Good morning, ladies and gentlemen, and welcome to Veru Inc.'s Investor Conference Call. All participants will be in a 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, sir.

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, the Chief Scientific Officer; Michele Greco, Chief Financial Officer and Chief Administrative Officer; Michael Purvis, General Counsel and Executive Vice President of Corporate Strategy; and Sam Fisch, Executive Director of Investor Relations and Corporate Communications. Thank you for joining our Q2 fiscal year 2025 earnings call. Veru is a late clinical-stage biopharmaceutical company focused on developing novel medicines for the treatment of cardiometabolic and inflammatory disease. Our drug development program consists of two clinical-stage drug candidates, Enobosarm and Sabizabulin. Enobosarm, an oral selective androgen receptor modulator (SARM), is being developed as a novel drug that makes GLP-1 receptor agonists for weight reduction more tissue selective while preserving lean muscle mass or causing fat loss in older patients who are overweight or obese. Sabizabulin is an oral microtubule disruptor being developed as a broad anti-inflammatory agent to reduce vascular plaque inflammation, slow the progression, and promote regression of atherosclerotic cardiovascular disease. This morning, we will focus our update only on our obesity program. As defined by the FDA, obesity is a disease of excess body adiposity or fat. Therefore, the medical objective to treat obesity through weight reduction drugs in combination should be to reduce excess body fat, not lean mass, in order to improve mobility and mortality associated with obesity. GLP-1 receptor agonists have been shown to produce significant weight loss in patients who are overweight or have obesity. Unfortunately, the weight loss is tissue non-selective, with indiscriminate loss of both fat and lean mass. As up to 50% of the total weight loss is attributable to lean mass, we must do a better job at targeting fat tissue only. Let's face it; no one wants to lose lean muscle mass. This is common sense, but the beneficial consequences of increasing or maintaining muscle mass in an aging population are increased basal metabolism with sustainable weight management, better control of blood glucose, better joint health, increased strength, improved balance, a potential decrease in falls, increased bone mineral density, a potential decrease in non-traumatic bone fractures, and an increase in the likelihood of maintaining independence in an older population. With that objective, we are developing Enobosarm, which has demonstrated in previous clinical studies improvements in body composition with tissue-selective increases in lean mass and decreases in fat mass, improvements in both muscle strength and physical function, no masculinizing effects in women, and neutral prostate effects in men. We conducted a Phase 2b multicenter, double-blind, placebo-controlled randomized dose-finding clinical study designed to evaluate the safety and efficacy of Enobosarm 3 milligrams and Enobosarm 6 milligrams versus placebo as a treatment to augment fat loss and prevent muscle loss in 168 older patients aged 60 years or older receiving semaglutide, known as Wegovy, for chronic weight management. The primary endpoint is the percent change in baseline total lean body mass, and the key secondary endpoints are the percent change in baseline total body fat mass, total body weight, and physical functions measured by the Stair Climb test at 16 weeks. After completing the efficacy dose assessment portion of the Phase 2b quality clinical study, the patients continued into the Phase 2b extension maintenance trial, where all patients stopped treatment with semaglutide but continued to take placebo, Enobosarm 3 milligrams, or Enobosarm 6 milligrams in a blinded fashion for an additional 12 weeks. The Phase 2b clinical trial will evaluate whether Enobosarm can maintain muscle and prevent the fat regain that generally occurs after discontinuing a GLP-1 receptor agonist. The purpose of the Phase 2b clinical trial is to select a dose of Enobosarm, in combination with semaglutide, that best preserves lean mass and physical function after 16 weeks of treatment, to advance into a Phase 3 clinical program. The positive top-line results of the Phase 2b clinical study demonstrated that Enobosarm is a novel drug that, when combined with GLP-1 receptor agonists, makes weight reduction more tissue selective for greater fat loss while preserving lean mass. The Phase 2b clinical study is the first human study to report the effects of a muscle preservation drug candidate on body composition and physical function in older patients receiving a GLP-1 receptor agonist for weight reduction. The Phase 2b clinical study met its primary endpoint with a statistically significant and clinically meaningful benefit of a 71% preservation of total lean body mass in all patients receiving Enobosarm plus semaglutide versus placebo plus semaglutide at 16 weeks, with a p-value of 0.002. Enobosarm 3 milligrams plus semaglutide was the best dose, achieving a greater 99% mean relative reduction in the loss of lean mass with a p-value of less than 0.001, indicating that almost the entire weight loss was fat mass. The Enobosarm 6 milligrams plus semaglutide dose preserved lean mass but was not any better than the Enobosarm 3 milligrams plus semaglutide dose. This is not unexpected, as we have observed similar results in the previous multiple ascending dose clinical study. We believe that at a certain point, the target of the androgen receptor becomes oversaturated by a drug. As for the secondary clinical endpoints, Enobosarm plus semaglutide treatment resulted in a dose-dependent greater loss of fat mass compared to placebo plus semaglutide, with the Enobosarm 6 milligrams dose achieving a 46% greater relative loss of fat mass compared to the placebo plus semaglutide group at 15 weeks, with a p-value of 0.014. Although Enobosarm plus semaglutide significantly preserved lean mass, the additional loss of fat mass caused by Enobosarm treatment allowed a similar net mean weight loss measured by DEXA with semaglutide at 16 weeks. Consequently, with Enobosarm treatment, the tissue composition of the total weight loss shifted to greater and more selective fat loss. For the placebo plus semaglutide group, the median percentage of total body weight loss was 32% for lean mass, while the estimated fat loss was 68%. In contrast, in the Enobosarm plus semaglutide group, the total weight loss due to lean mass was only 9.4%, with estimated fat loss at 90.6%. In the Enobosarm 3 milligrams plus semaglutide group, it was 0.9% lean mass and 99.1% estimated fat loss. Therefore, Enobosarm plus semaglutide improved changes in body composition, resulting in a more selective and greater loss of fat compared to subjects receiving placebo plus semaglutide. Now, regarding physical function, we measured this by the Stair Climb test, which assesses muscle strength, balance, and agility in activities of daily living. Performance in the Stair Climb test has been shown in older patients to predict a higher risk for mobility disabilities, gait difficulties, falls, fractures, hospitalizations, and mortality. The responder's analysis was conducted using a greater than 10% decline in Stair Climb power as a cutoff at 16 weeks. A greater than 10% decline in Stair Climb power at this stage represents a 7 to 8 year loss of function that occurs with aging, as documented by Van Roe in 2019. In our study, the loss in lean mass was significant; 42.6% of patients in the placebo plus semaglutide group experienced at least a 10% decline in Stair Climb power at 16 weeks. Again, this is the first human study to demonstrate that older patients receiving a GLP-1 receptor agonist for weight loss are at a higher risk for accelerated loss of lean mass and physical decline. The Enobosarm plus semaglutide group achieved a statistically significant and clinically meaningful 54.4% relative reduction in the proportion of subjects who lost at least 10% of Stair Climb power compared to the placebo plus semaglutide group, with a p-value of 0.0049. In the Enobosarm 3 milligrams plus semaglutide group, the relative reduction in proportion of patients with a decline was 62.4% versus the placebo plus semaglutide group, with a p-value of 0.0066. In the 6 milligrams plus semaglutide group, there was a 46.2% relative reduction in proportionate patients with at least a 10% decline in Stair Climb power versus placebo plus semaglutide, with a p-value of 0.0505. In conclusion, Enobosarm treatment, on average, preserved lean muscle mass, translating into a reduction in the proportion of patients who experienced a clinically significant decline in Stair Climb physical function compared to patients receiving semaglutide alone. In summary, Enobosarm, in conjunction with semaglutide improved body composition changes, resulting in more selective and greater loss of fat mass while preserving lean mass and physical function as measured by Stair Climb power compared to patients receiving placebo plus semaglutide alone. Enobosarm represents a novel drug that, when combined with GLP-1 receptor agonist therapy, leads to greater and more selective fat loss, achieving the goal of chronic weight management. Next, we will discuss several upcoming clinical and regulatory catalysts. Firstly, the results of the unblinded safety data for the Phase 2b study are expected this quarter. Safety data for the Phase 2b quality study will remain blinded as the Phase 2 extension maintenance clinical study portion is still concluding. It should be noted that the aggregate blinded safety data have not shown any significant differences compared to previous clinical studies of Enobosarm and what is expected for GLP-1 receptor agonists. Further, the independent data monitoring committee met on February 10, 2025, to evaluate the unblinded safety data, and they recommended continuing the study as planned. Next, the Phase 2b extension maintenance study efficacy and safety results are also expected this quarter. As a reminder, after completing the efficacy dose-finding portion of the Phase 2b study, evaluating the effects of Enobosarm on body composition during active weight loss, participants continued into the Phase 2b trial and Phase 2b extension trial where all patients stopped treatment with semaglutide, but continued taking placebo, Enobosarm 3 milligrams, and Enobosarm 6 milligrams monotherapy in a blinded fashion for an additional 12 weeks. The Phase 2b extension clinical trial will evaluate if Enobosarm can maintain muscle and prevent the fat regain that generally occurs after discontinuing GLP-1 receptor agonists. The company plans to present the full clinical efficacy and safety datasets for the Phase 2b study and the Phase 2b extension maintenance study in future scientific conferences and publications. Additionally, we expect regulatory clarity for the GLP-1 receptor agonist and Enobosarm combination Phase 3 clinical program, following the FDA end-of-Phase 2 meeting, anticipated in Q3 2025. Given the positive outcome of the Phase 2b study, we plan to request this meeting with the FDA. During our previous pre-IND FDA meeting, the FDA provided general comments on the regulatory path forward for Enobosarm as a drug aimed at improving body composition during chronic weight management, including input on Phase 3 clinical program design. Based on this FDA input, we plan to propose a Phase 3 clinical program similar to the already positive Phase 2b study. The proposed Phase 3 clinical trial design will be a double-blind placebo-controlled study in older patients aged 60 years or older, who have obesity or are overweight and are eligible for GLP-1 receptor agonist treatment. The GLP-1 receptor agonist may be either Wegovy, which is semaglutide, or Zepbound, tirzepatide. Patients will be randomized to receive either oral daily Enobosarm or matching placebo. All subjects will start and receive the GLP-1 receptor agonist during the study. The proposed primary endpoint will measure the effect of Enobosarm on physical function, as assessed by the Stair Climb test at 24 weeks. Key secondary endpoints will assess the impact of Enobosarm on total lean mass, total fat mass, HOMA-IR, which is a measure of insulin resistance, and HbA1c at 24 weeks. After the Phase 3 clinical trial concludes at 24 weeks of treatment, plans include continued measurement of total lean mass, total body weight, stair climb test, total fat mass, bone mineral density, HOMA-IR, and HbA1c for up to 68 weeks to capture the long-term benefits of Enobosarm on body composition, greater fat loss, and preservation of lean mass and bone for chronic weight management. Furthermore, we are developing a novel modified-release oral Enobosarm formulation, which is on track to be available for the Phase 2 clinical studies and commercialization. Veru is currently developing a novel, patentable modified-release oral formulation for Enobosarm, with the specific formulation, pharmacokinetic release profiles, and method of manufacturing subject to future patents. If issued, the expiry for the new modified-release oral Enobosarm formulation patent is anticipated in 2045. This formulation has completed animal trials and is expected to enter Phase 1 bioavailability clinical trials during the first half of calendar 2025. The expectation is that this novel modified-release oral Enobosarm formulation will be available for Phase 3 clinical studies and commercialization. We are also focusing our Phase 3 clinical program on an older patient population that could benefit from a weight reduction drug for chronic management, as they are at higher risk of muscle weakness and falls due to age-related muscle loss. The CDC prevalence is 41.5% among the 47.4 million patients enrolled in Medicare Part D plans. Up to 34.4% of patients over 60 years of age with obesity in the U.S. have sarcopenic obesity, which means they have both obesity and low muscle mass, making them at greater risk of severe muscle loss when using currently approved GLP-1 receptor agonists. Although older patients represent a large target market, success in this population could pave the way for the combination of Enobosarm and GLP-1 receptor agonist treatment in younger patients with obesity, diabetes, and frailty populations. I will now turn the call over to Michele Greco, our CFO, and CAO, to discuss the financial highlights. Michele?

Thank you, Dr. Steiner. Let's review the results for the three months ended March 31, 2025. Research and development costs increased to $3.9 million from $3 million in the prior quarter. The increase is due to expenses related to the company's Enobosarm Phase 2b clinical study for higher quality weight loss. Selling, general, and administrative expenses were $5.2 million compared to $5.9 million in the prior quarter. The decrease is primarily due to a decrease in share-based compensation. We recognized a gain on the sale of NTIA assets of $974,000, while there was none in the prior quarter. This gain represents non-refundable consideration received related to promissory notes due to Veru. The bottom-line results for continuing operations show a net loss of $7.9 million or $0.05 per diluted common share, compared to a net loss of $8.7 million or $0.06 per diluted common share in the prior year's quarter. The net loss from discontinued operations, related to the FC2 female condom business sold on December 30, 2024, was $49,000 or $0.00 per diluted common share, compared to a net loss of $1.3 million or $0.01 per diluted common share in the prior quarter. The current quarter's net loss from discontinued operations reflects changes in an estimate made at the time of the FC2 business sale, while the prior year quarter's net loss reflects the operations of the FC2 business during that period. Now, turning to the results for the six months ended March 31, 2025, research and development costs increased to $9.6 million from $4.6 million in the prior period, attributed to $6.4 million in expenses related to the Enobosarm Phase 2b clinical study for high-quality weight loss during the past six months. Selling, general, and administrative expenses totaled $10.4 million compared to $12.6 million in the prior period, with the decrease largely due to decreased share-based compensation. We recognized a gain on the sale of entity assets of $1.7 million, compared to a gain of $918,000 in the prior period, which is also based on non-refundable consideration received related to promissory notes owed to Veru. In conjunction with the sale of the FC2 female condom business, we recorded a gain on extinguishment of debt of $8.6 million related to the termination of the SWK Residual Royalty agreement. This reflects the difference between the change of control payment of $4.2 million and the net carrying amount of the extinguished debt of $12.8 million, which included an embedded derivative for the change of control provision at fair value of $4.7 million. The bottom-line result for continuing operations was a net loss of $9.6 million or $0.07 per diluted common share, compared to a net loss of $16.4 million or $0.13 per diluted common share in the prior period. The net loss from discontinued operations, net of taxes related to the FC2 business, was $7.2 million or $0.05 per diluted common share, which includes the $4.2 million loss on the sale of the FC2 business, compared to a net loss of $1.9 million or $0.02 per diluted common share in the prior period. The increase in net loss from discontinued operations of $5.3 million is due to the loss on the sale of the FC2 female condom business of $4.2 million and an increase in loss from the change in fair value of derivative liabilities of $3.1 million, partially offset by a decrease in selling, general and administrative expenses of $2.2 million. The purchase price for the sale of the FC2 business was $18 million in cash, subject to adjustments set forth in the purchase agreement for the transaction. The net proceeds from the FC2 female condom business sale were approximately $16.3 million after selling costs and other purchase price adjustments, but before a change of control payment of $4.2 million owed to SWK pursuant to a residual royalty agreement from a 2018 financing transaction. The loss on the sale of the FC2 female condom business is approximately $4.2 million, reflecting the difference between the estimated net proceeds of $16.3 million and the total carrying value of the FC2 business of $20.6 million. The sale of the FC2 female condom business represented a strategic change, allowing the company to focus all its efforts exclusively on drug development. Now, reviewing the balance sheet, as of March 31, 2025, our cash, cash equivalents, and restricted cash balance was $20 million, compared to $24.9 million as of September 30, 2024. The restricted cash balance as of March 31, 2025, was $354,000 related to the FC2 female condom business sale. Our net working capital was $15.8 million on March 31, 2025, compared to $23.4 million on September 30, 2024. The company is not yet profitable and has had negative cash flow from operations. We will need additional capital to support our drug development candidates. Based on 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 12 months. However, we have adequate capital to carry the company into the fourth quarter of this calendar year, covering upcoming near-term catalysts, such as the unblinded safety data for the Phase 2b clinical trial, top-line efficacy and safety data for the Enobosarm Phase 2b extension maintenance study, regulatory clarity from the FDA's end-of-Phase 2 meeting for the Enobosarm Phase 3 program, and Phase 1 bioavailability data for the novel modified-release oral Enobosarm formulation. During the six months ended March 31, 2025, we used cash of $19.1 million for operating activities compared with $11.7 million used for operating activities in the prior period. We generated cash from investing activities of $18.4 million for the six months ended March 31, 2025, while we used $40,000 in investing activities in the prior period. The cash generated this year pertains to proceeds from the sale of the FC2 female condom business amounting to $16.3 million, proceeds of $1.7 million from the sale of the Intesi assets, and proceeds of $393,000 from the sale of On Kinetics equity securities. We used cash for financing activities amounting to $4.2 million during the six months ended March 31, 2025, related to the change of control payment pursuant to the residual royalty agreement, which terminated alongside the sale of the FC2 female condom business. In the prior period, we generated $36.8 million from financing activities. I would now like to turn the call back over to Dr. Steiner. Dr. Steiner?

Thank you, Michele. And with that, I'll now open the call to questions. Operator?

Thank you. Ladies and gentlemen, at this time, we'll begin the question-and-answer session. And your first question today will come from Dennis Ding with Jefferies. Please go ahead.

Good morning. This is Anthea on for Dennis. Thank you for taking our questions. Could you talk a little bit more about how you're thinking about your cash balance in runway, specifically what options are you exploring to fund the Phase 3? And is there potential to partner out the program? Thank you.

Yes. Thank you for the question. So, hopefully, you heard loud and clear that we have enough cash to last us into the fourth calendar quarter. This gives us plenty of time to get through these catalysts. Part of what we're trying to do is to ensure investors and others fully appreciate and understand the value based on the forthcoming clinical data and other information. So, as I mentioned, we expect to receive the unblinded safety data for the Phase 2b study, as well as the top-line efficacy and safety data for the Enobosarm extension study this quarter. In Q3, we anticipate regulatory clarity because that’s when we will meet with the FDA regarding the Phase 3 program. This will dictate the amount of money needed for the clinical study. Therefore, it’s premature to speculate on cash requirements until we have clarity from the FDA. However, as we receive more information, we believe it will solidify the understanding of the value we offer. Yes, I think our approach aims toward non-dilutive funding, with partnerships being the optimal route, whether through a partnership arrangement or with a large pharmaceutical company, with whom we are actively discussing possibilities. The reason for these discussions is because we have Phase 2b data that has consistently been regarded as a game changer by key opinion leaders, our Scientific Advisory Board, and experts in the field, mainly due to our ability to develop a drug that allows a GLP-1 to specifically target fat loss, which is unprecedented. We are the first company to report on GLP-1 in combination with a muscle preservation drug that is also oral. As a small molecule, this offers intriguing potential towards the future of weight loss and chronic weight management, highlighting oral therapeutics that exclusively support fat loss while preserving lean tissue. Additionally, I envision a future where oral drugs could be combined to offer compounded benefits. This is undoubtedly an exciting prospect for all. Therefore, our strategy is to achieve key milestones, keep discussions with pharmaceutical companies ongoing, and have more clarity on the Phase 3 program to determine the most effective way to fund it. Thank you for your question.

Got it. Thank you.

And your next question today will come from Gary Nachman with Raymond James. Please go ahead.

All right. Thanks for all the updates, and good morning.

Good morning.

So, Mitch, for the Phase 2b extension maintenance study, please review what outcomes would be considered a success, in terms of the magnitude of benefit on weight loss and muscle mass for Enobosarm versus placebo after stopping the GLP-1 treatment. Does it need to be statistically significant or just show a positive trend? If you could provide some clarity regarding the timing of the data release, that would also be appreciated.

Okay. Fair enough. So, you're inquiring about the exact timing of the data release. I will provide more clarity. The study is powered based on the Phase 2b quality study, which involved the formal first 168 patients and lasted 16 weeks, with lean body mass as the primary endpoint. Therefore, think of the extension study as mainly a safety study. The key question is what happens when you stop the GLP-1 treatment? Consequently, it will be more descriptive, but it’s telling a significant story about the working hypothesis that muscle is important. For the success criteria, we already know that Enobosarm maintains lean mass while facilitating more fat loss. Additionally, we understand that the placebo group, which is semaglutide alone, is acting as expected based on other studies of semaglutide. Dosing discrepancies aside, studies indicate 40% of the total weight loss results from lean mass. We anticipate the placebo arm, now off both semaglutide and Enobosarm, will respond similarly and experience fat regain post-therapy. Poor fat management leads to weight regain, which is undesirable. Thus, the focus is to minimize fat regain while potentially yielding further fat loss through Enobosarm, resulting in robust weight management. If we can demonstrate successful prevention of regain or even additional fat loss, this would be considered a successful outcome. As for timing, I can tell you the following: the safety data for the Phase 2b study will be available first this quarter, followed by the Phase 2b extension maintenance data soon after, with both safety and efficacy data released together.

Okay. That's helpful. And in regard to the Phase 3 study, understanding that you still have to meet with the FDA, what's your best guess on how large the study will need to be? Are you leaning towards using the three milligram, six milligram or both doses? Will it only involve older patients? Also, do you anticipate any potential concerns regarding tariffs, regarding the sourcing and manufacturing of Enobosarm?

Yes. Gary, I will now address your concerns regarding tariffs since Gary Barnett has a better grip on the sourcing and manufacturing processes we're employing for formulation. As for your first question, we expect the primary endpoint for the trial to involve older patients. In doing so, we recognize that older patients have a distinct risk-benefit profile. This realization is significant, as a decline in function can hold serious implications such as balance impairment, gait dysfunction, mobility disabilities, falls, and fractures. Therefore, physical function remains pivotal. That said, the primary endpoint of the Stair Climb test will occur after 24 weeks. With power calculations considered, we estimate approximately 200 patients per arm, totaling around 400 patients randomized for the Phase 3 study. Regarding the drug dose, we are still debating whether to proceed with the 3 milligrams or 6 milligrams; however, 3 milligrams appears favorable based on our findings as it effectively presumes lean mass while also delivering acceptable fat results. Comparatively, we aim to stratify subjects based on whether they receive semaglutide or tirzepatide to avoid mixing different GLP-1 drugs among test groups. We will take into account both semaglutide and tirzepatide as they are dominant on the market. Now, regarding tariffs, I will hand it over to Gary to provide insights.

At this point, we don’t foresee anything significant regarding tariffs. There’s always a chance that changes may arise, but the costs are relatively low for sourcing. Our assessment indicates we will be in good shape in terms of tariffs.

Okay. Great. Thanks a lot.

And your next question today will come from William Wood with B. Riley. Please go ahead.

Thank you for taking our questions and congratulations on a very nice quarter and very promising results. Everyone is looking ahead to those. I would like to see if you can provide more clarity on what you might have seen regarding safety. Understanding that it is blinded to date, you did mention there haven't been any major differences compared to what was expected based on prior studies and what we should be interpreting in regards to just overall safety, particularly concerning liver tests.

Yes. The best way to address this is to go directly into liver concerns, particularly because there are preconceived notions that SARMs come with risk, especially based on literature from recreational misuse. The doses used in such instances often range from 10 to 20 times higher than what we are utilizing (3 milligrams versus the non-regulated doses of 30 to 75 milligrams). Taking a common pain reliever like Advil in excess reveals risks associated with overdosing. It should be noted that the uncontrolled studies don’t represent our clinical data, which is from 1,600 patients, where ALT increases were around 1.8% in the placebo group and 3.4% in the Enobosarm group. Our findings show these increases relate closely to testosterone-type products, not the alkylated testosterone we've modified. Mild increases are generally temporary and resolve during treatment. There are no indications of liver function impacts, such as bilirubin or alkaline phosphatase increases, nor coagulation issues. The increases we've seen are predominantly manageable and return to baseline levels, which may align more with the liver's capacity to handle certain agents. Overall, we have not observed anything in the aggregate resembling drug-induced liver injury. To clarify, our expected outcome shouldn’t be unexpected. It’s consistent with past data, and as we roll out the full safety dataset, we expect to clarify results across each treatment category. Is this explanation helpful?

Yes, you have summarized the situation accurately. Thus far, there have not been significant serious adverse events, nor have we observed any in this particular study. Thus, the overall safety profile is consistent with our previous studies.

Interestingly, GLP-1s also influence ALT levels in a similar manner, but these elevations tend to decrease over time. Therefore, we recognize the principle of adaptation and tolerance, which holds true for very widely utilized drugs such as those in the GLP-1 category. Again, our findings appear consistent with previous findings and reinforce the expected trends. When we present the complete safety dataset, you will see differences across treatment categories: semaglutide alone versus semaglutide in combination with Enobosarm. Does that clarify the concern?

Very helpful. I appreciate that detailed clarification, Mitch. One more question from our side. Based on everything you’ve presented so far, it appears that the FDA has provided two potential paths toward regulatory improvements focusing on functional improvements versus metabolic improvements. I gather your primary emphasis is on functional data with positive results from Stair Climb as your primary endpoint for Phase 3. I’m curious about the second potential path that is open for Enobosarm. Additionally, I haven’t seen sufficient data on that aspect yet. Could you share how you foresee these alternate routes towards regulatory improvements? Will we or should we expect any metabolic assessments from the upcoming Phase 2b data shortly?

Yes. Let me clarify by discussing Enobosarm. This candidate consistently shows lean body mass maintenance and improvement across various populations, including older patients in the current study. We’ve recorded reductions in fat across various groups and expect similar outcomes with this cohort. We have not yet examined individual metabolic parameters in detail; however, we will assess LDL, insulin resistance, and HbA1c. Historical studies indicate LDL remains steady or may even lower, while triglycerides diminish with Enobosarm usage. Improvements in insulin resistance are also indicated, though it’s uncertain regarding HbA1c’s status. We’re measuring HbA1c and LDL in this current study, indicating our metabolic impact should contribute to the benefits seen with GLP-1. However, unlike the GLP-1 aspect that primarily measures metabolic improvements, we also encapsulate physical function, which has proven challenging for drugs like myostatin inhibitors. While recognizing improvements in muscle mass can yield metabolic benefits, we must make clear, physical function must be quantifiable. Our evidence from the Phase 2b study systematically presents how we address and observe functional improvements. Given the FDA is concerned with evidence illustrating functionality, we found our findings create a clear roadmap forward, consistent with their guidance in our meetings. If we replicate our Phase 2b outcomes in Phase 3, it constitutes a success, especially if we preserve physical functions such that we reduce declines in Stair Climb power among GLP-1 treatments.

Thank you for the clear response. I'll defer to the queue now while eagerly awaiting the imminent data. Congratulations again on a successful quarter.

Thank you.

Your next question today will come from Yi Chen with H.C. Wainwright. Please go ahead.

Good morning. This is Eduardo on for Yi. Just one quick question again on the Phase 3 trial. You mentioned adding tirzepatide, and I’m curious regarding your thoughts there. There’s anecdotal evidence that implies tirzepatide leans more toward fat loss compared to lean mass. How are you planning around that in your trial design regarding potential necessities?

Yes, we did take a closer look, and our findings suggest that both tirzepatide and semaglutide tend to produce similar outcomes when examining lean mass loss. In fact, the data from tirzepatide indicates about 6.2 kilograms at 72 weeks, close to the 6.8-kilogram lean mass loss noted with semaglutide. In our study, the functional implications of tirzepatide will be comparable to the observed outcomes with semaglutide. However, we are carefully planning to power the study based on these estimates, allowing us to stratify subjects according to their assigned GLP-1 treatments to maintain the integrity of our results. Gary Barnett, could you further clarify the points about tariffs in terms of how we are managing our supply chain?

That is correct. We will ensure stratification exists for each GLP-1 treatment, which helps minimize influence and inaccuracies in final randomization, remaining consistent across treatment groups. Additionally, this will serve as a covariate in our ANOVA during the final analysis.

Thank you for your detailed answers.

Thank you.

And your next question today will come from Leland Gershell with Oppenheimer. Please go ahead.

Hey, good morning. Thanks for taking our question. Mitch, the industry is investing significantly in the development of potential therapies for the side effects of GLP-1s, especially regarding myostatin blockers among others. Given your insights, do you harbor any concerns that these alternatives could show benefits that supersede or differ markedly from the Enobosarm outcomes while awaiting the remaining data from the Phase 2 study?

That's a great question. First, I'll summarize what distinguishes our offering from the competition. It's evident that oral administration differs significantly compared to IV or subQ routes, and there’s a market movement toward oral treatment options for chronic weight management. While GLP-1s cause lean loss, the older patient segment is particularly at risk given their reduced muscle mass. Major pharmaceutical entities acknowledge the need to monitor this demographic closely. Myostatin inhibitors, while they may showcase higher fat loss, will face hurdles in demonstrating tangible benefits related to physical function. It’s imperative that these gains translate into objective functional measurements rather than relying solely on activities like the 6-minute walk test which may indicate cardiovascular status as opposed to muscular support. The challenge lies in proving their functional implications convincingly. Additionally, they must strive to enhance metrics such as LDL, HbA1c, and insulin resistance; proving their worth in a landscape where GLP-1 treatments already perform well. There’s limited room for improvement in those measures. Despite interest in other pathways, our distinct oral mechanism allowing integration with future small-molecule combinations is compelling. The idea of delivering results is to specifically target fat loss while preserving lean mass—this is a breakthrough in fat management and an essential goal.

Great. Thanks very much.

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

I appreciate everyone who joined us on today's call. I look forward to updating all of you on our progress during our next Investor call. Please stay tuned for the numerous catalysts that will be coming out over the short term. Thank you and goodbye now.

The digital replay of the conference call will be available beginning approximately 12:00 p.m. Eastern Time today, May 8, by dialing 1877-344-7529 in the United States and 1412-317-0088 internationally. You will be prompted to enter the replay access code, which will be 7682749. Please record your name and company when joining. The conference call has now concluded. Thank you for attending today's discussion.