Veru Q1 2025 Earnings Report

Veru EPS Results

• Actual EPS: -$0.07
• Consensus EPS: -$0.08
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

Veru Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $2.98 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Veru Announcement Details

• Quarter: Q1 2025
• Date: 2/13/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, February 13, 2025
• Conference Call Time: 8:00AM ET

Veru (NASDAQ:VERU), a late clinical stage biopharmaceutical company, focuses on developing medicines for treatment of metabolic diseases, oncology, and acute respiratory distress syndrome (ARDS). Its marketed products comprise FC2 female condom for the dual protection against unplanned pregnancy and the transmission of sexually transmitted infections. The company's development program includes enobosarm, a selective androgen receptor modulator for treatment of augment fat loss and to prevent muscle loss in sarcopenic obese and overweight elderly patients; Enobosarm, a selective androgen receptor modulator for the treatment of AR+ ER+ HER2- metastatic breast cancer; and sabizabulin, a microtubule disruptor for the treatment of hospitalized patients with viral lung infection on oxygen support who are at high risk for viral induced ARDS and death. The company was formerly known as The Female Health Company and changed its name to Veru Inc. in July 2017. Veru Inc. was incorporated in 1971 and is headquartered in Miami, Florida.

Veru Q1 2025 Earnings Call Transcript

Key Takeaways

• In the Phase 2b QUALITY study, Enobasarm plus semaglutide met its primary endpoint by reducing lean mass loss by 71% compared to placebo and shifted total weight loss composition to over 90% fat (vs. 68% in controls), with the 3 mg dose achieving >99% fat-specific loss.
• Enobasarm treatment also delivered a 54% mean reduction in participants experiencing a ≥10% decline in stair-climb power, demonstrating a clinically meaningful preservation of muscle function.
• An ongoing Phase 2b extension trial will evaluate whether Enobasarm alone can maintain muscle and prevent post-GLP-1 therapy fat regain, with top-line results expected in Q2 2025, and a 52-week Phase 3 design is planned following an end-of-Phase 2 meeting with the FDA.
• Veru is advancing Cebizobulin, an oral microtubule disruptor, as a broad anti-inflammatory agent to slow progression or promote regression of atherosclerotic cardiovascular disease, targeting a small Phase 2 proof-of-concept study with coronary CT angiography endpoints.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to Veru Inc. Investors Conference Call. All participants will be in listen only mode. After this morning's discussion, there will be an opportunity to ask questions. Please note that this event is being recorded.

[Operator]

I would now like to turn the conference over to Mr. Samtush, Verruckt Inc. Executive Director, Investor Relations and Corporate Communications. Please go ahead.

[Samuel Fisch, Executive Director, Investor Relations & Corporate Communications at Veru]

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 of 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 Doctor.

[Samuel Fisch, Executive Director, Investor Relations & Corporate Communications at Veru]

Mitchell Steiner, VeriRing's Chairman, CEO and President.

[Mitchell Steiner, Chairman, President & CEO at Veru]

Good morning. With me

[Mitchell Steiner, Chairman, President & CEO at Veru]

on this morning's call are Doctor. Gary Barnett, Chief Scientific Officer Michelle Greco, Chief Financial Officer and Chief Administrative Officer Michael Purvis, General Counsel and Executive Vice President of Corporate Strategy and Sam Fish, the Executive Director of Investor Relations and Corporate Communications. Thank you for joining our Q1 fiscal year twenty twenty five earnings call. Veera has evolved into a late clinical stage biopharmaceutical company focused on developing medicines for the treatment of cardiometabolic and inflammatory diseases. Our drug development program consists of two clinical stage new chemical entities, Enobasarm and Cebizobulin.

[Mitchell Steiner, Chairman, President & CEO at Veru]

EnovusARM is an oral selective antireceptor modulator, SARM, and is being developed in a new generation of drugs that make GLP-one receptor agonist wave reduction more tissue selective by preserving lean mass, which is muscle, and physical function and augmenting fat loss in older patients who are overweight and will have obesity. Cebizobulin is an oral microtubule disruptor and it's being developed as a broad anti inflammatory agent to reduce inflammation to slow progression or promote the regression of atherosclerotic cardiovascular disease. On 12/30/2024, the company sold its FDA approved commercial product, the FC2 female condom. Let's talk about our obesity program. Obesity, as defined by FDA, is a disease of excess body adiposity or fat.

[Mitchell Steiner, Chairman, President & CEO at Veru]

The medical objective is to treat obesity by weight reduction drug or drugs in combination should be to reduce excess body fat to improve the morbidity and mortality associated with obesity. GLP-one receptor agonists have been shown to produce significant weight loss in patients who are overweight and have have obesity. Unfortunately, the weight loss is tissue non selective with loss of both fat and lean mass, which contains muscle. Of the total weight loss, twenty percent to fifty percent of total weight loss reported by patients was attributable to lean mass loss. According to Medicare, twenty two percent of The U.

[Mitchell Steiner, Chairman, President & CEO at Veru]

S. Population is greater than 60 years of age and represents seventy million people. Based on the Centers for Disease Control and Prevention data, forty one point five percent of older adults are obese and could benefit from weight reduction medication. Up to thirty four point four percent of patients over the age of 60 with obesity in The United States have what's called sarcopenic obesity. Saropenic obese patients are patients who have obesity and low muscle mass at the same time and are potentially at the greatest risk for developing critically low muscle mass when taking the current approved GLP-one receptor agonist.

[Mitchell Steiner, Chairman, President & CEO at Veru]

We therefore believe there is an urgent unmet need for a new generation of obesity drugs like enobasarm that can prevent the loss of muscle and allow the preferential loss of fat in older patients who are overweight or have obesity receiving GLP-one receptor agonist therapies for weight reduction. Novosarm is a next generation drug that makes weight reduction by GLP-one receptor agonist drugs more tissue selected for fat loss. Let's talk about our Phase 2b quality clinical study update. On 01/27/2025, the company announced positive top line results from the Phase 2b quality clinical study, which is a multicenter, double blind, placebo controlled, randomized, dose finding clinical trial designed to evaluate the safety and efficacy of lenobasum three milligrams, and then we saw six milligrams or placebo as a treatment to augment fat loss and muscle loss in sarcopenic obese overweight patients over the age of 60 receiving semaglutide, Gekovi. The study was conducted in 14 clinical sites in The United States.

[Mitchell Steiner, Chairman, President & CEO at Veru]

The Phase 2b quality study is the first human study to report the effects of a muscle preservation drug candidate on body composition in older patients who have obesity or overweight receiving a GLP-one receptor agonist. In a top line efficacy analysis, the trial met its prespecified primary endpoint with a statistically significant and clinically meaningful benefit in the preservation of total lean body mass in all patients receiving Inovisong plus semaglutide versus placebo plus semaglutide alone at sixteen weeks. There was 71% relative reduction in lean mass loss and that p value of 0.002. The Inovisong three milligram plus somagnetide was the best dose with a greater than 99% mean relative reduction in loss of lean mass, that p value is less than 0.001. And Inovisong six milligram somagnetide dose is not much better than the Inovozymes three milligram somaglutide dose on lean mass.

[Mitchell Steiner, Chairman, President & CEO at Veru]

As for the secondary clinical endpoints, Inovozymes somaglutide treatment resulted in dose dependent greater loss of fat mass compared to placebo and semaglutide alone, with a six milligram dose having a 46% greater relative loss of fat mass compared to placebo plus semaglutide group at sixteen weeks. And that P value is 0.014. Although Inovosan semaglutide significantly preserved lean mass, the additional loss of fat mass caused by Inovosan treatment was able to replace the lean mass preserved to allow a similar net mean weight loss with semaglutide at sixteen weeks. Accordingly, the tissue composition of the total weight loss shifted to greater and selective loss of fat with the Novozarm treatment. The median percentage of total weight loss in the placebo somatic type group that was due to lean mass was 32% and the estimated fat loss was 68%.

[Mitchell Steiner, Chairman, President & CEO at Veru]

In contrast, in the all Inovosum plasimatic type group, total weight loss due to lean mass was 9.4% versus estimated fat loss of 90.6%. For enobasone three milligrams placentatide, it was a 0.9% lean mass loss versus 99.1% fat loss. Therefore, enobasone plus semaglutide improved changes in body composition, resulting in more selective and greater loss of adiposity than subjects receiving placebo plus semaglutide. Physical function. Physical function was measured by the STAIR CLIMB test.

[Mitchell Steiner, Chairman, President & CEO at Veru]

Climbing stairs is an activity of daily living, and the STAIR CLIMB test measures functional muscle strength, balance and agility. The declines in performance measured by Stericline tests predicts in older patients higher risk for mortality, mobility disabilities, gait difficulties, hospitalizations, falls and bone fractures. As a point of reference, stericline power declined by 1.38% annually with aging according to Van Roy, and this is a plus one twenty nineteen reference. A responder's analysis was conducted using a greater than 10% decline in stair climb power as a cutoff of sixteen weeks. That cutoff represents an eight to ten year loss of stair climb power due to aging.

[Mitchell Steiner, Chairman, President & CEO at Veru]

In our study, the loss of lean mass mattered as forty two point six percent of patients on placebo semaglutide had at least a 10% decline in Stericline Power physical function in sixteen weeks. This is the first human study to demonstrate that older patients who are overweight will have obesity receiving semaglutide GLP-one receptor agonists who are at higher risk for accelerated loss of lean mass with physical function decline. The all in Novozarm zymactotide group had a statistically significant and clinically meaningful 54.4% mean relative reduction in a proportion of subjects that lost at least 10% stericline power compared to placebo plus semaglutide group. That p value is 0.0049. In the Novoson three milligram semaglutide group, there was a 62.4% relative reduction in the proportion of patients who released a 10% decline in Steriflion Power from baseline versus placebo for semaglutide, and that P value is 0.0066.

[Mitchell Steiner, Chairman, President & CEO at Veru]

In the Inovalent six milligram for semaglutide group, there was a forty six point two percent relative reduction of proportion of patients with at least a 10% decline in Stericline power from baseline versus placebo plus semaglutide group, and that P value is 0.0505. Therefore, the Novusarm treatment preserved lean mass muscle, which translated into the reduction in proportion of patients that had a clinically significant Stericline physical function decline versus subjects receiving semaglutide alone. Novusarm represents the next generation of drug that improves GLP-one receptor agonist therapy to result in tissue selective quality weight reduction. That is Novozarm plus semaglutide improved changes in body composition, which resulted in more selective and greater loss of adipose, that's fat, than subjects receiving placebo plus semaglutide alone. We're very excited about the top line results.

[Mitchell Steiner, Chairman, President & CEO at Veru]

The FXE data provides a proof of concept that you can retain lean mass, improve physical function and lose enough fat mass to make up for the lean mass retained to have the same weight loss as semaglutide alone in sixteen weeks. Our expectation is that when patients are treated longer with an opusompromat of semaglutide, this selective and greater loss of adiposity should translate to greater quality weight reduction than with somagnetide alone. As for safety, safety data for the Phase 2b quality study remains blinded as the Phase 2b extension clinical study portion is ongoing. The unblinded complete safety set will be available after the Phase 2b extension study is completed. However, the aggregate blinded safety data have not shown any significant differences compared to previous studies in the Novus arm and what is already expected with GLP-one receptor agonist.

[Mitchell Steiner, Chairman, President & CEO at Veru]

The independent data monitoring committee met this week, 02/10/2025, to evaluate the unblinded safety data, and they made the recommendation to continue the study as designed. So this week, they met and made that recommendation. After completing the efficacy dose finding portion of the Phase 2b quality clinical study, the participants continued into the Phase 2b extension trial where all patients have stopped treatment with semaglutide, but they continue taking placebo, Inovisarm three milligrams and Inovisarm six milligrams in a blinded fashion for twelve weeks. The Phase 2b extension trial will evaluate whether Inovisarm alone can maintain muscle and prevent fat regain that generally occurs after discontinuing GLP-one receptor agonist. The top line results of the separate blinded Phase IIb extensive clinical study are expected in the second quarter of calendar twenty twenty five.

[Mitchell Steiner, Chairman, President & CEO at Veru]

Company plans to present the full clinical efficacy and safety dataset for the Phase 2b quality clinical study in future scientific conferences and publications after the Phase 2b extension portion of the study is completed and unblinded. As the Phase 2bEquality study has positive top line clinical results, we plan to move forward to request an end of Phase two meeting with FDA. We have previously met with FDA to discuss our regulatory path forward as an improvement in body composition drug, and the FDA has provided general advice on Phase III design. Based on the successful Phase II quality clinical trial, we plan to run a similar study as a Phase III study. The duration of treatment will be expected to be fifty two weeks, which will allow us to also capture the longer term benefits of Innovasarm improvements on body composition for greater loss of adiposity and weight reduction.

[Mitchell Steiner, Chairman, President & CEO at Veru]

As for the novel Innovasarm modified release oral formulation, as you know, VERU is currently developing a novel patentable modified release formulation for Novosarm. We anticipate the actual formulation, pharmacokinetic release profile and method of manufacturing will be subject to future patents. The drug product formulation is currently in animal trials and is anticipated to be available for the Phase I bioavailability clinical trial during the first half of calendar twenty twenty five. The expectation is that the oral Novozarm modified release drug formulation will be utilized for the Phase III clinical studies and for commercialization. Our new program is the atherosclerosis inflammation program.

[Mitchell Steiner, Chairman, President & CEO at Veru]

So given the positive recent positive top line results from the Phase 2b quality study evaluating Novusarm as a cardiometabolic agent that has the potential to preserve muscle organ fat in overweight in obese patients receiving GLP-one receptor agonist therapy for weight reduction, Viro has evolved its drug development strategy for sebizibulin and is exploring the possibility of the clinical development of sebizibulin, which is a novel oral broad anti inflammatory agent for the treatment of the inflammation in atherosclerotic cardiovascular disease. The company believes there are compelling scientific evidence and rationale to evaluate SERIZIVUELIN as a treatment for inflammation associated with atherosclerotic cardiovascular disease. More specifically, atherosclerotic coronary artery disease remains the leading cause of mortality worldwide. Inflammation and high cholesterol strongly contribute to atherosclerotic cardiovascular disease. It appears that the pathogenesis and progression of coronary artery disease, however, is largely driven by inflammation in response to the astromatous plaques containing cholesterol in the arterial wall.

[Mitchell Steiner, Chairman, President & CEO at Veru]

Even with maximum cholesterol reduction therapies, there remains a major and largely untreated residual inflammation risk. The realization that the combined use of aggressive lipid lowering and inflammation inhibiting therapies might be needed to further reduce atherosclerotic risk has sparked the search for anti inflammatory medicines that can lower the risk of atherosclerotic events in patients of coronary artery disease. An old drug, colchicine, which inhibits tubulin polymerization to disrupt microtubules resulting in broad anti inflammatory activity. Recent randomized controlled trials assessing the role of low dose clocovacine to treat inflammation to reduce major adverse cardiovascular events had promising results, demonstrating a reduction in cardiovascular risk. Colchicine lowered major adverse cardiovascular events by thirty one percent among those with stable coronary artery disease by twenty three percent of patients following a recent myocardial infarction.

[Mitchell Steiner, Chairman, President & CEO at Veru]

This magnitude of benefit is greater than what has been observed in contemporary trials of lipid lowering agents, including those with PCSK9 inhibitors. Data from these trials led the FDA just recently in June of twenty twenty four to approve colchicine as the first anti inflammatory drug for reducing cardiovascular events in patients with established atherosclerotic cardiovascular disease. However, while colchicine may be the first FDA approved drug to treat atherosclerotic inflammation, unfortunately, colchicine had significant safety concerns that may limit this expected widespread use. Colchicine has high potential for drug drug interactions with commonly used cardiovascular drugs, including almost all statins. In contrast, virozabizobulin is a new molecular small molecule that targets the colzabizobulin binding site on beta tubulin.

[Mitchell Steiner, Chairman, President & CEO at Veru]

Like colzabizobulin, cepizobulin inhibits microtubule polymerization and has demonstrated the ability to reduce the most important inflammatory mediators that play a role in the initiation and the progression of atherosclerotic coronary artery disease. In contrast cepizobulin, to bisibulin has stable pharmacokinetics, low potential for drug drug interactions, and thus, bisibulin may be administered potentially more safely as a secondary therapy in combination with statin therapy for the reduction of inflammation to slow the progression and promote the regression of atherosclerotic cardiovascular disease. Overall preclinical data from the in vitro in vivo inflammatory study show that sebizipulline treatment suppressed all the cytokines and chemokines tested. And in Phase II and Phase III pulmonary inflammation COVID-nineteen clinical studies, sevizabulin has demonstrated broad anti inflammatory activity. Safety database consists of two sixty six dose patients from previous severe clinical development programs.

[Mitchell Steiner, Chairman, President & CEO at Veru]

The company's decision to explore this major cardiometabolic indication was based on the significant unmet medical need to treat inflammation in our atherosclerotic cardiovascular disease, the large global market opportunity, the current clinical and safety subizumabulin database of two sixty six patients, the high probability of success given that cabozabulin's drug mechanism of action is similar to colchicine, strong intellectual property position and is consistent with the company's focus on cardiometabolic diseases. Furthermore, the company believes cepizumabulin may be evaluated in small Phase two dose finding proof of concept study to assess the progression of coronary atherosclerosis in patients using the primary endpoint of coronary plaque volume and composition measured by coronary CT angiography imaging. Company decides to pursue the Phase II clinical study. The company plans to partner with the Colorado Prevention Center in Aurora, Colorado and the Lundquist Institute in Torrance, California. We were just having this pre IND meeting with the FDA Division of Cardiology and Nephrology Center for Drug Evaluation and Research in 12/26/2024.

[Mitchell Steiner, Chairman, President & CEO at Veru]

The indication for discussion was the use of cebizobulin, the slow progression and promote the regression of atherosclerotic disease in patients with coronary artery disease. The FDA agreed that there remains an unmet medical need based on disease pathophysiology and concurred with a general design of the small Phase two study using coronary CT angiography imaging as a primary endpoint. The FDA also requested the company conduct chronic non clinical toxicology animal studies to support the chronic use of subizibulin for this indication. The chronic non clinical animal studies are expected to be completed and a new IND for the proposed indications expected to be submitted by the first half of calendar twenty twenty six. VERU currently has sufficient drug substance to supply the proposed Phase II clinical study.

[Mitchell Steiner, Chairman, President & CEO at Veru]

I will comment on the FC2 female condom sale. On 12/30/2024, we sold our FC2 female condom business to an affiliate of REVA Ridge Capital Management, LP, a New York City based investment management firm for $18,000,000 subject to adjustment as set forth in the purchase agreement, which Michelle Greco will discuss in a few moments. The monetization of the FC2 business allows VERU to be a pure biopharmaceutical company focusing its additional non dilutive resources on the execution and development of its promising late stage clinical pipeline. I will now turn the call over to Michelle Greco, CFO and CEO, to discuss the financial highlights. Michelle?

[Michele Greco, Chief Financial Officer and Chief Administrative Officer at Veru]

Thank you, Doctor. Steiner. As Doctor. Steiner indicated, on 12/30/2024, VERU sold the FC2 female condom business to Clear Future Inc. The purchase price was $18,000,000 in cash, subject to adjustment as set forth in the purchase agreement for the transaction.

[Michele Greco, Chief Financial Officer and Chief Administrative Officer at Veru]

Net proceeds from the sale of the FC2 female condom business were approximately $16,400,000 after selling costs and other purchase price adjustments, but before a change of control payment of $4,200,000 owed to SWK Holdings LLC pursuant to a residual royalty agreement for a 2018 financing transaction. The loss on the sale of the FC2 female condom business is approximately $4,200,000 The difference between the estimated net proceeds of $16,400,000 and the total carrying value of the FC2 business of $20,600,000 On 12/30/2024, the carrying value of the FC2 female condom business was comprised primarily of deferred income tax assets of $12,300,000 accounts receivable of $4,600,000 and inventory of $3,400,000 partially offset by accrued expenses and other current liabilities of $1,500,000 Liabilities associated with the residual royalty agreement, which totaled $9,900,000 at 09/30/2024, were extinguished. The sale of the FC2 female condom business represents a change in strategy, allowing the company to focus all of its efforts exclusively on drug development and also affects how we present our operations and financial results. In our financial statements, all direct revenues, costs and expenses related to the FC2 female condom business are classified within the loss from discontinued operations net of tax in the statements of operations.

[Michele Greco, Chief Financial Officer and Chief Administrative Officer at Veru]

Let's review the results for the three months ended 12/31/2024. Research and development costs increased to $5,700,000 from $1,700,000 in the prior quarter. The increase is due to $4,300,000 in expenses related to the company's Innovasarm Phase IIb quality clinical study for higher quality weight loss. Selling, general and administrative expenses were $5,200,000 compared to $6,700,000 in the prior quarter. The decrease is primarily due to a decrease in share based compensation and a decrease in headcount from 23 to 22.

[Michele Greco, Chief Financial Officer and Chief Administrative Officer at Veru]

We recognized a gain on the sale of Ententeff assets of $695,000 compared to a gain of $918,000 in the prior quarter, which is based on non refundable consideration received related to promissory notes due to VERU. In conjunction with the sale of the FC2 female condom business, we recorded a gain on extinguishment of debt of $8,600,000 related to the termination of the residual royalty agreement. This represents the difference between the change of control payment of $4,200,000 and the net carrying amount of the extinguish debt of $12,800,000 which included an embedded derivative for the change of control provision at fair value of $4,700,000 The bottom line result for continuing operations was a net loss of $1,800,000 or $0.01 per diluted common share compared to a net loss of $7,700,000 or $0.08 per diluted common share in the prior year's quarter. Net loss from discontinued operations net of taxes related to the FC2 business was $7,100,000 or $0.05 per diluted common share, including the $4,200,000 loss on the sale of the FC2 business compared to a net loss of $609,000 or $0.01 per diluted common share in the prior quarter. The increase in the net loss from discontinued operations of $6,500,000 is due to the loss on the sale of the FC2 female condom business and the increase in the loss from the change in fair value of derivative liabilities of $3,100,000 partially offset by an increase in gross profit of $400,000 and a decrease in selling, general and administrative expenses of $500,000 Now looking at the balance sheet.

[Michele Greco, Chief Financial Officer and Chief Administrative Officer at Veru]

As of 12/31/2024, our cash, cash equivalents and restricted cash balance was $26,600,000 compared to $24,900,000 as of 09/30/2024. At 12/31/2024, there was $354,000 of restricted cash related to the sale of the FC2 female common business. Our net working capital was $22,000,000 on 12/31/2024, compared to $23,400,000 on 09/30/2024. The company is not profitable and has negative cash flow from operations. We will need additional capital to support our drug development candidates.

[Michele Greco, Chief Financial Officer and Chief Administrative Officer at Veru]

Based upon the company's current operating plan, our cash as of the issuance date of these financial statements is not sufficient for the company to fund operations for the next fifteen months. However, we currently have sufficient capital to take the company to the end of the calendar year, which is well beyond the data readout for Novosarm Phase IIb quality extension study. During the three months ended 12/31/2024, we used cash of $11,300,000 for operating activities compared with $6,000,000 used for operating activities in the prior period. We generated cash from investing activities of $17,200,000 for the three months ended 12/31/2024, while there was none generated in the prior period. The cash generated relates to proceeds from the sale of the FC2 female condom business of $16,200,000 proceeds of $700,000 from the sale of the AntiFE assets and proceeds of $400,000 from the sale of Onkinetic securities.

[Michele Greco, Chief Financial Officer and Chief Administrative Officer at Veru]

We used cash in financing activities for the three months ended 12/31/2024, of $4,200,000 related to the change of control payment SWK pursuant to the residual royalty agreement, which terminated in conjunction with the sale of the FC2 female condom business. In the prior period, we generated $37,000,000 from financing activities. On 12/18/2023, we completed an underwritten public offering of our common stock, which included the exercise in full of the underwriters option to purchase additional shares. Net proceeds to the company from this offering were approximately $35,200,000 after deducting underwriting discounts and commissions and costs incurred by the company. Now I'd like to turn the call back to Doctor.

[Michele Greco, Chief Financial Officer and Chief Administrative Officer at Veru]

Steiner. Doctor. Steiner?

[Mitchell Steiner, Chairman, President & CEO at Veru]

Thank you, Michelle. So we've gone over the company progress, clinical progress and financial highlights. With that, I'll now open the call to questions. Operator?

[Operator]

Thank you.

[Operator]

Our first question today will come from William Wood of B. Riley. Please go ahead.

[William Wood, Equity Research Analyst at B.Riley Securities]

Hi. Thanks to everybody. Appreciate you taking your questions and obviously congratulations on the very nice quarter and the results. I guess maybe first off, if I could, for the extension trial, I'm just kind of curious what the rollover of patients from the induction to the maintenance portion is? And maybe if you could provide any color on why patients may be discontinuing if so?

[Mitchell Steiner, Chairman, President & CEO at Veru]

Yes. So I'm going to ask Doctor. Gary Barnett, our Chief Scientific Officer, to answer the question of basically asking for the dropout rate or who didn't go on to the extension study and then he'll answer that for you. And he'll tell you the number one reason why they dropped out. Gary?

[Gary Barnette, Chief Scientific Officer at Veru]

Hello. As Mitch has said previously, the dropout rate in the study is about thirteen percent and it continues to be that. So about thirteen percent of the randomized subjects did not reach the will not reach the extension, etcetera. The most common reason for dropping out of the study or discontinuing the study is GI side effects, which as we all know, associated with GLP-one RA themselves. So it's relatively expected what we're seeing.

[William Wood, Equity Research Analyst at B.Riley Securities]

And I assume the potential difference between placebo versus treatment isn't disclosed yet and we'll get that information more at the end?

[Gary Barnette, Chief Scientific Officer at Veru]

That is correct. That will be in the final analysis of the study. And expected the safety stated right now remains blinded.

[William Wood, Equity Research Analyst at B.Riley Securities]

Right. And then one quick last one. You've been saying you're now saying second quarter for the induction I'm sorry, for the maintenance readout. I'm just curious, I believe you were saying sort of more April, maybe even early May. Have these been has this been now pushed out a little bit more or you just or relatively no changes here?

[Mitchell Steiner, Chairman, President & CEO at Veru]

It's relatively no changes. I just yes, so we're guiding in second quarter, but nothing's changed. I mean, twelve weeks of twelve weeks or twelve. We know when the last patient went out in December, we reported exactly as we've told you we're going to do for the Phase I for the Phase IIb quality. And twelve weeks to twelve weeks can shorten that and you can't make that longer.

[Mitchell Steiner, Chairman, President & CEO at Veru]

So the time span that we need after the twelve weeks when the last patient comes out of the study is just literally scrubbing the data and getting the tables, listings and figures and that kind of stuff. Thank you.

[Operator]

Our next question today will come from Gary Nachman of Raymond James. Please go ahead.

[Denis Reznik, Senior Equity Research Associate at Raymond James]

Hey, guys. Good morning. This is Dennis Resnick on for Gary Nachman. Just a couple of questions from us. First, talk a little bit more about your thoughts going into the extension trial data in the second quarter.

[Denis Reznik, Senior Equity Research Associate at Raymond James]

What are you hoping to show and what is the bar for success, particularly on the weight regain following the GLP-one discontinuation? Can you remind us what your assumptions are for the placebo arm? And then what are your expectations for the Innovusarm

[Denis Reznik, Senior Equity Research Associate at Raymond James]

arm? And then I've got a follow-up.

[Mitchell Steiner, Chairman, President & CEO at Veru]

Yes. So the way to think of the maintenance study is no one has actually I'd say it a different way. It's an exploratory extension where we're trying to show that Innovus Arms has the ability to hold on to muscle. And then the working hypothesis is that muscle if you hold on to muscle, you should not see the rebound weight gain, which is fat because muscle is not the issue, muscle is depleted. So it's all about fat and the regain that patients get is all fat.

[Mitchell Steiner, Chairman, President & CEO at Veru]

So the way to think of the extension for just twelve weeks, it's not the weight as much as it's the fat because fat attracts weight. So it's purely at a positive place. So for Novosarm holds muscle, so you have more muscle in that twelve week period of time, so you can burn more fat. And Novosarm itself, as you saw the six milligram group had a 46% further reduction in fat compared to maggotide alone. So it's a fat burner.

[Mitchell Steiner, Chairman, President & CEO at Veru]

So what we want to show and this is what people are afraid of is the rebound weight gain is all fat. So we want to so we were focusing most of our thinking around can we stop that rebound fat regaining and or maybe even show you more fat loss because it opens on burns fat as it goes forward. So I'm going to have Gary Barnett, our Chief Scientific Officer, add a few comments to

[Mitchell Steiner, Chairman, President & CEO at Veru]

that.

[Gary Barnette, Chief Scientific Officer at Veru]

Yes. So as you know, when you take away the GLP-one, appetite returns and we've seen that in the studies with the GLP-one. So we do expect weight gain and we specifically expect fat gain in the placebo group. And it's going to be interesting to see exactly how InnovusArm can minimize that fat regain while maintaining the muscles or the lean mass in this case. So that's what we expected, see.

[Gary Barnette, Chief Scientific Officer at Veru]

Obviously, the data will bear out exactly and we're looking forward to that result here coming in second quarter.

[Mitchell Steiner, Chairman, President & CEO at Veru]

Yes. So if we can show we can blunt the fat and potentially blunt the weight regain. But if you focus on fat and whole muscles constant, that's what you're gaining weight with, the fat. So I think the focus on fat, fat, fat because we're using body composition as our endpoint.

[Denis Reznik, Senior Equity Research Associate at Raymond James]

Okay, great. That was super helpful. And then just another couple of quick follow ups. Sure. For the safety monitoring committee that I met earlier this week, can you talk specifically about what kind of patient safety data they looked at, how far out went into?

[Denis Reznik, Senior Equity Research Associate at Raymond James]

And then now that you just had a little bit more time with the sixteen week data, are you finding anything notable within the patient site or the patient background characteristics that is abnormal that should be called out? Thanks so much guys.

[Mitchell Steiner, Chairman, President & CEO at Veru]

Yes. Good question. So to answer the second question and I have Gary answer the first question on what kinds of data that the independent data monitor committee see. But in terms of your question, remember, we only got top line data. So there's not much additional stuff to talk about.

[Mitchell Steiner, Chairman, President & CEO at Veru]

I mean, the base line characteristics with group characteristics, we don't have individual data. So the top line data, we're going to get the full data set, the individual data set when the study is unblinded. Then at that point we can go through and look and see. It's not so much what's abnormal and what's normal. I mean, big questions for me is going to be which groups are the best, which groups are the worst, how do you think about that as you go forward with your Phase III program, what additional information you're going to learn about gender and things of that sort.

[Mitchell Steiner, Chairman, President & CEO at Veru]

And so I think we're going to get a lot more information we just don't have. But the top line data, because it's kind of think of it as an interim look and then the study continues, we've got a very set set of data, if that makes sense. So there's not much more to say at this point, except that we're extremely excited about the outcome because it answered the questions we wanted to answer. And you remember Novosarm in five other studies is a three milligram dose particularly because that's what bridged us to this study. We never study above three milligrams in muscle studies.

[Mitchell Steiner, Chairman, President & CEO at Veru]

We've done it in multiple ascending dose studies. And three milligram was our bridge. It worked every time. And guess what? It worked again.

[Mitchell Steiner, Chairman, President & CEO at Veru]

So we it's unambiguous. We definitely can improve and stop the loss of lean mass. What was also exciting is also confirmed the ability to burn fat in a patient population on a GLP-one. So that was exciting. And then third, you're able to keep the lean mass, get rid of more fat to a point that the three milligrams ninety nine percent of the total weight you lost was fat and 1% less than 1% mass and you still have the same weight loss at sixteen weeks.

[Mitchell Steiner, Chairman, President & CEO at Veru]

And finally, we showed the physical function matters in these patients and that we were able to show there's a problem and that forty two point six percent of patients on semaglutide alone is sixteen weeks had greater than 10% decline in stair climb, which is like eight to ten years of your aging loss of stair climb. So I mean, that to me, that's a home run and that really helps us think very positively about our program going forward because it's better to fix a problem than try to have better HbA1c or better insulin resistance, we expect to see all of that. But better, better meaning that GLP-one does a great job with that. So you have to make it better than GLP-one, whereas GLP-one does affect function in a negative way, we make it better. But in terms of the data for the IDMC, Kerry, what does the IDMC see?

[Gary Barnette, Chief Scientific Officer at Veru]

Yes. They see individual patient data, individual safety data all the way down again to the patient level. They see it broken out within the traditional tables and they also see the dose or the randomization scheme. The data that this particular IDMC saw was up to a cutoff of 12/20/2024, which included all subjects had passed through or completed the day one twelve visit and then some additional data in the extension was included in this review. So they review down to the individual patients with the patient demographics and background and medical history and con meds and they get all that information and also including their treatment

[Gary Barnette, Chief Scientific Officer at Veru]

assignments.

[Operator]

The next question will come from Dennis Ding of Jefferies. Please go ahead.

[Analyst]

This is Anthea on for Dennis. Just a couple of questions from us. On the Novusarm, given the oral formulation that you're working on the new one, is there a potential for it to be combined with oral GLP-one as a fixed dose combo? I'm curious if you've looked into that and if you could pursue a partnership on that. And then on cevizobulin, cotycine, I believe works through HSCRP reduction.

[Analyst]

So can you just remind us what percent reduction they get and what cevizobulin does? And given your current cash position, your confidence that FAS2 would be feasible? Thank you.

[Mitchell Steiner, Chairman, President & CEO at Veru]

All right. So I have a clarification on your second question. So what did you say colchicine's mechanism was?

[Analyst]

It's just CRP reduction, C reactive protein.

[Mitchell Steiner, Chairman, President & CEO at Veru]

Oh, I got you. So you're talking about I got you, got you, got you. That's the extensive CRP. So CRP is a nonspecific inflammatory protein. So really it's not nonspecific inflammatory protein is a result of broad anti inflammatory activity.

[Mitchell Steiner, Chairman, President & CEO at Veru]

And so, yes, so got it. Okay. So first question about oral formulation. In the oral formulation, the expectation is and we know from Innovisarm that Innovisarm is a very nice oral product and highly bioavailable. And so, yes, we're working on new oral formulations and modified release, but we can be easily combined with an oral GLP-one.

[Mitchell Steiner, Chairman, President & CEO at Veru]

And so, yes, that has come up with some of our discussions because people feel that a fixed combination dose makes the most sense. Particularly, we asked the question, what are we trying to do? So if you think about GLP-one, it creates a hypocaloric state. The hypocaloric state allows your body to non selectively lose fat and muscle and just non selectively low calorie state. And in comes in Novosarm.

[Mitchell Steiner, Chairman, President & CEO at Veru]

And just in Novosarm telling muscle to take on to steal the calories and take it from fat, it allows you to hold on to muscle in that low calorie state and burn more fat. So if you want to make the GLP-one better, you'd better add an OBOSARM and that to me is a definition of a new generation obesity product. So the answer is yes, because we're oral. And if you look at our competition, our competition is IV or sub Q. The only other one that was oral was no longer pursuing activities.

[Mitchell Steiner, Chairman, President & CEO at Veru]

But the other ones are IVFQ and then and function has physical function has been very difficult to show. And we've shown over and over physical function. Again, we hit on physical function in this study. So if you want to do a fixed combination and make the drug make the GLP-one more tissue selective and have the functional benefit, I think it will be very attractive. And so yes, it's come up.

[Mitchell Steiner, Chairman, President & CEO at Veru]

As it relates to sapizobulin and colchicine, I'm telling you that all our assays that we've done pre clinically, colchicine is used as our positive control. So everything colchicine does, cebizobulin does. What's different is, cebizobulin is a different kind of molecule, so it's not substrate for P glycoprotein and three eighty four and that plays a bigger role in the drug drug interactions that can happen. Colchicine, as you know, has a very low therapeutic index, narrow therapeutic index. And if you have a drug drug interaction, you can push colchicine levels to toxic levels.

[Mitchell Steiner, Chairman, President & CEO at Veru]

And that's one of the reasons why it's not picked up widespread use. Yes, CRP, high sensitive CRP is a measurement that you would use peripherally in these patients, which sapidibulin should easily do the same thing given that all the cytokines and chemokines that we've measured have statistically significant reductions both in vivo and in vitro. So we measure the actual cytokines that cause C reactive protein to go up, C reactive protein against CRP, high sensitive CRP. With that said, because we don't have the drug drug interactions and this is the excitement around cesabizumabulin is that one of the things that people are thinking about is you want to take patients with atherosclerotic disease and suppress the lipid as much as possible. It's all about suppressing LDL.

[Mitchell Steiner, Chairman, President & CEO at Veru]

But once you suppress LDL, there's still a lot of risk left to a point that heart disease, in particular ischemic MIs is still the number one killer. So there's still residual risk and I believe that inflammation is the reason for that. So that's why colchicine got approved. And but the problem is you can't get colchicine with a lipid lowering drug because the drug drug interactions with statins. So imagine a subizobulin that you don't have to convince anybody that we have the same mechanism as colchicine from inflammatory standpoint, but it becomes a safety play.

[Mitchell Steiner, Chairman, President & CEO at Veru]

I'm a urologist and this reminds me of the days when abiraterone and ketoconazole were being developed. Ketoconazole is an old drug that's been shown to reduce in castrate males and they were given to patients with advanced prostate cancer, but it had side effects. Abiraterone came in and had a better safety profile and it's not generic and a pharma company owned it and had long IP became a blockbuster. So it's okay sometimes to come in and not be innovative and be the first anti inflammatory agent for coronary artery disease, but to be one that has the same mechanism of action but a different safety profile and oral and proprietary makes it very, very attractive, meaning that high probability of success with the efficacy and it will play out. And especially if you can do a small study like we're thinking about the Phase II where plaque measurements like CT coronary angiography can be give you the information you need to move forward.

[Mitchell Steiner, Chairman, President & CEO at Veru]

So that's what we're excited about. As it relates to cash, as Michelle said in her comments, we have enough cash to last at the end of the year end of the calendar year, so that's the December. And

[Analyst]

Sorry, if I could ask a follow-up on that.

[Mitchell Steiner, Chairman, President & CEO at Veru]

Sure.

[Analyst]

Is there a numerical HS CRP reduction that's been measured for cevidibulin or

[Mitchell Steiner, Chairman, President & CEO at Veru]

No, no, no, no. We've not taken patients with coronary artery disease and treated a patient to see what happens to CRP. What we have done is Got it. Got it.

[Analyst]

Yes. And if I could also ask how you're thinking about IL-six and the seventy percent to ninety percent HS CRP reduction profile in ASCVD?

[Mitchell Steiner, Chairman, President & CEO at Veru]

Yes. So IL-six, as you know, is not oral, right?

[Analyst]

Right.

[Mitchell Steiner, Chairman, President & CEO at Veru]

It's injectable. And so our expectation is that IL-six is one of the many cytokines that's responsible for the inflammation related to coronary artery disease. And this reminds us of the same battle we had with COVID IL-six versus, sapizobulin. Sapizobulin did a much better job. We had a reduction of 50% and these other agents were more like 5%.

[Mitchell Steiner, Chairman, President & CEO at Veru]

So I do think that inflammation is not one cytokine. And if you have a pan cytokine approach, which is what colchicine does and what zubizibulin does, that should be much more effective than a single knocking out a single cytokine in this particular disease.

[Operator]

Our next question today will come from Leland Gershell of Oppenheimer.

[Leland Gershell, Managing Director - Senior Biotechnology Analyst at Oppenheimer & Co. Inc.]

Mitch, as you've been studying Novusarm in the older population, obviously those at risk of sarcopenic obesity and seeing the data you have, obviously very encouraging. Just wondering if your thoughts as you take the compound forward into registration, if you'll include a means to study it maybe in a broader population of people who are not as old given that there is also maybe risk of muscle loss during weight loss?

[Mitchell Steiner, Chairman, President & CEO at Veru]

Good question. So first, the statistics. It turns out, as I mentioned, that twenty two percent of the population are older based on Medicare over the age of 60, 40 two percent of those patients could benefit from a weight reduction drug because they're overweight, obese. And a third of them have true sarcopenic obesity. So that's a big, big market, okay, big market.

[Mitchell Steiner, Chairman, President & CEO at Veru]

Now the question is how about outside that market? It turns out if you look at just forget age, this the data shows that thirty one million Americans have sarcopenia and are obese. So that presumably includes patients who are younger. And so the idea is from a clinical benefit risk profile, mostly is to treat patients that have a problem. And the older patients are more likely because as you know, we didn't screen for sarcopenia.

[Mitchell Steiner, Chairman, President & CEO at Veru]

We just took over the age of 60. And still forty two point six percent of those patients had a greater than ten percent decline in GLP-one. So this is actually showing you with Seroquine test that patients were in trouble and people were talking about it. But if you do a six minute walk test and endurance test, that's different. But if you do a test that's focusing on leg muscles and muscles that are important for what they call explosive force, getting out of a chair, getting out of a tub, going upstairs, that's different.

[Mitchell Steiner, Chairman, President & CEO at Veru]

And those are the muscle type, it's called type two muscle, that goes away with age. And so when you treat with an OBIS arm or testosterone type product, you build back the Type II muscle and that's why you see function. So it's a difference between taking an endurance runner and an older patient. I mean, the endurance runner is not going to be able to lift heavy weights like a bodybuilder, but they can certainly run six miles or 10 miles or whatever. So we focus primarily on the activities that they're living that matter to patients.

[Mitchell Steiner, Chairman, President & CEO at Veru]

But with that said, the FDA has told us that a drug of this nature would have benefit in younger patients as well. So if that's the case, Gary Barnett, who's on the call, has a strategy to address that in our Phase III. Gary, do you want to talk about that?

[Gary Barnette, Chief Scientific Officer at Veru]

Yes. Obviously, if the FDA asks for a more broader age population and if we deem it appropriate. What I would do is I would design the study with POWERED, with statistical power on efficacy on the older population and include the younger population as observational and maybe have an overall analysis for every randomized subject, but do a subgroup as the primary, meaning older over 60, the group we just ran with the additional efficacy and safety data generated in the younger population to support broadening the label, if appropriate.

[Leland Gershell, Managing Director - Senior Biotechnology Analyst at Oppenheimer & Co. Inc.]

Great. Thank you. And just a follow-up question. Just wanted to confirm that when VERU does report the extension data from the second part of the quality study coming up in a few months, if you'll also be including the full complement of the safety observations from both parts of this study? Thanks.

[Mitchell Steiner, Chairman, President & CEO at Veru]

Yes. So to make sure I understand the question. So when the study is unblinded and we're reporting the Phase IIb extension study, will we be reporting the full safety data set? Is that the question?

[Leland Gershell, Managing Director - Senior Biotechnology Analyst at Oppenheimer & Co. Inc.]

Yes. That's right. Yes.

[Mitchell Steiner, Chairman, President & CEO at Veru]

Yes. The answer is yes.

[Operator]

Ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to Doctor. Mitchell Steiner for any closing remarks.

[Mitchell Steiner, Chairman, President & CEO at Veru]

Great. Thank you. I appreciate everyone who joined our call today, and I look forward to updating you on our progress. And I'm excited about the prospects of the Novosarm, not only in patients in the Phase 2b study, but also the extension study. And again, thank you all for being on the call.

[Operator]

The digital replay of the conference call will be available beginning approximately noon Eastern Time today, February 13, by dialing 70408 internationally. You will be prompted to enter the replay access code, which will be 3764668. Please record your name and company when joining. The conference is now concluded. Thank you for attending today's discussion.

Participants

Executives

• Samuel Fisch, Executive Director, Investor Relations & Corporate Communications
• Mitchell Steiner, Chairman, President & CEO
• Michele Greco, Chief Financial Officer and Chief Administrative Officer
• Gary Barnette, Chief Scientific Officer

Analysts

• William Wood, Equity Research Analyst at B.Riley Securities
• Denis Reznik, Senior Equity Research Associate at Raymond James
• Analyst
• Leland Gershell, Managing Director - Senior Biotechnology Analyst at Oppenheimer & Co. Inc.