Good morning, ladies and gentlemen, and welcome to VARU, Inc.'s Investors Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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 Fish, Varou Anks, Executive Director, Investor Relations, and Corporate Communications. Please go ahead.

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 that differ materially are contained in our 10Q and 10K SAC 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, Bear Wings Chairman, CEO, and President.

With me on this morning's call is Dr. Gary Barnett, our Chief Scientific Officer, Michelle Greco, Chief Financial Officer and Chief Administrative Officer, Phil Greenberg, our General Counsel, and Sam Fish, Executive Director of Investor Relations and Corporate Communications. Thank you for joining us in our third quarter fiscal year 2026 earnings call. Vero is a late clinical stage biopharmaceutical company focused on developing innovative medicines for the treatment of cardiometabolic and inflammatory diseases. Our drug development program consists of two novel small molecules, Inobazarm and sebizobulin. The first one, Inobazarm, is an oral selective antireceptor modulative sarum and is being developed as a next-generation drug that, when combined with a GLP-1 receptor agonist, makes weight reduction, more tissues are likely for fat loss and preservation of lean mass and physical function, which is intended to lead to greater weight loss compared to a GLP-1 receptor agonist treatment alone, with a focus on older patients with obesity. Our second asset, sebizobulin, is a microtubule disruptor. is being developed as a broad anti-inflammatory agent to reduce vascular plaque inflammation to slow the progression or promote the regression of atherosclerotic cardiovascular disease. This morning, we will focus on the update of the clinical development progress of a Novosarm in our obesity program. We will also provide financial highlights for fiscal 2026 third quarter ended June 30, 2026. GLP-1s have been shown to produce significant weight loss in patients who are overweight or have obesity. Unfortunately, this weight loss is tissue non-selective with the significant indiscriminate loss of both lean mass and fat mass. Of the total weight loss, up to 50% is attributable to lean mass loss. Although GLP-1 receptor agonist treatment has resulted in substantial weight loss for many patients, the strategy for the next generation of obesity drugs should be a combination therapy with GLP-1 receptor agonists to cause patients to only lose fat while preserving lean mass and physical function and bone mineral density for the highest quality weight reduction. VURA has focused on the clinical development of Anovasarm for quality weight loss in older patients who may have sarcopenic obesity. This means these patients have both obesity and low muscle mass and are potentially at the greatest risk for reduction to a critically low muscle mass, which may lead to physical function decline when taking a currently approved GLP-1 receptor agonist. As muscle mass loss alone does not define sarcopenia, we chose to objectively evaluate and measure physical function by a stair climb test, which is a common activity of daily living. Vero completed the Phase IIb quality clinical study, which was a multi-centered, double-blind, placebo-controlled, randomized, dose-find, and clinical trial designed to evaluate the safety and efficacy of a novosome 3 milligrams, novosome 6 milligrams, or placebo as a treatment to augment fat loss and prevent muscle loss in 168 older patients greater or equal to the age of 60 receiving semaglutide, which is Regovi, for weight reduction. It should be noted that the Phase 2B quality clinical trial was the first human study to demonstrate that weight reduction in older patients who have obesity receiving a GLP-1 receptor agonist put them at higher risk for accelerated loss of lean mass with physical function decline. Further, the Novus Arm treatment preserved lean mass muscle, which translated into a reduction in the proportion of patients that had a clinically significant sterile physical function decline when compared to patients receiving a GLP-1 receptor agonist alone. Based on this short-term Phase IIb quality study, we believe there's an urgent, unmet need for a drug that prevents the loss of muscle and physical function as well as augments the loss of fat for greater weight loss in at-risk older patients with sarcopenic obesity receiving a GLP-1 receptor agonist for weight reduction. Now, a common and serious clinical and therapeutic challenge with GLP-1 receptor agonist treatments is that 88% of patients after one year on a GLP-1 receptor drug hit what's called a weight loss plateau where they stopped losing additional weight. Based on the Surmount 1 study conducted by Eli Lilly and Company, 62.6% of these patients unfortunately still had clinical obesity at the time they reached this weight loss plateau of one year. One explanation might be that the non-selective loss of muscle caused by weight loss may reach a point that now stimulates appetite in patients receiving a GLP-1 receptor agonist so they consume more calories, which in turn may cause patients to stop losing weight and hit the weight loss plateau. The clinical issue may be potentially more problematic in older patients that start out with low muscle reserves and who lost further muscle mass with weight loss but remain obese when they hit the weight loss plateau. It has been shown in previous studies that Inovosone directly burns fat and preserves muscle and physical function, which should burn even more calories. Thus, retaining muscle, appetite stays suppressed while more calories are burned, which could help to break through the weight loss plateau, leading to incremental weight reduction. We are currently conducting and have fully enrolled the Phase II B Plateau Clinical Trial, which is a double-blind placebo-controlled study to evaluate the effect of Inovosom 3 mg on total body weight, fat mass, lean mass, physical function, bone mineral density, and safety in approximately 200 older patients age greater or equal to 65 who have obesity with a BMI of greater or equal to 35 and are initiating semagnotide with GOVI, GLP-1 receptor agonist treatment for weight reduction. The primary efficacy endpoint of this study is the percent change from baseline and total body weight at 68 weeks, and interim analysis will be conducted at 32 weeks to assess the percent change in baseline lean body mass and total fat mass as measured by DEXA scan. The key secondary endpoints for the overall study are total fat mass, total lean mass, physical function with the stair climb test, mobility disability assessment, bone mineral density, and a patient-reported outcome questionnaire for physical function, HVA1C, and insulin resistance. The objective of the Phase IIb Plateau clinical trial is to focus on the effects of longer-term GLP-1 receptor agonist treatment in older patients who have obesity. The Phase IIb Plateau clinical study will also assess the ability of the Novosarm treatment to potentially break through the weight loss plateau observed in patients receiving GLP-1 receptor agonist treatment to achieve a clinically meaningful incremental weight reduction as well as preserve muscle mass and physical function by 68 weeks. We recently announced we have completed full enrollment of the Phase IIb Plateau Clinical Trial with 239 patients enrolled. This puts us on track for a near-term milestone, which is reporting the results of the 32-week interim analysis, which is expected in Q1 calendar year 2027. Semaglutide was selected as a GLP-1 receptor agonist for the Phase IIb PLATO study to build on Viru's previous clinical experience using Anobosarm in combination with semaglutide in the positive Phase IIb quality clinical study. Further, the clinical data from the Phase IIb PLATO clinical trial using injectable semaglutide may support the use of oral semaglutide and oral and Novosarm fixed-dose combination in future Phase III clinical trials. The choice for selecting semaglutide was also a strategic one. On June 2, 2026, Vero entered into a supply agreement with Novo Nordisk for this Phase IIb plateau clinical trial. In this agreement, Vero is solely responsible for conducting and sponsoring the Phase IIb plateau clinical study. Novo Nordis will supply Wigovi to Viru at no charge, as required for the conduct of the Phase 2b clinical study. Novo Nordis provides Wigovi solely for the use within the study under the supply agreement. In return, Viru will provide Novo Nordis with insights into obesity and weight management trial design, methodology, and clinical conduct, including regular clinical study updates, protocol changes, and safety updates. While Viro maintains full global development and commercialization by the Novus Arm, Viro has granted Novus Nortis a right of first negotiation if Viro in the future intends to develop, commercialize, or license the Novus Arm intellectual property in combination with any NOVA Nordisk GLP-1 product, including Mugobi, for any indication. For further information, please see Viru's Form 8-K filed with the SEC on June 4, 2026. As for developments regarding NOVA's arms intellectual property, the company recently announced that it has received from the United States Patent and Trademark Office a Notice of Allowance for Key Methods of Use, U.S. Patent Application Title, compositions comprising selective angio receptor-modulated compounds in combination with weight loss drugs and use thereof for quality weight loss. The notice of allowance encompasses treatment regimens where, one, the novosome is concurrently given with semaglutide with the set of co-therapy continuing. Two, the novosome is added to initial semaglutide monotherapy with the set of co-therapy continuing. And, three, anobosome continues or initiated after semaglative therapy is discontinued. The allowed claims are directed to, one, preservation, restoration, and gaining of lean body mass and muscle mass. Two, enhancement of fat mass loss, including reducing abdominal subcutaneous or intramuscular fat accumulation to improve body composition, lower body fat content, and lower fat mass. Three, preservation, restoration, and improvement of physical function and the corresponding prevention and treatment of a number of conditions that can result from decreased physical function, such as reducing or treating muscle weakness or poor balance, decreased gait speed, mobility disability, loss of independence, increased risk of falls, loss of physical function, and physical disability, poor quality of life, high hospitalization rates, and or increased mortality. Four, preservation, restoration, or gaining of bone, and a corresponding prevention and treatment of bone fractures. Five, overcoming and improving insulin resistance. Six, improving HbA1c. Seven, reduction or treatment of prevention to prevent total body gain rebound after discontinuing semaglutide. Eight, reduction of or treatment to prevent fat mass gain rebound after discontinuing semaglutide. And nine, treatment to prevent or restore lean mass loss during the rebound after discontinuing semaglutide. When issued, the U.S. patent will have a patent expiry of at least October 3, 2044, prior to the potential application of any patent term adjustment or patent term extension. These allowed claims to add to the company's worldwide portfolio of patent applications directed to the method of use of Inovus Arm in combination with weight loss drugs for higher quality weight loss and incremental weight loss, including already issued Inovus Arm-specific polymorphic composition and matter patents, as well as a number of other patent uses of selective antireceptor modulating compounds alone, or in combination with weight loss drugs for quality weight loss and chronic weight management patent. applications. The company continues to prosecute a number of patent, pending patent applications worldwide, covering a number of different weight loss drugs beyond semaglutide. In addition, the patent portfolio of Vero includes patent applications directed to a novel, oral, modified release, and novus arm formulation, which if such a patent were to issue, would provide patent protection until at least May of 2046. Now, Vero is targeting Nobosarm for the at-risk older patients with sarcopenic obesity, which is a very large market. The prevalence of obesity in patients who are 65 years older is 41.5% among the 47.4 million patients enrolled in Medicare Bar-D plans, which is about 20 million potential patients. Reimbursement for weight loss drugs continues to improve for patients over 65 years of age, and according to Medicare.gov, starting July 1, 2026, Medicare covers these GLP drugs, Tondeo tablet, Vigovia injection of tablet, and Zep-bound to QuickPen only. I will now turn the call over to Michelle Greco, CFO and CAO, to discuss the financial highlights.

Thank you Dr. Steiner. Let's review the results for the three months ended June 30, 2026. Research and development costs increased to $4.4 million from $3 million in the prior quarter. The increase is primarily due to the increased expenses related to the ongoing phase 2b plateau clinical study and the wind down of the phase 2b quality clinical study for Inovus Arm, which was completed during fiscal 2025. This increase was partially offset by a decrease in personnel costs, primarily due to reduced share-based compensation expense. General and administrative expenses decreased to $3.4 million from $5 million in the prior quarter. The decrease is primarily due to a decrease in share-based compensation for corporate personnel and a reduction in third-party consulting expenses. We recognize the gain on the sale of NTAFI assets of $485,000 in the prior year's quarter, which is based on non-refundable consideration received related to promissory notes previously due to VIRU. As the promissory notes are now settled, no additional gain is expected in future periods. During the prior fiscal year, the company entered into a settlement agreement with OnKinetics, Inc., which included payment of Series D preferred stock and warrants. During the current period, the increase in the fair value of the equity securities received was $546,000 due to the realized gain from the conversion of the preferred stock and the sale of the underlying common stock and the change in the fair value of the remaining warrants. Favorable anti-dilution provisions triggered by the on kinetics reverse stock split during the period contributed to the increase in the fair value. The net loss was $7 million for $0.30 per diluted common share compared to a net loss of $7.3 million or $0.50 per diluted common share in the prior period. Now turning to the nine months ended June 30, 2026. Research and development costs decreased to $8.8 million from $12.7 million in the prior period. The decrease is primarily due to wind down of the Phase IIb quality clinical study for Novus Arm, which was completed during fiscal 2025. Personnel costs also decreased due primarily to the reduced share-based compensation expense. General administrative expenses decreased to $11.5 million from $15.4 million in the prior period. The decrease is primarily due to a decrease in share-based compensation for corporate personnel and a reduction in third-party consulting expenses. We recognized a gain on the sale of NTAPI assets of $2.2 million in the prior period. In conjunction with the sale of the FC2 female condom business during the prior fiscal year, we recorded a gain on extinguishment of debt of $8.6 million related to the termination of the SWK Holdings Residual Royalty Agreement. During the period, the company recorded a gain of $4.4 million dollars from the increase in the fair value of on kinetics equity securities compared to a loss from the decrease in fair value of kinetics equity securities of 0.3 million dollars in the prior period the increase in fair value of the equity securities during the current period is the result of a realized gain from the conversion of the on kinetics preferred stock and the sale of the underlying common stock and a change in the fair value of the remaining warrants Favorable anti-dilution provisions triggered by the on kinetics reverse stock split during the period contributed to the increase in fair value. During the period, the company recognized an additional gain on sale of the FC2 business of $351,000 for the net proceeds received from Clear Future in the settlement of a dispute related to a pre-closing tax receivable liability, which resulted in income from discontinued operations. In the prior period, there was a net loss from discontinued operations of $7.2 million, which relates to the operations of the FC-2 business during the period and the loss on the sale of the business. The net loss was $15.1 million, or $0.68 per diluted common share, compared to a net loss of $24.2 million, or $1.65 per diluted common share in the prior period. Looking at the balance sheet, as of June 30, 2026, our cash, cash equivalents, and restricted cash balance was $23.9 million, compared to $15.8 million as of September 30, 2025. On both June 30, 2026 and September 30, 2025, there was $54,000 of restricted cash related to the sale of the FC2 female condom business. Our net working capital was $21.1 million on June 30, 2026, compared to $11.1 million on September 30, 2025. The company is not profitable and has had negative cash flow from operations. Based upon the company's current operating plan, our cash, as of the issuance date of these financial statements, is expected to be sufficient for the company to fund operations beyond the interim analysis in the phase 2b plateau clinical study during the nine months ended june 30th 2026 we used cash of 20.6 million dollars for operating activities compared with 24.6 million dollars used for operating activities in the prior period we generated cash from investing activities of 5.3 million dollars for the nine months ended June 30, 2026, compared to $18.9 million in the prior period. The cash generated in the current period represents proceeds from the sale of On Kinetic's equity securities of $5 million and $0.4 million for the settlement of a dispute related to pre-closing tax matters related to the sale of the FC2 business. The cash generated in the prior period relates to proceeds from the sale of the FC2 female condom business of $16.3 million, proceeds of $2.2 million from the sale of the NTAFI assets, and proceeds of $0.4 million from the sale of equity securities. Net cash provided by financing activities for the nine months ended June 30, 2026, was $23.3 million, which was the proceeds from the underwritten public offering net of commissions and costs. We used cash in financing activities for the nine-month ended June 30, 2025 of $4.2 million related to the change of control payment to SWK pursuant to the residual royalty agreement, which terminated in conjunction with the sale of the FC2 female condom business. Now I'd like to turn the call back to Dr. Steiner. Dr. Steiner?

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

Ladies and gentlemen, at this time we will begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys to ensure the best sound quality. To withdraw your question, please press star then 2. Please limit yourself to one question and one follow-up. If you have further questions, you may re-enter the question queue. Once again, that is star 1 to rejoin the question queue. We will pause momentarily to assemble our roster. Our first question comes from Leland Gerschel with Oppenheimer. Please go ahead.

Thanks. Great. Good morning, Mitch and team. And glad to hear all the progress with the PLATO study and so forth. Just a question from us on the IP, the new patent on the use of anobus arm in combination with anobus arm. Just wondering, obviously, that reflects, of course, your development of the compound in the trials. But as the GLP-1 class broadens and delivery modes expand with, you know, now the orals, as you've mentioned, Fandeo, and other, you know, GLP-1 plus other mechanisms being incorporated in the same medication, just wondering about the ability for you to broaden that patent or have additional IP that could cover, you know, other agents as they come along, given that people will likely look to use Novus Arm, should it be approved with those other agents?

Yeah, so first of all, it's a great question. So the first question is, why is this patent so significant for our company? And then the second, what does it mean for the other things that we're prosecuting at this point? So the first part is, you know, a Novosarm combination with semaglutide is a brand-new combination with a weight-loss drug. It was a brand-new concept. You know, the weight-loss drugs took us by storm, and we immediately found out that the weight-loss drugs, that was a situation where you lost lean and lost physical function. In comes a Novosarm. So the first part was to elbow our way in to make sure that we had a method of use path going forward in combination with the Novus Arm or with the Novus Arm being given after a patient stops at GLP-1 because they want to be rescued. And so we're very, very broad in the patent applications to include all weight loss drugs. If you look at the title of the application, the title of the application says weight loss drugs. But this is a one-two punch. The first punch is to get out there and show we can put a stake in the ground and get it. And that's why this is so significant. We got a wonderful notice of allowance with semaglutide, with all of the features that you would want to protect and obus arm in combination with semaglutide, whether it's oil or not, whatever form and whatever related to body composition. and whether you give it with semaglutide or before somebody's already on semaglutide, somebody's stopped semaglutide, these are all things that we just didn't know from a patent protection standpoint we would get. We did. And it's no surprise that we have patent applications pending for the whole weight loss class and beyond GLP-1s. And so it's not just GLP-1s. So, you know, it takes time to prosecute patents, but this is the first major break to show that, you know, who thought that a Novus Armin combination with a weight-loss drug would have these kinds of effects? And the Patent Office, you know, clearly sees this as novel and not obvious. And so that's a big breakthrough for us. So stay tuned as we get our patent portfolio more mature. But this is a big, big break because this is the first time we're able to pick up this whole area. And from a commercial standpoint, you know, now you have a patent in a major market and you're just, you know, waiting for the additional patents to make their way through the system. So, yes, the idea is to be broadly used. But with that said, you know, as you said, our clinical developments with semaglutide at this point, And to have that all covered initially is important for the company. And that's why I'm happy that Simaglityde 1 came first, because we're doing Simaglityde in our clinical development program at this point. Does that make sense?

Yeah, that's great. Thanks so much. It's very helpful.

In fact, you know, as I think about it, I think the patent is one of many things that happened this quarter that we should pay attention to and take notice. So, for example, when we first started out, the idea was, you know, you would try to preserve muscle and burn more fat for all patients. And remember, we were the company with our previous experience in frailty and cancer-wasting, saying that the older patients would be more at risk. And that's what's happening. The field is moving in our direction, but people are saying younger patients, we're not quite sure what it means with this non-selective weight loss, but everybody agrees that older patients is a problem. And, of course, we have data that we've presented that shows that you have a 45% decline in greater than 10% stericline power in patients on a GLP-1 alone if you're over the age of 60. So it's a real problem, and so we're seeing the field kind of move in our direction, which is important, because at the end of the day, when you have a commercial product, you have to have a commercial product for a specific population. And so the specific population is now being defined by the clinical trials that we're doing, so you can almost see what a label will look like. I mean, you're not going to have a situation where, you know, you're going to give a drug like this to everybody all the time. The FDA wants you to pick a patient population, and that's what we're spending a lot of time defining. Now, with that said, not only is the indication coming our direction, but also we have near-term milestones now. By having the trial completely enrolled with 239 patients, our first milestone coming up is Q1-2027. We'll have the interim look. And by the way, by Q4, 2027, we'll have the final data. So, you know, so this has gone from, oh, we're not going to have news to, we've got news coming up pretty soon, and this is important. Another thing that you have to take notice, you just have to take notice, is we now have a clinical supply agreement with Nova Nordis, which is a direct channel into the Nova Nordis conglomerate, I guess is the best way to say it. And as you know, there's two big players. There's Lilly and Novo, and everybody else is trying to get into the space. And right now, Novo and Lilly have staked out 15% weight loss all the way to 28% weight loss with their pills or their injectables. And anybody else coming in, the 80 companies or so that are developing, they do less than 15% weight loss. They're dead in the water. If they're greater than 28%, that's great, but if it's between 50% and 28%, they're not adding anything to what's already available commercially by Novo and Lilly. So you have to have something else, and something else is where Novosarm comes in, because if you can make the weight loss between 15% and 28% 100% fat and preserve muscle and improve physical function, then that could be interesting. Finally, as we mentioned previously in this answer to your question, it's a big deal that we picked up a method of use patent in this space, and it allows us to put a stake in the ground for Enobus Arm, where the patent office considers it novel and not obvious, and allows our patent portfolio to go to 2044 with just this asset with this patent. So 2044 is a long time, and, again, we're very, very excited about that development. The market's still massive. People said, why are you slicing the market? It's a massive market. As I said in my comments, prepared comments, 41.5% of the 47.4 million people on Part D of Medicare, Part D is the oral part. And, you know, if you buy the drug in a pharmacy, and I guess injectables will fall in that same category if you buy it from a pharmacy. And that's 20 million plus people. And Medicare is moving in a direction now. They're paying for the weight loss drugs. And so if we had a drug that preserves physical function and does the things that we're showing a nose arm can do, you know, we would be in the same category. category and it should be something that Medicare would want to pay for. So the big move is they've now swung in a direction to pay for obesity drugs, which is a big deal. So a lot of things happening, and they take notice, and we're ahead of the pack at this point, and we're highly focused on what is that commercial population that we need to understand the best benefit initially for a Novus Arm in combination with a GLP-1. Thank you.

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.

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

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