Q2 2020 Earnings Call

[music].

Welcome to root.

Investors Conference call.

Participants will be in listen only mode.

You need assistance, please certainly corporate specialist pressing the star keys, followed by <unk>.

After this morning's discussion there will be an opportunity to ask questions. Please note that this event is being recorded.

I would now what does turn the conference over to Mr., Sam Fish Group Inc.'s director of Investor Relations. Please go ahead.

Good morning.

Payments made in this conference call, they're 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 and the results are developments in such forward looking statements.

Factors that may cause actual results or development 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 company operations.

It's too late to competition.

Contracting risks and other risks detailed the company's press releases shareholder Communications and Securities Exchange Commission filings.

For additional information regarding such risks the company urges you to view, it's 10-Q and 10-K FCC filings.

Now I'd like to turn the conference over to Dr. Mitchell Steiner, there things chairman CEO and president.

Thank you Sam and good morning wouldn't meet with me on this morning's call, let Michele Greco CFO and COO field Greenberg Executive Vice President legal and Sam Fish director of Investor Relations. Thank you for joining our call various it oncology and urology biopharmaceutical company, where they are focused.

Hoping novel medicines, but 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's a brief update or the advancement of the prostate cancer drug pipeline.

You are 111 in prostate cancer, we have made significant progress in the clinical development program for Veer 111, a novel proprietary first in class World targeted anti Tubulin agent the men, who have metastatic castration resistant prostate cancer and have also become resistant to a now.

Oh androgen blocking agent enzalutamide side or apparatus <unk>, but prior to I'd be chemotherapy also referred to as the pre chemotherapy stage.

Unfortunately, there was a large number these affected man. According to publish scientific reports about 15% to 25% of men, who have metastatic castration resistant prostate cancer and started treatment with a novel androgen blocking age and will not respond at all to this therapy and about 75 to.

85% a man well initially response to treatment within androgen blocking age and but there is cancer book and I will start progressing in about 90 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 mechanisms of action.

That could be prescribed by your Raul just a medical oncologist like the investigative drug Bureau, 111 is greatly needed for these men.

The phase one be portion of the phase one be two clinical study and well 39 subjects. Some seven clinical sites in the United States extended three by three design was used to establish the maximum tolerated dose to select a recommended clinical does with the phase two study and to assess the preliminary evidence of anti tumor.

We're activity of your 111 in men with metastatic castration resistant prostate cancer has also become resistant to at least one novel androgen blocking gauge it.

Oral dosing escalated from 4.5 to 81 milligrams.

Seven days of dosing followed by 14 days of no two at the each 21 day cycle. After no dose limiting toxicity was observed in the seven days of dosing for cycle. The dose was then increased it in the next cohorts of patients.

Additionally, the dosing schedule was expanded to 21 days of continuous dosing per cycle.

That's the safety the maximum tolerated dose severe 111 was determined to be 72 milligrams. There's three up 11 men had reversible grade three diarrhea, no grade three diarrhea was observed at doses of 63 milligrams or less per day at doses of your 111 of 63 milligrams less per day the most common.

An adverse events were mild to moderate nausea, vomiting, diarrhea, and fatigue. There were no reports of neurotoxicity and no neutropenia was observed the 63 milligrams and lower the continuous oral dosing daily dosing.

For a 21 day cycle.

Efficacy or anti tumor activity was assessed by measuring serum p. essay and by standard imaging with Boeing and C.T. scans in the eight men that received at least for 21 day cycles of oral Veer 111 at any dose based upon the 21 day cycle baseline P.S.A.

Six of the eight man it which is 75% had decreases in their PSC levels.

Sure.

Four of eight men had which is 50% demonstrate a greater than or equal to 30% decline the PSC and two of eight man, which is 25% have greater or equal to 50% decline in PPSA based upon the prostate cancer working group three and the response evaluation criteria in solid tumors, which is RECIST 1.1.

Criteria these are conventional.

Criteria objective tumor responses were seen into the eight produced 25%.

Patience and soft tissue and bone, which was a partial responses in five of these men at 63% had stable disease.

[noise] objective tumor responses and PSC declines lasted longer than 12 weeks. The primary endpoint using the pivotal studies efficacy studies for the treatment of metastatic castration resistant prostate cancer is median time to cancer progression by imaging bone and CTG scans and the current study the median duration.

In a response or time to cancer progression has not been reached as seven at the eight men are still being treated on the study with an average duration of response of 10 months the ranges between six and 14 months there an additional three subjects on the study they have not yet completed the four day before 21 day cycles there.

For those a total of 10 men that are 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. The time of involved in in the phase one be had evidence of disease progression with at least one novel antigens.

Biding agent.

Dr., whether its apparatus on Enzalutamide side, and then contemporary series recently reported in the scientific literature literature for this similar population of men. The median observed time to cancer progression, while being treated with an alternative ATJ embarking gauge it was about 3.4 months.

We have already initiated enrolling and open label Phase two portion of the clinical trial and approximately 26 men with metastatic castration and a novel androgen blocking agent resistant prostate cancer prior to and prior to any Ivy chemotherapy using the recommended recommended dose and.

Schedule that was selected from the phase one be which the 63 milligram oral daily dosing for continuous 21 day cycle, we're on track to complete enrollment this quarter.

We have these the clinical safety and the anti tumor data necessary from the phase one be clinical study to move forward to select the patient population dose and schedule for the phase three 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 three to evaluate the efficacy and safety Aviragen 11 versus.

Alternative androgen blocking agent in men with metastatic castrate resistant prostate cancer, we have developed cancer progression, while receiving one androgen blocking agent.

These recent clinical results.

We have allowed the company to potentially accelerate the clinical development of your 111 for the treatment of metastatic castration engine blocking agent.

Resistant prostate cancer Consequently.

View has changed Veer has changed its strategy of investing in an additional phase two studies of other cancer types to focus on obtaining approval Aviragen 11 as quickly as possible by focusing on the study design, obtaining FDA agreement and initiating and completing a phase three registration trial.

So for this unmet medical need we look forward to updating everyone on the results of the FDA meeting.

We have strong IP protection for severe 111.

The composition of matter patents issued with expertise in 2031 in the U.S. with a possible patent extension to 2036 method of use patents with prostate cancer in the U.S. are issued expiry date is in 2031, we have issued composition and method of use patents in the major mark.

It's a major world markets, including you in Japan.

Pre chemotherapy space in men, who have metastatic castration androgen blocking agent resistant prostate cancer is currently one of the fastest growing unmet medical need segments and advanced prostate cancer. There are currently no FDA approved drugs for this indication.

According to our Q world to ads like apparatus around Enzalutamide side, the advanced prostate cancer head over $6 billion in 2018 global annual sales and $3.1 billion into us.

Men, who have failed these novel androgen blocking agents the patient severe 111 is currently targeting which we estimate estimate represents a $5 billion annual global market.

Operator: Good morning, ladies and gentlemen, and welcome to Veru, Inc.'s Investors Conference Call. All participants will be in listen-only mode.

In summary, the clinical development objective is to position Veer 111, which has a unique drug mechanism of action as it does not target. The answer me 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 antigen blocking agent like apparatus enzalutamide, but prior to Ivy chemotherapy.

In advantage, if you're one of the web is that it could be potentially to 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.

Operator: If you need assistance, please signal a conference specialist by pressing the star key followed by zero. After this morning's discussion, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Mr. Sam Fisch, Veru, Inc.'s Director of Investor Relations. Please go ahead. Good morning.

Dataset at an upcoming major scientific meeting these clinical results firmly positioned very true as an oncology focused biopharmaceutical company.

Next I will update you on vierra 100, our proprietary peptide drug candidates for the treatment of Herman sensitive advanced prostate cancer and establish multibillion dollar global market.

Samuel Fisch: 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 when needed to fund development and company operations, risks related to competition, government contracting risks, and other risks detailed in the company's press releases, For additional information regarding such risks, the company urges you to view its 10Q and 10K SEC filings.

Target product profile to view or 100 is commercially and scientifically compelling as having a number of anticipated advantages over currently available androgen deprivation therapies fear of 100 is a long acting banana tropin releasing hormone.

Given our age antagonists designed to be administered as a small volume subcutaneous three month depot injection without a loading dose as a g. and our age antagonists. It is intended to immediately suppressed testosterone with no testosterone surge upon initial or repeated administration and no testosterone.

I grew increases, which may adversely affect patient outcomes, a problem, which potentially occurs with the approved LH our age agonist drugs like Luke on so with X and our guard.

Mitchell S. Steiner: A. S. G. C. file. I would now like to turn the conference over to Dr. Mitchell Steiner, Veru, Inc.'s Chairman, CEO, and President. Thank you, Sam, and good morning. With me on this morning's call are Michele Greco, CFO and CAO, Phil Greenberg, Executive Vice President of 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 of fiscal year 2020. Here is a brief update on the progress of our prostate cancer drug pipeline.

Currently there are no gn RH antagonists commercially approved for treatment beyond one month, making Bureau 100, if approved the only commercially available Gn RH antagonist, three month depot, which is an attractive choice androgen deprivation therapy.

As previously mentioned, we have received agreement from FDA that the development program for Veer 100 may follow an expedited pathway based on this ft. A input the company plans to commence a single open label Multicenter dose finding phase two clinical trial in approximately 35 men.

Mitchell S. Steiner: 111 and prostate cancer. We have made significant progress in the clinical development program for Veru 111, a novel proprietary first-in-class oral-targeted antitubulant 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 pre-chemo Unfortunately, there is a large number of these affected men.

Followed by a single open label Multicenter Phase III clinical trial, and only approximately 100 man.

There isn't a process of scaling up GMP manufacturing a drug product to prepare the clinical trial prepare for the clinical trials of your 100.

Mitchell S. Steiner: According to published scientific reports, about 15 to 25 percent of men who have metastatic castration-resistant prostate cancer and started treatment with a novel androgen-blocking agent will not respond at all to this therapy, and about 75 to 85 percent 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 a urologist or medical oncologist, like the investigative drug Veru-111, is greatly needed for these men. The Phase 1b portion of the Phase 1b2 clinical study enrolled 39 subjects from 7 clinical sites in the United States.

Given the effects of covert 19, it will be at least the core is 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.

Mitchell S. Steiner: A standard 3 by 3 design was used to establish the maximum tolerated dose, to select a recommended clinical dose for the Phase 2 study, and to assess the preliminary evidence of anti-tumor activity of Vero111 in men with metastatic castration-resistant prostate cancer who have also become resistant to at least one novel androgen blocker. 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 is expanded to 21 days of continuous dosing per cycle. As for safety, the maximum tolerated dose of Vera-111 was determined to be 72 milligrams, as three of 11 men had reversible grade 3 diarrhea.

Company intends to submit an investigational new drug application in the second half. The 2020. So we can commence the open label Phase two study by Q4 calendar year 2020 as it is an open label Phase two study, we will be able to update you periodically on our progress towards reaching the primary endpoint the reduction of testosterone.

Mitchell S. Steiner: No grade 3 diarrhea was observed at doses of 63 milligrams or less per day. At doses of Vera-111 of 63 milligrams or 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 or lower for continuous oral dosing, daily dosing for a 21-day cycle. Efficacy or anti-tumor activity was assessed by measuring serum PSA and by standard imaging with bone and CT scans. In the eight men that received at least four 21-day cycles of oral Veru111 at any dose based upon their 21-day cycle baseline PSAs, six of the eight men, which is 75%, had decreases in their PSA levels. Four of the eight men, which is 50%, demonstrated a greater than or equal to 30% decline in PSA.

The castrate levels in real time during late 2020 in early 2021.

The plan development pathway severe 100 agreed upon by FDA represents a lower cost investment opportunity.

A major product that can address the shortfall of the current 2.6 billion dollar global ABT market.

Our next product candidate in clinical trials Soupline Mophie in novel proprietary oral non steroidal estrogen receptor agonist being evaluated the treat hot flashes. The most common side effect in men on androgen deprivation therapy for advanced prostate cancer in 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 two study and we were evaluating two doses 10 milligram and 50 milligram as opposed to theme versus placebo. We reported positive topline interim results a few weeks ago, we determined that the 10 milligram dose was the no effect.

Mitchell S. Steiner: And two of eight men, which is 25%, had a greater or equal to 50% decline in PSA. Based upon the prostate cancer working group three and the response evaluation criteria in solid tumors, which is resist 1.1 criteria, which is a conventional criteria, objective tumor responses were seen in two of eight, which is 25% of patients in soft tissue and bone, which were partial responses. And five of eight men, 63%, had stable disease.

Dose and the 50 milligram to public being demonstrated estrogenic activity in a reduction that frequency hot flashes from baseline to date.

Today 42.

We also reported on the safety from the current blinded aggregate clinical database from our placebo controlled trial based on this study's interim findings to come within appears to be well tolerated. We have not received any we we have not received any reports of gynecomastia painful brass or venous thromboembolic events.

Which a common side effects in men treated with high doses of estrogen.

Because of the continuing effect to covert 19, and the related strains on the health system and regulatory agencies, we will be delayed in obtaining a face to face into phase two meeting with FDA, but as you call moving program in order to obtain agreement on the phase three clinical program design that will be acceptable for approval.

We will provide details of design and timing of this study after we have our FDA meeting.

Your estimates at the peak us revenue potential visit from the concentrator to be between 580, the $639 million. Currently there are no FDA approved drugs for this indication.

Now, although various focus in prostate cancer oncology.

Mitchell S. Steiner: Objective tumor responses and PSA declines lasted longer than 12 weeks. The primary endpoint used in the pivotal 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 seven of the eight 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.

Due to the urgency of the current global pandemic.

And the fact of your 111 has the potential to treat both Sars koby to infection and the associated reactive severe lung inflammation and cobot nine patients at risk for acute respiratory distress syndrome. The company is compelled to pursue this cobot 19 indication even though this indication is not the primary focus.

Mitchell S. Steiner: There are an additional three subjects in the study that have not yet completed the four 21-day cycles. Therefore, there are a total of 10 men that are still being treated in 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 1b trial had evidence of disease progression with at least one novel androgen-binding 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 We have already initiated enrollment 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 any IV chemotherapy, using the recommended dose and schedule that was selected from the Phase I-B, which is 63 mg oral daily dosing for a continuous 21-day cycle. We are on track to complete enrollment this quarter.

Mitchell S. Steiner: We have the clinical safety and the anti-tumor data necessary from the Phase 1b clinical study to move forward to select the patient population, dose, and schedule for the Phase 3 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 3 to evaluate the efficacy and safety of VERA111 versus an alternative androgen-blocking agent in men with metastatic castrate-resistant prostate cancer who have developed cancer progression while receiving one androgen-blocking agent. These recent clinical results have allowed the company to potentially accelerate the clinical development of Veru Veru has changed its strategy from investing in 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 Veru111. The composition of MATTER patents were issued, with expiry in 2031 in the U.S., with a possible patent extension to 2036.

Mitchell S. Steiner: Method of use patents for prostate cancer in the U.S. have been issued, and the expiry date is in 2031. We have issued composition and method of use patents in the major world markets, including the EU and Japan. The pre-chemotherapy space in men who have metastatic castration and androgen-blocking agent-resistant prostate cancer is currently one of the fastest-growing unmet medical needs segments in advanced prostate cancer. There are currently no FDA-approved drugs for this indication. According to Acuvia, oral drugs like abiraterone and enzalutamide for advanced prostate cancer had over $6 billion in global annual sales in 2018, and $3.1 billion in the U.S. Men who have failed these novel androgen-blocking agents are the patients that Veru111 is currently targeting, which we estimate represents a $5 billion annual global market.

Most of our company.

Drugs that target market microtubules have broad anti tumor anti viral activity by disrupting the intercellular transport of viruses such as Sars co. The two along the microtubules microtubule trafficking is critical for viruses to cause infection.

Furthermore, microtubule deep preliminary station agents that target Alpha and beta Tubulin sub units of microtubules like a drug called Coproducing 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 saw.

Ours koby to viral infection that seems to be associated with the high co bid 19 mortality rates very well 11 is an oral first in class microtubule deeply memorization agent that targets the culture seeing binding site of alpha and beta tubular sub units to inhibit microtubules.

Mitchell S. Steiner: 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 anzalutamide but prior to IV chemotherapy. An advantage of Veru 111 is that it could potentially be prescribed by not only the medical oncologist but also the urologist, who is the usual physician managing these types of patients.

The company met with the FDA and has received agreement on the clinical development Revera 111, as a potential dual anti viral and anti inflammatory agent to combat Cobot 19 under the new Ft a program.

Around a virus treatment acceleration acceleration program see tab as reported yesterday ft granted Bureau permission to proceed with a phase two double blind randomized one to one placebo controlled clinical trial evaluating daily doses of beer 111 versus placebo. The 21 days in 40.

Hospitalized patients will be 20 in the virulent 11, and 20 in a placebo subjects and these are subjects. It tested positive for Sars koby to virus.

And are deemed to be at high risk for acute respiratory distress syndrome.

The primary efficacy endpoint will be the proportion of patients that are alive and without respiratory failure. At date 29 secondary endpoints will include measured improvements on DW HL disease severity scale.

It's an eight point or no scale, which can which captures the co bid 19 disease symptoms and signs, including hospitalization to progression of pulmonary symptoms to mechanical ventilation as well as Deb.

The study is expected to commence in two weeks, we're excited about the potential severe 111, the tree both the viral infection and potential for the treat both the viral infection any inflammatory response caused by the virus.

Mitchell S. Steiner: We plan to present the full clinical data set at 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 in the established multi-billion dollar global market. The target product profile for Veru 100 is commercially and scientifically compelling as having a number of anticipated advantages over currently available androgen deprivation therapy. Veru 100 is a long-acting gonadotropin-releasing hormone called a GnRH antagonist designed to be administered as a small-volume subcutaneous three-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 antagonist drugs like Lupron, Solidex, and Eligard.

The phase two primary endpoint is critical to phase two primary endpoint is being alive without respiratory distress is a clinically meaningful one.

Because of the urgent need for effective and timely therapeutics to combat Cobot 19. The company has applied for significant grant funding to both the biomedical advanced research and development authority of the US Department of health and human services called BARDA and the defense Advanced research projects agency of the.

US Department of defense called DARPA to expedite the clinical development Aviragen 11 to cope with 19, the Corona virus pandemic continues to paralyze the economy and threatened lives across the world in effective drug to treat cobot 19 is still desperately needed and this phase two study will X.

Additionally, determine whether virulent 11 has efficacy and safety against Cobot 19.

There's really no downside to conducting this small study, especially if we get the non dilutive funding and Aviragen 11 has efficacy upside is substantial per patient.

Veers ability to advance of clinical development of our proprietary prostate cancer drugs that address unmet medical needs and large markets is being substantially supported by investment is going to commercial sources revenue the FC to internal condom as well as the pre boost weldment swipes, which is at 4% bends again wise between mature Jack elation.

The company also expects revenue some tests in 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.

I will Miss Greco will cover the detailed financial result highlights in a few moments I would like to make a few comments.

We again had the pleasure.

Reporting robust growth in fiscal year, 2020, and expect further increases of FCC FC to sales in both in public sector and prescription sales in the us for the rest of the year.

We have 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 all of fiscal year 2019, we sold 159000 FC to prescribed units and for just the first quarter first two quarters of fiscal year 2020, we sold 171891 FC to prescribed unit.

Focusing on the Deroos commercial segment, which is made up of FC to pre boost wellman swipes into our commercialization costs. We have net revenues increase in Q2 fiscal year 2000, $29.9 million compared to $70 million in Q2 fiscal year 2019, which is up four.

83%.

Gross profits for Q2 fiscal year 2020 were 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 can this sector.

Mitchell S. Steiner: Currently, there are no GnRH antagonists commercially approved for treatment beyond one month, making Veru 100, if approved, the only commercially available GnRH antagonist three-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 VERA-100 may follow an expedited pathway. Based on this FDA input, the company plans to commence a single open-label, multi-center, dose-finding Phase 2 clinical trial in approximately 35 men, followed by a single open-label, multi-center, Phase 3 clinical trial in only approximately 100 men. Veru is in the process of scaling up GMP manufacturing of its drug product to prepare for the clinical trial to Veru 100. Given the effects of COVID-19, there will be at least a quarter delay in this program, but otherwise, we expect the company's development program to resume as workers return to the GMP facilities.

Mitchell S. Steiner: The company intends to submit an investigational new drug application in the second half of 2020 so we can commence the open-label phase 2 study by Q4 calendar year 2020. As it is an open-label phase 2 study, we will be able to update you periodically on our progress towards reaching the primary endpoint of reduction of testosterone in castrate levels in real time during late 2020 and early 2021. The planned development pathway for VIR100 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 the clinical trial is Zuclomafine, a novel proprietary oral non-steroidal estrogen receptor agonist being evaluated to treat hot flashes, the most common side effect in men on androgen deprivation therapy for advanced prostate cancer We enrolled 93 men in a multi-sensor, double-blind, placebo-controlled dose-finding study, phase 2 study.

But significantly increased to $6.2 million than $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 an increase of 54%.

Our income from operations for this segment of the business was $12 million with fiscal year to date, Twentytwenty Optum $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 income from operations. This continued revenue growth and profit and positive cash flow from this based commercial business has allowed us to substantially invest.

In the development of our prostate cancer clinical programs, which enhances the entire value very true for our shareholders.

We intend to continue this revenue growth trajectory with not only the current growth of revenues MFC two in pre boost but also from the revenues that we expect to jet generate from the commercialization of the company's proprietary to Dalafield finasteride combination capsule for the treatment of BPH called Tad fan.

We're collecting 12 months stability data ONTAP fan manufacturing batches and expect to submit the NDA by the end of 2022 to just beginning of 2021 in the United States, we're exploring commercially launching tad fan to telemedicine channels as you have seen we've had great success.

With our other products using this sales channel, we expect to revenues and tap into at substantially to near term revenues with high gross margins to existing and growing revenues from FC too and the pre boost limits white business.

Ill now turn the call over to Michele Greco CFO and COO to discuss the financial highlights Michelle.

Thank you Dr. Steiner is Dr. Steiner indicated we started off the year with two great quarters, let's start our highlights of the second quarter results for the three months ended March 31st 2020.

I think you 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.

Mitchell S. Steiner: And we were evaluating two doses, 10 milligram and 50 milligram of zuclomavine 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 zuclomavine demonstrated estrogenic activity and a reduction in frequency of hot flashes from baseline to day 42.

$7 million in the prior year second quarter.

The company reported quarterly sales growth in its us prescription business.

And in previous.

Net revenues from the U.S. prescription business was up 168%.

$7 million from $2.6 million in the prior year second quarter.

Gross profit was up 61% to $7.4 million, so $4.6 million in the prior year second quarter.

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

Gross margin increased to 75% some 66% in the prior year second quarter.

Increasing 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 three 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 three years we.

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.

Mitchell S. Steiner: 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 and a phase-two meeting with FDA for the Zuclomavine program in order to obtain agreement on the phase three 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 zirconia quincitrate will be between $580 to $639 million. Currently, there are no FDA-approved drugs for this indication.

Non operating expenses were $644000 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 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 $133000 compared to a tax expense of $25000 in the prior year second quarter.

Mitchell S. Steiner: Now, although Veru is focused in prostate cancer and oncology.., due to the urgency of the current global pandemic, and the fact that Veru111 has the potential to treat both SARS-CoV-2 infection and the associated reactive severe lung inflammation in COVID-9 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 antiviral activity by disrupting the intracellular transport of viruses such as SARS-CoV-2 along the microtubules. Microtubule trafficking is critical for viruses to cause infection. Furthermore, microtubule depolymerization agents that target alpha- and beta-tubulin subunits of microtubules, like a drug called Coltucetamide, 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 a high COVID-19 mortality rate.

The effective tax rate for this quarter of 14% is due to recording evaluation allowance against the net operating loss generated for the quarter in the U.S.

Bottom line results for the second quarter fiscal 2020 was a net loss of $811000 a one cents per diluted common share.

Fair to a net loss of $4 million or six cents per diluted common share in the prior year second quarter.

Now turning to highlight that the results for the six month ended March 31st 2020.

First six months of fiscal 2000, 20-F C. Two 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 FC to sales in the U.S. prescription business in in Prepas.

Net revenue from the U.S. prescription business was up 158% to $13 million from $5 million in the prior year period.

Mitchell S. Steiner: 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 1.11 as a potential dual antiviral and anti-inflammatory agent to combat COVID-19 under the new FDA program, the Coronavirus Treatment Acceler As reported yesterday, FDA granted Veru permission to proceed with a Phase II double-blind randomized one-to-one placebo-controlled clinical trial, evaluating daily doses of Veru 1.11 versus placebo for 21 days in 40 hospitalized patients. There will be 20 in the Veru 1.11 group and 20 in the placebo group, and these are subjects that tested positive for the SARS-CoV-2 virus and are deemed to be at high risk for acute The primary efficacy endpoint will be the proportion of patients that are alive and without respiratory failure at date 29. Secondary endpoints will include measured improvements on the WHO disease severity scale. It's an eight-point ordinal scale that captures the COVID-19 disease symptoms and signs, including hospitalization, progression of pulmonary symptoms to mechanical ventilation, as well as death.

Just to note for all of fiscal year 2019, the U.S. prescription revenue was $14.1 million.

Net revenue for previous Roman swipes with $574000 compared to $180000 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 million 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.

Non operating 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 six month period, we recorded a tax benefit of $210000 compared to tax expense of $118000 in the prior year period.

Second tax rate for the six month of 4.9% is due to recording evaluation allowance against the net operating loss generated for the six month in the U.S.

The company has net operating loss carry forwards for us federal tax purposes.

$42.7 million.

With $14.4 million expiring in years through 2038, and $28.3 million, which can be carries forward indefinitely.

Mitchell S. Steiner: Studies are expected to commence in two weeks. We're excited about the potential for Veru111 to treat both the viral infection and the inflammatory response caused by the virus. The primary endpoint of the Phase II trial, this is critical; the primary endpoint of the Phase II trial 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 to 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 The coronavirus pandemic continues to paralyze the economy and threaten lives across the world.

And our UK subsidiary has net operating loss carry forwards of $61.7 million, which do not expire.

The bottom line result for the first six months of fiscal 2020 was a net loss of $4.1 million or six cents per diluted common share compared to a net loss of $6.2 million or 10 cents per diluted common share in the prior period. The reduction in 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 31st 2020, our cash balance was $2.6 million in our accounts receivable were $5.8 million compared to cash balance of $6.3 million in accounts receivable of $5 million at September Thirtyth 2019.

Mitchell S. Steiner: An effective drug to treat COVID-19 is still desperately needed, and this Phase 2 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 if we get the non-diluted 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 two commercial sources of revenue, the FC2 internal condom, as well as the pre-booze Roman Swipes, which is a 4% benzocaine-wise solution for premature ejaculation. The company also expects revenues from Tadfin, for which the NDA is expected to be submitted in late 2020 or 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 profits 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.

During the six months ended March 31st 2020, we used cash of $4.9 million for operating activities compared with using cash a $4 million in the prior period.

Overall, we're delighted to see the continued increases in sales in the U.S. FC to prescription business and the increasing sales people is Raman 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 used to invest.

In our promising pharmaceutical clinical programs as we continue to transform our company into an oncology in 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. Stein.

Thank you Michelle.

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 FC to us prescription business.

Looking forward to the rest of fiscal year 2020 in early fiscal year 2021, we expect our revenues to continue to be strong and growing towards a record year.

Mitchell S. Steiner: We again have the pleasure of reporting robust growth in Fiscal Year 2020 and expect further increases in FC2 sales in both the public sector and prescription sales in the U.S. for the rest of the year. In fact, to give you a sense of the growth trajectory, we had $7 million in revenue from the prescription business for Q2 FY 2020 compared to $2.6 million for Q2 FY 2019, an increase of 168%.

With the improving performance of of the commercial business. We believe that we'll be able to substantially invest into continued clinical development of our prostate cancer and other cancer drug product candidates as well submit the NDA and if approved commercially launched had been too.

Through Internet sales, which would provide even more revenue, adding to the already growing revenue from FC to and from pre boost Roman swipes, we're creating a very valuable commercial business, which includes both the urology specialty pharmaceuticals, and the female health company divisions.

Mitchell S. Steiner: All of fiscal year 2019, we sold 159,000 FC2 prescribed units, and for just the first quarter, first two 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, pre-booze, Roman swipes, and drug commercialization costs, we had net revenues increase in Q2 fiscal year 2020 to $9.9 million compared to $7 million in Q2 fiscal year Gross profits for Q2 fiscal year 2020 were $7.4 million compared to $4.6 million in Q2 of 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.

With the new clinical data from the very 111 prostate cancer program, we must prioritize and focus our efforts towards the execution of the phase three registration program for this unmet need and prostate cancer. This begins by obtaining regulatory clarity from both FDA and M&A.

On the clinical trial design, we have reached an important company clinical milestones.

That well positions view as an oncology biopharmaceutical company.

We anticipate a steady flow of important positive news, we view over the next few months two year, one severe 111 oral selective anti Tubulin. We will report an open label efficacy and safety clinical results from the phase two clinical trials Revera 111.

And we'll meet with the FDA and report on the Phase three clinical trial program.

Severe 100, our novel peptide Gn, our age antagonist three month depot formulation, we will complete GMP manufacturing of clinical supply submit the eye and D. and we will initiate the phase two clinical trial.

Mitchell S. Steiner: 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, it would be quite valuable, experiencing significant growing revenue and income 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.

To close within our oral estrogen receptor agonist, we will have a face to face meeting with the FDA, we face to face and the phase two meeting with FDA.

We plan to initiate and complete the phase two clinical program to covert 19 in subjects at high risk to acute respiratory distress syndrome.

We'll submit the NDA for Tad fan.

Would have secured partnerships with some of our drug products and we plan to continue to demonstrate.

Robust growing revenues for our commercial products FC two and pre boost Wellman swipes.

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

Mitchell S. Steiner: 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 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 or just the beginning of 20 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 revenues from Tadfin to add substantially to near-term revenues with high gross margins to existing and growing revenues from FC2 and the Preboost moments-wide business. I will now turn the call over to Michele Greco, CFO and CAO, to discuss the financial highlights. Michele?

With that I'll now open the call the questions operator.

Ladies and gentlemen at this time, we will begin the question and answer session to ask your question in a press Star then one under telephone keypad. If you are using a speaker phone. We ask that you. Please pick up your handset before pressing the keys to ensure the best sound quality.

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Please limit yourself to one question and one follow up.

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Once again it is star then one to rejoin the question Q.

First question comes from Brandon Folkes of Cantor Fitzgerald. Please go ahead.

Hi, Thanks for taking my question. Thanks, Congratulations on all the probably grip on Baru walking granted you havent met with regulatory agencies.

Could you, perhaps just just elaborate about how you're thinking about the phase three design anything you can say maybe around the size the number of patients and then.

Michele Greco: Thank you, Dr. Steiner. As Dr. Steiner indicated, we started off the year with two great quarters. Let's start our highlights with the second quarter results for the three months ended March 31st, 2020. FC2 unit sales totaled $6.9 million compared to $9.8 million in the prior year's second quarter. Total net revenues were up 43% to $9.9 million from $7 million in the prior year's second quarter. The company reported quarterly sales growth in its U.S. prescription business and in pre-boost. 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. Growth margin increased to 75% from 66% in the prior year's second quarter.

How are you thinking about what is the hurdle you think physicians in practice will want to see you next phase three.

Through 111 in practice.

And then lastly, add maybe just quite a bit 19 should we think of this as a potential revenue generating opportunity for the company or is it going to be similar to what we've seen from other companies, where it's Randy just a public GT types and thank you.

Thank you all excellent question, so let's talk about the phase three design for the for Vierra 111, So what I can do is I can refer you to the elaborate there, but that's a L.A.P.

Our IB so a P.A.R. IB 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 we'll get approved this is it patient population. It's similar to our patient population. These are patients with metastatic castration.

Michele Greco: The increase in gross margin is driven primarily by an increase in the U.S. prescription business. However, 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 three 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 three years. We expect these new orders from South Africa to ship in greater volumes during the third quarter of this fiscal year.

Just in prostate cancer.

Failed and Andrew block engage in some of them have chemo logistic.

It's 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 at a place on an alternative androgen blocking agent. So that means if you think of our patient population as they fail.

Castration to the castration resistant that put on an Andrew blocking agent either enzalutamide have read around and then they get randomize to alternative Andrew blocking each to me that they start out with the apparatus around they get put on Enzalutamide start with Enzalutamide. They get put on apparatus and Thats why I mean by alternative androgen blocking agent okay.

Michele Greco: Operating expenses for the quarter increased by $1 million to $7.7 million compared to the prior year's second quarter of $6.7 million due to an increase in research and development costs of $1 million. Non-operating expenses were $644,000 compared to $1.9 million in the prior year's second quarter and primarily consisted of interest expense and the 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.

And that's your comparator arm. The FDA has allowed that in three of the non metastatic studies that have been approved and it's being allowed in this study. So thats why we feel pretty good the endpoint of that study just like those other three clinical studies with non metastatic is progression free survival radiographic progression free survival imaging based progression free survival another.

Michele Greco: 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 an evaluation allowance against the net operating loss generated for the quarter in the U.S. The bottom line result for the second quarter of fiscal 2020 was a net loss of $811,000, or 1 cent per diluted common share, compared to a net loss of $4 million, or 6 cents per diluted common share, in the prior year's second quarter. Now, turning to highlights of the results for the six months ended March 31st, 2020.

Way of saying that is when cancer progressive.

And you can see it on either bone scan RCT scan that steam to failure, okay. They have accepted that okay.

The active comparator in this case, an oral agent thats going after patients that lapper. It is it going after patients have a genetic mutation, which is really a small segueing into the population thats why we want to be to go to drought, we want to be the drug that will treat anybody not anybody that has a genetic mutation. So that's a much bigger market.

Andy.

And in that study interestingly.

They hit the hurdle they have to hit is in the treatment and then back out in terms of the trial size because you can do progression free survival imaging based progression free survival. Instead of 800 patients with 1000 patients in the study that study I think is about 250 patients. So the ranges can be around the 250 to 300 markets a much smaller.

Michele Greco: For the first six months of fiscal 2020, 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 pre-boost. 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, U.S. prescription revenue was $14.1 million, and net revenue for pre-boost Romans White 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

This study and quite frankly is a shorter study and the reasons. The shortest study is because the.

Compared to RMB active control.

Fails and about 3.43 0.6 months. So if you go for a year you've gone three of those cycles and and so so follow up is not very long. Unfortunately for the patient, but you're benchmark that you're going up against is about 3.43 0.6 months median progression free survival.

As a radiographic progression free survival and.

Our lack rib they showed a 7.4 month advantage and everybody believes are going to get approved okay.

So I say I share that with you because I think we'd be very similar that I think our trial design will trial size will be between 215 300 I think.

Going to we're going to have an endpoint of imaging based progression free survival I think we'll be able to compare our agents grew 111 against an a. alternative blocking.

Michele Greco: Operating expenses increased by $4.4 million to $16.8 million compared to the prior year period of $12.4 million, driven primarily by an increase in research and development costs of $4 million. Non-operating 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 finance. For the six-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 six months of 4.9% is due to recording a valuation allowance against the net operating loss generated for the six months in the U.S.

Alternative and embarking agent I think the hurdle that we need to his thinking about 3.4 to 3.6 months I have comfort to know that in the phase one be the median duration of response is 10 months with a range between fixed and 14 months. It feels good but of course you have to be careful is a phase one be but but.

You know that gives you that gives you comfort that we should we should be in good shape from the standpoint of being able to beat that and.

And and and that's the kind of design. So it's I feel 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 three registration program. Because these patients are around so recruitment should be pretty straightforward and is completely an unmet medical.

Michele Greco: The company has net operating loss carried forward 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 UK subsidiary has net operating loss carry forwards of $61.7 million which do not expire. The bottom line result for the first six 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.

Lead 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 Koeppen 19, Thats Nice you doing it and youre going to do like Gilly AD and and just kind of give it away and give all the doses to the government and.

Joe three or four days of hospital benefit and you know and and move on no aware were small company. We think we have an innovative compound veer away 11, Veer 111 has the potential for dual activity.

As we know the microtubules or that basically the transport system of which viruses make the way and hijacked the Sal and get replicated in come out of the sell to infect others sales.

If you disrupt the railroad tracks just like we do in cancer, even disrupt railroad tracks just in a viral infection.

Fact that this class a compound has been used to gout and been used in familiar Mediterranean fever, and be chaise disease, all which are very.

Artery inflammation long inflammation, and hard inflammation, and total inflammation and even the opiates and nonsteroidal anti Inflammatories can't touch it and colchicine does so its if we bind to the cope seem gardening side, what makes us dividend colchicine is a culture scene has a very narrow therapeutic index.

Michele Greco: During the six 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.

And even in the recommended therapeutic dose you can get into toxicity, we're not a substrate for people like a protein we don't have those drug drug interactions. It is.

You can tell from 39 patients we have a wide safety margin. So I think we have a very unique opportunity. This step in and have a dual function.

We do not we do think also that the endpoint that we're going after is a clinically meaningful one.

I think people as scratch their heads of why some of these companies have gotten and again out of his point ideally add wife gotten so much press over three or four days, leaving the hospital and I would argue that in that in that crazy period of time people will leaving the hospital because beds would need for sicker patients and is that endpoint really a red.

Mitchell S. Steiner: 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 US prescription business. Looking forward to the rest of fiscal year 2020 and early fiscal year 2021.

With an endpoint because people can leave the hospital for reasons independent of the disease.

But you can't fake a death and you can fake being on a respirator and so we have an endpoint of being alive and not in respiratory distress, that's a pretty clinically meaningful endpoint.

Mitchell S. Steiner: 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 continuous clinical development of our prostate cancer and other cancer drug product candidates, as well as submit the NDA and, if approved, commercially launch Tadfin through internet sales, which would provide even more revenue, adding to the already growing revenue from FC2 and from pre-boost Roman swipes. We are creating a very valuable commercial business, which includes both the urology specialty pharmaceuticals division and the female health company division. 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 with 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 is Veru-111, our oral selective antitubulin.

Thinking is to get non dilutive funding front of funding to help US do two things one is to continue to do development. The clinical trial development and second is to to be able to manufacture the doses that are going to be required they're asking the 20 million doses and so to get to that number of course, we don't have the money for that so thats only going to.

Happen, if we get non dilutive resources from government agencies that are focused on this no I see this is.

This is going to be a this is not this is not charity guys. This is not called the duty for charity were small company that can use these resources to help move our other programs along and did well capitalize our company. So we can become a major force in oncology and Thats going to and so this product turns out to have activity, which will.

We'll find out here by summer then we're not we're going to be in a different place. This is going to be substantial upside yes for the patients but also for the company. So this is not.

It's a call the duty and were compelled to do because we understand the mechanism of our drug and similar compounds.

In the World and we feel that we will we feel is a very good chances of fascinating hypothesis and and is enough.

Mitchell S. Steiner: We will report 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. 100, our novel peptide GnRH antagonist three-month depot formulation. We will complete GMP manufacturing of the clinical supply, submit the IND, and initiate the phase two clinical trial. For azucromafine, our oral estrogen receptor agonist, we will have a face-to-face meeting with the FDA, a face-to-face meeting with the FDA, and a phase two meeting with the FDA. We plan to initiate and complete the phase two clinical program for COVID-19 in subjects at high risk for acute respiratory distress syndrome.

Pharmacologic rationale and evidence that we should be doing this but I would also say that we will be looking for this to be a drug that we would sell not only for cobot 19 before any other covert twentyk over 21, covert 20 or whatever because whatever the mechanism is being done a very common vice.

Yes by Corona virus, it can be used across others. So we may end up having an antiviral section of our oncology company, but that's okay.

Great. Thank you very much and congratulations again on every or the progress.

Thank you.

Next question comes from Leland Gershell of Oppenheimer. Please go.

Hi, Good morning, Mitch Thanks for taking my questions and.

Operator: We will 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 commercial products FC2 and pre-boost moment swipes. We're committed to driving shareholder value by transforming Veru into an oncology company. We will initially focus our efforts on 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 the disease. With that, I now open the call to questions, Operator.

Regulations, what's really great to hear of all the terrific progress that you're making particularly with 111 and want to ask about as you think about that overall development program.

In addition to going into those who or refractory to the most novel antigen blockers.

Wanted to ask about your thoughts in terms of moving that earlier in the paradigm.

Before you're trying to squeeze the less bid and sort of engine blocking ability out with those agents.

It's harder and harder to get to benefit as you get further down the kind of energen axis.

With with compounds wanted to ask about how you might 111 to be earlier in the treatment paradigm for advanced prostate cancer also want to ask in terms of the James you are going to be using in the opened 19 program would that be that same 63 milligram that you have for oncology. Thanks.

Operator: Ladies and gentlemen, at this time we will begin the question and answer session. To ask a question, you may press star and then one on your telephone keypad. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys to ensure the best sound quality.

Brandon Richard Folkes: To withdraw your question, please press star then two. Please limit yourself to one question and one follow-up. If you have further questions, you may re-enter the question queue. Once again, it is better than one to rejoin the question. The first question comes from Brandon Folkes of Cancer Fitzgerald. Please go ahead. Hi, thanks for taking my questions and congratulations on all the progress and on Veru 1.11. Granted, you haven't met with the regulatory agencies. Could you perhaps just elaborate about the phase three design, anything you can say maybe around the size, the number of patients, and then, what are you thinking about what is the hurdle you think physicians in practice will want to see in that phase three 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 it going to be similar to what we've seen from other companies where it's really just a public duty type thing? Thank you.

Mitchell S. Steiner: Thank you. All excellent questions.

Great two good questions I'll I'll answer the second the second question first the dose that we're using in the Cobot 19 is 80 milligrams. So it's really much lower than the 63 milligrams, we know we get.

Good drug levels with that but there's a big difference.

Trying to be an antiviral versus being anticancer drug so for anticancer drug we tend to get as close as you can to the maximally tolerated dose and with an antiviral we've got plenty drug around 80 milligrams and so it will differentiate those two doses.

As it relates to your question related to can you go earlier.

In the in the treatment paradigm for prostate cancer and answer is definitely yes, and but let me let me. Let me tell you why this is what we've learned in the phase one be that is critical critical as you think about going earlier.

If we were a an oral.

Cytotoxic drug that had a side effect profile similar to other ones like platinum based and.

Taxane based and.

You know just think just think of all those Ivy.

Outside of toxic agent.

Those drugs that given by medical oncologists for a reason.

Given to the medical oncologists, because the patients have to be pre medicated with antihistamines and predator zone because of the hypersensitivity reactions that could they can threaten their life.

Mitchell S. Steiner: So let's talk about the Phase III design for VIRU-111. So what I can do is I can refer you to the ELAPRIB, that's A-L-A-P-R-I-B, that's an 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.

The dose limiting toxicities for those kinds of drugs, and neutropenia, which which means if you had neutropenia you have sepsis and I see you visits and on 14 patients can pass away from the from the sepsis.

Have neurotoxicity have basically aside of adverse event as side effects and a and a in a series of side effects that really need to be managed by the medical oncologists Jay So in that setting even if you want to go earlier, you may not be able to in prostate cancer, because and I'll tell you why brought that up in it.

Mitchell S. Steiner: 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 have chemo with just some, but it's 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 are placed on an alternative androgen blocking agent. So that means if you think of our patient populations, they fail castration to the castration-resistant, they're put on an androgen blocking agent, either enzalutamide or abiraterone, and then they get randomized to an 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 agents.

Moment in prostate cancer is a very unique circumstance because the urologist, we'll manage the prostate cancer patient from that from the time, there diagnose to the time they develop hormone sensitive.

Prostate cancer.

Static hormone sensitive prostate cancer, all way to now because of the oral agents enzalutamide that Brad one which can be given with reasonable side effects. They have created.

These centers to manage prostate cancer in acute disease to a chronic disease and so they are using all of these oral agents, maybe they have a busy practice and so they can be sitting in the in the in the hospital managing sepsis and all this other stuff and so they really need to have an agent that has fewer side effects that could be given by urologist versus having.

Mitchell S. Steiner: And that's your comparator arm, just like those other three clinical studies for non-metastatic 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 a bone scan or a CT scan, that's deemed a failure, okay? They've accepted that, okay?

Trudges, so that's a key test once a patient.

Needs Ivy chemotherapy or that's the option. They choose then they going into a center that has chemotherapy chairs and and has the all the wherewithal to handle the side effects. So vierra 111 has demonstrated in the phase when B study that the side effect profile is consistent.

With a drug at urologist can give in their practice.

Mitchell S. Steiner: The active comparator, in this case, is an oral agent that's going after patients, that Elaporib 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 treats anybody, not just anybody that has a genetic mutation. So that's a much bigger market. And in that study, interestingly, the hurdle they have to hit is in the treatment of, and let me back up, in terms of the trial size, because you can do progression-free survival, imaging-based progression-free survival, instead 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.

So we could potentially think about going earlier.

Not because we want to go earlier, but because of drug drug has a side effect profile that potentially will allow us to go earlier.

And so we're driving by that so going earlier would mean.

Going after patients that that Threed three drugs have recently been approved for.

And again these are androgen blocking agents in the one is enzalutamide side.

Apalutamide side and dearly to my these are all antigen blocking agents that have been moved in the non metastatic castrate resistant space. So these are patients who.

Mitchell S. Steiner: 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 gone through three 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 to 3.6 months median progression-free survival, and for allopurib, they showed a 7.4-month advantage. And everybody believes they're going to get approved.

Do not habitat metastatic disease, they will put an androgen deprivation therapy to treat the PSC. Unfortunately, and now they're psh going back up they still don't have any meds and their freaked out because they worry that they're going to get a bone met and so they put them on one of those three agents and they will delay time to that bone met for about two years very.

Effective however, there are about third of those patients it doesn't help and so we can do those third to pay they can't you've exhausted. The Andrew receptor is a target and so at that point they need a new medicine with a new mechanism of action and these patients being treated by urologists and severe 111 could potentially be positioned as.

A therapy almost like we did so its castration in this case non metastatic castrate resistant.

Mitchell S. Steiner: So I share that with you because I think we're going to be very similar to that. I think our trial design, and our trial size will be between 250 and 300. I think we're going to have an endpoint of imaging-based progression-free survival. Then, I think we'll be able to compare our agent, Veru111, against an alternative 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 Phase 1B, the median duration of response is ten months with a range between six and fourteen months. It feels good, but of course, you have to be careful in Phase 1B, but that gives you comfort that we should be in good shape from a standpoint of being able to beat that. And that's the kind of design.

And.

And the engine blocking resistant, but still have you havent, you're trying to stop them from developing the first met so that would be a great spot to go.

Interestingly based on the Stampede and the charted data one of the things that we've learned is that if patients come in with bulky hormone sensitive disease, meaning that.

They haven't been castrated, yet that the standard of care is now emerging that you combine it with either an andrey blocking agent or we don't see taxes. So that means a patient will come in with hormone sensitivities, which about early as you can be and then they get Ivy doshi taxable plus androgen deprivation therapy and that has shown a benefit so I could see.

A situation where as an oral at the Tubulin, we could be in that space as well. So the beauty of the side effect profile and the beauty of the understanding extremely well be the in the entire spectrum of where we could be in prostate cancer. The two mechanisms that have continued to show promise has been androgen receptor targeted agents.

Mitchell S. Steiner: It feels safe because we're not asking the agency to do anything new, but it also gives you a sense of why we're excited about going into a Phase 3 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, you know, 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, you know, show three or four days of hospital benefit and, you know, and move on. No, we're, you know, we're a small company, and we think we have an innovative compound, Vero111. Vero111 has the potential for dual activity. As we know, microtubules are basically the transport system in which viruses make their way into the cell and get replicated, and then come out of the cell to infect other cells.

And anti tubular goods and so yes. So I think I think I think we're well positioned to take advantage of other indications with that all set we have to focus focus focus on metastatic prostate cancer metastatic castration resistant prostate cancer has failed an androgen blocking agent and if we can win with that.

While it a single trial and do it correctly going beyond the market have significant revenue and we can use those resources to to continue to expand the indications.

Thank you.

Thank you.

The next question comes from each one of H.C. Wainwright. Please go ahead.

Mitchell S. Steiner: If you disrupt the railroad tracks, just like we do in cancer, you can disrupt the railroad tracks in a viral infection. The fact that this classic compound has been used in gout and has been used in familial Mediterranean fever and Bechet's disease, all of which are very, you know, artery inflammation and lung inflammation and heart inflammation and toe inflammation and even opiates and nonsteroidal anti-inflammatory drugs can't touch it, and colchi So, you know, we bind to the colchicine binding site. What makes us different than colchicine is that colchicine has a very narrow therapeutic index, and even at the recommended therapeutic dose, you can get into toxicity. We're not a substrate for peak lycoprotein.

Okay. Thank you for taking my hi.

Thank you for taking my questions. So my first question is for the trial for for the.

Well the trial involving a team to you.

Do you plan to enroll patients who received run disappear or any other drugs, who are currently being evaluating a clinical trial, but did not respond.

Yes at this point no because it because.

That that would.

First of all of a couple of reasons first of all that there's tons of patients out there. Unfortunately, even though new York has shown a flattening I'd say reduction, but a flattening of the curve, where we're seeing in the rest of the country between.

Mitchell S. Steiner: We don't have those drug-drug interactions. It is, as we already can tell from the 39 patients, we have a wide safety margin. So I think we have a very unique opportunity to step in and have a dual function. We do not, but we do think also that the end point that we're going after is a clinically meaningful one. I think people have scratched their heads about why, you know, some of these companies have gotten, and again, I'll point out Gilead, why it's gotten so much press over three or four days of leaving the hospital. And I would argue that, in that crazy period of time, people were leaving the hospital because beds were needed for sicker patients. And is that end point really a relevant end point because people can leave the hospital for reasons independent of the disease? But you can't fake a death, and you can't fake being on a respirator.

Those those those areas because that's where we're running the clinical trials or have a CRL in place we've already done the feasibility. So we have a real keen sense of what's really happening in the country and this has not gone away I don't care, where Trump is saying about let's reopened the schools and all that stuff im not trying to be political here I'm just trying to be realistic here.

Go look at the newspapers those numbers are still pretty damn scary. So they will not be a shortage of patients and so if you want you a study to be informative it's best to do it in patients that will give you the information.

And so the idea would be that would take patients.

That have.

Had been deemed by the critical care specialists to be at high risk for for acute respiratory distress syndrome, and we know those patients are it's based on age is based on co morbidities they've already started to show the moving down the path of travel and their hospitalized and so that's going to either.

Mitchell S. Steiner: And so if you have an endpoint of being alive and not in respiratory distress, that's a pretty clinically meaningful endpoint. Our thinking is to get non-dilutive funding to help us do two things. One is to continue to develop the clinical trial development, and second is to be able to manufacture the doses that are going to be required. They're asking for 20 million doses. And so to get to that number, of course, we don't have the money for that.

Patient population that quite frankly, if that patient population has addressed and we're going to feel much more comfortable reopening schools and reopening businesses and that kind of stuff and so that's the ones with folks have EMD as of year.

And quite frankly, if you take step back hydro heidrick or core Colin and as if the Miocene combination has been shown over and over and over not to work. So even though is we jump to that initially I think everybody's pretty comfortable that that really doesn't have activity.

Mitchell S. Steiner: So that's only going to happen if we get non-dilutive resources from government agencies that are focused on this. No, I don't see this as charity, guys. This is not called a duty for charity.

And now we've ramped as of year people to scratching their head because they had three trials that questionable and they had this trial that was successful and they get untapped not taking anything away from them.

Mitchell S. Steiner: We're a small company that can use these resources to help move our other programs along and to well-capitalize our company so we can become a major force in our college. And so if this product turns out to have activity, which we'll find out here, you know, by summer, then we're going to be in a different place. This is going to be substantial upside, yes, for the patient, but also for the company. So, no, this is not, you know, it's a call to duty, and we're compelled to do it because we understand the mechanism of our drug and similar compounds in the world. And we feel that we will. You know, we feel there's a very good chance. It's a fascinating hypothesis, and there's enough pharmacologic rationale and evidence that we should be doing this.

I'm going to use with Fasi said, he said basically it's a good start and we have to build upon it and to me build upon that means you need drugs with multiple mechanisms of action and we have a completely different mechanism of action that we now and look at the virus with more importantly, these sequentially the virus in today. The common cold is not managed by treating the underlying virus.

It's managed by treating the symptoms I mean, it ever runny nose, again, and histamine give a fee we get an anti part radek and you disciplined to cores in this situation too. It's the cytokine storm. It's the cytokine release syndrome is a very very characteristic of this disease interestingly other key.

Mitchell S. Steiner: But I would also say that, you know, we would be looking for this to be a drug that we would sell, not only for COVID-19 but for any other COVID-20, COVID-21, COVID-20, whatever, because whatever the mechanism is being done for a very common virus like coronavirus, it can be used across others. We'll end up having an antiviral section in our oncology company, but, you know, that's okay.

Arcturus to could this disease. It makes it different is the is the total body inflammation. So we focus on the lungs, but.

We're seeing now that need exceeding the pericarditis and there it's really a strange Perry card eyes and by the way. If you look at coal to see has kind of used with Barrick highlighted car that is the other thing is these kids are starting to show up with whats called camera Soc is disease, which is a very similar to.

Basically a total body.

Brandon Richard Folkes: Great, thank you very much, and congratulations again on all the progress. Thank you.

Inflammation of the blood vessels, and and familial Mediterranean fever, and chaise disease Vishays disease is basically in our total body vessel inflammation and they use colchicine the treat those patients. So we were thinking we have a really good mechanism of action.

Operator: and Yuchen Ding.

Operator: The next question comes from Leland Gershell of Oppenheimer. Hey, good morning, Mitch. Thanks for taking my questions. And congratulations.

Leland James Gershell: It's really great to hear of all the terrific progress that you're making, particularly with 1.11. And I'd like to ask you about, as you think about that overall development program, you know, in addition to going into those who are refractory to the most novel energy blockers. Wanted to ask about your thoughts in terms of moving that earlier in the paradigm, you know, before you're trying to squeeze that last bit of sort of antigen-blocking ability out of those agents. It's harder and harder to get to, you know, benefit as you get further down the kind of antigen axis with compounds. I wanted to ask about how you might move 1-11 to be earlier in the treatment paradigm for advanced prostate cancer. Also, wanted to ask in terms of the dose you are going to be using in the COVID-19 program, would that be the same as the 63 mg that you have for oncology? Thanks.

And that's why we want to focus focus focus on patients that can give us the most information the fewest number to patient give the most information and then decide what we want to go from there, but but starting initially.

Well, we're going to take patients that have not been on.

Any of those drugs.

Okay.

His line has disconnected I'm sorry, so no worries, we can call back stock questioner has become for comes back right to Peter Macmall and Peter Macmall and consulting. Please go ahead.

Hey, good morning mature you.

Good morning, Peter.

Two quick questions one.

I think Malaysia is on a pretty good job of.

Controlling goal that 19 can you give us a status report on the factory or your source of cash flow and is it open will openness.

Mitchell S. Steiner: Great. Two great questions. So I'll answer the second question first. The dose that we're using in COVID-19 is 18 milligrams. So it's really much lower than 63 milligrams. We know we get good drug levels with that.

Producing the female condoms.

Second question there's.

Second question just to get both.

Mitchell S. Steiner: But there's a big difference between trying to be an antiviral versus being an anti-cancer drug. So for an anti-cancer drug, you tend to get as close as you can to the maximally tolerated dose. And with an antiviral, we've got plenty of drug around 18 milligrams. And so it will differentiate those two doses. As it relates to your question related to whether you can go earlier in the treatment paradigm for prostate cancer, and the answer is definitely yes, but let me tell you why this is what we've learned in phase 1B that is critical, critical as you think about going earlier.

Oh grew on 11, so making great progress theres other people developing competing drugs out there are some of which a better balance sheets just talk about how you feel of what the competitive profile in the future.

Sure. So the first question has to do it.

How to covert 19 effect.

Affect our supply chain so to speak so when we saw because when we saw that things were starting to remember this happened rapidly.

Where all of a sudden in February February buddies sitting in the picnic and then by March of the bottom falls out of the market and where we saw was.

Mitchell S. Steiner: If we were an oral cytotoxic drug that had a side effect profile similar to other ones, like platinum-based and taxane-based, and just think of all those IV cytotoxic agents. Those drugs are given by medical oncologists for a reason, given by the medical oncologist because the patients have to be premedicated with antihistamines and prednisone because of the hypersensitivity reactions that can, you know, The dose-limiting toxicities for those kinds of drugs are neutropenia, which means that if you have neutropenia, you have sepsis and ICU visits, and unfortunately, patients can pass away from sepsis. You have neurotoxicity You basically have a side effect and a series of side effects that really need to be managed by a medical oncologist. So in that setting, even if you want to go earlier, you may not be able to.

We saw that and as you know our number one.

Area of high margin business as the us to the first thing we did as we stockpiles FC to prescriptions and 12 12.

12, count supply 12 pack supply in the us and we did so that we end up stockpile and what we thought we would need for the whole year. So we really dodged a bullet there. So there was no interruption at all in the U.S. business.

In the ex us business.

[music].

We we were able to meet the needs of most of the large governments, but some of the large government shutdown, So south Africa, and Brazil, I mean, this read the newspapers their freaked out and having some real issues. So even though we made it.

We couldn't ship it because they couldnt have didn't have the people at work to do the testing to bring to product in so you will see for Q3 RQ fiscal year Q3.

We have a slight decrease in units we had a decrease in units outside the U.S., but the units into us will allow us allowed us to make our money and so we have a good quarter and so next quarter, we going to see.

Mitchell S. Steiner: In prostate cancer, and I'll tell you why I brought that up in a moment, prostate cancer is a very unique circumstance because the urologist will manage the prostate cancer patient from the time they're diagnosed to the time they develop metastatic hormone-sensitive prostate cancer, all the way to now because of the oral agents enzalutamide and abiraterone, these centers manage prostate cancer from an acute disease to a chronic disease. And so they're using all of these oral agents. Remember, they have a busy practice, and so they can't be sitting in the hospital managing sepsis and all this other stuff. And so they really need to have an agent that has fewer side effects that could be given by a urologist versus a medical oncologist. So that's the key test.

Over abundance in overrepresentation of public sector, because because now the opening up and taking product.

As it relates to the factory.

Malaysian factory was shut down.

And and we all looked at each of the all my guys, what's going to happen there, but with that I think that happens about two or three weeks and then the government said for any essential.

Businesses, they were allowed to open up and and so so we got an exemption the team did a great job opening up.

We're not at a 100% capacity with about 50% to 60% capacity, but thats fine because of all the.

Mitchell S. Steiner: Once the patient needs IV chemotherapy, or that's the option they choose, then they're going into a center that has chemotherapy chairs and has the equipment to handle the side effects. So Veru111 has demonstrated in the Phase 1b study that the side effect profile is consistent with a drug a urologist can give in their practice. So we could potentially think about going earlier, but not because we want to go earlier, but because the drug has a side effect profile that could potentially allow us to go earlier. And so what do I mean by that?

Stockpile that we put in the us and on all the product we already have on hand, we're going to be able to meet the needs of our customers not only in Q3, but also in Q4 and and then we just have to take it after that and see what happens in Malaysia is back online.

As it relates to as it relates to your second question about the competitive landscape. So really the competitive landscape with companies a bigger balance sheets and you know I'm not worried about that because look how much progress we've been able to do.

Being smart and.

And inefficient and being able to take a a program like Bureau 111.

Mitchell S. Steiner: So going earlier would mean going after patients for whom three drugs have recently been approved. And again, these are androgen-blocking agents. And one is enzalutamide, apalutamide, and daralutamide. These are all androgen-blocking agents that have been moved into the non-metastatic castrate-resistant space. So these are patients who do not have metastatic disease. Unfortunately, they were put on androgen deprivation therapy to treat their PSA levels. And now their PSA is going back up, but they still don't have any METs.

Two registration trial in the period of two and a half years from the time, we started the the first phase one is pretty pretty impressive I congratulate my team.

Does it relate to the competitive landscape is really.

Existing drugs like.

Taxanes future Ivy and though given by medical oncologists, and we already know the side effects and and the by patients are trying to avoid that and there's nothing in this space.

If I had to pick a class a drugs that is coming in.

And again in prostate immunotherapy is just not been very effective and I'll tell you that.

Mitchell S. Steiner: And they're freaked out because they're worried that they're going to get a bone MET. And so they put them on one of those three agents, and it will delay time to that bone MET for about two years. Very effective. However, there are about a third of those patients who it doesn't help. And so what are you going to do with those third-degree patients? You've exhausted the angina receptor as a

There's another a drug.

Which is which is a radiation based or radio isotope based drug and that when tend to be for patients later in their course of disease, but in the exact space that we're in this class of compounds called PARP inhibitors, and these are indeed being backed by some of the biggest companies Astra zeneca merge.

Mitchell S. Steiner: And so at that point, they need a new medicine with a new mechanism of action. And these patients are being treated by urologists. And so VIRU-111 could potentially be positioned as a therapy, almost like we did with HIV. So it's castration. In this case, it's non-metastatic, castrate-resistant, and angina-blocking resistant, but still, you're trying to stop them from developing the first met. So that would be a great spot to go.

Work Pfizer I mean, this is sort of the Nestle thing, but these drugs are indicated for patients that have certain mutations that you can actually measure. So for example, we've heard a braca one and bracket two which are common in breast cancer prostate cancer, there in those occur and and those.

Mitchell S. Steiner: Interestingly, based on the STAMPEDE and the charted data, one of the things that we've learned is that if patients come in with bulky hormone-sensitive disease, meaning that they haven't been castrated yet, the standard of care is now emerging that you combine it with either an androgen-blocking agent or with docetaxel. So that means a patient will come in with hormone-sensitive disease, which is about as early as you can be, and then they get IV docetaxel plus androgen deprivation therapy, and that has shown a benefit. So I could see a situation where, as an oral antitubulant, we could be in that space as well. So the beauty of the side effect profile and the beauty of understanding extremely well the entire spectrum of where we could be in prostate cancer, the two mechanisms that have continued to show promise are androgen receptor-targeted agents and antitubulants.

Mutations or the mutations that they're they're driving to treat these patients. So so for example.

Operator, elaborate but which is the one in front of the FDA now I mean as I mentioned in my previous comments, the New England General Medicine article showed at 3.4 month.

Progression free survival for the control arm.

And for the treatment arm, which is going after those mutations means 7.4 months to able to double it and.

And that's the degree of benefit that we're seeing these kinds of drugs and a and if you ask.

Can we co exist the answer is absolutely yes.

It's about 5% to 15% of the patient population would have these mutations which means with the 95% to 85% of patients they need another drives with a different mechanism is another and while on the top of there's another set of drugs called androgen receptor degrading agents at these are aging.

Mitchell S. Steiner: And so I think we're well-positioned to take advantage of other indications. With that all said, we have to focus, focus, focus on metastatic prostate cancer, metastatic castration-resistant prostate cancer that's failed an androgen-blocking agent. And if we can win that trial, in a single trial, and do it correctly, we can be on the market and have significant revenue, and we can use those resources to continue to expand the indications. Thank you.

Is that.

One of the thoughts as to keep pounding on the antigen receptor and.

My personal view on that as I think we're doing a pretty good job on squeezing testosterone as low as we can and so those agents a successful I think they're just going to cannibalize the engine blocking agent.

Population and and will not add anything incrementally once you've exhausted that target. So I think we're in good shape I think times of the essence that we need to get into the registration trial as quickly as possible and and and be that go to drive.

Yi Chen: Our next question comes from Yi Chen of HC Wainwright. Please go ahead. Thank you for taking my questions. So, my first question is, for the trial, for the... For the trial in COVID-19, do you plan to enroll patients who have received Remdesivir or any other drugs who are currently being evaluated in a clinical trial but did not respond?

Thank you.

Thank you.

And we have a follow up on each one.

Right.

Go ahead Sir.

Okay. Thank you for taking my follow up question I just wonder.

Are there any animal data published on the income farewell property of available one love him and also do you think based on the mechanism of one level that can treat.

Mitchell S. Steiner: Yeah, at this point, no, because, you know, that would be, first of all, for a couple of reasons. First of all, there are tons of patients out there, unfortunately, even though New York has shown a flattening, I wouldn't say a reduction, but a flattening of the curve. What we're seeing in the rest of the country between those areas, because that's where we're running the clinical trials, we have a CRO in place, we've already done the feasibility, so we have a real keen sense of what's really happening in the country, and this has not gone away. I don't care what Trump is saying about, you know, let's reopen the schools and all that stuff.

While there were quite yield koby, my 10 patients as well.

Yes, so the for I think.

The first I think the first part of your question was whether there's any coat any any veer 111 animal data for cobot 19.

Yes. Thank you, yes. So the answer is no and we do have what we do have is not pickup in 19, specifically, but we have done and but there are data showing that colchicine has anti viral and anti inflammatory activity and there are data that show that the way culture.

Mitchell S. Steiner: I'm not trying to be political here. I'm just trying to be realistic. Just go look at the newspapers.

Seeing works is that it works by.

Mitchell S. Steiner: Those numbers are still pretty damn scary. So, if you want your study to be informative, it's best to do it in patients who will give you the information. And so the idea would be that we take patients that have been deemed by the critical care specialist to be at high risk for acute respiratory distress syndrome, and we know who those patients are. It's based on age.

Microtubule do polymerization agent. So it binds to micro tube tubulin into guess, what culturally binds the colchicine binding sites.

That's why they named that and so the primary mechanism of action is inhibiting microtubules.

We have done in vitro and nvvault in vivo and cancer models, but in vitro we have done those assets, where we compete against coaching and we bind to the coaxing binding site.

Mitchell S. Steiner: It's based on comorbidities. They've already started to show they're moving down the path of trouble, and they're hospitalized. And so that's going to be the patient population that, quite frankly, if that patient population is addressed, then we're going to feel much more comfortable reopening schools and reopening businesses and that kind of stuff. And so that's what we're focused on. Remdesivir, and quite frankly, if you take a step back, hydrochloroquine and azithromycin combinations have been shown over and over and over not to work. So even though we jumped to that initially, I think everybody's pretty comfortable that it really doesn't have activity. And now, with Remdesivir, people are scratching their heads because they had, you know, three trials that were questionable, and they had this trial that was successful. And again, I'm not taking anything away from them. I'm going to use what Fossey said. He said, basically, it's a good start, and we have to build upon it.

We we have more we have.

In the in the in the published data we show that we are well more potent and colchicine in preventing microtubule polymerization in vitro.

We also have.

Molecular data showing.

Where our where our work we're very well 11 binds to alpha and beta Tubulin. So we we've done mass spec and molecular modeling and we know exactly how it fits in the in the microtubule and fit exactly where culture seems bids. So it's not surprising that we're basically a derivative.

Colds, Racine and more potent with a better side effect profile, because it's like drug interaction. So so I don't think we're making a big leap.

Thats standpoint, so that's why I think is worth testing and testing it as it relates your second question, which is set against strong strong rationale and and I do think it's the anti inflammatory component, it's going to win today here.

Mitchell S. Steiner: And to build upon that, means you need drugs with multiple mechanisms of action. And we have a completely different mechanism of action that would not only look at the virus, but more importantly, the sequelae of the virus. I mean, today, the common cold is not managed by treating the underlying virus; it's managed by treating the symptoms. I mean, if you have a runny nose, you get antihistamines, if you have a fever, you get an antipyretic, and you just run the course.

As it relates your second question.

Yes, I mean, our situation is that we have a cancer program and we've been developing view 111, as a cancer product and so it makes sense said the first place to start is in patients that are severely ill and.

Mitchell S. Steiner: In this situation, too, it's the cytokine storm, it's the cytokine relief syndrome. It's very, very characteristic of this disease. Interestingly, the other characteristic of this disease that makes it different is total body inflammation. So we focus on the lungs, but we're seeing now that you're seeing pericarditis, and it's really a strange pericarditis. And by the way, if you look at colchicine, it's kind of used for pericarditis. The other thing is these kids are starting to show up with what's called Kawasaki's disease, which is very similar to, you know, it's basically a total body inflammation of the blood vessels. And familial Mediterranean fever and Bechet's disease. Bechet's disease is basically a total body vessel inflammation, and they use colchicine to treat those patients.

Potentially could become severely ill, but as in most.

Anti viral loads and drugs at this sort once you've demonstrated in that patient population then it makes sense to go earlier and and and so we would do the same thing, but we would start we're getting a signal in a patient population that are heavily dependent on whether a flamel story reaction occurs because of the in the underlying viruses.

Section and an endpoint that's not ambiguous that you can clearly say it's related to the drought.

We can do that than I think the program will take off on its own.

Thank you and just lastly, I just want to confirm you currently do have enough.

To support both prostate cancer and called the 19 trials right.

Correct, we have plenty of drug, but we do not have enough drug to support the United States or the world. If in the event was successful.

Mitchell S. Steiner: So we think we have a really good mechanism of action, and that's why we want to focus, focus, focus on patients that can give us the most information, the fewest number of patients that can give the most information, and then decide where we want to go from there. But starting initially, we're going to take patients that have not been on any of those drugs.

With that said, it's not that doesn't take long to make it. It is a small molecules has nothing complex about it and and we've already identified sources that can help us.

Do that and help us scale up so we're ready for it in the event that.

That we get news back this summer that we have activity and which case you do you do scale up at the same time you doing in phase three because when the phase III is done yet to be ready for distribution you. So how quickly webmd as of year had to get distributed but we're not going to make that decision until we see signal and usually don't make you don't do the expansion.

Operator: His line had disconnected. I'm sorry. So no worries. We can go back to Questioner if he comes back right to Peter McMullin of Peter McMullin consulting, please. Go ahead. Hey, good morning, Mitch. How are you?

Peter McMullin: Good morning, Peter. I have two quick questions. One, I think Malaysia's done a pretty good job of, you know, controlling COVID-19. Can you give us a status report on the factory or your source of cash flow, and is it open? Will it open? Is it producing female condoms? Second question is, second question, just to get both: Veru 111's making great progress. But there are other people developing competing drugs out there, some of which have better balance sheets. Can you just talk about how you feel about the competitive profile in the future?

And let's define non dilutive money from government agencies that will help you do that so so that's how we're thinking about it.

Got it thank you very much.

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

Thank you. Thank you I appreciate you joining us a joining us on todays call I look forward to updating all of you about our progress in the next investors call. Thank you.

The digital replay of the conference will be available beginning approximately noon eastern time today may 13th are dialing 187734475 to nine in the U.S. and one for one to three one 700.

Mitchell S. Steiner: Sure. So the first question has to do with, you know, how COVID-19 affected our supply chain, so to speak. So when we saw that things were starting, I mean, remember this happened rapidly, where all of a sudden in February everybody's sitting at a picnic, and then by March the bottom falls out of the market. And what we saw was we saw that.

Each stage internationally.

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Please record your name and company one joint.

Mitchell S. Steiner: And as you know, our number one area of high-margin business is the U.S. So the first thing we did was we stockpiled FC2 prescription medication 12, 12. 12-pack supply in the U.S., and we did so that we ended up stockpiling what we thought we would need for the whole year. So we really dodged the bullet there, so there was no interruption at all in the U.S. business. In the ex-U.S. business, we were able to meet the needs of most of the large governments, but some of the large governments shut down. So South Africa and Brazil, I mean, just read the newspapers. They're freaked out and having some real issues. So even though we made it, we couldn't ship it because they didn't have the people at work to do the testing to bring the product in.

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[music].

Mitchell S. Steiner: So you'll see in Q3, our fiscal year Q3, we had a slight decrease in units. We had a decrease in units outside the U.S., but the units in the U.S. will allow us to make our money. And so, you know, we had a good quarter. And so next quarter, we're going to see, you know, an overabundance and overrepresentation of the public sector because, you know, now they're opening up and taking product. As it relates to the factory, the Malaysian factory was shut down. And we all looked at each other and said, oh my gosh, what's going to happen there? But that, I think, happened for about two or three weeks.

Mitchell S. Steiner: And then the government said that for any essential businesses, they were allowed to open up. And so we got an exemption. The team did a great job opening up.

Mitchell S. Steiner: We're not at 100% capacity. We're about 50% or 60% capacity. But that's fine, because of all the The stockpile that we put in the U.S. and all the products we already have on hand, we're going to be able to meet the needs of our customers, not only in Q3, but also in Q4. And then we just have to take it after that and see what happens when Malaysia is back online. As it relates to your second question about the competitive landscape, so really the competitive landscape with companies with bigger balance sheets, and I'm not worried about that because look how much progress we've been able to make by being smart and efficient, and being able to take a program like Vuru111 to a registration trial in a period of two and a half years from the time we started phase one is pretty impressive. I congratulate my team.

Mitchell S. Steiner: But as it relates to the competitive landscape, there are really existing drugs like taxanes that are IV and are given by medical oncologists, and we already know the side effects and why patients are trying to avoid them, and there's nothing in this space. And again, in prostate cancer, immunotherapy has just not been very effective, and I'll tell you that. There's another drug, which is a radiation-based or a radioisotope-based drug, and that one tends to be for patients later in their course of disease. But in the exact space that we're in, there's a class of compounds called PARP inhibitors, and these are, indeed, being backed by some of the biggest companies, AstraZeneca, Merck, and Pfizer. I mean, this is sort of the next big thing.

Mitchell S. Steiner: But these drugs are indicated for patients that have certain mutations that you can actually measure. So, for example, we've heard of BRCA1 and BRCA2, which are common in breast cancer. Well, in prostate cancer, those mutations occur, and those mutations are the ones that they're driving to treat these patients. So, for example, Olaparib, which is the one in front of the FDA now, I mean, as I mentioned in my previous comments, the New England Journal of Medicine article showed a 3.4-month progression-free survival for the control arm, and for the treatment arm, which is going after those mutations, it was 7.4 So, you're able to double it, and that's the degree of benefit that we're seeing with these kinds of drugs. And if you ask, you know, can we coexist, the answer is absolutely yes.

Mitchell S. Steiner: About 5 to 15 percent of the patient population would have these mutations, which means for the 95 percent to 85 percent of patients, they need another drug with a different mechanism. While we're on the topic, there's another set of drugs called androgen receptor degrading agents. So, these are agents that, you know, one of the thoughts is to keep pounding on the androgen receptor. And, you know, my personal view on that is I think we're doing a pretty good job of squeezing testosterone as low as we can, and so if those agents are successful, I think they're just going to cannibalize the androgen-blocking agent population and will not, you know, So, I think we're in good shape. I think time is of the essence that we need to get into the registration trial as quickly as possible and, you know, be that go-to drug. Thank you. Thank you.

Yi Chen: Thank you for taking my follow-up question. I just wonder, are there any animal data published on the antiviral property of Veru 1.11? And also, do you think, based on the mechanism of 1.11, that it could treat moderately ill COVID-19 patients as well?

Mitchell S. Steiner: So I think the first part of your question was whether there's any VIR-111 animal data for COVID-19.

Yi Chen: Yes, thank you.

Mitchell S. Steiner: So the answer is no, and what we do have is, not for COVID-19 specifically, but we have done, but there are data showing that colchicine has antiviral and anti-inflammatory activity, and there are data that show that the way colchicine works is that it works as a microtubule depolymerization agent, so it binds to microtubulin in the, guess what? Colchicine binds to the colchicine binding sites, and that's why they named it that, and so the primary mechanism of action is inhibiting microtubules. We have done, in vitro and in vivo—in vivo in cancer models, but in vitro—those assays where we compete against colchicine. And we bind to the colchicine binding site. We have, in published data, we show that we're more potent than colchicine in preventing microtubule polymerization in vitro. We also have molecular data showing where VERO111 binds to alpha and beta tubulin.

Mitchell S. Steiner: So we've done mass spec and molecular modeling, and we know exactly how it fits in the microtubule, and we fit exactly where colchicine fits. So it's not surprising that we're basically a derivative of colchicine and more potent with a better side effect. So I don't think we're making a big leap from that standpoint. So that's why I think it's worth testing it.

Yi Chen: As it relates to your second question, which is, so again, strong rationale, and I do think it's the anti-inflammatory component that's gonna win the day here. As it relates to your second question, yes, I mean, our situation is that we have a cancer program, and we've been developing Veru111 as a cancer product. And so it makes sense that the first place to start is in patients that are severely ill and or potentially could become severely ill. But as with most antivirals and drugs of this sort, once you've demonstrated their effectiveness in that patient population, then it makes sense to go earlier. And so we would do the same thing, but we would start with getting a signal in a patient population that is heavily dependent on whether an inflammatory reaction occurs because of the underlying virus infection and in an endpoint that's not ambiguous, that you can clearly say is related to the drug. If we can do that, then I think the program will take off on its own.

Mitchell S. Steiner: And just lastly, I just want to confirm that you currently do have enough drug to support both prostate cancer and COVID-19 trials, right?

Mitchell S. Steiner: Correct. We have plenty of drugs, but we do not have enough drugs to support the United States or the world in the event that we're successful. With that said, it doesn't take long to make it. It is a small molecule, so there's nothing complex about it. And we've already identified sources that can help us do that and help us scale up. So we're ready for it in the event that we get news this summer that we have activity, in which case you scale up at the same time you're doing your Phase 3, because when your Phase 3 is done, you have to be ready for distribution. You saw how quickly Remdesivir had to get distributed, but we're not going to make that decision until we see a signal. And usually, you don't do the expansion unless you find non-dilutive money from government agencies that will help you do it. So that's what we're thinking.

Yi Chen: Got it. Thank you very much. Okay, ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to Dr. Mitchell Steiner for any closing remarks.

Mitchell S. Steiner: Thank you. Thank you. I appreciate you joining us on today's call, and I look forward to updating all of you about our progress on our next investor call.

Operator: The digital replay of the conference will be available beginning approximately noon Eastern Time today, May 13th, by dialing 1-877-344-7529 in the U.S. and 1-412-317-0088 internationally. You will be prompted to enter the replay access code, which will be 10143 040. Please record your name and company when joining. The conference has now concluded. Thank you for attending today's discussion. You may now disconnect.