Good morning, ladies and gentlemen, and welcome to the Veru Inc. 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 Inc.'s Executive Director, Investor Relations and Corporate Communications. Please go ahead.

Good morning. The statements made on this conference call may be forward-looking statements. Forward-looking statements may include, but are not necessarily limited to, statements of the company's plans, objectives, expectations or intentions regarding its business, operations, regulatory interactions, finances, and development, and product portfolio. Such forward-looking statements are subject to known and unknown risks and uncertainties and our actual results may differ significantly from those projected, suggested or included in any forward-looking statements. Risks that may cause actual results or developments 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. Joining me on today’s call are Dr. Gary Barnett, Chief Scientific Officer; Michele Greco, 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 being with us. Veru is a biopharmaceutical company dedicated to developing innovative medicines for COVID-19, other viral diseases, ARDS-related illnesses, and oncology. Our commercial sexual health program, known as Urev, features two FDA-approved products: ENTADFI, a new treatment for benign prostatic hyperplasia, and the FC2 Condom, an internal condom designed to offer dual protection against unintended pregnancies and sexually transmitted infections. The revenue generated from our sexual health program is partially funding the clinical development of our late-stage therapeutic candidates that target significant market opportunities. Today, we will update you on our COVID-19 sabizabulin clinical program, the development of our oncology pipeline, and the commercialization of our Urev products, alongside financial highlights from our first quarter of fiscal year 2023. First, let me provide an update on sabizabulin, an investigational drug candidate aimed at treating hospitalized adult COVID-19 patients at high risk for ARDS, which is the primary focus of our infectious disease program. We recently reported positive outcomes from our Phase III COVID-19 clinical trial, a double-blind, multicenter, multinational randomized placebo-controlled study assessing a daily oral dose of 9 milligrams of sabizabulin for up to 21 days versus placebo in 204 hospitalized patients suffering from moderate-to-severe COVID-19 and at high risk for ARDS and death. On April 8, 2022, the Independent Data Monitoring Committee performed a planned interim analysis of the first 150 patients. After reviewing the unblinded clinical data, the committee unanimously recommended halting the Phase III study early due to clear clinical efficacy. They also noted no safety concerns. The interim analysis indicated that sabizabulin treatment led to a significant 24.9 percentage point absolute reduction and a 55.2% relative reduction in all-cause mortality by day 60, the study's primary efficacy endpoint, with a P value of 0.0042. The efficacy results were consistently observed across various subgroup analyses. Significant reductions in mortality were noted with sabizabulin compared to placebo, regardless of other treatment received, baseline WHO ordinal score, sex, age, baseline comorbidities, BMI, or location. The complete dataset of 204 randomized patients showed similar results, with a 51.6% relative reduction in deaths compared to placebo, and a P value of 0.0046. Key secondary endpoints also confirmed that sabizabulin treatment led to fewer days in the ICU, on mechanical ventilation, and in the hospital compared to placebo. Additionally, sabizabulin exhibited an acceptable safety profile, with significantly fewer adverse and serious adverse events reported compared to placebo, and fewer treatment discontinuations due to adverse events. The safety profile from the Phase III trial indicates that treatment may have resulted in lower COVID-19-related complications, particularly respiratory failure and other serious conditions. Next, I will discuss our regulatory progress for sabizabulin in treating COVID-19 in both the U.S. and internationally. On May 10, 2022, we had a pre-emergency use authorization meeting with the FDA, which confirmed that no additional efficacy studies would be needed for an Emergency Use Authorization or a new drug application. The FDA also stated that no more safety data would be required for the EUA; however, ongoing safety data collection under the EUA would fulfill safety requirements for the NDA. The FDA formally documented these positions in the meeting minutes sent to us afterward. Following this guidance, we submitted our EUA request to the FDA on June 6, 2022. On November 9, 2022, the FDA’s Pulmonary-Allergy Drugs Advisory Committee reviewed our EUA request. Although they voted eight to five that the potential benefits of sabizabulin do not outweigh the known risks, they discussed clinical trial design aspects for a potential confirmatory Phase 3 clinical trial as a post-EUA authorization requirement. While the FDA considers the advisory committee's input, it holds the final decision on the EUA application. We believe we meet the criteria for EUA issuance based on FDA guidance, namely that COVID-19 constitutes a serious disease, that there is reasonable belief regarding sabizabulin's effectiveness, and that the benefits outweigh the risks, with no adequate alternatives available. It's been three months since the FDA Advisory Committee meeting, and while we’ve been in contact with the FDA, we do not have a timeline for when they will act on our EUA. Additionally, on January 30, 2023, the White House Office of Management and Budget announced plans to terminate the national COVID-19 emergency on May 11, 2023. However, the Department of Health and Human Services had previously declared a national emergency in 2020, which remains in effect. The FDA has confirmed that this termination will not affect its ability to authorize new treatments for emergency use, nor will it impact existing EUAs. Internationally, on July 27, 2022, we announced that the European Medicines Agency's Emergency Task Force began reviewing sabizabulin for use in hospitalized COVID-19 patients at high risk for ARDS. This review will aid 31 EU member states that may consider permitting the use of the drug before receiving formal marketing authorization. In addition, we have completed our final rolling submission to the Access Consortium nations for regulatory approvals. This month we expect to finalize our submission to Health Canada. In total, we have submitted regulatory requests for emergency authorizations to the European Union, UK, Australia, Switzerland, and Canada, and are in various stages of discussions with regulatory agencies in countries such as South Korea, Israel, Egypt, New Zealand, and South Africa. Regarding commercialization, we have ramped up manufacturing to ensure we have a sufficient drug supply ready for potential authorization in the U.S., Europe, and other countries. We are positioned to launch sabizabulin to U.S. hospitals promptly if we receive EUA. We have also established an international commercialization strategy and have begun further discussions with the European Commission’s Health Emergency Preparedness and Response Authority. Furthermore, we have forged partnerships with various international companies, enhancing our presence in markets across different countries. We are also excited about exploring sabizabulin’s potential in other infectious diseases, particularly since we have data suggesting its activity against the H1N1 variant of Influenza A. In addition, we are planning to conduct Phase 3 clinical studies of sabizabulin for treating hospitalized patients with viral ARDS, including conditions like Respiratory Syncytial Virus. Our unique antiviral and anti-inflammatory profile suggests that sabizabulin could be a significant treatment for multiple infectious diseases leading to ARDS. I will now briefly cover our oncology drug portfolio, focusing on advanced breast and prostate cancers. In advanced breast cancer, we are actively enrolling two registration clinical trials. The first, the ARTEST Phase 3 trial, evaluates Enobosarm monotherapy for third-line treatment of AR positive ER positive HER2-negative metastatic breast cancer. The second trial, the ENABLAR Phase 3 clinical study, looks at the efficacy and safety of Enobosarm and Abemaciclib combination therapy in patients with AR positive ER positive HER2-negative metastatic breast cancer who have failed first-line therapy. We have a collaboration agreement with Lilly for this trial, where Veru is conducting the study, and Lilly is supplying the drug. In advanced prostate cancer, we are also enrolling Phase 3 and Phase 2 trials. The Phase 3 VERACITY clinical trial is evaluating sabizabulin versus alternative treatments in chemotherapy-naive men with metastatic castration-resistant prostate cancer. The primary endpoint is radiographic progression-free survival, and enrollment is ongoing. Our second clinical study evaluates a three-month GnRH antagonist depot formulation for hormone-sensitive advanced prostate cancer. As we navigate clinical trial priorities and spending while awaiting regulatory decisions on sabizabulin, we will keep you informed of any changes in our trial protocols or R&D efforts. We are also progressing with our commercial sexual health program, Urev, which features two FDA-approved products, FC2 and ENTADFI. We have established our infrastructure for broad market access to FC2, and it is now available through various sales channels, including partnerships with telemedicine platforms. While market conditions in the telemedicine sector experienced a downturn last year, we are starting to see revenue growth in the second quarter of fiscal year 2023. ENTADFI has demonstrated itself as an effective treatment option for benign prostatic hyperplasia without causing common sexual side effects. Following its launch, we are focusing on payer agreements and distribution contracts. I will now turn the call over to Michele Greco, our CFO and CAO, to discuss financial highlights. Michele?

Thank you, Dr. Steiner. As Dr. Steiner indicated, we continue to have a lot of ongoing activity at Veru. Let's review the first quarter results. Overall net revenues were $2.5 million, compared to $14.1 million in the prior year quarter. The U.S. prescription business net revenues decreased to $163,000 from $11.6 million in the prior year period. The reduction is due to some business challenges experienced by our telemedicine customers in recent quarters, which resulted in a slowdown in orders. Net revenue for the global public health sector business was $2.3 million, compared to $2.6 million in the prior year period. Overall, gross profit was $700,000 or 28% of net revenues, compared to $11.8 million, or 84% of net revenues in the prior year period. The decrease in gross profit and gross margin is driven primarily by decreased sales in our U.S. FC2 prescription business. Operating expenses for the quarter increased to $36.3 million, compared to the prior quarter of $16.8 million. The increase of $19.5 million is primarily due to research and development costs, which increased $8.7 million to $18.7 million from $10.1 million in the prior year period, and the increase in selling, general, and administrative expenses of $10.8 million from $6.7 million in the prior year period to $17.5 million in the current period. The increase in research and development costs is due to the increased costs associated with multiple in-process research and development projects, mainly for the Phase 3 sabizabulin COVID-19 registration trial and manufacturing costs of $8 million for pre-launch inventory, along with increased personnel costs resulting from increased headcount and an increase in the fair value of share-based compensation. The increase in selling, general, and administrative expenses is primarily due to commercialization costs of $8.4 million related to preparations for the potential launch of sabizabulin for COVID-19 incurred in the first quarter of fiscal 2023, and an increase in share-based compensation costs resulting from increased headcount and an increase in the fair value of share-based compensation. The operating loss for the quarter was $35.6 million, compared to $5 million in the prior year quarter. The change of $30.6 million is due to the increase in research and development costs and selling, general, and administrative expenses during the current period, as well as the reduction in net revenues and gross profit during the period. Non-operating expenses were $1.3 million for the current year quarter, consistent with the prior year quarter, which primarily consisted of interest expense and a change in the fair value for derivative liabilities related to the synthetic royalty financing. For the quarter, we recorded a tax benefit of $68,000 compared to a tax expense of $115,000 in the prior year quarter. The bottom line results for the quarter was a net loss of $36.8 million or $0.46 per diluted common share, compared to $6.4 million or $0.08 per diluted common share in the prior year quarter. The company has net operating loss carry-forwards 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 U.K. company net operating loss carry-forwards of $63.1 million do not expire. Now, looking at the balance sheet, as of December 31, 2022, our cash balance was $46.9 million, and our accounts receivable balance was $3.9 million. Our net working capital was $32.9 million at December 31, 2022, compared to $63.3 million at September 30, 2022. During the quarter ended December 31, 2022, we used cash of $34.5 million for operating activities. Expected future revenues from sabizabulin for COVID-19, if authorized, and the continued revenue from the sales of FC2 in the U.S. prescription channel and the global public sector added to our current cash balance, 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, as well as for the management of breast and prostate cancers. If sabizabulin is not authorized in the U.S. or elsewhere in this current calendar, then we may have to seek additional sources of funding if we are unable to reduce our spending to a sufficient degree. Now, I'd like to turn the call back to Dr. Steiner.

Thank you, Michele. In January of 2023, the Los Angeles Times published an article by Doyle McManus entitled "Biden said the pandemic is over, but the pandemic won't cooperate." McManus further states, "But the pandemic isn't over. We're just pretending it is." So last month, the World Health Organization (WHO) concluded that COVID-19 remains a public health emergency of international concern. This declaration underscores that the COVID-19 virus and its resulting impacts warrant long-term public health action as we enter the fourth year of this COVID-19 pandemic. According to the CDC in the United States, there have been 1,106,824 deaths related to COVID. Currently, the weekly average for new deaths is 3,452 people, or approximately 500 deaths per day. The weekly average for new primary COVID-19 hospitalizations is 24,213 patients, or 3,459 new admissions per day. COVID-19 is the third leading cause of death in the United States, behind heart disease and cancer. COVID-19 is a serious disease. An effective and safe oral therapeutic to treat hospitalized moderate-to-severe COVID-19 patients who are high-risk for ARDS that prevents death is 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. We have pivoted our company to establish an infectious disease program with sabizabulin as the lead drug candidate. In a Phase 3 study, sabizabulin demonstrated clear clinical benefit in hospitalized moderate-to-severe COVID-19 patients at high-risk for ARDS and death. Because of sabizabulin’s mechanism of action, it has the potential to treat other virally induced ARDS. ARDS remains a worldwide unmet serious medical need. In addition, we continue to advance our late-stage clinical programs for breast and prostate cancer. For our cash-burning position, we have been able to pause some of our spending as we're now in a holding pattern while multiple regulatory agencies across the world review sabizabulin as a potential option for emergency use. Over the past few months, we have been proactively preparing multiple workstreams for commercialization in the background. For instance, manufacturing, drug supply, and scale-up activities are in place. Our U.S. and international commercialization infrastructure is ready to provide access to sabizabulin to hospitalized COVID-19 patients who are at high-risk for ARDS and death if authorized. We're working to prioritize our clinical development portfolio. We have begun to slow our clinical development spend, and we continue to evaluate the appropriate timing and spending of our planned clinical studies. Furthermore, we have a near-term strategy to drive FC2 sales as follows: we will seek to initiate additional and strengthen current telemedicine and internet pharmacy service partnerships. We have created and launched our own dedicated direct-to-patient telemedicine and internet pharmacy services portal. We're pleased with the telemedicine portal as a growing source of revenue. Making this strategic move has allowed us to supply FC2 to other telemedicine providers and to have our own dedicated FC2 telemedicine portal that we can control and grow. The website can be reached at fc2condoms.com. We expect to continue to increase U.S. public sector sales through our new agreements with the New York Department of Health and the new distribution partnerships with Global Protection, as well as fax orders. We're also starting to see an increase in global public health sector orders again. As I mentioned, we are seeing improvements in FC2 revenues in our second quarter of fiscal year 2023, and ENTADFI may also generate revenue, and if authorized, we expect to have substantial near-term revenue from sabizabulin 9 milligrams for hospitalized COVID-19 patients who are high-risk for ARDS. With that, I'll now open the call to questions. Operator?

Yes, thank you. Ladies and gentlemen, at this time we will begin the question-and-answer session. And the first question comes from Brandon Folkes with Cantor Fitzgerald.

Hi, thank you for taking my question. To start with, what makes you confident that HHS won't follow the White House in ending the COVID emergency? Have they made any public statements about this? Is there any precedent for this situation? Then, could you elaborate on your cash situation? When did you pause spending? Was this after the quarter ended or during it? Also, can you provide details on how much spending you've reduced and the urgency around either advancing clinical trials or improving your capital situation? Thank you.

Thank you. So, make sure I understand your first question is around HHS correct?

Correct.

Yes. HHS, as I mentioned earlier, is a separate group that oversees the FDA and has the authority to declare its own emergencies. On the same day the Biden administration announced the end of the national and public health emergency on May 11, 2023, the FDA clarified that they will continue to issue new Emergency Use Authorizations, and any existing EUAs will remain valid until HHS decides otherwise. From what I've gathered, there are specific timelines regarding the public health declaration, meaning if HHS chooses to retract the declaration, Medicare, Medicaid, and other related programs will persist until the end of that calendar year. Additionally, the Omnibus bill recently passed includes measures to facilitate the transition from the government's emergency declaration to a non-emergency status, specifically mentioning COVID drugs, which will be covered until the end of 2024. Although May 11 is the cutoff date, there are provisions in place to ensure we retain access to beneficial resources. As it relates to your second question, our biggest spend was, as you would imagine, in the first few months after we heard about the go-ahead to submit your EUA. We quickly submitted the EUA and then we went into a wait mode. We knew that we could hear at any time, so even back in the summer we were increasing our spend to build the U.S. commercial team and a small commercial team in Europe, more importantly to prepare for the commercialization of our product, including the manufacturing piece, which means that we had to scale up to provide the commercial drug as soon as the FDA told us we were authorized. Once the spend was done, we entered a holding pattern. As you've seen, we had a couple of planned clinical trials that we have not initiated – two in breast cancer, for example. We're just maintaining our cash to ensure we know our situation if we have revenue coming in from sabizabulin. Our focus remains on doing what we need to do to take a valuable drug like sabizabulin and get it to patients, while simultaneously focusing on our oncology programs.

I would just add that, as Mitch indicated, we needed to ramp up. I mentioned during my comments we spent $8 million during the quarter to get enough drug in place. As we've been working on our prioritization and pushing back on cash, that started toward the end of our quarter and now into this quarter. A lot of the spend takes time for it to materialize, and we are actively working on this.

Okay. Thank you.

Thank you. And the next question comes from Leland Gershell with Oppenheimer.

Good morning. Thank you for taking my questions. I just wanted to ask as you control the spend, as we await the potential EUA, with respect to spend on the enrollment in the oncology trials. Are you kind of pulling back there? Is that enrollment now expected to take a bit longer? If you could just kind of let us know what the timelines may be for updates on the oncology trials. Thanks.

Yes. The answer to that is that as soon as we have a better understanding of what's coming in and what's going out, we'll evaluate our options. We did not expect to be waiting seven to eight months without hearing from the FDA. There is precedent; a company called Sobi Pharmaceuticals submitted their EUA to the FDA back in January of 2022 and it took them 11 months before they heard that they received the EUA. We are at the mercy of the regulatory bodies. We also understand that we have sufficient cash but want to ensure it lasts, and we have cash coming in that is moving towards where we would expect. However, we need more time before rolling out what we’re planning for the oncology program.

Great. Thank you.

Thank you. The next question comes from Yi Chen with H.C. Wainwright.

Thank you for taking my questions. So without waiting for FDA response, can the company advance sabizabulin into a clinical trial for hospitalized patients with ARDS but excluding COVID-19 patients?

It's a very good question. If we do that, then that would mean conducting a study under an NDA. Our discussions have thus far been under the EUA. However, it is important to note that we have an agent that has shown clinical benefit. In fact, during the pandemic, there are fewer drugs available than when we started. Sabizabulin has a different profile and shows substantial risk reduction in the sickest patients. The mechanism by which it acts could be beneficial for other ARDS outcomes. The unmet need in ARDS is great, so we have to focus on continuing to push forward with sabizabulin for ARDS. Once we get clarity regarding the EUA authorizations from various organizations, we will push through.

Got it. My next question is, do you expect the FC2 sales to return to the levels seen in the fiscal first and second quarter of 2022? And if so, how soon do you expect to return to that level?

It's a good question. I'll have Michele answer that.

For this quarter, we're starting to see our revenues bounce back to the levels we saw in the first quarter and second quarter. Our customers experienced some temporary headwinds as Mitch mentioned, including leadership changes and rebranding issues. They seem to have worked those out. We stay in close contact with these customers and have been actively working on clearing those issues up. All signs are pointing to an increase, but visibility remains focused on the second quarter, where things look promising for the third and fourth quarter.

Thank you. And my last question is just to confirm that Veru may terminate one of the ongoing breast cancer or prostate cancer trials due to budgeting priority. Is that correct?

Again, we have not made that decision, but we're seriously looking at all options including modifications. It's too early to say definitively, what will happen moving forward. What I can tell you is that we want to decrease our spend and focus on clinical data. Our strategy is to ensure progress in clinical development—2023 is aimed at enrollment while 2024 will focus on gathering data. COVID-19 has impacted all clinical trials, but we will continue towards our goal.

Thank you.

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference call back over to Dr. Mitchell Steiner for any closing comments.

Thank you. I appreciate everyone who joined us on today's call, and I look forward to updating all of you on our progress in our next investor call. Thank you again.

Thank you. The digital replay of the conference call will be available beginning approximately noon Eastern Time today, February 9, 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 9127050. Please record your name and company when joining. The conference call has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.