Veru Inc. (NASDAQ:VERU) Q1 2024 Earnings Call Transcript
Veru Inc. (NASDAQ:VERU) Q1 2024 Earnings Call Transcript February 8, 2024
Veru Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, ladies and gentlemen, and welcome to the Veru Inc. Investor Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference call over to Mr. Michael Purvis, Veru Inc.'s Executive Vice President, General Counsel, and Corporate Strategy. Please go ahead.
Michael Purvis: 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 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 Mitchell Steiner, Veru Inc's, Chairman, CEO, and President.
Mitchell Steiner: Good morning. With me on this morning's call are Dr. Gary Barnette, Chief Scientific Officer, Michele Greco, the CFO and Chief Administrative Officer, Michael Purvis, the Executive Vice President, General Counsel and Corporate Strategy, and Sam Fisch, Executive Director of Investor relations and Corporate Communications. Thank you for joining our Q1 fiscal year 2024 earnings call. Veru is a late clinical stage biopharmaceutical company focused on developing innovative medicines for high quality weight loss, oncology, and ARDS. The company's drug development program includes two late-stage novel orally administered small molecules, Enobosarm and Sabizabulin. Our weight loss pipeline leads off Enobosarm, also known as Ostarine MK-2866, GTx-024, S-22, and VERU-024.
These are all the identical same molecule Enobosarm, which is an oral selective androgen receptor modulator. Enobosarm is being developed as a treatment in combination with weight loss drugs to augment fat loss and to avoid muscle loss in overweight or obese patients for chronic weight management. In our oncology pipeline, we're developing Enobosarm as a treatment for antigen receptor positive, estrogen receptor positive, and human epidermal growth factor two negative metastatic breast cancer in the second line set setting. In our infectious disease pipeline, which is pending additional external funding or pharma partnership is Sabizabulin, a microtubule disruptor, which is being developed as a Phase 3 in a Phase 3 clinical trial for the treatment of hospitalized patients with viral induced 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. This morning, we'll provide an update on our company's primary focus, the development of Enobosarm and oral SARM, in combination with weight loss drugs like glucagon-like peptide 1 receptor agonist, which we're going to refer to as GLP-1 receptor agonist. These are being used to avoid - Enobosarm in combination is used to avoid muscle loss and physical function loss to augment fat loss and potentially result in higher quality weight loss. We'll also provide financial highlights for our first quarter fiscal year of 2024. Now, GLP-1 receptor agonists like Ozempic, Wegovy, Zepbound, and Mounjaro, are very effective weight loss drugs.
Unfortunately, clinical studies have shown that up to 50% of the total weight loss comes from muscle, which is problematic as muscle is necessary for metabolism, strength, and physical function. Loss of muscle may be also one of the reasons why patients on GLP-1 drugs reach a weight loss plateau, meaning they cannot lose any more weight while taking the GLP-1 receptor agonist drug. According to the CDC, 41.5% of older adults have obesity in the United States, and could benefit from weight loss medication. Up to 34.4% of these obese patients over the age of 60 have sarcopenic obesity. This large subpopulation of sarcopenic obese patients is especially at-risk when taking a GLP-1 receptor agonist drugs for weight loss, as they already have critically low amounts of muscle due to age-related muscle loss.
Further loss of muscle mass when taking a GLP-1 receptor agonist medication, may lead to muscle weakness, leading to poor balance, decreased gait speed, mobility, disability, loss of independence, falls, bone fractures, and increased mortality. This can lead to a condition similar to age-related frailty. Because of the magnitude and speed of muscle loss while on a GLP-1 receptor agonist therapy for weight loss, GLP-1 receptor agonist drugs may accelerate the development of frailty in obese, overweight, elderly patients. We believe there's an urgent unmet medical need for a drug when given in combination with a GLP-1 receptor agonist that can prevent loss of muscle while preferentially reducing fat in not only all overweight or obese patients, but especially for the large subpopulation of sarcopenic or overweight elderly patients who are at-risk for developing muscle atrophy and muscle weakness, leading to frailty.
We believe that Enobosarm, a novel oral selective androgen receptor modulator, may be the best drug candidate to address this unmet medical need. Enobosarm has been previously studied in five clinical studies involving 960 older men and postmenopausal women, as well as older patients who have muscle wasting because of advanced cancer. Advanced cancer simulates a starvation state where there's significant unintentional loss or wasting of both muscle and fat mass like what is observed with the GLP-1 receptor agonist treatment. The totality of the clinical data from these five clinical trials demonstrates that Enobosarm treatment leads to dose-dependent increases in muscle mass, with improvements in physical function, as well as significant dose-dependent reductions in fat mass.
The patient data that were generated from these five Enobosarm clinical trials in both elderly patients and in patients with a cancer-induced starvation-like state, provides strong clinical rationale for Enobosarm. Our hypothesis is that Enobosarm, in combination with a GLP-1 receptor agonist, would potentially augment the fat reduction and total weight loss, while avoiding muscle loss. In addition, Enobosarm has a large safety database, which includes 27 clinical trials involving 1,581 men and women dosed with Enobosarm, with a duration of treatment in some patients for up to three years. In this large safety database, Enobosarm was generally well tolerated and no increase in gastrointestinal side effects. This is important, and there's already significant and frequent gastrointestinal side effects with a GLP-1 receptor agonist treatment alone.
As for our Enobosarm clinical program for high quality weight loss, this week, I'm happy to report that FDA has cleared our investigational new drug application for our Phase 2b multicenter double-blind placebo controlled randomized dose finding clinical trial designed to evaluate the safety and efficacy of Enobosarm, three milligrams, six milligrams of placebo as a treatment to augment fat loss and prevent muscle loss in approximately 90 randomized sarcopenic obese or overweight elderly patients receiving Semaglutide, who are at-risk for developing muscle atrophy and muscle weakness. The purpose of the Phase 2b trial is to select the optimal dose of Enobosarm in combination with a GLP-1 receptor agonist that best preserves muscle and reduces fat after 16 weeks of treatment to advance into a Phase 3 obesity or overweight clinical trial.
The primary endpoint to the Phase 2b clinical trial will be the change in lean body mass from baseline to 16 weeks, and key secondary endpoints will be the change in baseline to 16 weeks in total fat mass, insulin resistance, total body weight, and physical function, as measured by (caerulein) tests. We plan to initiate the Phase 2b clinical study in April of 2024, and the clinical study will be conducted in approximately 15 clinical sites in the United States. The top line clinical results in the Phase 2b clinical trial are expected at the end of calendar year 2024. We believe that assessing the effect of Enobosarm on lean body mass and fat mass at 16 weeks should be adequate to demonstrate significant loss of muscle in the Semaglutide plus placebo cohort.
Support comes from the step one study reported by Wilding, et al, in the New England Journal of Medicine publication. In the step one study, he evaluated Semaglutide for weight loss in overweight and obese patients and showed that 49% of the total weight loss in the 68-week study actually occurred by week 16, and 40% of the total weight loss was attributable to muscle loss. After completing the 16-week efficacy dose finding portion of the Phase 2b clinical trial, it is planned that participants will then continue into an open label extension trial where all patients will receive six milligrams from the Enobosarm monotherapy for 12 weeks to determine the ability of the Enobosarm to rescue or to reverse the muscle loss and prevent fat and weight rebound after stopping a GLP-1 receptor agonist.
The results of the separate Phase 2b open-label extension study are expected in calendar Q2 2025. In summary, our Phase 2b clinical program is designed to provide clinical data to support the development of the Enobosarm for high quality weight loss for two possible patient populations. The first population, Enobosarm dose-finding will be evaluated in the large at-risk subpopulation of obese overweight patients who are the sarcopenic, obese, overweight, elderly patients receiving GLP-1 receptor agonists for weight loss. The Enobosarm GLP-1 receptor agonist combination therapy has the potential to augment weight loss by preferentially increasing fat loss while preventing muscle loss and improving physical function, potentially leading to higher quality weight loss.
Second, a Enobosarm monotherapy treatment for the at-risk sarcopenic, obesity, overweight, elderly patients who discontinue a GLP-1 receptor agonist. In this case, Enobosarm may rescue the patient by increasing muscle mass and improving physical function while preventing the rebound in weight and fat gain that typically occurs when the GLP-1 receptor agonist is stopped. We believe we have sufficient financial resources on hand, which includes a recent financing of net proceeds of $35.2 million to complete and provide results for both the Phase 2b clinical trial and the open label extension clinical trial. I'll now turn the call over to Michele Greco, CFO, CAO, to discuss the financial highlights. Michele?
Michele Greco: Thank you, Dr. Steiner. Overall, net revenues were $2.1 million compared to $2.5 million in the prior year's first quarter. The US prescription channel net revenues increased to $634,000 from $163,000 in the prior year's first quarter, as a result of increasing sales through our telehealth portal. Global public sector net revenues decreased to $1.5 million compared to $2.3 million in the prior year's first quarter due to the timing of orders and shipments. Gross profit was $1.2 million or 54% of net revenues, compared to $702,000 or 28% of net revenues in the prior year’s first quarter. The increase in gross profit and gross margin is driven primarily by the change in the sales mix, with our US FC2 prescription channel representing 30% of net revenues in the current period, compared to 7% in the prior period.
Sales in our US prescription channel have a higher profit margin. On December 18th, 2023, we completed an underwritten public offering of our common stock, which included the exercise in full of the underwriter’s option to purchase additional shares. Net proceeds to the company from this offering were approximately $35.2 million after deducting underwriting discounts and commissions and costs incurred by the company. All the shares sold in the offering were offered by the company. As of December 31st, 2023, our cash balance was $40.6 million, compared to $9.6 million on September 30th, 2023. We believe our current cash balance will be adequate to fund the planned operations of the company as we continue to focus on developing Enobosarm for high quality weight loss.
Now, I'd like to turn the call back to Dr. Steiner.
Mitchell Steiner: Thank you, Michele. It has only been recently that the significance of clinical need to avoid adverse effect of significant muscle loss caused by GLP-1 receptor agonists has been appreciated. All the GLP-1 receptor agonists work by creating a starvation state that non-selectively reduces both muscle and fat tissues to cause weight loss. Using a muscle-preserving drug in combination with a GLP-1 receptor agonist, would potentially allow for a higher quality weight loss. I want to emphasize that Enobosarm is not competing with GLP-1 receptor agonist drugs that are already on the market or under development for weight loss. The expectation is that Enobosarm may be potentially combined with any one of the many GLP-1 receptor agonist drugs to avoid muscle loss and to augment fat loss.
This is truly a new indication. We believe Enobosarm is the best investigational drug candidate to address the muscle loss caused by GLP-1 receptor drugs for weight loss. Enobosarm is a first-in-class, has oral once-a-day dosing, has demonstrated tissue selectivity and utilizes a well-known mechanism of action, the androgen receptor, favorably change body composition. Activation of the androgen receptor increases muscle mass, improves physical function, and decreases fat mass to potentially achieve a higher quality weight loss. Enobosarm has favorable safety profile and would not add to the gastrointestinal side effects that are already observed with a GLP-1 receptor agonist treatment. Global obesity and overweight drug market is projected to be $100 billion by 2030.
It should be emphasized that Enobosarm may potentially be combined with any one of the GLP-1 receptor agonist weight loss drugs, not only for older or overweight at-risk patients, but also all overweight or obese patients who want to avoid muscle loss while taking a GLP-1 receptor agonist for weight loss. The combination of Enobosarm with a GLP-1 receptor agonist potentially represents a multi-billion dollar global opportunity. We are very excited about the prospects of Enobosarm to address this new and important unmet medical need. With the FDA go ahead, we are looking forward to the initiation of this important and timely Phase 2b clinical study. With that, I'll now open the call to questions. Operator?
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