, similar anti-inflammatory antibody treatments had an absolute reduction in mortality of less than 5%. So, anakinva, which is an IL-1 antibody, had a less than 4.4% absolute reduction, and tocilizumab, an IL-6 antibody, had less than 4.2% absolute reduction in mortality. In our Phase III COVID-19 study, which included patients on mechanical ventilation, treatment with subizobulin, a dual antiviral and broad anti-inflammatory agent, resulted in a 20% absolute reduction in mortality. Now, in April, we submitted a request to the FDA to re-evaluate FDA's declination of our EUA for subizobulin through FDA's formal dispute resolution process. The FDA denied our request for entry into the process. FDA stated that they're committed to working with us on subizobulin They have recommended we continue with our current clinical plan and to reach out to the FDA as often as needed under the FAST-TRACK designation to support subvisivulins development. Interestingly, in another development, the Influenza and Emerging Infectious Disease Division of the Biomedical Advanced Research and Development Authority of the United States Department of Health and Human Resources, BARDA, is planning a large multicenter clinical trial in hospitalized adult patients with ARDS. Barta states, quote, this clinical trial will evaluate the safety and efficacy of novel threat agnostic and host-directed therapeutics that can address ARDS caused by known and unknown health security threats, such as pandemic influenza, COVID-19, other emerging infectious diseases, and chemical, biological, radiological, and nuclear incidents, end quote. Veer was selected as one of the finalists and presented to Busy Buell and to BARDA as a novel threat agnostic and host-directed therapeutic agent with broad anti-inflammatory and anti-inflammatory activities in hospitalized adult patients at high-risk ARDS. The ARDS therapeutics pitch event was called Just Breathe, which was conducted at the end of July of 2023. We expect to be notified of a decision in early Q4 2023. BARDA plans to select up to three therapeutic candidates representing different mechanisms of action versus placebo for participation in the planned BARDA-sponsored ARDS clinical study, which would consist of 200 subjects per arm. As you know, we're pursuing smallpox and Ebola virus. There are other viral infections that may also lead to ARDS and death, and posing a global public health threat society includes smallpox and Ebola virus. A single outbreak involving any one of these viruses would be an immediate global emergency with limited existing options for treatment. On April 11, 2023, we announced positive results from a preclinical in vitro study conducted by a team of researchers led by Dr. Brian Ward, Associate Professor of Microbiology and Immunology, University of Rochester, New York. The preclinical study evaluated the effects of severe healing against the prototypical pox virus, called vaccinia virus, which demonstrated sabizabulin prevented both the release of the pox virus from infected cells and the spread of the pox virus to healthy cells. Sabizabulin as a host-directed antiviral and broad anti-inflammatory agent may be useful as a novel treatment not only against smallpox and other pox viruses, but also may reduce the hyperreactive immune response triggered by pox virus that's responsible for severe pneumonia, ARDS, multi-organ failure, and death. The company has a scheduled pre-IND meeting with FDA this month to discuss the animal rule regulatory requirements for assessing the efficacy of civizibulin for smallpox virus. As you know, clinical human efficacy trials of drugs for preventing or treating smallpox virus are not feasible, and you can't challenge studies, do challenge studies where you actually try to give smallpox to healthy subjects because it's unethical. Drugs for these indications are generally developed and approved under a regulatory pathway commonly referred to as the animal rule. The FDA may grant marketing approval based on adequate and well-controlled animal efficacy studies when the results of those studies establish the drug is reasonably likely to produce clinical benefit in humans. Now I'd like to turn to our commercial business. The company sells FC2 in both the U.S. commercial sector and in the public health sector in the United States and globally. As the only FDA-approved female internal condom in the United States, FC2 is a well-established and serious business. We have sold over 750 million female condoms worldwide, and since 2017, FC2 has generated over $213 million in net revenue. We have and we plan to continue to invest the profits from the FC2 business to help fund the clinical development of our drug candidates, Inovus Arm and Subisibulins. The telehealth channel has become an important commercial strategy in the United States for access to birth control products, especially for our product FC2 as a non-hormonal and latex-free option to prevent pregnancy and transmission of sexually transmitted infections. In a recent survey of 6,000 respondents conducted by the Kaiser Family Foundation, 82% of the respondents said, that the COVID-19 pandemic was not, not the reason they first accessed birth control online, which supports our strategy to provide contraceptive access using the telehealth portal. In the same survey, almost 5% of women reported getting the FC2 female condom was actually the number three most prescribed contraceptive behind pills in emergency contraception. As a point of reference, We believe this is good news about the potential commercial opportunity for FC2 in the United States contraceptive market. If 5% market share shown in this survey is able to be extrapolated to the estimated $8.3 billion contraceptive market in 2022, with projections to grow at a compound annual growth rate of approximately 5.1%, there is potentially a greater $400 million market opportunity for FC2. Accordingly, To have more direct control over promotion and distribution, to maximize U.S. prescription sales of FC2, the company made a decision last year to launch its own independent FC2-dedicated direct-to-patient telehealth telecontraceptive portal. The company continues to invest in and grows its direct-to-patient telemedicine portal, as well as adding new telehealth and internet fulfillment pharmacy partners so that we can provide coverage in all 50 states in the United States. Having taken the time to refine our marketing, drive operational improvements, and enhance the patient experience during the initial launch phase, there are increasing new prescriptions being written and filled through our FC2 telehealth portal. During the third quarter of fiscal year 2023, we saw our new prescriptions grow over 115%, providing prescriptions to approximately 4,400 patients. We believe these results support our strategy and demonstrate high demand for FC2. We plan to continue to grow and deepen our investment in a profitable way by further expanding our presence both in social media channels and online search. Now, in the U.S. public sector, the company has seen a 115% increase in volume there the third quarter fiscal year 2023 versus third quarter fiscal year 2022. The growth is attributable to key U.S. public sector partnerships, including the company's recent announcement in April 2023 that has entered into a purchasing agreement with AFAXIS Group Services, the number one provider of oral and emergency contraceptives in the U.S. clinics. In the global public health sector outside the U.S., the company markets FC2 to entities including ministries of health, government health agencies, U.N. agencies, not-for-profit agencies, and commercial partners. We're currently supplying a large multi-year South African tender for female condoms, which is expected to continue until 2025. and we have seen sales grow in the current year as the current tender launched. We also expect a formal Brazil tender process to commence later this year. Based on our experience to date, we expect revenue from our U.S. FC2 prescription business will demonstrate robust growth, both from our dedicated FC2 telehealth portal and from the addition of new telehealth and other commercial distribution partnerships. Furthermore, we intend to continue to leverage partnerships with entities in the U.S. public sector, such as state departments of health, 501c3 organizations, to generate the strong unit sales growth we have seen in fiscal 2023 from this channel. Now, the company had another FDA-approved product called Intadfeed, which is a product for new treatment for BPH that was approved by the FDA in December of 2021. The product is part of the company's sexual health program. On April 19, 2023, the company entered into an asset purchase agreement with Blue Water Vaccines to sell substantially all the assets related to Intadfi. The transaction closed April 19, 2023, and the purchase price for the transaction was $20 million plus $80 million in future sales milestones. I will now turn the call over to Michelle Greco, CFO, CAO, to discuss the financial highlights. Michelle?