VERU (2021 - Q4)

Good morning, ladies and gentlemen. And welcome to Veru Incorporated Investor Conference Call. All participants will be in a listen-only mode [Operator Instructions] Please note that this event is being recorded. I'd now like to turn the conference call over to Mr. Sam Fisch, Veru Incorporated's Executive Director of Investor Relations and Corporate Communications. Please go ahead. Sam Fisc

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, 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 Michele Greco, the CFO and CAO; Dr. Gary Barnette, the Chief Scientific Officer; Michael Purvis, Executive Vice President, General Counsel & Corporate Strategy; and Sam Fisch, Executive Director of Investor Relations and Corporate Communications. Thank you for joining our call. Fiscal year 2021 was an exciting and a very productive year for Veru. We have successfully transformed our company into a late stage oncology biopharmaceutical company. We are developing novel medicines for the management of two of the most prevalent cancers, breast cancer and prostate cancer. One of our anti-cancer drug, sabizabulin has dual anti-viral and anti-inflammatory effects and it is also being developed for the potential treatment of hospitalized COVID-19 patients at high risk with acute respiratory distress syndrome, which remains a global dire unmet medical need. The company has a commercial sexual health division, which includes a drug candidate ENTADFI, formerly referred to as TADFYN, a new treatment for benign prostatic hyperplasia and a commercial product, the FC2 Female Condom, Internal Condom an FDA approved product for the dual protection against unplanned pregnancy and the transmission of sexually transmitted infections. Revenue from the sexual health division is being used to largely fund the clinical development for our late-stage drug candidate assets, which aim to address multi-billion dollar premium market opportunities. This morning, we will discuss Veru's business strategy, the clinical development of our drug pipeline and the commercialization of our products. We will also provide financial highlights for the fourth fiscal quarter and record fiscal year 2021. As you're aware, we're still in the middle of the COVID-19 pandemic with no end in sight. Countries in Europe and other continents are now back in lockdown. The standard for Disease Control and Prevention have recently reported that the US COVID-19 - in the U.S., COVID-19 has killed 377,883 people in 2020 and 401,117 people in 2021 and the year is not yet over. A new potentially more troubling COVID-19 variant called Omicron has emerged in South Africa and a case just has been confirmed in California. This new virus variant appears to have mutations that make it more contagious and may infect people that have been previously vaccinated rendering to current choice of the COVID-19 vaccines and antibody drugs less effective. The mechanism of the drug action of sabizabulin is that it disrupts the microtubule intracellular transport of the coronavirus, a process that will still be required by new variants or strange of COVID-19 including Omicron to cause infection. While there have been recent developments evaluating the Merck drug, molnupiravir and the Pfizer drug, paxlovid for the treatment of unhospitalized patients with mild to moderate COVID-19 who are at relatively low risk of dying. Sabizabulin in contrast is being developed for hospitalized patients who have high risk of death. In our positive Phase 2 clinical study in hospitalized COVID-19 patient at high risk for acute respiratory distress syndrome, sabizabulin treatment resulted in an 82% relative reduction in deaths compared to placebo. If our Phase 2 clinical studies replicate -- results are replicated to any significant degree in our global Phase 3 clinical study, we believe sabizabulin would fill in as a significant unmet medical need for hospitalized patients. In May of 2021, we initiated the Phase 3 clinical study which is a double-blind multicenter, multinational randomized 2:1 placebo-controlled study, evaluating daily oral doses of 9 milligram sabizabulin for up to 21 days versus placebo standard of care in 300 hospitalized COVID-19 patients, who had high risk with acute respiratory distress syndrome. 200 subjects will be treated with sabizabulin and 100 subjects will receive placebo. The primary efficacy endpoint will be the proportion of patients who die on study up to day 60. Secondary endpoints will include the proportion of patients without respiratory failure, days in the ICU, WHO ordinal scale for Clinical Improvement change from baseline, days on mechanical ventilation, days in hospital and viral load. The study is being conducted in the US, Brazil, Argentina, Mexico, Colombia and Bulgaria. The company has sufficient clinical drug supply on hand to complete this Phase 3 clinical study. To help fund the commercial drug to supply the needs of the US population assuming confirmatory positive clinical results and FDA approval, we are seeking funding from BARDA and other agencies. The Company anticipates having results for the Phase 3 clinical trial in the first half of calendar year 2022. As for our oncology drug portfolio, this was a year we initiated our expansive, metastatic breast cancer program, with two of our drug candidates Enobosarm and Sabizabulin. We are developing treatments against both hormone receptor positive and triple-negative metastatic breast cancers. Enobosarm is an oral selective androgen receptor targeted agonist which has shown efficacy in Phase 2 studies in a heavily pre-treated hormone receptor positive metastatic breast cancer patient population, with an excellent safety profile, without causing unwanted masculinizing adverse side effects. Enobosarm represents the first new and novel endocrine therapeutic approach to breast cancer in decades. Our second drug candidate sabizabulin is an Oral Cytoskeleton Disruptor that targets unique binding sites and crosslinks microtubules, a well-validated cancer target resulting in promising efficacy and the favorable safety profile with our clinically relevant neurotoxicity, neutropenia or alopecia. Furthermore, chronic oral daily administration of sabizabulin is feasible. Our clinical development strategy allows us to potentially become an important treatment option for a variety of large market opportunities in both hormone receptor positive and triple-negative metastatic breast cancer. In the third line treatment setting for hormone receptor positive metastatic breast cancer, we have two clinical programs based on the patient's androgen receptor nuclei staining or expression levels in the breast cancer tissue. The patients with greater than or equal to 40% androgen receptor expression, we are actively enrolling a global Phase 3 ARTEST registration clinical study to evaluate enobosarm monotherapy with a third-line treatment of Androgen Receptor Positive, Estrogen Receptor Positive and Human Epidermal Growth Factor 2 Negative metastatic breast cancer. Enobosarm targeted androgen receptor which has a tumor suppressor activity in AR+, ER+, HER2- metastatic breast cancer without causing unwanted masculinizing side effects. Enobosarm has extensive non-clinical and clinical experience having been evaluated in 25 separate clinical studies in over 2000 patients including three Phase 2 clinical studies in advanced breast cancer involving more than 250 patients. This means, we have a very good understanding of the favorable safety profile with Enobosarm. As for efficacy, there were two Phase 2 clinical studies conducted in women with AR+, ER+, HER2- metastatic breast cancer where enobosarm demonstrated significant antitumor activity in heavily pretreated cohorts that develop tumor progression after receiving estrogen-blocking agent, chemotherapy and/or a CDK4/6 inhibitor. And again in this population, enobosarm was well tolerated with a favorable safety profile. In October of this year, we initiated the Phase 3 multicenter international open label, randomized 1:1 ARTEST registration clinical trial to evaluate the efficacy and safety of enobosarm monotherapy versus an active comparative either exemestane +/- everolimus or a SERM for the treatment of AR+,ER+,HER2- metastatic breast cancer in approximately 210 patients with greater than equal to 40% AR expression in a breast cancer tissue after receiving a nonsteroidal aromatase inhibitor fulvestrant and a CDK4/6 inhibitor. In patients with less than 40% AR expression, we have a planned Phase 2b study to evaluate sabizabulin monotherapy for the third-line treatment of ER+, HER2- metastatic breast cancer. A Phase 2b clinical study will be an open-label multicenter and randomized 1:1 study evaluating the efficacy and safety sabizabulin 32 milligrams monotherapy versus active comparative either exemestane +/- everolimus or SERM, for the treatment of ER+, HER2- metastatic breast cancer in approximately 200 patients with less than 40% AR expression in the breast cancer tissue after receiving a nonsteroidal aromatase inhibitor fulvestrant and a CDK4/6 inhibitor. We just received the safe to proceed letter from the FDA this month and the Phase 2b study is expected to commence in calendar of Q1 2022. We're also moving enobosarm earlier in the treatment sequence to the second line treatment of AR+, ER+, HER2- metastatic breast cancer by targeting patients with AR breast cancer expression greater than equal to 40% in the Phase 3 ENABLAR-2 clinical study. CDK4/6 inhibitor and estrogen-blocking agent combination has become the first line therapy for patients with ER+, HER2- advanced breast cancer. Fortunately, almost all patients will develop drug resistance and eventually develop breast cancer progression. Based on the positive Phase 2 clinical data and the preclinical data supporting the use of enobosarm in combination with the CDK4/6 inhibitor in patients who are CDK4/6 inhibitor, an estrogen-blocking agent resistant. We plan to conduct Phase 3 multicenter open label randomized 1:1 active control registration clinical study named ENABLAR to evaluate the efficacy and safety for enobosarm plus abemaciclib combination therapy versus an alternative estrogen-blocking agent in subjects with AR+ ER+ HER2- metastatic breast cancer with failed first line therapy with palbociclib, which is a CDK4/6 inhibitor, plus an estrogen-blocking agent and have greater than equal to 40% AR expression in their breast cancer tissue. We plan to enroll approximately 186 subjects in this Phase 3 clinical study, which is expected to commence in calendar Q1 2022. There will also be a scientific presentation on enobosarm's anti-tumor activity in estrogen-blocking agent CDK4/6 inhibitor resistant human metastatic breast cancer models, at the upcoming San Antonio Breast Cancer Symposium, which will be held December 7 through the 10th of 2021 to be presented by Dr. Elgene Lim of the Garvan Institute of Medical Research and the Kinghorn Cancer Centre and St Vincent Hospital in Sydney, Australia. Although the presentation is under embargo, we cannot share the exciting scientific data until next week. What I can say is that these scientific results clearly demonstrate the anti-tumor synergy of the combination of enobosarm and CDK4/6 inhibitor to treat patients who develop tumor progression after receiving an estrogen-blocking agent and a CDK4/6 inhibitor. Finally, for AR+ metastatic triple negative breast cancer patients, we will be conducting a Phase 2 single-arm study evaluating enobosarm plus sabizabulin combination therapy. As previously mentioned, sabizabulin is an oral first-in-class new chemical entity that targets and inhibits microtubules to disrupt the cytoskeleton. Overexpression of P-glycoprotein is a common mechanism that leads to taxane and other chemotherapy resistance in metastatic triple-negative breast cancer. As sabizabulin is not a substrate for P-glycoprotein, sabizabulin significantly inhibited cancer proliferation, migration, metastases, and invasion of triple negative breast cancer that become resistant to paclitaxel in preclinical models. Furthermore in a Phase 2 study conducted by Merck, 18 heavily pretreated women with AR+ metastatic triple-negative breast cancer treated by enobosarm plus pembrolizumab combination demonstrated promising evident of efficacy including a 25% clinical benefit rate which is the complete response added to the partial response added to stable disease at 16 weeks and objective tumor responses when they showed one complete response and one partial response. Thus, the combination of two oral agents sabizabulin, enobosarm may provide a new treatment option for women who have AR+ metastatic triple negative breast cancer. We intend to commence a single-arm sabizabulin plus enobosarm combination therapy Phase 2 clinical study in approximately 111 women with AR+ metastatic triple-negative breast cancer who have tumor progression after receiving at least two systemic chemotherapies in calendar Q1 2022. We are partnered with Roche Ventana, a major global diagnostics company to develop a companion diagnostic androgen receptor test. In the Phase 2 801 study, we have determined that the presence and the amount of the androgen receptor expression in breast cancer tissue are important for enobosarm's targeted anti-tumor activity. In fact, we have identified that patients who have greater than equal to 40% androgen receptor nuclei staining by immuno is the chemistry, which is a measure of AR expression, in their breast cancer tissue are the patients that are most likely to respond to enobosarm. Based on this observation, the FDA has recommended that we develop the companion diagnostic test to determine the patient's AR expression status. Consequently, we are partnering with Roche Ventana Diagnostics, a world leader in oncology companion diagnostic tests, who will develop and if approved commercialize this companion diagnostic AR test. The companion diagnostic test will be developed in parallel with the Phase 3 ARTEST clinical study. Fiscal year 2022, we will have an expansive breast cancer program and plan to be conducting four late-stage clinical studies for the treatment of different large and important populations of significant unmet medical need in metastatic breast cancer. Also in fiscal year 2021, our prostate cancer program has made great progress. We have late clinical stage studies addressing three separate indications. Our first indication is evaluating sabizabulin for the third-line treatment of metastatic prostate cancer in the Phase 3 Veracity study. Over the past 8 years, several novel androgen receptor targeting agents have been approved for castration-resistant prostate cancer, including abiraterone, enzalutamide and apalutamide. Unfortunately, most men with metastatic castration-resistant prostate cancer will develop tumor progression while receiving an androgen receptor targeted agent. 6o% to 70% of patients progressing by 12 to 18 months and 30% to 40% of men having no benefit at all. New effective and well tolerated treatment alternatives that do not target the androgen receptor access and have an easy mode of administration are greatly needed. Sabizabulin is a member of a novel class of drugs that disrupts the cytoskeleton by targeting unique binding sites of microtubules, which results in improved safety profile. In preclinical models, there was no evidence of significant liver toxicity, neurotoxicity and neutropenia with sabizabulin treatment. This more tolerable safety profile was also confirmed in the first-in-man Phase 1b/2 study in prostate cancer patient. At a recent presentation by the European Society for Medical Oncology Congress that was held September 16 to 21st 2021, we provided an updated analysis of 80 patients enrolled in both the Phase 1b and Phase 2 portions of the study. These subjects were heavily pretreated and had tumor progression while receiving at least one novel androgen receptor targeted agent. In fact, approximately 40% of the subjects had tumor progression after receiving at least two androgen receptor targeted agent. In regard to safety, there were 54 men treated at the recommended Phase 2 dose of sabizabulin 63 milligrams oral daily dosing in the Phase 1b/2 combined study. Sabizabulin was well tolerated with no clinically relevant neutropenia, neurotoxicity and the most common adverse events were gastrointestinal related including diarrhea, nausea, fatigue which were predominantly low Grade 1 and 2. As for efficacy and combining patients from both the Phase 1b and 2 studies, who received 63 milligrams sabizabulin daily and had measurable metastatic disease at baseline based on the Prostate Cancer Working Group 3 criteria. The median radiographic progression-free survival is estimated to be 7.4 months with a range of 3.2 to 35 plus months as there are still five patients on the study which two have been on sabizabulin without tumor progression for almost three years. In the Phase 1b/2 study population with measurable disease at baseline per resist 1.1, the overall response rate was 21%. Based on this Phase 1b/2 study, sabizabulin demonstrated a safety profile similar to what has been reported in the literature for the novel androgen receptor targeted agent and has promising evidence of efficacy similar to a better than IV chemotherapy. Thus these updated findings from our Phase 1b/2 clinical study, sabizabulin continue to support the potential role of sabizabulin filling a growing significant unmet medical need. In June, the company initiated an open label randomized 2:1 multicenter Phase 3 Veracity clinical study evaluating sabizabulin versus an alternative androgen receptor targeted agent for the treatment of chemotherapy naive men with metastatic castration-resistant prostate cancer who had tumor progression after receiving at least one androgen receptor targeted agent. The primary endpoint is radiographic progression-free survival, enrollment for the Phase 3 Veracity clinical study is on track, we expect to enroll approximately 245 patients from 45 clinical centers in the US. A second clinical study is evaluating VERU-100, a GnRH Antagonist 3-Month Depot formulation in a Phase 2 dose finding clinical study for the treatment of Hormone Sensitive Advanced Prostate Cancer. Androgen Deprivation Therapy remains the mainstay primary therapy for advanced prostate cancer, but current androgen deprivation therapy drug products have several important clinical shortfalls. LUPRON, ELIGARD, and ZOLADEX are LHRH agonists whose initial administration leads to a testosterone surge that lasts up to 21 days. FIRMAGON, a GnRH antagonist is a large volume subcutaneous injection formulation designed for only a single month release. Relugolix is an oral GnRH antagonist and has the potential for patient compliance concerns. In contrast, VERU-100 has a target product profile that addresses a number of these important clinical shortfalls of the currently commercial androgen deprivation therapy products. VERU-100 is a long-acting GnRH antagonist, designed to be administered as a small volume, subcutaneous three month depot injection. VERU-100 drug products are expected to immediately suppress testosterone with no testosterone surge. VERU-100 is a long-acting injected depot, would ensure patient compliance while on treatment. Furthermore, as a class, GnRH antagonist have been shown to have fewer cardiovascular adverse events than LHRH agonist. In June, the company initiated the Phase 2 dose finding clinical study of VERU-100 androgen deprivation therapy in 35 men with hormone-sensitive advanced prostate cancer. Although the study is ongoing, the pre-clinical -- the preliminary clinical data are promising and support the expected target product profile. The Phase 3 registration clinical study design is already been agreed upon with FDA. It will be a single-arm study which will enroll approximately 100 men, maintenance of castrate blood concentration of testosterone is the primary endpoint. After the Phase 2 dose-finding study is completed, we will initiate the Phase 3 clinical study which is anticipated to begin in calendar first half 2022. In our third late stage clinical study, we are advancing Zuclomiphene for the treatment of hot flashes caused by androgen deprivation therapy. Upon further evaluation of the clinical data of more positive Phase 2 zuclomiphene clinical study, we decided that because of zuclomiphene's excellent safety profile that we should optimize the efficacy zuclomiphene to treat hot flashes by further increasing the dose in a planned Phase 2b clinical study. In summary, we will have three late-stage clinical studies for the management of metastatic prostate cancer in fiscal year 2022. Veru has a base commercial sexual health division which includes a commercial product the FC2, an FDA approved product with a dual protection against unplanned pregnancy and transmission of sexually transmitted infections and the drug candidate ENTADFI which is Tadalafil 5 milligrams and Finasteride 5 milligram capsule, a new treatment of Benign Prostatic Hyperplasia with a FDA PDUFA date this month. We have built the infrastructure to allow for broad access to FC2 across the United States. As a result, FC2 is now available through multiple sales channels. In particular, we have partnered with fast growing, highly reputable telemedicine platform companies to bring FC2 product to patients in a cost effective and highly convenient manner. Though, Ms. Greco will provide the full financial results in Veru's commercial segment which is FC2 and drug commercialization costs, I'm happy to report that we've achieved another record fiscal year. In fact, our revenue increased 44% to $61.3 million, which significantly exceeded the revenue of $42.6 million we had in fiscal year 2020. Our strategy is to continue to drive robust FC2 sales is not only to seek additional telemedicine at pharmacy services partners, but also to create our own dedicated direct to patient telemedicine pharmacy services platform both to brand our company and to further sales -- and to further sales growth. We plan to also brand our new name UREV for our women's health business. We also have developed ENTADFI, a novel treatment for Benign Prostatic Hyperplasia, a co-administration of Tadalafil and Finasteride have been shown to be more effective with the treatment of Benign Prostatic Hyperplasia and finasteride alone without causing sexual adverse side effects. The PDUFA date is in December of 2021. If approved, ENTADFI is expected to be marketed and distributed by our own direct to patient telemedicine and telepharmacy platform. We have also partnered with GoodRx, a U.S. based digital resource for healthcare to reach their almost 20 million monthly visitors, which include both consumers and healthcare providers and offers a unique cash price to ensure that our treatment is more affordable and accessible. We plan to augment our marketing and sales effort by seeking partners in the U.S. and ex U.S. We expect to begin commercialization if approved in early calendar year 2022. I will now turn the call over to Michele Greco, CFO, CAO to discuss the financial highlights. Michele?

Thank you, Dr. Steiner. As Dr. Steiner indicated, we had another great year. Last December, the company sold PREBOOST for $20 million, resulting in a gain on sale of $18.4 million. In February, the company completed an equity raise, which resulted in $108 million in net proceeds after deducting underwriting commissions and costs. And for the fiscal year, the company achieved record level net revenues of $51.3 million and record level gross profit of $47.9 million. Let's start with highlights of our fourth quarter results for fiscal year 2021. Overall, net revenues were up 33% to $15.6 million from $11.7 million in the prior year fourth quarter due to the growth in our U.S. FC2 prescription business. The company reported significant FC2 sales growth in its prescription business with net revenues up 55% to $13.6 million from $8.7 million in the prior year fourth quarter. Gross profit was $12.3 million or 79% of net revenues compared to $9.6 million or 81% of net revenues in the prior year fourth quarter. The increase in gross profit is driven primarily by increased sales in our U.S. FC2 prescription business. Operating expenses for the quarter increased by $7.4 million to $14.2 million compared to the prior year fourth quarter of $6.7 million. Research and development costs were $8.3 million compared to $3.3 million in the prior year quarter due to the commencement of several new phases in our clinical trials. During the fourth quarter of fiscal 2020, we recorded a noncash impairment charge of $14.1 million related to in-process research and development associated with the acquisition of Aspen Park Pharmaceuticals in fiscal 2017. Operating loss for the quarter was $1.9 million compared to the prior period of $11.3 million, which included a non-cash impairment charge of $14.1 million. Nonoperating expenses were $2.8 million compared to $1.7 million in the prior year fourth quarter and primarily consisted of interest expense and a change in the fair value of the derivative liabilities related to the synthetic royalty financing. We entered the synthetic royalty financing during March of 2018. For the quarter, we recorded a tax benefit of $356,000 compared to a tax benefit of $1.1 million in the prior year fourth quarter. The effective tax rate for this quarter is 7.7% and 8.6% for the prior year quarter due to recording a valuation allowance against the net operating loss generated for the quarter in the U.S., which is most of the pretax loss for the period. The bottom line results for the fourth quarter of fiscal 2021 was a net loss of $4.3 million or $0.05 per diluted common share compared to a net loss of $11.8 million or $0.17 per diluted common share in the prior year fourth quarter. Now turning to the results for the fiscal year ended September 30, 2021. Total net revenues for fiscal year 2021 were up 44% to a record high of $61.3 million from $42.6 million in the prior year. The company reported growth in FC2 sales in the U.S. prescription business and in the global public sector business. Net revenues from the U.S. prescription business was up 71% to $46.5 million from $27.1 million in the prior year. Net revenue for the global public health sector business was $13.9 million for the fiscal year. Overall, gross profit was $47.9 million or 78% of net revenues compared to $30.8 million or 72% net revenues in the prior year. The increase in gross profit and gross margin is due primarily to the increase in the U.S. prescription business. Operating expenses increased to $53.3 million compared to the prior year of $31.4 million. The increase is primarily driven by research and development costs, which increased to $32.7 million from $16.9 million in the prior year and increases in the cost for personnel, insurance and commercialization. During the prior year, the company received a forgivable loan of approximately $540,000 under the Paycheck protection program of the Cares Act. The forgivable loan was treated like a government grant and recognize a reduction in operating expenses. During the first quarter of fiscal 2021, we sold PREBOOST, resulting in a pretax gain of $18.4 million. During the fourth quarter in the prior year, there was a non-cash impairment charge of $14.1 million. Operating income for the year was $13 million, which includes the $18.4 million related to the gain on sale of PREBOOST compared to an operating loss of $14.7 million in the prior year, which includes the non-cash impairment charge of $14.1 million. Non-operating expenses were $8.7 million compared to $5.3 million in the prior year, which primarily consisted of interest expense and change in the fair value of the derivative liabilities related to the synthetic royalty financing. For the year, we recorded a tax benefit of $3.1 million compared to $1.1 million in the prior year. The tax benefit primarily relates to an increase in U.K. tax rates from 19% to 25%, which will be effective in fiscal 2023. This change in tax rates increase the value that we expect to derive from our net operating losses in the U.K. The company has net operating loss carryforwards for U.S. federal tax purposes of $39.1 million, with $30.5 million expiring in years through 2040 and $8.6 million, which can be carried forward indefinitely. And our U.K. subsidiary has net operating loss carryforwards of $63.5 million, which do not expire. The bottom line results for fiscal year 2021 was net income of $7.4 million or $0.09 per diluted common share compared to a net loss of $19 million or $0.28 per diluted common share in the prior year. Now turning to the balance sheet. As of September 30, 2021, our cash balance was $122.4 million, and our accounts receivable balance was $8.8 million. Our net working capital was $136 million on September 30, 2021, compared to $12.3 million on September 30, 2020. Due to the sale of PREBOOST in December of 2020, we added $15 million in cash and $5 million in notes receivable, $2.5 million, which will be collected this month and the remaining $2.5 million, which will be collected over the next 6 months. In February, we completed an underwritten public offering that resulted in net proceeds of $108 million. During the fiscal year ended September 30, 2021, we used cash of $15.6 million for operating activities. Overall, we're delighted to see the continued increases in sales in the FC2 business. This revenue source, together with our strong balance sheet, continues to be the source of funds we used to invest in our promising pharmaceutical clinical development programs as we continue to transform our company into a premium oncology biopharmaceutical company seeking large market opportunities in breast and prostate cancers as well as being opportunistic by joining the global efforts to find effective treatments for COVID-19. Now, I'd like to turn the call back to Dr. Steiner.

Thank you, Michele. We've enjoyed a record year, which has allowed us to significantly advance our clinical oncology programs. In fact, we are now entering our fifth year of growth in our FC2 U.S. prescription business. We had a record year of $61.3 million in revenue. We plan to commercially launch ENTADFI approved via telemedicine portal and potential licensing deals, which will provide even more revenue, adding to the already growing revenues from FC2. We expect another record year in fiscal year 2022. With resources in place, we will continue to advance our expansive late clinical stage breast cancer and prostate cancer programs as well as Phase 3 COVID-19 clinical study is expected to have results in the first half of 2022. We anticipate a steady flow of important positive news for Veru over the next few months to 1 year. In summary, we have evolved into an oncology biopharmaceutical company solidly dedicated to developing treatments in breast cancer and prostate cancer. Our strategy to advance the clinical development of our drug candidates by investing revenues generated by our Sexual Health division is working. As a stand-alone business, our women's health business, UREV is valuable, profitable and growing, which provides optionality to Veru's shareholders. I am proud of the hard working, dedicated and talented team we have assembled to execute our clinical and commercial strategy. We are committed to driving shareholder value by developing commercial novel medicines, addressing significant unmet medical needs that the management of breast cancer and prostate cancer and being opportunistic by developing sabizabulin for hospitalized COVID-19 patients and high-risk for acute respiratory distress syndrome and death. With that, I'll now open the call to questions. Operator?

[Operator Instructions] Our first question comes from Brandon Folkes from Cantor Fitzgerald. Please go ahead.

Hi. Thanks for taking my questions. And congratulations on all the progress. So the two questions from me, maybe just on Sabizabulin and COVID, can you remind me what control arm is able to be dosed with? And then along those lines, how active are you in dialog with the respective agency on those end point just as sort of COVID treatments evolve? I guess my second question, I'll just ask upfront on Sabizabulin again in the third line monotherapy and breast, you noted you received the safe to proceed letter from the FDA. So can you just let us know, are there any other hurdles yet to overcome between now and starting the Phase 2b? Was it now just - are you just really setting up the study and getting it running in the first quarter of next year? Thank you.

First of all, Brandon, thank you for being on the call and I'm going to answer your second question first, that's an easy one. So, safe to proceed letter is typically, what you do technically after you file. This had to be filed as a separate IND because it's a different drug. And with that said, safe to proceed letter is the official green light from the FDA to move forward. There are no other hurdles. And so all we are doing now is we have to do - we've got everybody engaged. We have a CRO ready and ready to go. And just a pause for a moment, let me tell you why this is unique and maybe it didn't come across in the call. What we're doing is, we're actually asking - if you look at the population of the patients in the greater than 40 and less than 40, the same population of patients, these are patients that have received at least two estrogen-blocking agent and a CDK4/6 inhibitors, they are all third line. So when they come into the study, then the companion diagnostic or in this case will be CLIA test, look for the AR status. If their AR status is greater than 40, greater and equal to 40, then they go on to the AR test study. If it's less than 40, then they go to the Phase 2b study. So in some ways, they're sister companion studies. And so we're being incredibly efficient with money. Because that same patient, instead of being told, you can't be in the study and you chalk that up as a screen failure, whatever you call that. Now we have an opportunity to capture that patient in one or the other study. So it really is a very efficient way to fill that study. So maybe that didn't come across as loudly as I would like it to. But with that said, there are no hurdles. And in fact, we're starting to collect patients for recruitment because if your test study is up and running, and we do have patients that are less than 40. So it will be pretty efficient. So our thinking was that since we know less than 40s and not going to respond the way to greater than 40s do, let's take advantage with another one of our assets. As it relates to the second question, I'll frame the question. We're very fortunate to have here Dr. Gary Barnette will answer the question. And that was basically for the COVID-19 study, looking at the control arm. Just to remind you again what that control arm was in the Phase 2b and then what the control arm is in the Phase 3. And then the other part of your question was dialogue with the FDA in relation to that endpoint and how comfortable they are with that endpoint. Gary?

Yes. So in the Phase 2 study and in the Phase 3 study, we do allow standard of care. These are both blind - the Phase 2 is a blinded study. This is a blinded study. We -- ethically, we need to allow them to have standard of care, things like dexamethasone, remdesivir, the other products that have been approved by the FDA through the EUA process. And then on top of that, we have a blinded - either the patient is randomized to sabizabulin or to placebo. That's how the studies work. And the Phase 3 study is identical in that way to the Phase 2 where we showed the benefit. The - as far as the endpoint, the FDA, obviously, mortality or death is the gold standard endpoint for just about every clinical trial you have or you could have. Now we don't use it much because most of the time, we're trying to do something else. So the FDA is very comfortable with death as the primary endpoint. And based on the Phase 2 data, we are and the data we're seeing in the literature, we feel very comfortable that, that's where we should be.

I think the other statement I will make is that it's been - and the reason I brought it up, the Merck and the Pfizer drugs are not for hospitalized patients. In fact, the Merck drug failed in hospitalized patients. So they're in pre-hospitalized patients. And this patient group will have a much, much lower overall death rate. And in the hospitalized patients, one of the concerns we had running the study was that perhaps with this standard of care dexamethasone, remdesivir with a drug antibody cocktails and that kind of stuff that the death rate would be at a point that it's much lower than we would need a huge study. And that's not the case. What we're learning is that patients are coming in, WHO 5s and 6s, and quite frankly, 4s, these - the death rate is the same if not higher than what we saw in the Phase 2. And so we can say that in aggregate. And so we're feeling pretty good that there is a big difference between going after patients and a pre-hospitalization standpoint versus a hospitalized standpoint because the hospitalized patients are definitely sticker. So that's why we think we have a position with our drive at this point now, there really have been no effective drugs, oral drugs that have been approved in the space or any coming anytime soon. So we really own this space, and that's why we've got to push it pretty hard. Okay. Next question.

Next question is from Leland Gershell from Oppenheimer. Please go ahead.

Morning, Mich. Thank you for taking my question. Just t actually one question. It's on sabizabulin. That's kind of a mechanistic one. There's another compound being developed elsewhere, Plinabulin, which also binds approximate to the colchicine binding site on tubulin. And in addition to that, it's been recently published that, that compound may play in immuno oncologic role as it releases immune defense protein GEF-H1. I'm just wondering if on work you've done on Sabizabulin if you've seen other elements of activity that may be along those lines in addition to the known activity with the disruption of microtubules? Thank you.

Thank you. So yeah, from a mechanistic standpoint, let me just pause for a moment and tell you what I think is happening with Plinabulin. So first of all, from a mechanistic standpoint, Plinabulin started out as a colchicine binding compound. Colchicine binding site compound on the beta subunit tubulin. And what I don't know, quite frankly, is what does it do on the alpha subunits of tubulin. So the alpha subunit, the binding site on the alpha tubulin and subunit, I don't know, okay? With our compound, what makes it different. And that's why I keep saying we're a novel class is that it looks like - I have not seen another compound that has hydrogen bonding on the beta subunit and the hydrogen bonding on the alpha subunit tubulin. And so that's why we're saying it's crosslinks because those bonds are so strong. That's actually crosslinking, causing the microtubules not only to not be able to polymerize, but also they cause them to depolymerize. And so it's a little different. Now with that said, and we think this is the reason for the safety. We do think there's some overlap. So Plinabulin clinically shows a reduction in neutropenia and the story. And they had a very successful Phase 3 that showed the reduction in neutropenia. But as you know, when you go after side effects of chemotherapy, the agency usually requires two clinical studies. And so even though Plinabulin showed great success, and proof-of-concept in a Phase 3 setting that it can reduce the neutropenia induced by chemotherapy, the agency ask them for a second one. So it's not shocking from my point of view. And I don't know -- I've not read the regulatory documents or anything like that. But from the outside looking in, they usually want two. Like, for example, our hot flash product, even though we're treating cancer patients, the FDA has made it very clear, they'd like two pivotal studies, Phase 2b and the 3, they want two studies where they can move forward with treating the side effects of a cancer drug. So in this case treating side effect of androgen deprivation therapy-induced hot flashes, same thing here is chemotherapy induced neutropenia. So it's similar. As it relates to other things, I will tell you that sabizabulin has already shown us that it can have activity in as an antiviral and anti-inflammatory. And that's why we're using it in COVID-19 and we've actually - presents, put out in the press release, the anti-inflammatory activity across multiple cytokine proteins that are down regulated or inhibited by sabizabulin. And so it's not surprising to me that sabizabulin may have immunomodulating activities, but we have not tested specifically the immunomodulating activities that Plinabulin has. So I can't tell you whether the similar in that regard, but that would not be surprised. So the net-net of it is will be different but there is some overlap. And what we can say about sabizabulin off at preclinical stuff where we showed neutropenia and neurotoxicity in the preclinical models didn't appear to be important or did not appear to happen with the compound played out in the clinical model. And so we're feeling pretty good going forward in breast cancer that we should be able to still see the favorable side effect profile of sabizabulin.

Thank you.

Thank you. Next question please.

Next question is from Yi Chen from H.C. Wainwright. Please go ahead.

Thank you for taking my questions. Just to clarify the Companion Diagnostic AR Test being developed, is the test that you use in the ARTEST study to measure the AR expression, is that correct? Are there any other currently available test to measure AR expression level?

Yeah. So let me answer that question. So the question is basically, are we using Companion Diagnostic tests, being developed with Roche Ventana currently to measure androgen receptor expression, the patients entering the ARTEST study? That's question one. And the answer is no, we're not. We're using a AR CLIA test. And what we plan to do during the ARTEST, Phase 3, is to begin to bridge into the commercial test that's being developed by Roche Ventana. So this is not unusual. This is done often. And so we're using AR CLIA test versus - CLIA test means it is a laboratory developed test. It's done with all the controls and everything. It's done with the same antibody. It's done with the - so it's done the same way but it's not designated commercial tests and not designated an FDA approved test. So we're doing that and bridge into the ARTEST study. We have plenty of samples between the ARTEST study in the other three studies that are being done in ENABLAR study is a Phase 3 and the Phase 2b less than 40. And so we have plenty of sample. So we feel very, very comfortable that Ventana Roche is an expert in developing the diagnostic tests. We're not. So we are having a global diagnostic company do it for us. We will focus on drug development. So the short answer, the long answer, is that, yes and no, what's going to happen towards the tail of the study is probably by the time we were in the middle of it all, would have switched over to companion diagnostic. And so we'll have plenty of information. As a result -- and so the concept would be that the AR Test would be ready to be filed -- submitted to the FDA at the same time we file the clinical data for the ARTEST study. And interestingly, the same commercial companion diagnostic test can also be used. And not have to be re-validated in the other patient population to be used in the combination studies that we're doing. So really this opens up the companion diagnostic to being used across all of the AR studies. An interesting fact is Ventana Roche at this point, I think is doing about 85% of the initial testing that's done in breast cancer in the women to molecularly characterized the tissue for breast cancer. In other words, the ER+ and PR+, the progesterone receptor, HER2-, that panel is actually done by Roche. And so, Roche can come in and we were able to and this is me dreaming for a moment. We can be in a situation where every woman will know their AR status from the very beginning. And that would -- and then hopefully be a footnote of some sort that opens up the possibility, enobosarm could be available in the future. So this could be very, very interesting from a marketing commercialization standpoint. Now with that said, you know, ER is done by immunohistochemistry as well as estrogen receptor. And that was grandfathered in. So the FDA that have a companion diagnostic for ER. However HER2-, I mean, excuse me, HER2 whether it's negative or positive is, it does have a companion diagnostic that have to be approved. And so the FDA when they saw with the results that we presented to them for the antigen receptor, they made very clear that although many laboratories across the world are doing androgen receptor immunohistochemistry in a standard fashion, that they require -- because it's so important to treat the white women to get the best effect like - if we got going after greater than equal to 40%, and the flip side is true too, and that is that we're not seeing the same kind of activity in less than 40s, they shouldn't be subjected to a drug that is not going to buy them benefit. And so the FDA took the position that because this is critical, that it should be a companion diagnostic. So when we now fast forward into -- now we have an approved product enobosarm hopefully, then in that situation the companion diagnostic could be available, AR testing will be done in other laboratories. So the one that would be approved will be the combination of enobosarm and the companion diagnostic.

Got it. And based on current enrollment status, when do you expect the ARTEST study and the VERACITY study to completing enrollment?

Gary?

Yeah, obviously, we are actively we're on track on both of them. We expect toward the end of 2022 into 2023, that's our target.

So we're targeting data readout and again this is -- we're not trying to guide or anything, but we're certainly targeting data readout in sort of mid 2023 quite frankly for both studies, they're really close.

Got it. Thank you.

Thank you. Next question please?

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

Hey, great. Thanks so much for taking the questions. Mitch, I may have missed it, but I just was wondering if there was any updated strategy for the FC2 business? I know there were some thoughts of divestiture, but obviously it's been doing pretty well. So that would be one question. And then the follow-up to that would be, could you provide some guidance or some thinking with respect to that business for the next fiscal year, please. Thank you.

I'll answer the second - well let me answer the first question. So as we mentioned and publicly put out that we were exploring strategic options for the FC2 business and the strategic option doesn't always mean that you just go up and sell it off. It looks -- it means what's the best way to maximize shareholder value. And as I also said many times, is that we're not in the rush. We're making lots of money of the product and it's paying for a development. So it's not like we have to get rid of anything, I love the damn [ph] business, but it's -- we're just trying to figure out how we can get instead of 1 plus 1 equals 0.5, I would get a 1 plus 1 equals 10. So we've got very different shareholder base looking at the base business and we have a different shareholder base and their expectations could be pharmaceutical business. But with that said, what's important to us as we're running new business. And so what we're doing is we're continuing to understand the option that we have in the FC2 business. We're treating the business as if we're never going to get rid of it, so that we make sure we make the right decision to continue to grow the revenue. But at the same time, we've been very opportunistic in understanding what is the best next step with the asset. So stay tuned. As it relates to revenue as I mentioned in our call, we have put additional -- again, along those lines and in treating it like our own baby. We have put in some additional ways to continue to grow the business. I mean we're in our 50 year [ph] of growth now and this past year we did 44% revenue growth, and this keeps happening. And for some reason when you start looking at other women's health companies and we all know, many of them that you guys have been following, we kind of blown them away. So as a standalone business with revenues for this part of our business, $61.3 million and most of that revenue - we don't have the salesforce. We don't have a 100 people calling on people. We are not putting fancy ads on the Super Bowl. And so that means instead of spending that money, we're using that money to run our business and to minimize dilution and to accelerate the programs, so that we have become a major player in breast cancer and prostate cancer. And of course COVID, we think now that the dust is settled and the Omicron variant is here, it is remind us that don't be -- it humbles us that this is not going away as much as business wants COVID to stay or go away and we can reopen, it looks like it's going to be tough. I mean it's scaring people. Okay? So when you have that kind of fear, that means, we do not have control over it. And we don't have control over it, we need to continue doing what we're doing is right away through getting the study done, so that if we are -- if we become an important option, you know, that we can move that quickly to patients. Okay. So back to the guide. So we're putting in a direct-to-patient portal, so that means we have evolved from a purely manufacturer providing to other telemedicine portals to actually having our own portal. So it does kind of change the valuation of the base business instead of being a manufacturer that depends on customers who have their own portals. We will have our own portal. And you know, our competition out there is the male condom business. And the male condom business, the female condom business is about less than 1% of that market share. It is a tremendous blue ocean out there for us. And so with that size of blue ocean, there is room for a lot of portals to be out there to serve and to bring this product forward. And again our track record shows there is a market and we are -- we want to feed into that market directly because if the female health business UREV has its own telemedicine portal and that really opens us up to a lot of control over our destiny. So and the second thing we're doing is to continue to go out there and get additional telemedicine partners, because every time you turn around, there's another female contraception, Internet storefront or pharmacy that's opening up because that is such a big area of need. And because of COVID again, women are not interested in going to the OB-GYN doctor or the primary care doctor than having to go walk over to the CVS and then have to stay on the line and then have to wait for the medicine to come in 2 days, 3 days later, go back to CVS and then, just too many steps. They'd like to push the button like they do the button for Amazon to get to Pellegrino water, and push the button and it shows up in the front store -- front step. And so that because of COVID that is the reason why you're seeing such a surge in interest in telemedicine right now because that has really created tremendous convenience and we tapped right into it. So I think that's a lot of our success. So we think all I can say about guidance to get back to your question as you know, we don't give guidance, but we do feel that we're going to have a better year in fiscal year 2022 than we did 2021 and we had great year in 2021. And so that gives you a sense of some real resources that we can reinvest into our programs and quite frankly some of those resources that put into, are continuing to drive the robust growth. As it relates to the sexual health business ENTADFI, is in front of the FDA right now and we're expecting to hear this month. And assuming we get approved, we've already moved very, very quickly in creating a telemedicine portal again separate from the Female Health business, almost we treat that like a standalone business and it's going to - and we're partnered with GoodRx. GoodRx spends $300 million, $400 million a year pulling people into their site and we're going to piggyback on that power and take advantage of that because as you know BPH is probably one of the main medicines that men will go for men's health particularly men over the age of 50. And so we can tap into that, take advantage of something -- GoodRx didn't even exist 3 years ago, 4 years ago. So we're dealing with technologies and approaches to selling product that just didn't exist 5 years ago, 4 years ago and we're tapping right into with ENTADFI. The other thing we're doing at ENTADFI is we are not going to hire a marketing and selling sales force, which is not going to do go out there and get a 100 people out there trying to sell the doctors. COVID didn't let doctors into the offices anymore. I mean it doesn't let salespeople in the doctor's offices anymore, and it's just become a new world and it's just an expense that we just don't have to spend. I rather use that money for drug development. And so with that said, there are opportunities for us also to partner ex-US. And in the US for other groups, then it's going to be interested in how getting this product out, kind of like we're doing with FC2. And FC2, is not exclusive to us. We've got other very, very popular telemedicine portals that are helping us sell the product. And we're going to kind of do the same thing with ENTADFI, why not. And it's not about trying to be exclusive in the doctor's offices anymore. So I think we're going to have a very good year. Our expectation is that is that second half of the year will be stronger than the first half of the year because everything will be in place towards the second half of the year. But we're looking for a good year.

Okay, Well, thank you very much,

Thank you.

The next question comes from Kumar Raja from Brookline Capital. Please go ahead.

Thanks for taking my questions\ And also congratulations on all the progress.

The next question comes from Kumar Raja from Brookline Capital.

And also congratulations on all the progress. So first, with regard to the COVID-19 trial. What kind of variability, are you seeing across the different regions? And do you expect that predominantly these patients are going to have that delta variant?

Yeah. So make sure I understand the first part. So what are we seeing across different regions in terms of strain? A - A – K. Gary Barnette Death rate.

A death rate.

It's pretty comparable. Obviously we're in the middle of recruitment and we watch the blinded data very closely, but we're not -- we're seeing very, very similar for instance, very similar mortality rates in the United States versus Brazil.

Yeah. So I would say that's the reason why the FDA likes to use death as an endpoint because you can't fake it out. And so if the death happens, it's a pretty hard endpoint. And you're not worried about things like there may be different standard of care and hospitalizations or ICU stay in different countries, not because they're better or worse, but because if you have to make a decision, who goes in the ICU, you may take somebody out of the ICU that in the U.S. would stay in the ICU because you don't have enough ICU beds and you've got to just ration it and that has nothing to do with the virus. So that's why deaths probably the better endpoint. And when you look at deaths as a endpoint, it seems to be comparable from region to region. As it relates to the strains, interesting, I saw a recent graph where it looks like the delta strain has become the predominant strain across the world. And so the other ones have kind of gone away. And now the big fear is this Omicron strains coming in, and it's going to do the same thing. And what's going to -- the only reason people are getting scared is because we already know with 30-plus mutations in the spike protein that we're already seeing Regeneron already reported. And some of the other - I just saw a recent one with another antibody directed drug, we're going to see that these monoclonal antibodies that are going to very specific epitopes on the spike protein and then epitope, that spot has changed. The virus -- the antibody is not going to work. And we've seen that now. And so we - it is time for an oral agent that has a more - think of as sort of the broad spectrum antibiotic concept, where it's going to have activity in some basic, very well conserved mechanism, which is how does the virus move from outside the cell into the nucleus, replicate and gets the new virions, the new viruses to come back out of the cell. I mean that is highly regulated, highly conserved highway, the microtubules that they use. And so whether you're a delta strain or a Omicron strain, it doesn't matter, that's how it works. That's why I think we're in good shape. But we are -- as part of the determining whether they're COVID positive or not, we are getting information on what constrain the patient has. So we can go back, once we get the data set and see whether or not there's differences from strain to strain which we don't think we'll see. But we aren't collecting that information. But I would argue, I think most of the strain right now is delta. Kumaraguru Raja

Okay. And with regard to TADFIN, have you had labeling discussion? And what are your expectations in terms of the label?

Okay. In terms of TADFIN, and so just with the [regular] people are clear. So the FDA has agreed that the - if we're approved, the trade name will now be in TADFIN. And so I love TADFIN, but it turns out that the agency said there's another compound at the agency that could be confusing to use TADFIN. And so because of that, they asked us to come up with another name. So we came up with ENTADFI. And so that's it. As it relates to the agency, what I can tell you at this point is we are going back and forth with the agency now on label. And so I can't give you a full statement yet in terms of what the label will say. And -- but we're working on that. So stay tuned.

Thanks so much.

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

Thank you, operator. I appreciate you all joining us today, and I look forward to updating you all on the progress at our next investors call. Thank you.

The digital replay of the conference call will be available beginning approximately noon Eastern time today, December 2, by dialing 1 (877) 344-7529 in the U.S. and -- excuse me, 1 (412) 317-0088 internationally. You will be prompted to enter the replay access code, which will be 10161217. Please record your name and company when joining. The conference call has now concluded. Thank you for attending today's discussion.