CHICAGO May 14, 2020 (Thomson StreetEvents) -- Edited Transcript of Veru Inc earnings conference call or presentation Wednesday, May 13, 2020 at 12:00:00pm GMT

Veru Inc. - CFO & Chief Administrative Officer

* Mitchell S. Steiner

Veru Inc. - Chairman, President & CEO

Veru Inc. - Director of IR

Oppenheimer & Co. Inc., Research Division - MD & Senior Analyst

Independent Portfolio Consultants, Inc. - Investment Strategist

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

Good morning, ladies and gentlemen, and welcome to Veru Inc.'s investors' conference call. (Operator Instructions) Please note that this event is being recorded. I would now like to turn the conference over to Mr. Sam Fisch, Veru Inc.'s Director of Investor Relations. Please go ahead.

Samuel Fisch, Veru Inc. - Director of IR [2]

Good morning. The statements made in this conference call that are not historical in nature are forward-looking statements. Such forward-looking statements reflect the company's current assessment of the risks and uncertainties related to our businesses. Our actual results and future developments could differ materially from the results or developments in such forward-looking statements. Factors that may cause actual results or developments to differ materially include such things as the risks related to the development of the company's product portfolio, risks related to the ability of the company to obtain sufficient financing on acceptable terms we need to fund development and company operations, risks related to competition, government contracting risks and other risks detailed in the company's press releases, shareholder communications and Securities and Exchange Commission filings. For additional information regarding such risks, the company urges you to review its 10-Q and 10-K SEC filings.

I would now like to turn the conference over to Dr. Mitchell Steiner, Veru Inc.'s Chairman, CEO and President.

Mitchell S. Steiner, Veru Inc. - Chairman, President & CEO [3]

Thank you, Sam, and good morning. With me on this morning's call are Michele Greco, CFO and CAO; Phil Greenberg, Executive Vice President, Legal; and Sam Fisch, Director of Investor Relations. Thank you for joining our call. Veru is an oncology and urology biopharmaceutical company with a focus on developing novel medicines for the management of prostate cancer. Today, we will update you on the clinical development of our drug pipeline and the commercialization of our products as well as provide financial highlights for the second quarter fiscal year 2020.

Here is a brief update on the advancement of the prostate cancer drug pipeline, VERU-111 in prostate cancer. We have made significant progress in the clinical development program for VERU-111, a novel proprietary first-in-class oral-targeted antitubulin agent for men who have metastatic castration-resistant prostate cancer and have also become resistant to a novel androgen blocking agent, enzalutamide or abiraterone, but prior to IV chemotherapy, also referred to as the prechemotherapy stage. Unfortunately, there is a large number of these affected men.

According to published scientific reports, about 15% to 25% of men who have metastatic castration-resistant prostate cancer and started treatment with a novel androgen blocking agent will not respond all to this therapy. And about 75% to 85% of men will initially respond to treatment with an androgen blocking agent but their cancer will start progressing in about 9 to 15 months. So essentially, within 12 months, the majority of these men will have tumor progression. And a new orally available drug with a different mechanism of action that could be prescribed by urologists and medical oncologists, like the investigative drug VERU-111, is greatly needed for these men.

The Phase Ib portion of the Phase Ib/II clinical study enrolled 39 subjects from 7 clinical sites in the United States. A standard 3x3 design was used to establish the maximum tolerated dose to select a recommended clinical dose for the Phase II study and to assess the preliminary evidence of antitumor activity of VERU-111 in men with metastatic castration-resistant prostate cancer, who have also become resistant to at least 1 novel androgen blocking agent.

Oral dosing escalated from 4.5 to 81 milligrams in the 7 days of dosing, followed by 14 days of no drug for each 21-day cycle. After no dose-limiting toxicity was observed in the 7 days of dosing per cycle, the dose was then increased in the next cohort of patients. Additionally, the dosing schedule has expanded at 21 days of continuous dosing per cycle.

As for safety, the maximum tolerated dose of VERU-111 was determined to be 72 milligrams as 3 of 11 men had reversible grade 3 diarrhea, no grade 3 diarrhea was observed at doses of 63 milligrams or less per day. At doses of VERU-111 of 63 milligrams less per day, the most common adverse events were mild to moderate nausea, vomiting, diarrhea and fatigue. There were no reports of neurotoxicity and no neutropenia was observed at 63 milligrams and lower for the continuous oral dosing, daily dosing for a 21-day cycle.

Efficacy or antitumor activity was assessed by measuring serum PSA and by standard imaging with bone and CT scans. In the 8 men that received at least 4 21-day cycles of oral VERU-111 at any dose based upon their 21-day cycle baseline PSAs, 6 of the 8 men, which is 75%, had decreases in their PSA levels; 4 of 8 men had -- which is 50%, demonstrated greater than or equal to 30% decline in PSA; and 2 of 8 men, which is 25%, have greater or equal to 50% decline in PSA.

Based upon the Prostate Cancer Working Group 3 and the Response Evaluation Criteria in Solid Tumors, which is RECIST 1.1 criteria, these are conventional criteria, objective tumor responses we're seen in 2 of 8, which is 25% of patients, in soft tissue and bone, which were partial responses; and 5 of 8 men, 63%, had stable disease. Objective tumor responses and PSA declines lasted longer than 12 weeks. The primary end point used in the pivotal studies, efficacy studies for the treatment of metastatic castration-resistant prostate cancer is median time to cancer progression by imaging, bone and CT scans.

In the current study, the median duration of response or time to cancer progression has not been reached, as 7 of the 8 men are still being treated on the study with an average duration of response of 10 months. The range is between 6 and 14 months. There were an additional 3 subjects on the study that have not yet completed the 4-day -- the 4 21-day cycles. Therefore, there is a total of 10 men that is still being treated on the study.

To better understand the clinical relevance of these preliminary findings, it's important to note that all patients with metastatic castration-resistant prostate cancer at the time of enrollment in the Phase Ib had evidence of disease progression with at least 1 novel androgen blocking agent drug, whether it's abiraterone or enzalutamide. In a contemporary series recently reported in the scientific literature for this similar population of men, the median observed time to cancer progression, while being treated with an alternative androgen blocking agent, was about 3.4 months.

We have already initiated enrolling in an open-label Phase II portion of the clinical trial in approximately 26 men with metastatic castration and a novel androgen blocking agent-resistant prostate cancer prior to and prior to any IV chemotherapy using the recommended dose and schedule that was selected from the Phase Ib, which is the 63-milligram oral daily dosing for a continuous 21-day cycle. We are on track to complete enrollment this quarter.

We have the clinical safety and the antitumor data necessary from the Phase Ib clinical study to move forward to select the patient population, dose and schedule for the Phase III registration trial. We plan to meet with the FDA next quarter to discuss our proposed registration trial design, which is an open-label, single pivotal Phase III to evaluate the efficacy and safety of VERU-111 versus an alternative androgen blocking agent in men with metastatic castrate-resistant prostate cancer, who have developed cancer progression while receiving 1 androgen blocking agent.

These recent clinical results have allowed the company to potentially accelerate the clinical development of VERU-111 for the treatment of metastatic castration and androgen blocking agent of resistant prostate cancer. Consequently, Veru has changed its strategy of investing in an additional Phase II studies of other cancer types to focus on obtaining approval of VERU-111 as quickly as possible by focusing on the study design, obtaining FDA agreement and initiating and completing a Phase III registration trial for this unmet medical need. We look forward to updating everyone on the results of the FDA meeting.

We have strong IP protection for VERU-111. The composition of matter patents are issued, with expiry in 2031 in the U.S., with a possible patent extension to 2036. Method of use patents for prostate cancer in the U.S. are issued and expiry date is in 2031. We have issued composition and method of use patents in the major markets -- major world markets, including EU and Japan.

The prechemotherapy space in men, who have metastatic castration and androgen blocking agent-resistant prostate cancer, is currently one of the fastest-growing unmet medical need segments in advanced prostate cancer. There are currently no FDA-approved drugs for this indication. According to Accuvia, oral drugs like abiraterone and enzalutamide for advanced prostate cancer had over $6 billion in 2018 global annual sales and $3.1 billion in the U.S. Men who have failed these novel androgen blocking agents are the patients that VERU-111 is currently targeting, which we estimate represents a $5 billion annual global market.

In summary, the clinical development objective is to position VERU-111, which has a unique drug mechanism of action as it does not target the androgen receptor, as the next go-to drug in men who have metastatic castration-resistant prostate cancer and who have developed prostate cancer progression while being treated with an androgen blocking agent, like abiraterone or enzalutamide, but prior to IV chemotherapy. An advantage of VERU-111 is that it could be potentially prescribed by not only the medical oncologists but also the urologists, who is the usual physician managing these types of patients. We plan to present the full clinical data set in an upcoming major scientific meeting. These clinical results firmly position Veru as an oncology-focused biopharmaceutical company.

Next, I will update you on VERU-100, our proprietary peptide drug candidate for the treatment of hormone-sensitive advanced prostate cancer, an established multibillion-dollar global market. The target product profile of VERU-100 is commercially and scientifically compelling as having a number of anticipated advantages over currently available androgen deprivation therapies.

VERU-100 is a long-acting gonadotropin-releasing hormone, called GnRH antagonist, designed to be administered as a small-volume subcutaneous 3-month depot injection without a loading dose. As a GnRH antagonist, it is intended to immediately suppress testosterone, with no testosterone surge upon initial or repeated administration and no testosterone micro increases, which may adversely affect patient outcomes, a problem which potentially occurs with the approved LHRH agonist drugs like Lupron, Zoladex and Eligard. Currently, there are no GnRH antagonists commercially approved for treatment beyond 1 month, making VERU-100, if approved, the only commercially available GnRH antagonist 3-month depot, which is an attractive choice for androgen deprivation therapy.

As previously mentioned, we have received agreement from FDA that the development program for VERU-100 may follow an expedited pathway. Based on this FDA input, the company plans to commence a single open-label, multicenter, dose-finding Phase II clinical trial in approximately 35 men, followed by a single open-label, multicenter Phase III clinical trial in only approximately 100 men. Veru is in the process of scaling up GMP manufacturing of drug product to prepare the clinical trial -- prepare for the clinical trial to VERU-100. Given the effects of COVID-19, it will be at least a quarter delay in this program. But otherwise, we expect the company's development program to resume as workers are returning to the GMP facility.

The company intends to submit an Investigational New Drug Application in the second half of 2020, so we can commence the open-label Phase II study by Q4 calendar year 2020. As it is an open-label Phase II study, we will be able to update you periodically on our progress towards reaching the primary end point, the reduction of testosterone to castrate levels in real-time during late 2020 and early 2021. The planned development pathway for VERU-100 agreed upon by FDA represents a lower-cost investment opportunity for a major product that can address the shortfalls of the current $2.6 billion global ADT market.

Our next product candidate in clinical trial is zuclomiphene, a novel proprietary oral nonsteroidal estrogen receptor agonist being evaluated to treat hot flashes, the most common side effect in men on androgen deprivation therapy for advanced prostate cancer and a major reason why men want to stop androgen deprivation therapy. We enrolled 93 men in a multicenter, double-blind, placebo-controlled dose finding study, Phase II study. And we're evaluating 2 doses, 10-milligram and 50-milligram zuclomiphene versus placebo. We reported positive top line interim results a few weeks ago. We determined that the 10-milligram dose was the no-effect dose, and the 50-milligram zuclomiphene demonstrated estrogenic activity and a reduction in the frequency of hot flashes from baseline to day 42.

We also reported on the safety from the current blinded aggregate clinical database from our placebo-controlled trial. Based on the study's interim findings, zuclomiphene appears to be well tolerated. We have not received any reports of gynecomastia, painful breasts or venous thromboembolic events, which are common side effects in men treated with high doses of estrogen.

Because of the continuing effects of COVID-19 and the related strains on the health system and regulatory agencies, we will be delayed in obtaining a face-to-face end-of-Phase II meeting with FDA for the zuclomiphene program in order to obtain agreement on the Phase III clinical program design that will be acceptable for approval. We will provide details of the design and timing of this study after we have our FDA meeting. Veru estimates that the peak U.S. revenue potential for zuclomiphene citrate to be between $580 million to $639 million. Currently, there are no FDA-approved drugs for this indication.

Although Veru is focused in prostate cancer and oncology, due to the urgency of the current global pandemic and the fact that VERU-100 has the potential to treat both SARS-CoV-2 infection and the associated reactive, severe lung inflammation in COVID-19 patients at risk for acute respiratory distress syndrome, the company is compelled to pursue this COVID-19 indication even though this indication is not the primary focus of our company. Drugs that target microtubules have broad antitumor -- antiviral activity by disrupting the intracellular transport of viruses, such as SARS-CoV-2, along the microtubules.

Microtubule trafficking is critical for viruses that cause infection. Furthermore, microtubule depolymerization agents that target alpha and beta tubulin subunits of microtubules, like a drug called colchicine, also have strong anti-inflammatory effects, including the potential to treat the cytokine-release syndrome, also known as the cytokine storm, which is induced by the SARS-CoV-2 viral infection that seems to be associated with the high COVID-19 mortality rates.

VERU-111 is an oral, first-in-class microtubule depolymerization agent that targets the colchicine binding site of alpha and beta tubulin subunits to inhibit microtubules. The company met with the FDA and has received agreement on the clinical development of VERU-111 as a potential dual, antiviral and anti-inflammatory agent to combat COVID-19 under the new FDA program Coronavirus Treatment Acceleration Program, CTAP. As reported yesterday, FDA granted Veru commission to proceed with a Phase II double-blind, randomized 1:1 placebo-controlled clinical trial evaluating daily doses of VERU-111 versus placebo for 21 days in 40 hospitalized patients. There'll be 20 in the VERU-111 and 20 in the placebo subjects, and these are subjects that tested positive for SARS-CoV-2 virus and are deemed to be at high-risk for acute respiratory distress syndrome.

The primary efficacy end point will be the proportion of patients that are alive and without respiratory failure at day 29. Secondary end points will include measured improvements on the WHO disease severity scale. It's an 8-point ordinal scale, which captures the COVID-19 disease symptoms and signs, including hospitalization, to progression of pulmonary symptoms, to mechanical ventilation as well as death. The study is expected to commence in 2 weeks. We're excited about the potential for VERU-111 to treat both the viral infection and potential for -- to treat both the viral infection and the inflammatory response caused by the virus. The Phase II primary end point -- this is critical, the Phase II primary end point is being alive without respiratory distress is a clinically meaningful one.

Because of the urgent need for effective and timely therapeutics to combat COVID-19, the company has applied for significant grant funding through both the Biomedical Advanced Research and Development Authority of the U.S. Department of Health and Human Services, called BARDA, and the Defense Advanced research Projects agency of the U.S. Department of Defense, called DARPA, to expedite the clinical development of VERU-111 for COVID-19.

The coronavirus pandemic continues to paralyze the economy and threaten lives across the world. An effective drug to treat COVID-19 is still desperately needed. And this Phase II study will expeditiously determine whether VERU-111 has efficacy and safety against COVID-19. There's really no downside to conducting this small study, especially as we get the nondilutive funding. And if VERU-111 has efficacy, the upside is substantial for patients.

Veru's ability to advance the clinical development of our proprietary prostate cancer drugs that address unmet medical needs in large markets is being substantially supported by investments from 2 commercial sources of revenue: the FC2 Internal Condom as well as PREBOOST Roman Swipes, which is a 4% benzocaine wipe for premature ejaculation. The company also expects revenues from TADFIN, which the NDA is expected to be submitted in late 2020, early 2021, which will provide additional resources to support the company's clinical development program. As you can see from the earnings release, in Q2 fiscal year 2020, we continue to have significant growth in revenue and gross profit from these commercial products.

Although Ms. Greco will cover the detailed financial result highlights in a few moments. I would like to make a few comments. We again have the pleasure of reporting robust growth in fiscal year 2020 and expect further increases of FC2 sales in both the public sector and prescription sales in the U.S. for the rest of the year. We had a $7 million -- we had $7 million in revenue from the prescription business for Q2 fiscal year 2020 compared to $2.6 million for Q2 fiscal year 2019, an increase of 168%. In fact, to give you a sense of the growth trajectory for all of fiscal year 2019, we sold 159,000 FC2 prescribed units. And for just the first quarter -- first 2 quarters of fiscal year 2020, we sold 171,891 FC2 prescribed units.

Focusing on the Veru's commercial segment, which is made up of FC2, PREBOOST Roman Swipes and drug commercialization costs, we have net revenues increase in Q2 fiscal year 2020 to $9.9 million compared to $7 million in Q2 fiscal year 2019, which is up 43%. Gross profits for Q2 fiscal year 2020 was $7.4 million compared to $4.6 million in Q2 for fiscal year 2019, which is up 61%. In fact, our gross margin climbed to 75% of net revenues from 66%.

Our operating income from this segment significantly increased to $6.2 million from $2.8 million. Net revenue for fiscal year-to-date 2020 was $20.5 million compared to fiscal year-to-date 2019 of $13.3 million. This is an increase of 54%. Our income from operations for this segment of the business was $12 million for fiscal year-to-date 2020, up from $6.2 million in fiscal year-to-date 2019, an increase of 94.6%.

As you can see, our base commercial business is doing very well. And as a stand-alone business would be quite valuable, experiencing significant growing revenue and incomes from operations. This continued revenue growth and profit and positive cash flow from this base commercial business has allowed us to substantially invest in the development of our prostate cancer clinical programs, which enhances the entire value of Veru for our shareholders.

We intend to continue this revenue growth trajectory, with not only the current growth of revenues from FC2 and PREBOOST but also from the revenues that we expect to generate from the commercialization of the company's proprietary Tadalafil and Finasteride Combination capsule for the treatment of BPH, called TADFIN. We're collecting 12-month stability data on TADFIN manufacturing batches and expect to submit the NDA by the end of 2020 to just beginning of 2021.

In the United States, we're exploring commercially launching TADFIN through telemedicine channels. As you have seen, we've had great success with our other products using this sales channel. We expect to -- revenues from TADFIN to add substantially to near-term revenues with high gross margins, to existing and growing revenues from FC2 and the PREBOOST Roman Swipes business.

I will now turn the call over to Michele Greco, CFO and CAO, to discuss the financial highlights. Michele?

--------------------------------------------------------------------------------

Michele Greco, Veru Inc. - CFO & Chief Administrative Officer [4]

--------------------------------------------------------------------------------

Thank you, Dr. Steiner. As Dr. Steiner indicated, we started off the year with 2 great quarters. Let's start our highlight with the second quarter results for the 3 months ended March 31, 2020.

FC2 unit sales totaled $6.9 million compared to $9.8 million in the prior year second quarter. Total net revenues were up 43% to $9.9 million from $7 million in the prior year second quarter. The company reported quarterly sales growth in its U.S. prescription business and in PREBOOST. Net revenue from the U.S. prescription business was up 168% to $7 million from $2.6 million in the prior year second quarter. Gross profit was up 61% to $7.4 million from $4.6 million in the prior year second quarter. Gross margin increased to 75% from 66% in the prior year second quarter. The increase in gross margin is driven primarily by the increase in the U.S. prescription business.

These financial results do not reflect the new tender orders that will be coming from South Africa. We previously announced that we won 75% of the South African tender, representing up to 120 million units over 3 years for the total tender. This translates to approximately 30 million units per year for our company and potentially $10.4 million in revenue per year for a total of approximately $30 million over 3 years. We expect these new orders from South Africa to ship in greater volumes during the third quarter of this fiscal year.

Operating expenses for the quarter increased by $1 million to $7.7 million compared to the prior year second quarter of $6.7 million due to the increase in research and development costs of $1 million. Nonoperating expenses were $644,000 compared to $1.9 million in the prior year second quarter and primarily consisted of interest expense and the change in the fair value of the derivatives 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 $133,000 compared to a tax expense of $25,000 in the prior year second quarter. The effective tax rate for this quarter of 14% is due to recording a valuation allowance against the net operating loss generated for the quarter in the U.S. The bottom line results for the second quarter of fiscal 2020 was a net loss of $811,000 or $0.01 per diluted common share compared to a net loss of $4 million or $0.06 per diluted common share in the prior year second quarter.

Now turning to highlights of the results for the 6 months ended March 31, 2020. For the first 6 months of fiscal 2020, the FC2 unit sales totaled 17 million compared to 17.2 million units in the prior year period. Total net revenues were up 54% to $20.5 million from $13.3 million in the prior year period. The company reported growth in FC2 sales in the U.S. prescription business and in PREBOOST. Net revenue from the U.S. prescription business was up 158% to $13 million from $5 million in the prior year period.

And just to note, for all of fiscal year 2019, the U.S. prescription revenue was $14.1 million. Net revenue for PREBOOST Roman Swipes was $574,000 compared to $180,000 in the prior year period. Gross profit was up 59% to $14.7 million from $9.3 million in the prior year period. Gross margin increased to 72% from 69% in the prior year period due primarily to the increase in the U.S. prescription business.

Operating expenses increased by $4.4 to $16.8 million compared to the prior year period of $12.4 million driven primarily by the increase in research and development costs of $4 million. Nonoperating expenses were $2.2 million compared to $2.9 million in the prior year period, and primarily consisted of interest expense and the change in the fair value of the derivative liabilities related to the synthetic royalty financing.

For the 6-month period, we recorded a tax benefit of $210,000 compared to a tax expense of $118,000 in the prior year period. The effective tax rate for the 6 months of 4.9% is due to recording a valuation allowance against the net operating loss generated for the 6 months in the U.S. The company has net operating loss carryforwards for U.S. federal tax purposes of $42.7 million with $14.4 million expiring in years through 2038, and $28.3 million, which can be carried forward indefinitely. And our U.K. subsidiary has net operating loss carryforwards of $61.7 million, which do not expire.

The bottom line results for the first 6 months of fiscal 2020 was a net loss of $4.1 million or $0.06 per diluted common share compared to a net loss of $6.2 million or $0.10 per diluted common share in the prior period. The reduction in the net loss of $2.1 million is due primarily to the increase in our net revenues, which is offset by the increase in our research and development costs.

Turning to our balance sheet. As of March 31, 2020, our cash balance was $2.6 million and our accounts receivable were $5.8 million compared to a cash balance of $6.3 million and accounts receivable of $5 million at September 30, 2019. During the 6 months ended March 31, 2020, we used cash of $4.9 million for operating activities compared with using cash of $4 million in the prior period.

Overall, we're delighted to see the continued increases in sales in the U.S. FC2 prescription business and the increasing sales of PREBOOST Roman Swipes to Roman Health Ventures and look forward to increasing sales in the global public sector business in the third quarter. These revenue sources continue to be a source of funds we use to invest in our promising pharmaceutical clinical programs as we continue to transform our company into an oncology and urology biopharmaceutical company with a focus on developing novel medicines for the management of prostate cancer.

Now I'd like to turn the call back to Dr. Steiner.

--------------------------------------------------------------------------------

Mitchell S. Steiner, Veru Inc. - Chairman, President & CEO [5]

--------------------------------------------------------------------------------

Thank you, Michele. We have enjoyed yet another strong financial quarter, which has allowed us to significantly advance our clinical programs. In fact, we now have had 10 straight quarters of growth in our FC2 U.S. prescription business. Looking forward to the rest of fiscal year 2020 and early fiscal year 2021, we expect our revenues to continue to be strong and growing towards a record year.

With the improving performance of the commercial business, we believe that we'll be able to substantially invest in the continued clinical development of our prostate cancer and other cancer drug product candidates as well as to submit the NDA and, if approved, commercially launch TADFIN to -- through Internet sales, which would provide even more revenue, adding to the already growing revenue from FC2 and from PREBOOST Roman Swipes. We are creating a very valuable commercial business, which includes both the urology specialty pharmaceuticals and the female health company divisions.

With the new clinical data from the VERU-111 prostate cancer program, we must prioritize and focus our efforts towards the execution of the Phase III registration program for this unmet need in prostate cancer. This begins by obtaining regulatory clarity from both FDA and EMA on the clinical trial design. We have reached an important company clinical milestone that well positions Veru as an oncology biopharmaceutical company.

We anticipate a steady flow of important positive news for Veru over the next few months to a year. One, for VERU-111, our oral selective antitubulin, we will report an open-label efficacy and safety clinical results from the Phase II clinical trials of VERU-111. And we will meet with the FDA and report on the Phase III clinical trial program.

For VERU-100, our novel peptide GnRH antagonist 3-month depot formulation, we will complete GMP manufacturing of clinical supply, we'll submit the IND, and we'll initiate the Phase II clinical trial. With zuclomiphene, our oral estrogen receptor agonist, we will have a face-to-face meeting with the FDA for -- face-to-face and a Phase II meeting with FDA.

We plan to initiate and complete the Phase II clinical program for COVID-19 and subjects of high-risk to acute respiratory distress syndrome. We'll submit the NDA for TADFIN. We would have secured partnerships with some of our drug products. And we plan to continue to demonstrate robust growing revenues for our commercial products FC2 and PREBOOST Roman Swipes.

We're committed to driving shareholder value by transforming Veru into an oncology company. We will initially focus our efforts to providing substantial benefits to prostate cancer patients by developing and commercializing VERU-111 as well as our other oncology products to address unmet medical needs in the management of their disease.

With that, I now open the call to questions. Operator?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) The first question comes from Brandon Folkes of Cantor Fitzgerald.

--------------------------------------------------------------------------------

Brandon Richard Folkes, Cantor Fitzgerald & Co., Research Division - Analyst [2]

--------------------------------------------------------------------------------

Congratulations on all the progress. And on VERU-111, granted you haven't met with the regulatory agencies, could you perhaps just elaborate about how you're thinking about the Phase III design? Anything you can say maybe around the size and number of patients?

And then how are you thinking about what is the hurdle you think physicians in practice will want to see in that Phase III to use VERU-111 in practice? And then, lastly, maybe just on COVID-19. Should we think of this as a potential revenue-generating opportunity for the company? Or is this going to be similar to what we think from other companies, where it's really just a public duty-type thing?

--------------------------------------------------------------------------------

Mitchell S. Steiner, Veru Inc. - Chairman, President & CEO [3]

--------------------------------------------------------------------------------

Thank you. All excellent questions. So let's talk about the Phase III design for the -- for VERU-111. So what I can do is I can refer you to the ALAPARIB, that's A-L-A-P-R-I-B -- so A-L-A-P-A-R-I-B study that's in front of the FDA as we speak. It's very instructive in terms of how we're thinking about our clinical trial. So this is one I believe will get approved. This is a patient population that's similar to our patient population. These are patients with metastatic castration-resistant prostate cancer that have failed an androgen blocking agent. Some of them had chemo, but just some -- but mostly the same patient population.

And the reason I bring that up is because it is a registration trial, and the FDA has allowed them to use as an active comparator patients that have placed on an alternative androgen blocking agent. So that means if you think of our patient populations, they fail castration, so they're castration resistant. They put on an androgen blocking agent, either enzalutamide or abiraterone, and then they get randomized to alternative androgen blocking agent. It means if they start out with abiraterone, they get put on enzalutamide. If they start with enzalutamide, they get put on abiraterone. That's what I mean by alternative androgen blocking agent, okay?

And that's your comparator arm. The FDA has allowed that in 3 of the nonmetastatic studies that have been approved, and it's being allowed in this study. So that's why we feel pretty good. The end point of that study, just like those other 3 clinical studies were nonmetastatic, is progression-free survival, radiographic progression-free survival or imaging-based progression-free survival. Another way of saying that is when cancer progresses and you can see it on either bone scan or CT scan, that's deemed a failure, okay? They've accepted that, okay?

The active comparator, in this case, is an oral agent that's going after patients -- that ALAPARIB is going after patients that have a genetic mutation, which is really a small segment of the population. That's why we want to be the go-to drug. We want to be the drug that will treat anybody, not anybody that has a genetic mutation. So that's a much bigger market.

And the -- and in that study, interestingly, they hit -- the hurdle they have to hit is in the treatment and then back up, in terms of the trial size, because you can do progression-free survival, imaging-based progression-free survival, sort of 800 patients or 1,000 patients in the study. That study, I think, is about 250 patients. So the range is going to be around the 250 to 300 mark. It's a much smaller study. And quite frankly, it's a shorter study. And the reason it's a shorter study is because the comparator arm, the active control, fails in about 3.4 to 3.6 months. So if you go for a year, you've got 3 of those cycles. And so follow-up is not very long, unfortunately, for the patient. But your benchmark that you're going up against is about 3.4, 3.6 months median progression-free survival and radiographic progression-free survival. And for ALAPARIB, they showed a 7.4-month advantage. And everybody believes it's going to get approved, okay?

So I shared that with you because I think we're going to be very similar to that. I think our trial design -- our trial size will be between 250 and 300. I think we're going to have an end point of imaging-based progression-free survival. I think we'll be able to compare our agent VERU-111 against an alternative blocking -- alternative androgen blocking agent. I think the hurdle that we need to hit is going to be about 3.4 to 3.6 months.

I have comfort to know that in the Phase Ib, the median duration of response is 10 months, with a range between 6 and 14 months. It feels good but, of course, you have to be careful. It is Phase Ib, but that gives you comfort that we should be in good shape from the standpoint of being able to beat that. And that's the kind of design.

So it feels safe because we're not asking the agency to do something new. And -- but it also gives you a sense of why we're excited about going into a Phase III registration program because these patients are around so recruitment should be pretty straightforward. And it's completely an unmet medical need. And there's enough regulatory precedent that we can feel comfortable around trial design.

As it relates to your second question, which has to do with COVID-19. That's nice you're doing it, and you're going to do like Gilead and just kind of give it away and give all the doses to the government and show 3 or 4 days of hospital benefit and move on. Now we're a small company, and we think we have an innovative compound, VERU-111.

Excerpt from:
Edited Transcript of FHCO earnings conference call or presentation 13-May-20 12:00pm GMT - Yahoo Finance

Comments are closed.