Veru Inc. Q4 FY2022 Earnings Call

Good morning, ladies and gentlemen, and welcome to Veru Incorporated’s Investor 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. I would now like to turn the conference call over to Mr. Sam Fisch, Veru Incorporated’s Executive Director of 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 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 Dr. Mitchell Steiner, Veru Inc's Chairman, CEO, and President.

Good morning. With me on this morning's call are Dr. Gary Barnett, CSO; Michele Greco, the CFO and CAO; Michael Purvis, EVP, General Counsel and Corporate Strategy; and Sam Fisch, Executive Director of Investor Relations and Corporate Communications. Thank you for joining our call. Veru is a biopharmaceutical company focused on developing novel medicines for COVID-19 and other viral and ARDS-related diseases and for oncology. The company has its commercial sexual health program, called Urev, which includes two FDA-approved products: ENTADFI, a new treatment for benign prostatic hyperplasia; and FC2 Female Condom, an internal condom for dual protection against unplanned pregnancy and the transmission of sexually transmitted infections. The revenue from the sexual health program is being used partially to fund the clinical development of our late-stage therapeutic candidates, which aim to address multi-billion dollar premium market opportunities. This morning, we will provide an update on our COVID-19 sabizabulin clinical program, the clinical development of our oncology drug pipeline, and the commercialization of our products in the Urev program. We will also provide financial highlights for our fiscal fourth quarter and our fiscal year 2022 year-end. First, I will update you on the status of sabizabulin, an investigational drug candidate for the treatment of hospitalized adult COVID-19 patients at high risk for ARDS. We reported positive results from the Phase 3 COVID-19 clinical trial, which was a double-blind, multicenter, multinational randomized 2:1 placebo-controlled study evaluating daily oral 9 milligram doses of sabizabulin for up to 21 days versus placebo in 204 hospitalized moderate to severe COVID-19 patients who had high risk for ARDS and death. Both the placebo and sabizabulin treatment groups were allowed to receive standard of care treatment, which could include Dexamethasone, Remdesivir, anti-IL6 receptor antibodies, and/or JAK inhibitors. The primary efficacy endpoint of our Phase 3 trial was the proportion of patients who died on study up to day 60. Key secondary endpoints measured included the proportion of patients alive without respiratory failure, days in the ICU, days on mechanical ventilation, days in the hospital, and viral load. On April 8, 2022, the Independent Data Monitoring Committee conducted a planned interim efficacy analysis in the first 150 patients randomized in the Phase 3 COVID-19 study. After reviewing the unblinded clinical data, the Independent Data Safety Monitoring Committee unanimously recommended that the Phase 3 study be halted early due to clear clinical efficacy benefit. The Independent Data Monitoring Committee also remarked that no safety concerns were identified. In this interim analysis, sabizabulin treatment demonstrated a statistically significant 24.9 percentage point absolute reduction and a 55.2% relative reduction in all-cause mortality by day 60. That was the primary efficacy endpoint of the study, and that P value was 0.0042. The efficacy was further supported by the consistency of the mortality benefit across subgroup analyses of the primary endpoint; clinically meaningful reductions in deaths with the sabizabulin treatment compared to placebo were observed regardless of the standard of care treatment received, baseline WHO ordinal score, sex, age, baseline comorbidities, BMI, or geographic location. In the full final data set of 204 randomized patients, the all-cause mortality benefit was similar to the positive clinical results observed in the interim efficacy analysis population, with sabizabulin treatment resulting in a 51.6% relative reduction in deaths compared to placebo treatment, and that P value was 0.0046. Data from the key secondary efficacy endpoints demonstrated that sabizabulin treatment resulted in a significant reduction in days in the ICU, days on mechanical ventilation, and days in the hospital compared to placebo. Sabizabulin also had an acceptable safety profile, with significantly fewer adverse and serious adverse events reported for sabizabulin compared to placebo. There were also fewer treatment discontinuations due to adverse events in the sabizabulin group compared to placebo. The Phase 3 reported safety profiles suggest that sabizabulin treatment may have resulted in fewer COVID-19-related morbidities, especially respiratory failure, pneumothorax, acute kidney injury, cardiac arrest, septic shock, and hypertension. We're proud that the Phase 3 clinical treatment, clinical trial interim efficacy, and full study safety results were published in the New England Journal of Medicine, evidenced in July, which recognizes both the importance of a trial focused on COVID-19 treatment during the ongoing pandemic and the potential clinical benefit of sabizabulin in hospitalized moderate to severe COVID-19 patients. We plan to submit a manuscript of the overall 204 randomized subjects to prestigious peer-reviewed medical journals soon. In addition, we are extremely pleased that the clinical results in the Phase 3 trial with sabizabulin in COVID-19 patients were highlighted in two medical conference presentations this fall, including a late breaker oral presentation at IDWeek. Next, I will share with you our U.S. and ex-U.S. regulatory situation and progress regarding sabizabulin and COVID-19. On May 10, 2022, we had a pre-emergency use authorization meeting with the FDA. In this meeting, the FDA agreed that no additional efficacy studies would be required to support an Emergency Use Authorization or an NDA. The FDA also agreed that no additional safety data would be required to support an EUA, but that the collection of safety data under the EUA would satisfy the safety requirements for an NDA. Based on the FDA feedback from that meeting, on June 6, 2022, we submitted a request for an EU application to the FDA. On November 9, 2022, the U.S. FDA's Pulmonary-Allergy Drugs Advisory Committee met with the company to review its request for EUA of sabizabulin. Although the Advisory Committee had a vote of 8 to 5 that the known or potential benefits of sabizabulin, when used for the treatment of adult patients hospitalized with COVID-19 at high risk of ARDS, do not outweigh the known or potential risks of sabizabulin. There was additional discussion by the Advisory Committee around the possible clinical trial design aspects to a potential confirmatory Phase 3 clinical trial as a post-EUA authorization requirement. The FDA will consider the input of the advisory committee as part of their review, but the FDA makes a final decision on the emergency use authorization application. We're in contact with the FDA as they continue to review our request for the EUA. As it relates to our ex-U.S. regulatory update, on July 27, 2022, we announced that the European Medicines Agency's Emergency Task Force had informed the company that it had initiated a review of sabizabulin for the treatment of hospitalized COVID-19 patients at high risk of acute respiratory distress syndrome. The review will assess the 31 EU member states who may consider allowing the use of the medicine before a formal marketing authorization is granted. This review of sabizabulin is the first to be triggered under Article 18 of the new EU Regulation that expanded the role of the EMA during public health emergencies in 2022. We have been in active communication with the Emergency Task Force as they complete their review of sabizabulin. Once the Emergency Task Force completes their review, they will submit their formal recommendation to the EMA's Committee for Medicinal Products for Human Use, also known as CHMP. The CHMP then reviews the recommendation and renders an opinion on whether sabizabulin qualifies for emergency use in Europe. On December 2, 2022, we had discussions with the Health Emergency Preparedness and Response Authority, also known as HERA, which is part of the European Commission. HERA is responsible for joint procurement framework contracts, which offer 36 participating countries the possibility of jointly procuring medical drugs and countermeasures as an alternative or a complement to procurement at the national level. The joint procurement framework contracts have been previously signed with Gilead, Hoffmann-La Roche, GSK, and most recently on November 23 with Pfizer. With respect to the United Kingdom, on July 25, 2022, we announced that the UK's Medicines and Healthcare Products Regulatory Agency considers that the currently available safety and efficacy data will support an expedited review of the marketing authorization application for the company's sabizabulin treatment in hospitalized COVID-19 patients at high risk of acute respiratory distress syndrome when the application is submitted. In August of 2022, Australia's Therapeutic Goods Administration granted the company an expedited provisional registration regulatory pathway for sabizabulin treatment in hospitalized COVID-19 patients in high-risk ARDS. On November 28, 2022, Veru submitted a regulatory package to the Access Consortium National Groups, which includes the U.K., Australia, and Switzerland. The Access Consortium is a coalition of these regulatory authorities with therapeutic products that work together to promote greater regulatory collaboration and alignment of regulatory requirements. Also, on November 28, we submitted a regulatory data package for sabizabulin to Health Canada. To recap, we have submitted regulatory data packages and requests for emergency use authorizations on an international level to the European Union, the U.K., Australia, Switzerland, and Canada, as well as South Korea. We are also in various stages of discussions with regulatory agencies in other countries to obtain regulatory emergency or expedited authorizations for sabizabulin in the near term, including Israel, Singapore, Egypt, and South Africa. Turning now to sabizabulin’s commercialization preparation update. In anticipation of the need for a potential commercial sabizabulin drug product, we have scaled up manufacturing processes and have commercial drug on hand to address anticipated drug needs following a potential FDA authorization in the U.S., as well as potential authorizations and approvals in other ex-U.S. countries and territories. Regarding the commercialization of sabizabulin in the U.S., Joel Batten, our Executive Vice President and General Manager of Veru’s U.S. Infectious Disease Franchise, was hired in May of 2022. Mr. Batten has assembled an experienced leadership team to commercialize sabizabulin in the U.S. This dedicated team consists of 16 employees and 52 contractors who have focused on commercial launch, market access, and medical affairs. We have also executed contracts with wholesalers and specialized hospital distribution services for sabizabulin. We are ready for the launch of sabizabulin into hospitals across the U.S. if we are granted emergency use authorization. We have also established Veru International to commercialize sabizabulin worldwide. Jason Davies joined us in August of 2022 as the Executive Vice President and General Manager for Europe, the Middle East and Africa, Latin America, Canada, the U.K., and Asia Pacific for Veru’s Infectious Disease Franchise for Veru International. Most recently, Mr. Davies held positions as the EMEA Head of Launch Excellence in the pharmaceutical portfolio at Janssen, a Johnson & Johnson Company, where he was responsible for creating and leading a new organization to enhance launch strategy and execution across all of Janssen's EMEA pharmaceutical portfolio. Over the course of his career, Mr. Davies spent approximately 20 years in several commercial positions of increasing responsibility across Janssen business units, including pharmaceutical business unit P&L responsibility, sales, marketing, market access, integration, and strategy, focusing on pharmaceuticals for virology and infectious diseases. Mr. Davies is responsible for developing and leading all aspects of the international launch strategy, including government purchase agreements, as well as the go-to-market commercial partner and distribution strategy for sabizabulin for COVID-19 if authorized, as well as planned future indications for other viral ARDS-related diseases. If we receive emergency use authorization from the U.S., the EU, or another large market, we plan to initiate any potential additional clinical studies in a post-EUA authorization setting at regulatory agencies' request to evaluate sabizabulin for the treatment of hospitalized moderate-to-severe COVID-19 adult patients at high risk for ARDS and death. We're also excited to expand the investigation of sabizabulin into other infectious disease indications based on the candidate's novel mechanism of action. We have preclinical in vivo scientific data that demonstrates sabizabulin's activity against the H1N1 variant of Influenza A, also known as swine flu. We plan to conduct a Phase 3 clinical study to evaluate sabizabulin in hospitalized adult patients with Influenza A who are at high risk for ARDS. Influenza A virus causes up to 52,000 deaths and 710,000 hospitalizations in the U.S. alone each year. We also plan to conduct a Phase 3 clinical study of sabizabulin for the treatment of hospitalized adult patients with viral ARDS, which would include Respiratory Syncytial Virus, which alone causes 14,000 deaths and 177,000 hospitalizations each year in the U.S. As outlined above, sabizabulin, a novel antiviral and anti-inflammatory agent, is positioned to potentially become a valuable treatment option for multiple infectious diseases that can lead to ARDS, a life-threatening lung condition that has a high mortality rate. I will now briefly discuss the progress of our oncology drug portfolio focused on advanced breast and prostate cancers. In advanced breast cancer, we're actively enrolling two Phase 3 clinical trials. The first is the ARTEST registrational clinical study in approximately 210 patients to evaluate Enobosarm monotherapy for third-line treatment of AR positive ER positive HER2-negative metastatic breast cancer. The second is the ENABLAR-2 Phase 3 clinical study in approximately 186 patients to evaluate the efficacy and safety of Enobosarm and Abemaciclib combination therapy versus an alternative estrogen-blocking agent in subjects with AR positive ER positive HER2-negative metastatic breast cancer who have failed first-line therapy with palbociclib, a CDK4/6 inhibitor, plus an estrogen-blocking agent and who have sufficient AR expression in breast cancer tissue. We have a clinical trial collaboration and supply agreement with Lilly for the ENABLAR-2 Phase 3 clinical study. Under the terms of the non-exclusive clinical trial collaboration supply agreement, Veru is responsible for conducting the trial while Lilly is supplying Abemaciclib for this study. Veru maintains full exclusive and global rights to Enobosarm. In advanced prostate cancer, we are actively enrolling a Phase 3 and a Phase 2 clinical trial. We are enrolling an open-label randomized 2:1 multi-center Phase 3 VERACITY clinical study evaluating sabizabulin 32 milligrams versus an alternative anti-receptor targeted agent for the treatment of chemotherapy-naive men with metastatic castration-resistant prostate cancer who have had tumor progression after previously receiving at least one androgen receptor targeted agent. The primary endpoint is radiographic progression-free survival. Enrollment for the Phase 3 VERACITY clinical study is on track and ongoing. Our second clinical study in prostate cancer is evaluating VERU-100, a GnRH antagonist three-month depot formulation in a Phase 2 dose-finding clinical study for the treatment of hormone-sensitive advanced prostate cancer. While the study is ongoing, the promising preclinical data demonstrate that VERU-100 can induce and maintain castration for three months. Veru has a commercial sexual health division called Urev, which includes two FDA-approved products, FC2 and ENTADFI. We have built the infrastructure to allow for broad market access to FC2 across the U.S. As a result, FC2 is now available through multiple sales channels. We have partnered with fast-growing and highly reputable telemedicine platform companies to bring our FC2 product to patients in the most cost-effective and highly convenient manner. While the telemedicine sector has underperformed across the board this past year, we're anticipating improvement in revenues after a couple of down quarters. Our strategy to drive FC2 sales is as follows: One, we will seek additional telemedicine and Internet pharmacy service partnerships; Two, we have created and launched our own dedicated direct-to-patient telemedicine and Internet pharmacy services platform. We're pleased with its growing source of revenue to date and are committed to expanding its customer base and reach; the website can be reached at fc2condoms.com. We also expect to see continued increases in our U.S. public sector sales through our new agreement with the New York Department of Health and through new distribution partnerships with Global Protection, as well as FX. Additionally, we have ENTADFI, an FDA-approved new treatment for benign prostatic hyperplasia, and currently prescribed benign prostatic hyperplasia medicines may lead to the most common side effect of sexual adverse events. ENTADFI has demonstrated to be a faster and more effective treatment option for benign prostatic hyperplasia than finasteride alone, and it has not caused the side effect of impotence. We launched this product during the fourth fiscal quarter with a focus on payer agreements, as well as executing distribution, wholesaler, and Medicare contracts. I will now turn the call over to Michele Greco, CFO, CAO, to discuss the financial highlights. Michele?

Thank you, Dr. Steiner. As Dr. Steiner indicated, once again, we have a lot of ongoing activity at Veru. Now, let's review the results for the fiscal year ended September 30, 2022. Overall, net revenues for fiscal year 2022 were $39.4 million, compared to $61.3 million in the prior year. The U.S. prescription business net revenues decreased to $30.2 million from $46.5 million in the prior year. The reduction is due to some business challenges experienced by our telemedicine customers during the year, which resulted in a slowdown in orders. Net revenue for the global public health sector business was $9.1 million, compared to $13.9 million in the prior year. The decrease in sales in the global public sector during the year is due primarily to 9.7 million units sold to Brazil and 4.9 million more units sold to South Africa in the prior year for tenders, which have ended and therefore did not repeat in the current year. Overall, gross profit was $30.6 million, or 78% of net revenues, compared to $47.9 million or 78% of net revenues in the prior year. The reduction in gross profit is driven primarily by the reduction in sales in our U.S. FC2 prescription business. Operating expenses increased to $113.8 million, compared to the prior year of $53.4 million. The increase of $60.4 million is primarily due to research and development costs, which increased by $37.9 million to $70.6 million from $32.7 million in the prior year and the increase in selling, general, and administrative expenses of $22.5 million from $20.7 million in the prior year to $43.2 million in the current year. The increase in research and development costs is due to the increased number of clinical trials. This year, we had four Phase 3 clinical trials and two Phase 2 clinical trials ongoing, while in the prior year, we had three Phase 3 clinical trials and three Phase 2 clinical trials ongoing. The increase in selling, general, and administrative expenses is primarily due to the increase in headcount related to the preparations for the commercial launch of ENTADFI and potentially sabizabulin for COVID-19, as well as the launch of the company's own direct-to-patient telemedicine and pharmacy services portal for FC2, resulting in increased compensation, increased stock compensation, and increased sales and marketing expenses. Operating loss for the year was $83.2 million, compared to operating income in the prior year of $13 million. The change of $96.2 million is primarily due to the gain on sale of PREBOOST of $18.4 million in the prior year period. The increase in research and development costs and selling, general, and administrative expenses during the current year, as well as the reduction in net revenues and gross profit during the year. Non-operating expenses were $316,000, compared to $8.7 million in the prior year, which primarily consisted of interest expense and change in the fair value of derivative liabilities related to the synthetic royalty financing. For the year, we recorded a tax expense of $236,000, compared to a tax benefit of $3.1 million in the prior year. The tax benefit recorded in the prior year is primarily due to the increased value of the U.K. net operating losses, due to an increase in the U.K. tax rates from 19% to 25%. The company has net operating loss carryforwards for U.S. federal tax purposes of $112.5 million, with $29.7 million expiring in years through 2042 and $82.8 million, which can be carried forward indefinitely. The company also has U.K. net operating loss carryforwards of $63.1 million, which do not expire. The bottom line results for fiscal year 2022 was a net loss of $83.8 million or $1.05 per diluted common share, compared to net income in the prior year, which included the gain on the sale of PREBOOST of $7.4 million or $0.09 per diluted common share. Now, turning to the balance sheet. As of September 30, 2022, our cash balance was $80.2 million and our accounts receivable balance was $3.6 million. Our net working capital was $63.3 million on September 30, 2022, compared to $136 million on September 30, 2021. As a reminder, during fiscal year 2021, we sold PREBOOST for $15 million in cash and $5 million in notes receivable and completed an underwritten public offering, resulting in net proceeds of $108 million. During the fiscal year ended September 30, 2022, we used cash of $47.5 million for operating activities. The expected future revenues from sabizabulin for COVID-19 is authorized. The continued revenue from sales of FC2 in the U.S. prescription channel and the global public sector, as well as future revenue from ENTADFI, added to our healthy balance sheet, should continue to be the primary sources of funds we use for commercial activities and to invest in our promising pharmaceutical clinical development programs, as we continue to focus on developing novel medicines for COVID-19 and other viral and ARDS-related diseases and for the management of breast and prostate cancers. Now, I'd like to turn the call back to Dr. Steiner.

Thank you, Michele. COVID-19 cases continue to persist worldwide and hospitalizations and death rates are rising as we head into the winter season. The emergence of COVID-19 variants BQ.1 and BQ.1.1 has contributed to this new surge, and these mutated strains have the ability to evade immunity, meaning that these variants can affect anyone, including vaccinated individuals. In fact, for the first time, more vaccinated people than unvaccinated people are dying from COVID-19. This waning immunity is partly because of the new variants, but also from booster vaccine fatigue. Unfortunately, 1,080,000 Americans have died from COVID-19 to date. A series of recent articles, including one by Ariana Eunjung Cha and Dan Keating published in the Washington Post entitled 'COVID-19 becomes a plague of the elderly' reviving a debate over acceptable loss, points out, 'nearly 9 of 10 deaths are now in people 65 or older, the highest rate since the pandemic began.' With the current standard of care treatment, approximately 300 people are still dying each day. This is unacceptable. We need to do better. We must reduce the risk of death from COVID-19, including in this vulnerable population of individuals over the age of 65. An effective and safe oral therapeutic to treat hospitalized moderate to severe COVID-19 patients with high risk for ARDS that prevents death is still desperately needed. We strongly believe that sabizabulin, an oral therapy with dual antiviral and anti-inflammatory properties, can serve as this new treatment modality that addresses and overcomes the threat of death that hospitalized moderate-to-severe COVID-19 patients continue to face. While multiple regulatory agencies across the world view sabizabulin as a potential option for emergency use settings, we are eagerly and proactively preparing multiple work streams in the background. For instance, manufacturing drug supply and scale-up activities are in place. Our U.S. and international commercial infrastructure is ready to provide access to sabizabulin to hospitalized patients at high risk for ARDS and death if authorized. We continue to live in a world facing a public health emergency as we enter the fourth year of the COVID-19 pandemic. In summary, we continue to advance our core late clinical stage breast cancer and prostate cancer programs with three actively enrolling Phase 3 clinical studies. Our legacy sexual health business, comprised of two FDA-approved products, continues to generate revenue, and if authorized, we expect to have substantial near-term revenue from sabizabulin at 9 milligrams for hospitalized COVID-19 patients and high risk for ARDS. With that, I'll now open the call to questions. Operator?

Thank you. Our first question comes from Brandon Folkes from Cantor Fitzgerald. Please go ahead.

Hi. Thanks for taking my questions and congratulations on all the progress. So, I guess no surprise where I'm going to start. Can you talk about how much interaction you've had with the FDA post the AdCom anyway to put into context the nature of those interactions? And then secondly, given the proposal to run a potential confirmatory Phase 3 trial, I'm not saying that's going to happen, but just how quickly could you get such a trial up and running provided within the range of maybe, what you're expecting a trial to look like? Any risks or how should we think about getting U.S. patients and U.S. standard of care? Is there a rush to get it done this winter? Thank you very much.

Okay. So, first question has to do with getting a sense of how much interaction we're having with the FDA post AdCom? As I said in my prepared comments, we are in contact with the FDA on an ongoing basis. This is not radio silence by any means. What I can tell you is that we have been actively in communication with the FDA. That's an important point because as you know with PDUFA dates, if you don't hear from the FDA, you worry. But we don't have a PDUFA date; however, we're hearing from the FDA. That's number one. They are continuing to review the EUA post AdCom. As it relates to your second question about the Phase 3 clinical trials, if we have to do the Phase 3, not under an EUA, post-EUA, it doesn't matter. If they ask for additional U.S. exposures, I think we can get that up and running relatively quickly.

Does it need to be this winter versus maybe going to the southern hemisphere or having to wait for next year?

Yes. Well, first of all, if you look at the pattern, we had our surge during the summer just like Australia. It doesn't seem so far that COVID is necessarily following the surge concept of the viruses where they tend to happen based on coming together during the winter months. It appears that you're still going to have it even in the summer months when people are going for air conditioning. The strategy this time includes having more clinical sites than just U.S., South America, and Bulgaria. I wouldn't say there's a rush, except the fact that the people are dying and the standard of care. One of the things that works in our favor is that thousands of companies have done clinical trials trying to find a drug for COVID-19 and have failed. Now we're down to a handful of drugs that have emergency use authorization, a full authorization that have a modest at best mortality benefit. Remdesivir has no mortality benefit, and the anti-inflammatory agents at best with baricitinib give you about a 5.7% absolute benefit in mortality. There is an unmet need for a new agent, and because of the data we have, our Phase 3 study published study, fully published, we have a real opportunity. Our goal is to enroll it as quickly as we can. But it still takes about three to six months to get most of your clinical sites up and running; the endpoint will be 60 days. We are contemplating adding in long COVID as a follow-up, not as a primary endpoint. We think we can be pretty aggressive in getting that study done. On the second question about the standard of care, the best we're doing is still dealing with 300, 350 deaths a day on average, and now the hospitalizations are going back up. The lag behind hospitalizations with deaths is returning; people are not getting the booster, which is still a significant issue, and we’re seeing the antibody drugs, particularly those from Lilly are gone. We should have an additional tool soon.

Thanks, Mitch. I appreciate all the color. Congrats on the progress.

Our next question comes from Leland Gershell from Oppenheimer. Please go ahead.

Mitch, thank you for the update and for taking our questions. Just to get into specifics to the extent you're able to with respect to the ongoing FDA discussions, can you say that you are continuing to discuss the design of what may be a confirmatory trial that would be performed under the EUA? Is that a part of the ongoing discussion content?

The FDA stated in their background package that the design laid out was agreed upon by the sponsor. So, that's not the top discussion point as that’s been agreed upon. I can't share more details than that right now; the FDA is checking their boxes that they need to check.

Can you comment if there are any particular boxes that are left to check that you're working on?

I can't say much more.

Okay. And then with respect to the other countries, has there been any change in tender in their interest since the advisory committee? Are you aware of any dependence on what the EUA decision outcome will have in terms of what those ex-U.S. decisions may be versus independent emergency authorizations in other places irrespective or prior to an FDA decision?

No changes in the interactions related to other governments reviewing our application based on the advisory committee. It seems the discussions with other regulatory agencies outside the U.S. are intense. Analogously to Remdesivir, Gilead reported almost 52% to 53% of their revenue was coming from outside the U.S. Looking at the split of 65% in the U.S. and 35% outside the U.S. doesn't make sense. Major markets turn out to be Europe, and if Europe gives emergency use authorization, around 80% of the countries outside of Europe will use that authorization as part of their review. There has not been at all any change in the interactions that we've had, and multiple agencies remain engaged and active in their review. No, the answer is quite independent. The FDA is still reviewing the application.

Okay. And then just one question on the other development programs. With our test and veracity, you indicated around the time that those trials were getting going that we could see enrollment starting to complete in this timeframe. Wanted to ask about enrollment progress with those. If you do see either of both trials perhaps completing enrollment by year-end, what's that timeframe looking like?

Yes. The timeframe still looks like data in 2023, probably towards the end of next year. Enrollment is still consistent with that, but that’s all I can say at this point.

Okay, great. Thanks for taking the questions.

Thank you.

Our next question comes from Chris Howerton from Jefferies. Please go ahead.

Hey, good morning. Thanks for taking the questions. I guess, two from me. One would be, with respect to the FC2 and ENTADFI part of your business, what measures are you going to take in your own internal hub to combat some of the challenges that your partner had for telemedicine and to give you confidence that that will be a sustainable business? Curious if you can give us some more color around liquidity and your cash runway in a scenario where sabizabulin has launched? What would be your cash needs to launch such a drug? In a scenario with maybe a longer delay, how do you see your current cash reserves being deployed against your plan? Thank you.

Okay. Thank you for your questions. As it relates to FC2, we've had two down quarters, and the telemedicine market, we have two customers that make up a significant portion of that revenue. They've been experiencing a down year, which affected us. But we're happy to report that our partners are indicating that whatever the hiccup was is turning around. We expect to see an increase in revenue. We’re also not sitting on our hands; we've realized it’s better not to depend solely on customers. So we've implemented our own telemedicine hub. This has been pressure-tested and is viable. There’s a correlation between our marketing spend and sales. So we're committed to expand this aspect of our business. We didn't have much focus on ENTADFI until recently due to our contracts with payers and wholesalers as well as distribution agreements. This year was a launch opportunity for us with Urev generating $39 million, which helps alleviate some growth pressure.

From a liquidity standpoint, if we launch sabizabulin, our drug spend was around $70 million this year; over half was COVID-related. We're prepared to launch and won't need additional liquidity other than what we generate from our business. We're managing our cash and increasing revenues, so liquidity is not a concern.

Thank you.

Our next question comes from Yi Chen from H.C. Wainwright. Please go ahead.

Thank you for taking my questions. When do you expect the FDA to issue its final decision on the EUA application? Do you think it could occur before the end of 2022?

I will tell you that I’ve given up guessing when the FDA is going to decide. The FDA does what they do, and I can’t provide guidance because we are dealing with a drug with incredible mortality benefit. I can't give any more info for now.

For the fiscal fourth quarter, there appears to be a sharp decline in terms of revenue from FC2. Could you comment on the current trend of the U.S. prescription for FC2? How much revenue contribution do you expect to get from the launch of ENTADFI going forward? Could you also comment on whether the operating expenses will be at the same level as observed in the fiscal fourth quarter going forward? Thank you.

Regarding FC2, we're already seeing a turnaround, and we believe the fourth quarter represents the bottom. They’ve added some customers this year, and we expect an increase in revenue. As for ENTADFI, lot of infrastructure is in place to allocate for its launch. I’ll let Michele answer the other queries.

Yes. We're working with our customers; we're projecting a turnaround here. This won't be instant, but it’s coming for the FC2 business. In the global sector, it’s timed with tenders. The ENTADFI launch will depend on marketing spend and COVID launch spending.

Okay. Thank you.

Ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference call back over to Dr. Mitchell Steiner for any closing remarks.

I appreciate everyone who joined us on today's call, and I look forward to updating you all on our progress at our next Investor Call. Thank you.

The digital replay of the conference call will be available beginning approximately noon Eastern Time today, December 5, by dialing 1-877-344-7529 in the U.S. and 1-412-317-0088 internationally. You will be prompted to enter the replay access code, which will be 4646397. Please record your name and company when joining. The conference call has now concluded. Thank you for attending today's discussion.