Q3 2025 Veru Inc Earnings Call

Speaker #2: Good morning, ladies and gentlemen, and welcome to VERU INC. Investors Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Mitchell Steiner: Good morning, ladies and gentlemen, and welcome to Veru Inc.'s investors conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After this morning's discussion, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference call over to Mr. Michael Purvis, Veru Inc.'s General Counsel and Executive Vice President of Corporate Strategy. Please go ahead. The statements made on this conference call may be forward-looking statements. Forward-looking statements may include but are not necessarily limited to statements of the company's plans, objectives, expectations, or intentions regarding its business operations, regulatory interactions, finances, and development and product portfolio.

Speaker #2: After this morning's discussion, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference call over to Mr. Michael Purvis, Veru Inc.'s General Counsel and Executive Vice President of Corporate Strategy.

Speaker #2: Please go ahead.

Speaker #4: The The statements made on this conference call may be forward-looking statements. Forward-looking statements may include but are not necessarily limited to statements of the company's plans, objectives, expectations, or intentions.

Speaker #4: Regarding its business, operations, regulatory interactions, finances, and development and product portfolio, such forward-looking statements are subject to known and unknown risks and uncertainties and are actual results may differ significantly from those projected, suggested, or included in any forward-looking statements.

Mitchell Steiner: Such forward-looking statements are subject to known and unknown risks and uncertainties, and our actual results may differ significantly from those projected, suggested, or included in any forward-looking statements. Risks that may cause actual results or developments to differ materially are contained in our 10-Q and 10-K SEC filings, as well as in our press releases from time to time. I would now like to turn the conference call over to Dr. Mitchell Steiner, Veru Inc.'s Chairman, CEO, and President.

Speaker #4: Risks that may cause actual results or developments to differ materially are contained in our 10-Q and 10-K SEC filings, as well as in our press releases from time to time.

Speaker #4: I would now like to turn the conference call over to Dr. Mitchell Steiner, VERU INC.'s Chairman, CEO, and President.

Speaker #5: Thank you, Michael. Good morning. With me on this morning's call are Dr. Gary Barnett, Chief Scientific Officer; Michele Greco, the Chief Financial Officer and Chief Administrative Officer; and Michael Purvis, the General Counsel and Executive Vice President of Corporate Strategy.

Michael Purvis: Thank you, Michael. Good morning. With me in this morning's call are Dr. Gary Barnett, Chief Scientific Officer; Michele Greco, the Chief Financial Officer and Chief Administrative Officer; and Michael Purvis, the General Counsel and Executive Vice President of Corporate Strategy. Thank you for joining our Q3 fiscal year 2025 earnings call. Veru Inc. is a late clinical stage biopharmaceutical company focused on developing novel medicines for the treatment of cardiometabolic and inflammatory diseases. Our drug development program consists of two clinical stage drug candidates: enobosarm and sabizabulin. enobosarm is an oral selective androgen receptor modulator, also known as SARM. It is being developed as a novel drug that makes GLP-1 receptor agonist weight reduction more tissue selective by preserving lean mass, which is muscle, while causing greater fat loss in older patients who are overweight or have obesity.

Speaker #5: Thank you for joining our Q3 fiscal year 2025 earnings call. VERU is a late clinical-stage biopharmaceutical company focused on developing novel medicines for the treatment of cardiometabolic and inflammatory diseases.

Speaker #5: Our drug development program consists of two clinical stage drug candidates, Inovasarm and Sabizabulin. Inovasarm is an oral selective androgen receptor modulator, also known as a SARM.

Speaker #5: It's being developed as a novel drug that makes GLP-1 receptor agonists weight reduction, more tissue selective, by preserving lean mass with its muscle, while causing greater fat loss in older patients who overweight who have obesity.

Speaker #5: Sabizabulin is an oral microtubule disruptor currently being developed as a broad anti-inflammatory agent to reduce vascular plaque inflammation and slow the progression of, and promote regression of atherosclerotic cardiovascular disease.

Michael Purvis: sabizabulin is an oral microtubule disruptor being developed as a broad anti-inflammatory agent to reduce vascular plaque inflammation and slow the progression or promote the regression of atherosclerotic cardiovascular disease. This morning, we will focus our update only on our chronic weight loss management program. As defined by FDA, obesity is a disease of excess body adiposity or fat. Therefore, the medical objective to treat obesity by weight reduction drug or drugs in combination should be to reduce the excess body fat, not lean mass, to improve the morbidity and mortality associated with obesity. GLP-1 receptor agonists have been shown to produce significant weight loss in patients who are overweight or have obesity. Unfortunately, the weight loss is tissue non-selective, and the indiscriminate loss of both fat and lean mass of the total weight loss, up to 50% of the total weight loss, is attributable to lean mass.

Speaker #5: This morning, we'll focus our update only on our chronic weight loss management program. As defined by FDA, obesity is a disease of excess body adiposity or fat.

Speaker #5: Therefore, the medical objective to treat obesity by weight reduction drug or drugs in combination should be to reduce the excess body fat, not lean mass, to improve the mobility and mortality associated with obesity.

Speaker #5: GLP-1 receptor agonists have been shown to produce significant weight loss in patients who overweight or have obesity. Unfortunately, the weight loss is tissue non-selective and the indiscriminate loss of both fat and lean mass.

Speaker #5: Of the total weight loss, up to 50% of the total weight loss is attributable to lean mass. We must do a better job of getting rid of fat tissue only.

Michael Purvis: We must do a better job of getting rid of fat tissue only. As we previously presented the clinical data as they became available for our Phase 2 program, I will now present a summary of all of these important findings. Now, we have demonstrated in the Phase 2b QUALITY study that enobosarm is a next-generation drug that makes GLP-1 receptor agonist weight loss more tissue selective for fat loss while preserving lean mass and physical function. In January of 2025, the company announced positive top-line efficacy data results from the Phase 2b QUALITY clinical study, which is a multicenter, double-blind, placebo-controlled, randomized dose-finding clinical trial designed to evaluate the safety and efficacy of Inovasarm 3 milligrams, Inovasarm 6 milligrams, or placebo as a treatment to augment fat loss and prevent muscle loss in 168 older patients greater than 60 years of age receiving semaglutide for chronic weight management.

Speaker #5: As we previously presented the clinical data as they became available for our Phase 2 program, I will now present a summary of all of these important findings.

Speaker #5: Now, we have demonstrated in the Phase Two quality study that Inovasarm is the next-generation drug that makes GLP-1 receptor agonist weight loss more tissue-selective for fat loss, while preserving lean mass and physical function.

Speaker #5: In January of 2025, the company announced positive top-line efficacy data results from the phase two B quality clinical study, which is a multi-center double-blind placebo-controlled randomized dose-finding clinical trial designed to evaluate the safety and efficacy of Inovasarm 3 milligrams and Inovasarm 6 milligrams or placebo as a treatment to augment fat loss and prevent muscle loss in 168 older men excuse me, older patients greater than 60 years of age receiving semaglutide for chronic weight management.

Speaker #5: Inovasarm plus semaglutide group met the primary endpoint of the study, with a statistically significant 100% average preservation of total lean mass compared to placebo plus semaglutide at 16 weeks and that P-value is less than zero.

Michael Purvis: Inovasarm plus semaglutide group met the primary endpoint of the study with a statistically significant 100% average preservation of total lean mass compared to placebo plus semaglutide at 16 weeks, and that p-value is less than 0.001. Inovasarm plus semaglutide treatment resulted in a dose-dependent greater loss of fat compared to placebo plus semaglutide, with the Inovasarm 6 milligram dose having a 42% greater relative loss of fat mass compared to the placebo semaglutide group at 16 weeks, and that p-value is 0.017. Inovasarm 3 milligram group had a 12% greater fat loss. Even with having preserved the lean mass, the Inovasarm plus semaglutide treatment resulted in a similar mean body weight loss as semaglutide alone at 16 weeks.

Speaker #5: Inovasarm plus semaglutide treatment resulted in a dose-dependent greater loss of fat compared to placebo plus semaglutide with the Inovasarm 6 milligram dose having a 42% greater relative loss of fat mass compared to the placebo semaglutide group at 16 weeks and that P-value is 0.017.

Speaker #5: Inovasarm 3 milligram group had a 12% greater fat loss. Even with having preserved the lean mass, the Inovasarm plus semaglutide treatment resulted in a similar mean body weight loss as semaglutide alone at 16 weeks.

Speaker #5: And the tissue composition of the total body weight loss was 34% lean mass and 66% fat mass for the placebo plus semaglutide group, whereas it was 0% lean mass and 100% fat mass for the Inovasarm 3 milligrams plus semaglutide group.

Michael Purvis: The tissue composition of the total body weight loss was 34% lean mass and 66% fat mass for the placebo plus semaglutide group, whereas it was 0% lean mass and 100% fat mass for the Inovasarm 3 milligrams plus semaglutide group. Physical function was measured by the stair climb test. Responders' analysis was conducted using greater than the 10% decline in stair climb power as a cutoff at 16 weeks, which represents approximately seven to eight years' loss of stair climb power that naturally occurs with aging. The Phase 2b QUALITY clinical trial is the first human study to demonstrate that older patients who are overweight or have obesity receiving semaglutide are at higher risk for accelerated loss of physical function, as 44.8% of the placebo plus semaglutide group had at least a 10% decline in stair climb power physical function at 16 weeks.

Speaker #5: Physical function was measured by the stair-climb test. Respondents' analysis was conducted using greater than the 10% of the climb in stair-climb power as a cutoff at 16 weeks, which represents approximately 7 to 8 years loss of stair-climb power that naturally occurs with aging.

Speaker #5: The Phase 2B quality clinical trial is the first human study to demonstrate that older patients who are overweight will have obesity receiving semaglutide or are at higher risk for accelerated loss of physical function.

Speaker #5: As 44.8% of the placebo plus semaglutide group had at least a 10% decline in stair-climb power or physical function at 16 weeks. Inovasarm treatment preserved the lean mass, which translated into a reduction in the proportion of patients that had a clinically significant stair-climb physical function decline with 17.6% of the Inovasarm 3 milligram plus semaglutide group having at least a 10% decline in stair-climb power function at 16 weeks, which is a 59.8% relative reduction in a proportion of patients with loss at least 10% stair-climb power compared to placebo semaglutide group and that P-value is 0.006.

Michael Purvis: Inovasarm treatment preserved the lean mass, which translated into a reduction in the proportion of patients that had a clinically significant stair climb physical function decline, with 17.6% of the Inovasarm 3 milligram plus semaglutide group having at least a 10% decline in stair climb power function at 16 weeks, which is a 59.8% relative reduction in a proportion of patients that lost at least 10% stair climb power compared to the placebo semaglutide group, and that p-value is 0.006. In May of 2025, the company announced that Inovasarm and semaglutide combination had a positive safety profile in the Phase 2b QUALITY clinical trial. After the trial participants completed the efficacy dose-finding portion of the Phase 2b QUALITY clinical trial, 148 participants continued to the Phase 2b maintenance extension study.

Speaker #5: In May of 2025, the company announced that the Inovasarm and semaglutide combination had a positive safety profile in the Phase 2B quality clinical trial.

Speaker #5: Now, after the trial participants completed the efficacy dose-finding portion of the Phase 2B quality clinical trial, 148 participants continued to the Phase 2B maintenance extension study.

Speaker #5: This is a double-blind study where all patients discontinued semaglutide treatment but continued receiving placebo Inovasarm 3 milligrams or Inovasarm 6 milligrams as monotherapy for 12 weeks.

Michael Purvis: This is a double-blind study where all patients discontinued semaglutide treatment but continued receiving placebo, Inovasarm 3 milligrams, or Inovasarm 6 milligrams as monotherapy for 12 weeks. In June of 2025, the company announced positive top-line efficacy and safety results in the maintenance extension portion of the Phase 2b QUALITY clinical study that showed that Inovasarm significantly reduced body weight regain, prevented fat regain, and preserved lean mass after semaglutide discontinuation. As a point of reference, at the end of the Phase 2b QUALITY study active weight loss period of 16 weeks, body weight loss was similar across treatment groups, with the semaglutide plus placebo group losing an average of about 11.88 pounds.

Speaker #5: In June of 2025, the company announced positive top-line efficacy and safety results from the maintenance extension portion of the phase two B quality clinical study that showed that Inovasarm significantly reduced body weight regain, prevented fat regain, and preserved lean mass after semaglutide discontinuation.

Speaker #5: At the point of reference, at the end of the phase two B quality study active weight loss period, of 16 weeks, body weight loss was similar across treatment groups with semaglutide plus placebo group losing an average of about 11.88 pounds.

Speaker #5: After the 12-week maintenance extension period, where all treatment groups discontinued semaglutide, the placebo monotherapy group regained 43% of the body weight that was previously lost during the Phase Two B quality study, for a mean percentage change of 2.57%, which is 5 pounds.

Michael Purvis: After the 12-week maintenance extension period where all treatment groups discontinued semaglutide, the placebo monotherapy group regained 43% of the body weight that was previously lost during the Phase 2b QUALITY study for a mean percentage change of 2.57%, which is 5 pounds, compared to 1.41%, which is 2.73 pounds for the 3 milligram group, and that p-value is 0.038, and 2.87%, which is 5.29 pounds for the 6 milligram Inovasarm group. This means that the 3 milligram Inovasarm monotherapy significantly reduced the body weight regain by 46% after discontinuation of semaglutide. The mean tissue composition of the body weight regained was 100% lean mass in both the 3 milligram and 6 milligram groups, whereas it was 28% fat and 72% lean mass in the placebo group.

Speaker #5: Compared to 1.41%, which is 2.73 pounds for the 3 milligram group, and that P-value is 0.038, and 2.87%, which is 5.29 pounds for the 6 milligram Inovasarm group.

Speaker #5: This means that the 3 milligram Inovasarm monotherapy significantly reduced the body weight regain by 46% after discontinuation of semaglutide. By the way, the mean tissue composition of the body weight regained was 100% lean mass in both the 3 milligram and 6 milligram groups, whereas it was 28% fat and 72% lean mass in the placebo group.

Speaker #5: Inovasarm plus semaglutide followed by Inovasarm monotherapy regimen was more effective in preserving lean mass and causing and maintaining greater loss of fat by the end of the study.

Michael Purvis: Inovasarm plus semaglutide, followed by Inovasarm monotherapy regimen, was more effective in preserving lean mass and causing and maintaining greater loss of fat by the end of the study. The placebo plus semaglutide, followed by the placebo monotherapy group, experienced loss of lean mass, while the Inovasarm plus semaglutide group, followed by Inovasarm monotherapy group, significantly preserved more than 100% of lean mass, with the Inovasarm 3 milligram p-value less than 0.001 and Inovasarm 6 milligrams p-value equals 0.004. The Inovasarm plus semaglutide, followed by Inovasarm monotherapy patients, had a 58% greater loss of fat with Inovasarm 3 milligrams, a p-value of 0.085, and 93% greater loss of fat with Inovasarm 6 milligrams, and that p-value is 0.008 compared to placebo plus semaglutide, followed by placebo monotherapy. Now, adverse events and adverse events of special interest in this double-blind Phase 2b maintenance extension trial.

Speaker #5: So the placebo plus semaglutide followed by placebo monotherapy group experienced loss of lean mass, while the Inovasarm plus semaglutide group followed by Inovasarm monotherapy group significantly preserved more than 100% of lean mass with the Inovasarm 3 milligram P-value less than 0.001 and Inovasarm 6 milligrams P-value equals 0.004.

Speaker #5: The Inovasarm plus semaglutide followed by Inovasarm monotherapy patients had a 58% greater loss of fat with Inovasarm 3 milligrams P-value of 0.085, and a 93% greater loss of fat with Inovasarm 6 milligrams and that P-value is 0.008 compared to placebo plus semaglutide followed by placebo monotherapy.

Speaker #5: Now, adverse events and adverse events of special interest in this double-blind phase two B maintenance extension trial. Inovasarm monotherapy had a positive safety profile.

Michael Purvis: Inovasarm monotherapy had a positive safety profile. After discontinuation of semaglutide, there were essentially no gastrointestinal side effects, no evidence of drug-induced liver injury by HIES law, and no increases in obstructive sleep apnea observed at any dose of Inovasarm compared to placebo monotherapy. There were no adverse events of increases in prostate-specific antigen in men, and there were no adverse events related to masculinization in women, and there were no reports of suicidal ideation observed.

Speaker #5: After discontinuation of semaglutide, there were essentially no gastrointestinal side effects, no evidence of drug-induced liver injury at the highest dose, and no increases in obstructive sleep apnea observed with any dose of Inovasarm compared to placebo monotherapy.

Speaker #5: And there were no adverse events of increases in prostate-specific antigen in men, and there were no adverse events related to masculinization in women, and there were no reports of suicidal ideation observed.

Speaker #5: In summary, the Phase 2B quality maintenance extension clinical trial confirms that preserving lean mass with Inovasarm plus semaglutide led to greater fat loss during the active weight loss period. After semaglutide was discontinued, Inovasarm monotherapy significantly prevented the regain of both weight and fat mass during the maintenance period. By the end of the study, there was a greater loss of fat mass while preserving lean mass for a higher quality weight reduction compared to the placebo group.

Michael Purvis: In summary, the Phase 2b QUALITY maintenance extension clinical trial confirms that preserving lean mass with Inovasarm plus semaglutide led to greater fat loss during the active weight loss period, and after semaglutide was discontinued, Inovasarm monotherapy significantly prevented the regain of both weight and fat mass during the maintenance period, such that by the end of the study, there was greater loss of fat mass while preserving lean mass for a higher quality weight reduction compared to the placebo group. On August 11th, 2025, the company announced the selection of a novel modified-release oral formulation for chronic weight management, chronic weight loss management, following a pharmacokinetic clinical study. A single-dose open-label pilot study evaluated the plasma concentrations versus the time profile of a proprietary, patentable modified-release formulation of Inovasarm 3 milligrams.

Speaker #5: On August 11th, 2025, the company announced the selection of a novel modified release oral formulation for chronic weight management, chronic weight loss management following a pharmacokinetic clinical study.

Speaker #5: A single dose open-label pilot study evaluated the plasma concentrations versus the time profile of a proprietary patentable modified release formulation of Inovasarm 3 milligrams.

Speaker #5: The new formulation demonstrated the intended distinct target body release profile which includes a reduction in maximum plasma concentration which is called Cmax and a delayed time to maximum plasma concentration called Tmax, and a distinct secondary peak concentration and a similar extent of absorption which is called AUC.

Michael Purvis: The new formulation demonstrated the intended distinct target product release profile, which includes a reduction in maximum plasma concentration, which is called Cmax, a delayed time to maximum plasma concentration called Tmax, and a distinct secondary peak concentration, and a similar extent of absorption, which is called AUC, compared to historical values for Inovasarm immediate release capsules. The novel modified-release oral Inovasarm formulation is planned to be available for the Phase 3 clinical study and for commercialization. The novel Inovasarm oral formulation's unique manufacturing process is protected by issued global patents with protection through 2037, and the new patents on the novel modified-release oral Inovasarm formulation itself have been filed and have issued. X-ray is expected to be in 2046. We expect regulatory clarity for the GLP-1 receptor agonist and Inovasarm combination Phase 3 clinical program, as we have had an end of Phase 2 FDA meeting scheduled this quarter.

Speaker #5: Compared to historical values for Inovasarm immediate release capsules, the novel modified release oral Inovasarm formulation is planned to be available for the phase three clinical study and for commercialization.

Speaker #5: The novel Inovasarm oral formulation's unique manufacturing process is protected by issued global patents with protection through 2037. And the new patents on the novel modified release oral Inovasarm formulation itself have been filed and have issued expertise expected to be in 2046.

Speaker #5: Now, we expect regulatory clarity for the GLP-1 receptor agonist and Inovasarm combination phase three program as we've had as we have had an end of phase two end of phase two FDA meeting scheduled this quarter.

Speaker #5: So we'll hear it this quarter. The proposed indication is Inovasarm is a selective anti-receptive modulator indicated as an adjunct to GLP-1 receptor agonist therapy and reduce calorie diet and increase physical activity in chronic weight management for greater reduction in fat mass, preservation of physical function, and preservation of lean mass in older greater than 60 years of age adult patients with obesity.

Michael Purvis: So we will hear it this quarter. The proposed indication is Inovasarm is a selective anti-receptor modulator indicated as an adjunct to GLP-1 receptor agonist therapy, a reduced-calorie diet, and increased physical activity in chronic weight management for greater reduction in fat mass, preservation of physical function, and preservation of lean mass in older, greater than 60 years of age, adult patients with obesity. During our previous pre-IND FDA meeting, FDA provided general comments about a regulatory path forward for Inovasarm as a drug that improves body composition during chronic weight management, including input on the Phase 3 clinical program design. So we have some preliminary information, previous information that we have received from the FDA when we started with our pre-IND meeting.

Speaker #5: Now, during our previous pre-IND FDA meeting, the FDA provided general comments about the regulatory path forward for Inovasarm as a drug that improves body composition during chronic weight management, including input on the Phase 3 clinical program design.

Speaker #5: So we have we have some preliminary information previous information that we've that we've received from the FDA when we started with our pre-IND meeting.

Speaker #5: Some of these FDA comments from the pre-IND meeting were Inovasarm in combination with an approved and Cretan drug, so like a GLP-1, needs to show that there's some stabilization in lean mass that's clinically meaningful.

Michael Purvis: Some of these FDA comments from the pre-IND meeting were Inovasarm in combination with an approved incretin drug, like a GLP-1, needs to show that there is some stabilization of lean mass that is clinically meaningful. Imaging-based changes in lean mass would need to be directly linked to improvements in how a patient feels, functions, and survives in order to support the indication related to preservation of lean mass. Improvement in stair climb performance measure is clinically meaningful. So that is one way to do it. It would need to be linked to observed improvements in lean mass rather than weight loss itself. Stair climb test has been accepted by the FDA, and again, as a point of reference for previous drug approvals and pivotal trials.

Speaker #5: Imaging-based changes in lean mass would need to be directly linked to improvements in how a patient feels, functions, and survives in order to support the indication related to the preservation of lean mass.

Speaker #5: Improvement in stair-climb performance measure is a clinically is clinically meaningful. So that's one way to do it. And would need to be linked to observed improvements in lean mass rather than weight loss itself.

Speaker #5: Stair-climb test has been accepted by the FDA again as a point of reference for previous drug approvals and pivotal and pivotal trials. So for the treatment of the two-chain muscular dystrophy and also pivotal phase three cancer detection studies, that we for the 504 and 505 lung cancer studies have used stair-climb as a primary endpoint in a phase three program.

Michael Purvis: For the treatment of two-chain muscular dystrophy, and also pivotal Phase 3 cancer detection studies that we for the 504 and 505 lung cancer studies have used stair climb, as a primary endpoint in a Phase 3 program. Finally, we are focusing our Phase 3 clinical program on an older population that could benefit from a weight reduction drug for chronic weight management, but who are at higher risk for muscle weakness and falls because of age-related loss of muscle. In general, there are 47.4 million patients over the age of 60 enrolled in Medicare Part D, of which 41.5% of them could benefit from a drug for overweight or obesity. Furthermore, up to 34.4% of patients over the age of 60 with obesity in the United States have what is called sarcopenic obesity.

Speaker #5: Finally, we're focusing our Phase 3 clinical program on an older population that could benefit from a weight reduction drug for chronic weight management, but who are at higher risk for muscle weakness and falls because of age-related loss of muscle.

Speaker #5: Now, in general, there are 477.4 million patients over the age of 60 enrolled in Medicare Part D, of which 41.5% of them could benefit from a drug for overweight or obesity.

Speaker #5: Furthermore, up to 34.4% of patients over the age of 60 with obesity in the United States have what's called sarcopenic obesity. Sarcopenic obesity means these are patients who have obesity and low muscle mass at the same time.

Michael Purvis: Sarcopenic obesity means these are patients who have obesity and low muscle mass at the same time and are potentially at the greatest risk for developing critically low muscle mass when taking a currently approved GLP-1 receptor agonist. Although older patients represent a large market alone, success in this patient population could be accentuated into the combination of Inovasarm and GLP-1 treatment in younger patients who have obesity as well as diabetic and frail people populations. We are looking forward to receiving the FDA regulatory clarity for this novel unmet medical need soon. I will now turn the call over to Michele Greco, Chief Financial Officer and Chief Administrative Officer, to discuss the financial highlights. Michele.

Speaker #5: And are potentially at the greatest risk for developing critically low muscle mass when taking a currently approved GLP-1 receptor agonist. Although older patients represent a large market alone, success in this patient population could be segued into the combination of Inovasarm and GLP-1 treatment in younger patients who have obesity, as well as diabetic or frail populations.

Speaker #5: We're looking forward to receiving the FDA regulatory clarity for this novel unmet medical need soon. I will now turn the call over to Michele Greco.

Speaker #5: CFO, CAO, to discuss the financial highlights. Michele.

Speaker #6: Thank you, Dr. Steiner. On August 8, 2025, the company affected a 1-for-10 reverse stock split of its issued and outstanding common stock.

Michele Greco: Thank you, Dr. Steiner. On August 8th, 2025, the company affected a one-for-10 reverse stock split of its issued and outstanding common stock. As a result of the reverse split, each 10 shares of issued and outstanding common stock were automatically converted into one share of common stock. The reverse stock split did not change the total number of shares authorized or par value per share. The reverse stock split was approved by the company's shareholders on July 25th, 2025. All share and per-share amounts presented in our financial statements as of June 30th, 2025, have been retroactively adjusted for all periods presented. There were no fractional shares issued in connection with the reverse stock split. Reviewing the results for the three months ended June 30th, 2025, research and development costs decreased to $3 million from $4.8 million in the prior quarter.

Speaker #6: As a result of the reverse split, each 10 shares of issued and outstanding common stock were automatically converted into one share of common stock.

Speaker #6: The reverse stock split did not change the total number of shares authorized or the par value per share. The reverse stock split was approved by the company's shareholders on July 25, 2025.

Speaker #6: All share and per share amounts presented in our financial statements as of June 30th, 2025, have been retroactively adjusted for all periods presented. There were no fractional shares issued in connection with the reverse stock split.

Speaker #6: Now, reviewing the results for the three months ended June 30, 2025. Research and development costs decreased to $3 million from $4.8 million in the prior quarter.

Speaker #6: The decreases due primarily to the wind-down of the company's phase two B quality clinical study for Inovasarm as a treatment to augment fat loss and to prevent muscle loss.

Michele Greco: The decrease is due primarily to the wind-down of the company's Phase 2b QUALITY clinical study for enobosarm as a treatment to augment fat loss and to prevent muscle loss, which was completed during the quarter ended June 30th, 2025. The company initiated the Phase 2b QUALITY clinical study during the quarter ended June 30th, 2024. Selling, general, and administrative expenses were $5 million compared to $5.8 million in the prior quarter. The decrease is primarily due to a decrease in share-based compensation. We recognize the gain on sale of Entathy assets of $485,000 compared to $110,000 in the prior quarter. The gain represents non-refundable consideration received related to promissory notes due to Veru.

Speaker #6: Which was completed during the quarter ended June 30th, 2025. The company initiated the phase two B quality clinical study during the quarter ended June 30th, 2024.

Speaker #6: Selling, general, and administrative expenses were $5 million compared to $5.8 million in the prior quarter. The decrease was primarily due to a reduction in share-based compensation.

Speaker #6: We recognize the gain on sale of entity assets of $485,000 compared to $110,000 in the prior quarter. The gain represents non-refundable consideration received related to promissory notes due to Veru.

Speaker #6: The bottom line results for continuing operations were the net loss of $7.3 million or 50 cents per diluted common share. Compared to a net loss of $10.3 million or 71 cents per diluted common share in the prior year's quarter.

Michele Greco: The bottom line result for continuing operations was a net loss of $7.3 million or $0.50 per diluted common share compared to a net loss of $10.3 million or $0.71 per diluted common share in the prior year's quarter. Net loss from discontinued operations, net of taxes related to the FC2 Female Condom business, which was sold on December 30th, 2024, was $9,700 or $0.00 per diluted common share compared to a net loss of $629,000 or $0.04 per diluted common share in the prior quarter. The net loss from discontinued operations during the current quarter represents changes in an estimate made at the time of the FC2 business sale, while the net loss for the prior year quarter represents the operations of the FC2 business during that period.

Speaker #6: Net loss from discontinued operations net of taxes related to the FC2 female condom business, which was sold on December 30th, 2024, was $9,700 or 0 cents per diluted common share.

Speaker #6: Compared to a net loss of $629,000, or 4 cents per diluted common share, in the prior quarter, the net loss from discontinued operations during the current quarter represents changes in an estimate made at the time of the FC2 business sale, while the net loss for the prior year quarter represents the operations of the FC2 business during that period.

Speaker #6: Now, turning to the results for the nine months ended June 30, 2025, research and development costs increased to $12.7 million from $9.5 million in the prior period.

Michele Greco: Now, turning to the results for the nine months ended June 30, 2025, research and development costs increased to $12.7 million from $9.5 million in the prior period. The increase is due to $4.5 million incurred related to the company's Phase 2b QUALITY clinical study for enobosarm as a treatment to augment fat loss and to prevent muscle loss, partially offset by a decrease in expenditures related to the company's other drug development programs that were terminated in previous years. Selling, general and administrative expenses were $15.4 million compared to $18.4 million in the prior period. The decrease is primarily due to a decrease in share-based compensation. We recognized the gain on sale of Entathy assets of $2.2 million compared to a gain of $1 million in the prior period, which is based on non-refundable consideration received related to promissory notes due to Veru Inc.

Speaker #6: The increases due to $4.5 million incurred related to the company's phase two B quality clinical study for Inovasarm as a treatment to augment fat loss and to prevent muscle loss.

Speaker #6: Partially offset by a decrease in expenditures related to the company's other drug development programs that were terminated in previous years. Selling, general, and administrative expenses were $15.4 million compared to $18.4 million in the prior period.

Speaker #6: The decrease is primarily due to a decrease in share-based compensation. We recognize the gain on sale of entity assets of $2.2 million compared to a gain of $1 million in the prior period.

Speaker #6: Which is based on non-refundable consideration received related to promissory notes due to VERU. In conjunction with the sale of the FC2 female condom business, we recorded a gain on the extinguishment of debt of $8.6 million related to the termination of the SWK Holdings residual royalty agreement.

Michele Greco: In conjunction with the sale of the FC2 Female Condom business, we recorded a gain on extinguishment of debt of $8.6 million related to the termination of the SWK Holdings residual royalty agreement. This represents the difference between the change of control payment of $4.2 million and the net carrying amount of the extinguished debt of $12.8 million, which included an embedded derivative for the change of control provision at fair value of $4.7 million. The bottom line results for continuing operations were the net loss of $17 million or $1.16 per diluted common share compared to a net loss of $26.7 million or $2.04 per diluted common share in the prior period.

Speaker #6: This represents the difference between the change of control payment of $4.2 million and the net carrying amount of the extinguished debt of $12.8 million.

Speaker #6: Which included an embedded derivative for the change of control provision at fair value of $4.7 million. The bottom line results for continuing operations were a net loss of $17 million, or $1.16 per diluted common share, compared to a net loss of $26.7 million, or $2.04 per diluted common share in the prior period.

Speaker #6: Net loss from discontinued operations net of taxes related to the FC2 business was $7.2 million or 49 cents per diluted common share. Including the $4.3 million loss on the sale of the FC2 business, compared to a net loss of $2.6 million or 20 cents per diluted common share in the prior period.

Michele Greco: Net loss from discontinued operations, net of taxes related to the FC2 business was $7.2 million or $0.49 per diluted common share, including the $4.3 million loss on the sale of the FC2 business compared to a net loss of $2.6 million or $0.20 per diluted common share in the prior period. The increase in the net loss from discontinued operations of $4.6 million is due to the loss on the sale of the FC2 Female Condom business of $4.3 million and the increase in the loss from the change in fair value of derivative liabilities of $3.2 million, partially offset by a decrease in selling, general and administrative expenses of $3.9 million. The purchase price for the sale of the FC2 business was $18 million in cash, subject to adjustments as set forth in the purchase agreement for the transaction.

Speaker #6: The increase in the net loss from discontinued operations of $4.6 million is due to the loss on the sale of the FC2 female condom business of $4.3 million and the increase in the loss from the change in fair value of derivative liabilities of $3.2 million partially offset by a decrease in selling general and administrative expenses of $3.9 million.

Speaker #6: The purchase price for the sales of FC2 business was $18 million in cash. Subject to adjustments as set forth in the purchase agreement for the transaction.

Speaker #6: Net proceeds from the sale of the FC2 female condom business were approximately $16.3 million after selling costs and other purchase price adjustments but before a change of control payment of $4.2 million owed to SWK holdings pursuant to a residual royalty agreement for a 2018 financing transaction.

Michele Greco: Net proceeds from the sale of the FC2 Female Condom business were approximately $16.3 million after selling costs and other purchase price adjustments, but before a change of control payment of $4.2 million owed to SWK Holdings pursuant to a residual royalty agreement for a 2018 financing transaction. The loss on the sale of the FC2 Female Condom business is approximately $4.3 million. The difference between the estimated net proceeds of $16.3 million and the total carrying value of the FC2 business of $20.6 million. The sale of the FC2 Female Condom business represented a change in strategy, allowing the company to focus all its efforts exclusively on drug development. Looking at our balance sheet, as of June 30th, 2025, our cash, cash equivalents, and restricted cash balance was $15 million compared to $24.9 million as of September 30th, 2024.

Speaker #6: The loss on the sale of the FC2 female condom business is approximately $4.3 million, which is the difference between the estimated net proceeds of $16.3 million and the total carrying value of the FC2 business of $20.6 million.

Speaker #6: The sale of the FC2 female condom business represented a change in strategy allowing the company to focus all its efforts exclusively on drug development.

Speaker #6: Now, looking at our balance sheet, as of June 30th, 2025, our cash cash equivalents and restricted cash balance was $15 million compared to $24.9 million as of September 30th, 2024.

Speaker #6: The restricted cash as of June 30, 2025, was $354,000 related to the sale of the FC2 female condom business. Our net working capital was $9.5 million on June 30, 2025.

Michele Greco: The restricted cash as of June 30th, 2025, was $354,000 related to the sale of the FC2 Female Condom business. Our net working capital was $9.5 million on June 30th, 2025, compared to $23.4 million on September 30th, 2024. The company is not profitable and has had negative cash flow from operations. We will need additional capital to support our drug development candidates. Based upon the company's current operating plan, our cash as of the issuance date of these financial statements is not sufficient for the company to fund operations for the next 12 months. However, we have sufficient capital to take the company into the next calendar year, which is beyond obtaining regulatory clarity from the FDA end of Phase 2 meeting for the Inovasarm clinical program.

Speaker #6: Compared to $23.4 million on September 30, 2024, the company is not profitable and has had negative cash flow from operations. We will need additional capital to support our drug development candidates.

Speaker #6: Based upon the company's current operating plan, our cash as of the issuance date of these financial statements is not sufficient for the company to fund operations for the next 12 months.

Speaker #6: However, we have sufficient capital to take the company into the next calendar year, which is beyond obtaining regulatory clarity from the FDA end-of-phase two meeting for the Inovasarm clinical program.

Speaker #6: During the nine months ended June 30th, 2025, we used cash of $24.6 million for operating activities, compared with $17.3 million used for operating activities in the prior period.

Michele Greco: During the nine months ended June 30th, 2025, we used cash of $24.6 million for operating activities compared with $17.3 million used for operating activities in the prior period. We generated cash from investing activities of $18.9 million for the nine months ended June 30th, 2025, compared to $15,000 from investing activities in the prior period. The cash generated in the current year relates to proceeds from the sale of the FC2 Female Condom business of $16.3 million, proceeds of $2.2 million from the sale of the Entathy assets, and proceeds of $393,000 from the sale of OnConnex Equity Securities. We used cash in financing activities for the nine months ended June 30, 2025, of $4.2 million related to the change of control payment pursuant to the residual royalty agreement, which terminated in conjunction with the sale of the FC2 Female Condom business.

Speaker #6: We generated cash from investing activities of $18.9 million for the nine months ended June 30th, 2025, compared to $15,000 from investing activities in the prior period.

Speaker #6: The cash generated in the current year relates to proceeds from the sale of the FC2 female condom business of $16.3 million, proceeds of $2.2 million from the sale of the entity assets, and proceeds of $393,000 from the sale of OnKinetics equity securities.

Speaker #6: We used cash in financing activities for the nine months ended June 30, 2025, of $4.2 million related to the change of control payment pursuant to the residual royalty agreement, which terminated in conjunction with the sale of the FC2 female condom business.

Speaker #6: In the prior period, we generated $36.8 million from financing activities. Now, I'd like to turn the call back to Dr. Steiner. Dr. Steiner?

Michele Greco: In the prior period, we generated $36.8 million from financing activities. Now, I would like to turn the call back to Dr. Steiner. Dr. Steiner?

Speaker #5: Thank you, Michele. With that, I'll now open the call to questions. Operator?

Mitchell Steiner: Thank you, Michele. With that, I will now open the call to questions. Operator?

Speaker #7: Ladies and gentlemen, at this time, we will begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad.

Operator: Ladies and gentlemen, at this time, we will begin the question and answer session. To ask a question, you may press star, 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. 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, that is star, then one, to rejoin the question queue. We will pause momentarily to assemble our roster. The first question comes from Dennis Ding with Jefferies. Please go ahead.

Speaker #7: 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.

Speaker #7: 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.

Speaker #7: Once again, that is star, then one to rejoin the question queue. We will pause momentarily to assemble our roster. And the first question comes from Dennis Sting with Jeffries.

Speaker #7: Please go ahead.

Speaker #8: Good morning. This is Anthea, standing in for Dennis. Thank you for taking our questions.

Anthea (for Dennis Ding): Good morning. This is Anthea on for Dennis. Thank you for taking our questions.

Speaker #5: Absolutely.

Speaker #8: I have two questions if I may. on the modified release formulation of Inovasarm could you talk a little bit about, if this new formulation still allows for, fixed dose combinations particularly with oral GLP-1s potentially down the road?

Operator: Absolutely.

Anthea (for Dennis Ding): I have two questions, if I may.

Operator: Sure.

Anthea (for Dennis Ding): On the modified-release formulation of enobosarm, could you talk a little bit about if this new formulation still allows for fixed-dose combinations, particularly with oral GLP-1s, potentially down the road? On partnering XUS, any updates there? Have you presented potential partners or had conversations about the novel formulation given there is a stronger IP there? Thank you.

Speaker #8: and then on partnering XUS, any updates there? And, have you presented potential partners or had conversations about the novel formulation given there is a stronger IP there?

Speaker #8: Thank you.

Speaker #5: Great. Thank you for the question. So yes, the answer is, you know, we're a small molecule. And as you know, Lilly, or Fort Griffon, has a small molecule, and they like small molecules because of the fact they're easy to make and not dealing with cold storage like you do with proteins.

Mitchell Steiner: Great. Thank you for the question. Yes, the answer is, we are a small molecule. As you know, Lilly with orforglipron has a small molecule, and they like small molecules because they are easy to make. They are not dealing with cold storage like you do with proteins. They got into trouble, both Lilly and Novo Nordisk got into trouble because they could not keep up with the demand with a protein, where small molecules could easily plug that into contract manufacturers to get your supply. There is a lot, and so the idea is at some point pricing can be more competitive. You get to more patients. There is a real push to go into oral weight loss. Oral weight loss drugs, GLP-1 drugs, GLP-1 receptor agonist targets also have the problem of muscle loss. You could imagine a fixed combination with Inovasarm.

Speaker #5: They've gotten into trouble. But for Lily, and Novo Nordisk got into trouble because they couldn't keep up with the demand. with a with a, you know, a protein whereas small molecules could easily, plug that into contract manufacturers to get their supply.

Speaker #5: So there is a lot and so the idea is at some point pricing can be more competitive. You get to more patients. So there is a real push to go into, you know, oral weight loss.

Speaker #5: Well, oral weight loss drugs, GLP-1 drugs, and GLP-1 receptor agonist targets also have the problem of muscle loss. So you could imagine a fixed combination with an Inovasarm. Yes, the answer is that it can be done and could add additional patent life.

Mitchell Steiner: Yes, the answer is, it can be done and could add additional patent life. You have additional patent life for just having the formulation itself, but to have that formulation with a fixed combination with a GLP-1 could be very interesting. So it definitely can be done. As it relates to partnership discussions, yes, we have been, as I mentioned before, we have been talking to partners. The way to think about it is really two buckets of partners. One is, interestingly, there is a lot of noise about the market, but really on the market, it is only two main players: Novo Nordisk and Lilly. All the others are trying to get their product approved, or further down in the pipeline, in development.

Speaker #5: So, you have additional patent life just for having the formulation itself. However, having that formulation combined with a fixed combination with a GLP-1 could be very interesting.

Speaker #5: So, yeah, it definitely can be done. As it relates to partnership discussions, yes, we have been, as I mentioned before, we have been talking to partners. The way to think about it is really two buckets of partners.

Speaker #5: One is the, you know, interestingly, there's a lot of noise about, the market, but really on the market, it's only two main players. Novo Nordisk and and Lily.

Speaker #5: all the others are trying to get their product approved. or, you know, or further down in the pipeline. in development. So with that said, yes, we, you know, we are talking to, partners in the marketplace.

Mitchell Steiner: With that said, yes, we are talking to partners in the marketplace, and also the second bucket of partners, potential partners, Big Pharma trying to get into the space, and third, potential partners that we are reaching out and having discussions of partners that, you know, the 70 companies plus that are working on a GLP-1 of some sort. Most of them do not have much to differentiate themselves. Again, all of them will have the same issue with lean mass. So, you know, maybe oral to differentiate them, maybe a long-acting GLP-1 receptor agonist instead of once a week, once a month, or something like that could be interesting. But really, to differentiate themselves, if they could have a combination therapy with our drug so that they could address the lean mass loss and have the GLP-1 benefits, could be interesting as well.

Speaker #5: and also the second bucket of partners potential partners, big pharma trying to get into the space. And then third, potential partners with that we're, reach out and having discussions.

Speaker #5: Or partners that, you know, the 70 companies plus that are working on a GLP-1 of some sort. Most of them don't have much to differentiate themselves.

Speaker #5: and again, all of them will have the same issue with lean mass. And, and so so so so, you know, maybe oral will differentiate them.

Speaker #5: Maybe a long-acting GLP-1 receptor agonist instead of once a week, once a month, or something like that could be interesting. But really, to differentiate themselves, if they could have a combination therapy with our drug.

Speaker #5: So that they could they can address the lean mass loss and have the GLP-1 benefits could be interesting as well. So that's another bucket of folks that we're talking to as well.

Mitchell Steiner: So that's another bucket of folks that we're talking to as well. We're very active, and our position at this point is to keep those discussions going along so that we can secure non-dilutive dollars for funding the future studies.

Speaker #5: So we're very active and and, and and our position at this point is, you know, to keep those discussions going along and so that we can, you know, secure non-diluted dollars, you know, for for funding our the future studies.

Speaker #8: Great. Thank you.

Anthea (for Dennis Ding): Great. Thank you.

Speaker #5: Thank you.

Mitchell Steiner: Thank you.

Speaker #7: And And your next question comes from Gary Knoxman with Raymond James. Please go ahead.

Operator: Your next question comes from Gary Nachman with Raymond James. Please go ahead.

Speaker #9: Thanks and good morning. Mitch, what are your expectations for the end of phase two meeting with FDA? And the phase three design that you'll propose to them that you outlined before?

Gary Nachman: Thanks, and good morning. Mitch, what are your expectations for the end of Phase 2 meeting with FDA and the Phase 3 design that you will propose to them that you outlined before where there might be any pushback? If there is any, if it would be on the functional endpoint or patient population or maybe something else? How will you communicate the outcome of that meeting? Will you wait for the minutes first, or will you talk about it sooner with the investment community? Then I have a follow-up.

Speaker #9: Where there might be any pushback if there is any? if it would be on the functional endpoint or patient population, or maybe something else?

Speaker #9: And then how will you communicate the outcome of that meeting? will you wait for the minutes first or will you talk about it sooner with the investment community?

Speaker #9: and then I have a follow-up.

Speaker #5: Great. So I'm going to ask Dr. Gary Barnett to address your first question about our expectations with the what we consider a win for the FDA meeting.

Mitchell Steiner: Great. I am going to ask Dr. Gary Barnett to address your first question about our expectations with what we consider a when, for the FDA meeting. He is our Chief Scientific Officer that heads up our regulatory. Gary, would you like to comment?

Speaker #5: And he's he's our chief scientific officer that heads up our regulatory. So Gary, would you like to comment?

Speaker #10: Sure. Yeah. As as as you know, the the key to all discussions and interactions with the FDA is is obtaining clarity. The FDA has given us clarity before we want to confirm that clarity on the the endpoint.

Gary Barnett: Sure. Yeah. As you know, the key to all discussions and interactions with the FDA is obtaining clarity. The FDA has given us clarity before. We want to confirm that clarity on the endpoint, the population, the dose, etc. I think that the FDA is going to continue to present to us and tell us that a physical function measurement is going to be required. It will not be an incremental weight loss. I think that will be a win. I think that the population, if I had to pick one area where the FDA would want to expand, and they have already told us this one time, is that if you are retaining muscle in this patient population, all subjects lose muscle on a GLP-1 or lose mass on GLP-1 or a treatment.

Speaker #10: the population the dose, etc. I think that you know the I think the FDA is going to continue to to to present to us and and and and tell us that a physical function measurement is going to be required.

Speaker #10: It won't be an incremental weight loss. I think that will be a win. I think that the the population if I had to pick one area where the FDA would want to expand, is and they've already told us this one time, is that if you are retaining muscle in these patient population, all subjects lose muscle on GLUP1 or lean mass on GLUP1.

Speaker #10: RA treatments. I think if you know we have focused on the the older population, the greater than 60 because we believe, and I think the FDA does as well, that this patient population is the highest risk.

Gary Barnett: I think if, you know, we have focused on the older population, the greater than 60, because we believe, and I think the FDA does as well, that this patient population is the highest risk. However, we also do understand that younger patients could benefit from maintaining lean mass and physical function. I think that would be the biggest pushback from the agency is really to expand this because they do and have said that they believe that enobosarm could benefit all the patient population, the entire patient population, not just the older population.

Speaker #10: However, we also do understand that younger patients could benefit from maintaining lean mass and physical function. and I think that would be the biggest pushback from the agency is really to expand this because they do and have said that they believe that the that Inovasarm could benefit all the patient the entire patient population not just the older population.

Speaker #5: Yeah. And and and as a as a result to how we how we plan to communicate the the feedback from the FDA, as you know, you know you have your meeting preliminary comments and then you have a you know opportunity to have further discussion.

Mitchell Steiner: Yeah. As a result, how we plan to communicate the feedback from the FDA, as you know, you have your meeting, preliminary comments, and then you have the opportunity to have further discussion. Based on that further discussion, you have to wait for them to put it back officially in writing. I would say I would guide everybody that a September timeframe, end of August, a September timeframe is probably the timeframe that we should be looking for the FDA clarity. As you know, once we get the FDA clarity, then we will have a much better understanding of the Phase 3 design and what that means in terms of capital needs and that kind of stuff. At this point now, the good news is we have got great data, and we have got great data in the relevant population. We have, you know, the FDA meeting has been granted.

Speaker #5: And and then based on that further discussion, you have to wait for them to put it back officially in writing. So I I would say I would guide everybody that you know September timeframe end of August is September timeframe is probably the timeframe that we should be looking for the FDA clarity.

Speaker #5: And as you know, once we get the FDA clarity, then we'll we'll have a much better understanding of of phase three design and and what that means in terms of capital needs and that kind of stuff.

Speaker #5: So at this point now, the good news is we're at great data. And we got great data and the relevant population. And we have you know the FDA meeting has been granted.

Speaker #5: The packet has been sent way back when, so that everything's cooking. And we are the first. I mean, I know that you've seen results from Scala Rock and from Regeneron and also from Versant, which is part of Lilly.

Mitchell Steiner: The packet has been sent way back when so that everything is cooking, and we are the first. I mean, I know that you have seen results from Scholar Rock and from Regeneron and also from VERSANIS, which is part of Lilly. What you saw in those results is lean mass is kind of hard to hold on to. These GLP-1s are pretty powerful, and incremental weight loss does not occur in, you know, at least six months or sooner. If you go to a year of 72 weeks, you will see incremental weight loss. Sooner than that, you do not. You are holding on to lean mass. You are burning more fat to keep the same weight loss.

Speaker #5: And and you know would you what you saw in those results is you know lean mass is kind of hard to hold on to.

Speaker #5: These GLP-1s are pretty powerful. Incremental weight loss doesn't occur in, you know, at least six months or sooner. If you go to a year, maybe the 72 weeks, you'll see incremental weight loss.

Speaker #5: But you know sooner than that, you you don't. You hold on to the lean mass, you're burning more fat to keep the same weight loss.

Speaker #5: So we've learned a lot of information, and now we're just waiting for the regulatory parts so that we can, you know, have a full understanding of how to take a drug like this into this massive market.

Mitchell Steiner: We learned a lot of information, and now we are just waiting for the regulatory part so that we can, you know, have full understanding of how to take a drug like this, into this into this massive market. I think you said you had a follow-up?

Speaker #5: I think you said you had a follow-up?

Speaker #9: Yeah. Yeah. Just on the modified release formulation, with the reduction in Cmax and dilute Cmax. Would you arguably have an even better side effect profile than the current formulation?

Operator: Yeah, yeah. Just on the modified-release formulation, with a reduction in Tmax and delayed Tmax, would you arguably have an even better side effect profile than the current formulation? How are you confident it will have the overall same efficacy as the IR? What do you have to show FDA for them to allow that new formulation in the Phase 3? Thanks.

Speaker #9: And and how are you confident it'll have the overall same efficacy as the IR? And then just you know what do you have to show FDA for them to allow that new formulation in the phase three?

Speaker #9: Thanks.

Speaker #5: Okay. So Gary, can I ask you to address that?

Mitchell Steiner: Okay. So, Gary, can I ask you to address that?

Speaker #10: Yeah. Sure. you know the safety profile of Inovasarm is is very good. But as as we all know, reducing Cmax and and delayed Cmax it is something the FDA looks at.

Gary Barnett: Yeah, sure. The safety profile of Inovasarm is very good. As we all know, reducing Tmax and delayed Tmax is something the FDA looks at. If anything, it will have a better safety profile, but it is hard to make better on what we already have. What we are doing is we have run the pilot study, and we are running, we will be conducting a formal, relative bioavailability study. That is what the FDA is going to look at. As far as the efficacy goes, efficacy in general for this kind of molecule is dependent on the extent of absorption. That means the area under the plasma concentration time curve, that is the key piece. We are similar between the immediate release capsule formulations and our current, modified-release formulations.

Speaker #10: So if anything, it will have a better safety profile. But it's hard to to make better on what we already have. so what we're doing is we run the pilot study and we're running we you know, we will be conducting a a formal relative bioavailability study and that is what the FDA is going to look at and as far as the the efficacy goes.

Speaker #10: Efficacy in general for this kind of molecule is dependent on the extent of absorption that means the the area under the plasma concentration time curve.

Speaker #10: That is the key piece and we are similar between the the the the immediate release capsule formulations and our current modified release formulation. So we believe efficacy is going to be similar.

Gary Barnett: We believe efficacy is going to be similar, with, if anything, a better safety profile due to the lower Tmax levels.

Speaker #10: with if anything, a better safety profile due to the lower Cmax levels.

Speaker #5: And you're and you're able to bridge and you're able to bridge by the by the study that shows that the AUCs are similar.

Mitchell Steiner: You are able to bridge by the study that shows that the AUCs are similar.

Speaker #10: That's right.

Speaker #5: Okay. And you'll you'll show that the the bioavailability study to them at the end of phase two meeting I presume?

Gary Barnett: That's right.

Mitchell Steiner: Okay. You will show that the bioavailability study to them at the end of Phase 2 meeting, I presume?

Speaker #10: Well, we we will we will be showing it to them as as time goes on. The the end of phase two meeting is really focused on the the trial design or the the meeting we're having with the agencies really focused on the trial design.

Gary Barnett: Well, we will be showing it to them as time goes on. The end of Phase 2 meeting is really focused on the trial design, or the meeting we're having with the agency is really focused on the trial design, with follow-up discussion on the formulation.

Speaker #10: with with follow-up discussion on on the on the on the formulation.

Speaker #5: Okay. Got it. All right. Thank you very much. Thank you.

Mitchell Steiner: Okay. Got it. All right. Thank you very much.

Operator: Thank you. Your next question comes from William Wood with B. Riley Securities. Please go ahead.

Speaker #7: And And your next question comes from William Wood with B Riley Securities. Please go ahead.

Speaker #11: Thank you for taking our questions, and congrats on the quarter, team. I have just been thinking about the sort of the phase three design.

William Wood: Thank you for taking our questions and congrats on the quarter, team.

Mitchell Steiner: am just thinking about the sort of the Phase 3 design. I know this will come up more at the end of Phase 2 meeting this quarter, but it looks like based on at least the proposed 68-week trial design, it is incorporating sort of two RCTs that are sort of combined together, incorporating a dropout portion, and then what may be also described as an add-on portion where patients come on or off enobosarm, testing what happens after these sort of changes occur. I mean, I guess, could you just discuss this plan, you know, maybe where you sort of came up with this, and what you have incorporated from any peers, learnings thus far and into these designs and endpoints? And maybe what endpoints you will be focused on, including cardiometabolic, that may be incorporated in this test?

Speaker #11: I know this will will come up more at the end of phase two meeting this quarter. but it looks like based on at least the proposed 68-week trial design, it's incorporating sort of a two RCTs that are sort of a combined together incorporating a dropout portion.

Speaker #11: and then what maybe also described as an add-on portion will patients come on or off Inovasarm testing what happens after these sort of changes occur.

Speaker #11: so I mean, I guess could you just discuss this plan you know maybe where this sort of maybe where you need to sort of came up with this?

Speaker #11: and what you've incorporated from any peers learnings thus far and and into these designs and endpoints and and maybe what endpoints you you'll be focused on including cardiometabolic that may be incorporated in this test.

Speaker #5: So so I'll make a comment and then I'll have Dr. Barnett answer to both of those questions since he's he's he's a he's a gentleman that came up with the I think a a brilliant trial design.

Mitchell Steiner: I will make a comment, and then I will have Dr. Barnett answer the bulk of those questions since he is the gentleman that came up with, I think, a brilliant trial design. In general, the idea was we had a very successful Phase 2b study in 168 patients. The idea for the Phase 3 is, especially with physical function being the primary endpoint, let us not change too many things because we had a very successful physical function endpoint. As you know, physical function has been a real problem for other compounds, particularly myostatin inhibitors show function. So the lean mass that they put on may not be as functional as a lean mass you put on using the androgen receptor, which is how testosterone puts on lean mass. We know testosterone improves performance, and enobosarm does the same, so it is no surprise.

Speaker #5: in general, the idea was we had a very successful phase two B study. And in 168 patients, and the idea for the phase three is especially especially the physical function being the primary endpoint.

Speaker #5: Let's not change too many things because we had a very successful physical function endpoint. And, as you know, physical function has been a real problem for other compounds, particularly myostatin inhibitors showing function.

Speaker #5: So the lean mass that they put on may not be as functional as a lean mass you put on using the antigen receptor which is how testosterone puts on lean mass.

Speaker #5: And we know testosterone improves performance and Inovasarm does the same. So it's no surprise. So we want to take advantage of our strength, no pun intended, and and make sure that the trial design matches as much as possible what we've already done.

Mitchell Steiner: We want to take advantage of our strength, no pun intended. We want to make sure that the trial design matches as much as possible what we have already done. With that said, there are some other features that Dr. Gary Barnett built into the study that I think will help us understand the efficacy and safety a lot better. Gary?

Speaker #5: With that said, there are some new some other features that Gary built into the Dr. Barnett built into the study that I think will will help us understand the efficacy and safety a lot better.

Speaker #5: So Gary?

Speaker #10: Yeah. In the in in Inovasarm we have really this two buckets of of of efficacy parameters. One is the shorter term, the the lean mass, the physical function, the fat mass, the changes in body composition.

Gary Barnett: Yeah, in enobosarm, we have really these two buckets of efficacy parameters. One is the shorter term, the lean mass, the physical function, the fat mass, the changes in body composition. Then there is a longer term. The two longer-term assessments are incremental weight loss, which you asked about what we have learned from others. Certainly, we see that from VERU-100. Lily, the MAGRAMab product, showed incremental weight loss after 72 weeks, not so much in the earlier points. And then the other is bone. We believe that enobosarm is going to have a positive effect on bone mineral density, and it takes 9 to 12 months for that to really be seen.

Speaker #10: Then there's a longer term, the two longer term assessments are incremental weight loss which which you asked about what we've learned from others. Certainly, we see that from Versantas Lily, Vemagramab product showed incremental weight loss after after 72 weeks.

Gary Barnett: So, as Mitchell Steiner said, we want to keep the shorter term, the lean mass, the physical function, the fat mass, those parameters in this short-term study to mimic and replicate what we have already done in the Phase 2, which was very successful. But we also want to have this longer-term assessment for bone incremental weight loss and also safety. So, the design we have come up with is to implement that. So, we have the double-blind randomized placebo control, first part, up to the efficacy portions for lean mass, fat mass, and physical function. Then we re-randomize the subjects so that we have really, I think we have two groups. One group continuing on enobosarm plus the GLP-1 for the entire 12-plus months. One group on placebo plus GLP-1 for the entire 12-plus months. Then we have two other groups. One is a de-challenge group.

Gary Barnett: So, you imagine, if you will, you have a patient population that is on enobosarm plus a GLP-1 for the first part of the study. We see maintenance of lean mass, maintenance of physical function, increased fat mass, and then you take the enobosarm away. What happens? I believe that the patient will start losing lean mass, et cetera, and that is what we are going to show with the de-challenge. And that is, if you look at the FDA's guidances and rules and so on and so forth, that is one of the parameters or one of the ways you assess efficacy is to de-challenge a patient. The other one is what I am going to call a rescue. So, in the placebo group, you have patients that in the first part of the study have lost lean mass, lost fat mass, of course, and lost physical function.

First part up to uh, up to the the the efficacy portions for lean, mass fat, mass and and and physical function. Then we re randomize the subjects. So that we have really, I think we have 2 2 groups, 1 group, continuing with an overarm, plus the glyph 1, for the entire 12, 12, 12 plus months, 1 group and, uh, on Placebo plus, uh, glyph 1 for the entire 12, Punk, plus month. Then we have 2 2 other groups. 1 is a, d challenge group. So you can imagine, if you will, you have patient population that, that is on a novasar and plus a glyph 1. For the first part of the study, we see maintenance of lean mass uh maintenance of physical function, increased fat mass and then you take the anovas arm away. What happens? I believe that the patient will start uh losing lean mass Etc. And that's what we're going to show with the d challenge and that's if you look at the fda's guidances and and rules and so on so forth, that's 1 of the parameters or 1.

Gary Barnett: Now we are going to take some of that, a proportion of those patients, and actually add enobosarm. So, to rescue the population. This would mimic a population that is already on lean mass or already on GLP-1s, have a deficit of some sort, and now we are going to give them enobosarm. Instead of de novo patients, give them enobosarm and then rescue them. We expect to see an increase in lean mass, further decreases in fat mass, hopefully further decreases in, we believe, further decreases in body weight, and then maintenance or return of physical function. That is the design we have come up with and proposed to the agency. It really encapsulates the short-term efficacy, the long-term efficacy, and safety, and then this de-challenge and rescue portions that I think is innovative.

Of the ways you assess efficacy is to be challenged. Uh, a patient. The other 1 is a is what I'm going to call a rescue. So in the placebo group, you have patients that in the first part of the studies that lost lean mass loss fat, mass of course and lost uh physical function. Now we're going to take some of the some of that a proportion of those patients and actually add an overarm so to rescue the population. So this would mimic population that's already on lean mass or on the on the clip 1.

Gary Barnett: If you think about how this administration is trying to optimize drug development, make drug development more streamlined, more and more informative, I think this study does all those things.

Have a deficit of some sort and now we're going to give them a noice arm instead of denovo patients, give them a novasar and then rescue them. We expect to see increasing lean mass, uh, further decreases in fat Mass hopefully further decreases in in, uh, we believe further decreases in in body weight. And then, uh, uh, uh, maintenance or, uh, return of physical function, that's the design. We've we've come up with and proposed to the agency, it really encapsulates, the short-term efficacy, the long-term, efficacy and safety. And then this d challenge and and, uh, and and rescue portions that I think is innovative. And if you think about how this Administration is trying to optimize drug development, uh, make drug development more, uh, streamline more and more, uh, uh, informative. I think this study does all those things.

Rachel Smith: Appreciate that extra color. Just one more if I may. In terms of expectations on where we may expect the full data from both the induction and the maintenance trials, I am assuming that is going to be upcoming at a conference later this year, or maybe if you could sort of point us in the direction on where we might be expecting that and then what additional color we may gain at those presentations. Thank you.

Mitchell Steiner: Yeah, yeah. So, at this point now, we are targeting a BC week. Abstracts have been submitted. We have not heard back yet because it is still, you know, late in the fall. I think, yeah, I think it was November or something like that. That will be able to provide more data that we have not provided yet. So, that will be in the format in a scientific meeting. Beyond that, it will be, you know, publications. I think the next major data point will be in a scientific meeting, will be a BC week.

And uh so so that will will be able to provide more data uh and that we have not provided yet because of that that'll be in the format and the scientific meeting. And uh and then of course, beyond that will be, you know Publications. But I I think the next major data point will be uh in a scientific meeting will be a BC to the week.

Rachel Smith: Awesome. Thanks again for taking our questions and congrats.

Mitchell Steiner: Sure. Thank you very much.

Awesome. Thanks again, for taking our questions and congrats sure. Thank you very much.

Michael Purvis: Your next question comes from Leland Gershell with Oppenheimer. Please go ahead.

And your next question comes from Leland Gershel with Oppenheimer. Please go ahead.

Michele Greco: Hi, Eric. Morning, Mitch. Thanks for the update and congrats on the progress you've been making. I just have a couple of questions on the new formulation. As we await issuance of the patents from those applications, I just wanted to know if you could share the degree to which your observations were novel and unanticipated based on the technology involved. Also, I guess, because of the confidence that you'll get those patents allowed and also speaking to the defensibility of those patents against potential generic violence down the road.

Hey, good morning Mitch. Uh, thanks for the update and, um, uh, congrats on on the progress. You've been making I just had a couple questions on on the new formulation uh, just as we await issuance of um, of the patents from from those applications. Just want to know if you could share.

sort of the degree to which, um,

You know what what what your observations were novel and unanticipated based on the technology involved and I guess speaking to the confidence that you'll get uh those patterns allowed. And and also speaking to the um, defensibility of those patents,

Against, you know, potential generic filers down the road.

Mitchell Steiner: Gary Barnett and myself have the double team on that one too. I would say that one of the beautiful things about having a novel formulation and a novel formulation formed by existing patents and new patents because of the formulation, it gives you a lot of, almost like a composition of matter type patent because the delivery of the drug is different. Because it is different, two things. One is the fact that people have to, if you are referring to generics, have to match that up. The technology was used is almost like a 3D printing technology where you have multiple, multiple layers of drug being applied. It makes it almost impossible for someone to design around that. That is the power of that technology. We use a very reputable company called Laxon Medical, and this is what they do.

So Gary Barnett and myself have the double team on that 1 too. Um, I I I would I would say that, you know, 1 of the beautiful things about having a novel, formulation and a novel formulation formed by um uh existing patents and new patents because of the formulation. It gives you a lot of a lot of almost like a composition of matter type patent. Um uh because uh because the uh uh delivery of the drug is different. And and because it's different uh 2 things 1.

Mitchell Steiner: We knew that to really button up our patent portfolio, which just to remind everybody, we do have composition of matter for polymorphs that run out in 2034 if you add the PTO. We have method of use patents that will run out in 2044. We have gotten some preliminary feedback from the International Patent Office that their search showed that the claims are novel and there is no prior art. It feels pretty good. That can be highly defensible. Verona Pharma and also Chinook had those kinds of patents, and they were taken out of a multi-billion dollars. Finally, the formulation patents, which I think are key, especially since we plan to use them only in Phase 3 and in commercial. That is the key point. Maybe, Gary, you can comment on what makes it different from a patent protection standpoint.

Uh, uh, 1 is the fact that, uh, people have to, uh, if I think you're referring to generics have to match that up. And then, uh, the technology was used almost like a 3D printing technology where you have multiple multiple layers of, uh, of of drug being applied to, it makes it almost impossible for someone to design around that. And so that's the power of that technology. And and we use a very reputable company called lacson medical and this is what they do. And so uh, so we knew that to really button up our hand portfolio which is you know, just to remind everybody. We do have composition matter for polymorphs to run out in 2034 if you had the PTO. Um we have a method of use patents

Uh, that we went out in 2044, uh, and we have gotten some Plumbing feedback from, uh, International patent office, that the research showed that the claims and novel.

Gary Barnett: Yeah, so it is not an immediate release formulation we have used in the past. We specifically designed this control release formulation that optimizes where the molecule or the enobosarm is released in the GI tract, et cetera, and how long it is retained there. It has, what I believe, is optimized the pharmacokinetic profile for optimal efficacy and safety. As we have talked about before, that is novel. It is new. It is not consistent with any of the, you know, it is different, I should say, from the immediate release formulations that we have used. However, from an efficacy standpoint, it is not different from an AUC standpoint, which I have talked about before, which is the key to the efficacy of this type of molecule.

And the, uh, uh, and there's no prior art, so it feels pretty good and that, that, you know, that can be highly defensible. I mean, uh, uh, Verona Pharma, uh, you know, uh, and also chinuk had those kinds of patents, and they were taking off a multi-billion dollars. And then finally, the formulation patents, uh, which I think are key, especially since we plan to use them only in Phase 3 and in commercial so that that that's that's the the key Point. Um, and maybe Gary you can comment on what makes it uh, different uh, from a from a, from a patent protection standpoint.

Yeah, so it's it's it's not an immediate release formulation we've used in the past, we we specifically designed this control relief.

Formulation that optimizes where the molecule or the Nobis arm is released in the GI tract, etc. and how long it's retained there, and that have, uh, have what I believe is optimized the pharmacokinetic profile for optimal efficacy and safety. So, as we talked about before, so that's, that's novel, it's new, it's not, uh, it's not consistent with any of the, uh, you know, it's it's different. I should say from the immediate release formulations that we've used, however,

Mitchell Steiner: For the FDA, AUC is important. For generics, it is a whole PK profile because they have to match the Cmax and they have to match the AUC exactly. They have certain parameters they have to hit it. By changing that and actually even including a second peak and changing the Tmax, which is how things get released and the time to get released, then it becomes really difficult to crack that nut.

From an Esky standpoint. It's not different from an AUC standpoint, which I've talked about before which is the key to that. So you have to see of this type of molecule.

So for the FDA you see, is it for for the FDA? You see is important for generics? It's a whole PK profile because they have to match to see Max and they have to match the AUC exactly. And they have certain parameters, they have to hit it and by

changing that and it actually even including a second piece and changing the team Max, uh, which is, you know how things get released in a time to get released, then it becomes really difficult to crack that nut.

Michele Greco: Got it. Okay, that's very helpful. Just a question on the Phase 3. Presumably, you'll be building in open label extension beyond the Phase 3B. Just wondering if there's any need that you think from a regulatory standpoint for any additional safety exposure work or if that's pretty much buttoned up with the Phase 3 and the prior work you've done with enobosarm. Thank you.

Michael Purvis: Gary?

Um, 3 pres you'll be building in open label extension beyond the phase 3B. It's just wondering if there's any need that. You think from a regulatory standpoint for any additional safety exposure work, or if that's pretty much sucking up with the phase 3 and the prior uh work you've done with the notes on. Thank you.

Gary Barnett: No, at this point in time, we have not designed an open label monotherapy extension to the study. We believe if you look at the FDA's requirements for non-life-threatening, non-acute dosing, we believe that we will be in compliance with their safety database that they have documented in their guidances and regulations. We do not believe that there is a need for an open label extension for safety reasons. Right now, the design does not include it. We could add some sort of an extension later if there is a need from a commercial standpoint, a potential partner, or the FDA asks us to. But right now, we have not designed anything like that.

Gary.

Yeah, no. We at this point in time, I we have not designed in, in an open label monotherapy extension to the study. Uh, we believe if you look at the fda's requirements for, uh, non-life-threatening non, uh, acute dosing. We believe that we will be in compliance with their safety database, uh, that they, that they have documented in their, in their guidances and regulations. Uh, so we do not believe that there is, uh, a need for, uh, for an open label extension, for safety reasons. Now, you know, we might add something in later on to, to, uh, the right now. The design does not include, we could add a add, some sort of an extension later. If there's a need from a, from a commercial standpoint, uh, potential partner, or the FDA asked us to, but right now we've not designed anything like that.

Michele Greco: Great, thanks very much.

Mitchell Steiner: Thank you.

Great. Thanks very much.

Thank you.

Michael Purvis: Your next question comes from Yi Chen with H.C. Wainwright. Please go ahead.

In your next question, comes from Yi Chen with HC Wayne Wright. Please go ahead.

Michele Greco: Hi, this is Eduardo. I had a quick question again on the Phase 3 trial. You mentioned a particular benefit among patients that can be sarcopenic or have osteoporosis. I am curious if you have any target benchmark for including a specific fraction of the patient population to have those specific comorbidities or if you are just hoping by happenstance, you know, naturally by recruiting from this population, you will get some fraction of them.

Hi, this is Eduardo on for you. I had a quick question again on the Phase 3 trial. You mentioned the particular benefit among patients that can be sarcopenic or have osteoporosis. I'm curious if you have any target benchmark for including a specific fraction of the patient population to have those specific comorbidities, or if you're just hoping by happenstance, you know, naturally by recruiting from this population, you'll get some fraction of them.

Mitchell Steiner: I'll make a comment and I'll invite Gary to make a comment as well. Initially, we thought about that. Then it became, we said, you know, this may be really super screened patients for patients that have sarcopenia or mobility disability as your screening inclusion exclusion type criteria. Then we realized that, you know, hold on, that may not be fair because we do know that patients over the age of 60 lose muscle and as they age, they lose even more muscle. This is not our first rodeo. Previously, we've done studies in our former company, where Dr. Gary Barnett and myself and others have been involved, where enobosarm originated, where we did work in frailty, we did work in cancer wasting. So, we have a pretty good understanding of the patient population, particularly the frail patient population.

I'll, I'll make a comment and then can I have I'll invite Gary to make a comment to as well. Initially. We thought about that, then it became we said, you know, just maybe really super screened. The patients for patients that have a sarcopenia or Mobility. Disability. Uh as your uh screening inclusion, exclusion type criteria. Then we realized that, you know, hold on. Uh, that may not be fair because we do know that patients over the age of 60 uh, lose muscle. And as they age, they lose even more muscle. So, so, you know, this is not our first rodeo. I mean, previously we've done studies in, uh, in in, in our former company, um, and a former company where Gary Barnett and myself and others have been involved,

Uh, we in Ossur originated where we did work in frailty. We did work in cancer wasting, so we have a pretty good understanding.

Mitchell Steiner: We took a bet that we would be able to see detriment in the GLP-1 in a patient population that all we did was pick patients over the age of 60 that took a GLP-1. We learned a lot. The first thing we learned is that GLP-1 is pretty toxic to muscle, period. There's a lot of clues to that that we'll publish on because I think that's very, very important. So much so that even the competitors of myosin inhibitors, the best they can do is about 50% to 60% present lean, and we were able to hit 100%. It's tough in a low-calorie state to hold on to lean. Again, enobosarm was able to do that. So, what we've learned in our patient population is that 44% of these patients had a decline in stairclimb power of greater than 10%.

Of the patient population, particularly the fair application population. So we took a bet that we would be able to see detriment in the glp1 in a patient population and all we did was pick patients over the age of 60 that uh, took a glp1 and and we learned a lot. The first thing we learned is that glp1 is a pretty toxic to muscle period.

Mitchell Steiner: So, essentially, they lost seven to eight years of stairclimb power in 16 weeks. So, I think we have the right patient population as it relates to muscle without having to cut the patient population even tighter. With bone, same thing. Again, we already know the patients over the age of 60 start to lose bone. We also have some clues from the Wegovy label that if you're over the age of 75, that they saw a four to five-fold increase in hip fractures and pelvic fractures. So, it's not just loss of bone, but you know the next bad thing that can happen and the whole reason you worry about loss of bone is it falls and fractures and pelvic fractures and hip fractures are, unfortunately, a kiss of death for older patients. So, I think the patient population is ideal.

And, uh, and there's a lot of Clues to that that were published on. Because I think that's very, very important, I mean so much so that even the competitors of my stat inhibitor is the best they can do, is about 50 to 60% lean and we were able to hit 100%. It's tough and the locality state to hold on to lean. And and again an old son was able to do that. So so what what we've learned in our patient population is at 44% of these patients had a decline in their client power of grade and 10%. So essentially they lost 7 to 8 years of stair, climb power and 16 weeks. So I think we have to write patient population as it relates to, um, muscle without having to, you know, cut the patient population even tighter. Um with bone, same thing. We all again, we already know the patients over the age of 60 start to lose bone. And we also have some Clues from the recovery label

Mitchell Steiner: But I'll let Gary answer what does he think.

That if you, if you owe the age of 75 that, uh, they saw 5 4 to 5 fold increase in Hip fractures and cuffing fractures, uh, uh, so it's not just loss of bone, but, you know, the next bad thing that can happen, and the whole reason, they worry about loss of bone, is it falls and fractures and and, and and pelvic fractures and hip fractures are unfortunately, a kiss of death for older patients. So I think the patient population is ideal, um,

But I'll let Gary answer uh answer it, you know, what does he think?

Gary Barnett: I will answer the muscle and the bone differently. The muscle, what we are really talking about here is drug-induced loss of lean mass and so on and so forth. We believe that with lean mass, we are talking about changes from baseline. A patient that may not be completely sarcopenic, and remember, there are various definitions of sarcopenia, that may not be completely sarcopenic at baseline, they go on a GLP-1, they become sarcopenic. That is what we are trying to prevent with the study and with the drug. We believe that if we stratify the populations correctly based on age and gender and maybe some other thing, that we can account for that and gain enough population of each different, meaning patients that have sarcopenia coming in versus not, et cetera, to be able to analyze it meaningfully.

Gary Barnett: From a bone perspective, remember, about 70%, the FDA requires that 70% of our study be female, or meaning one of the genders, at least 30% of each gender. So, 70% of our population is going to be female. That is the way it worked out in our Phase 2, and I believe that is the way it will work out in our Phase 3. With 70% of that population being female, I believe that with the prevalence and incidence of osteopenia and osteoporosis in that population, even in the obese population, I believe that we will have sufficient numbers to evaluate bone mineral density changes and the effect of enobosarm in that population, if that makes sense.

So forth. So we believe that uh with lean mass we're talking about changes from Baseline. So a patient that may not be completely sarcopenic and remember there's you know various definitions of sarcopenia that may not be completely sarcopenic at Baseline. They go on a glyph 1 they become sarcopenia. That's the that's what we're trying to prevent with the study uh and with the drug. So we believe that the that what if we stratify the population's correctly based on age and gender and and maybe some other things that we can account for that and gain enough population of each different meaning patients that have sarcopenia coming in versus not Etc, uh to be able to analyze it meaninglessly from a bone perspective, remember about 70%, the FDA requires that, 70% of our of our study be uh, be at

Mitchell Steiner: Yeah, just to add to that, if you go again, go back to the Wegovy label. I made the comment that males over the age of 75, males over the age of 75 with hip fractures. The other group that has a five-fold increase in hip fractures and pelvic fractures are just women. So, women in general. They start out with less bone mineral density. I think, again, the issue here is that GLP-1 is inducing the loss of lean and inducing bone loss. We are trying to stop what is happening from baseline as opposed to going after patient population that is full risk. Does that make sense?

Female or meaning 1 of the genders, at least, 30% of each gender. So, it's 70% of our population is going to be female, that's the way it. It worked out in their Phase 2 and I believe that's the way to work out in the phase 3 with 70% of that population being female. I believe that with the prevalence and incidence of of, uh, osteopenia and osteoporosis in that population, even in the obese population. I believe that we'll have sufficient numbers, uh, to, to evaluate bone mineral density changes and and and and, and and the effect of an overarm in that population, if that makes sense.

Yeah. You know, just to add to that. If you go again, go back to the govt label and I made the comment, you know, males over the age of patients. Over the age of 75 is a health of the age 75 with, with hip fractures, uh, the, the other group that has a 5-fold increase in Hip practice in public fractures or just women. So women in general. So they start out with less, you know, the uh, bone mineral density. And so I, I think I again, I think the issue here is the glp1 is is is is is is inducing. The the loss of lean and inducing bone loss and so was trying to stop what's happening from Baseline as opposed to going after patient B.

that, that is, uh,

Michele Greco: Yeah, that's really helpful. And regarding those comorbidities, fractures, and falls, are you also going to be monitoring hospitalizations, fractions associated with these falls to see if there's any more robustness of health attributed to the increase in lean mass or possible bone density?

Uh, full risk. So does that make sense?

Yeah. No, that's that's really helpful and and regarding those comorbidities structures and Falls. Are you also going to be monitoring that hospitalization? Fractions associated with these false to see if there's any more robustness of Health attributed, to the increase in the mass of possible bone density,

Michael Purvis: Gary?

Gary Barnett: So, obviously, any kind of fall fracture would be considered an adverse event. But as we go in the longer study, we will certainly monitor those things, and it will most likely, in my opinion, be an adverse event of special interest.

Gary, yes. Uh, we're obviously at any kind of fall fracture would be considered an adverse event. Uh, but as we go into the longer study, we will certainly monitor those things, and it'll be, in my opinion, most likely an adverse event of special interest.

Michele Greco: Got it. Okay. Thanks so much for the question. Thank you very much.

Mitchell Steiner: Thank you.

Got it. Okay, thanks so much for the questions and for that.

Thank you.

Michael Purvis: Your next question comes from Robert Sassen with Water Tower Research. Please go ahead.

Operator: Hi, good morning. I have a couple of questions. The 17% of the population in the 3 milligram in the Boston group that reported clinically significant stair climb physical function loss, were there any sort of characteristics, you know, obviously outside of, given that that group was generally preserved lean mass? Is there anything, any particular characteristic of that population, subpopulation that you think caused that statistic?

And your next question comes from Robert Sassen with Water Tower Research. Please go ahead.

Hi, well, good morning. Uh, I'm questioning a few, a couple of questions, uh, the 17% of the population in the, uh, 3, uh, 3 milligram in the Boston, uh, um, group that, uh, reported clinically significant stair, climb physical function decline, uh, loss. Uh, were there any sort of characteristics, you know, obviously outside of, you know, given that the that, that group was, uh, generally preserved preserved. Lean mass, is there anything any particular characteristics of that population are population that, uh, think you caused that, uh, that statistic

Mitchell Steiner: To answer the question, the question is you still have 17% of your patients in the 3 milligram group that had a greater than 10% decline in stair climb power.

Operator: Right, yeah.

Mitchell Steiner: Is there something about that group that makes them different? I would say, I don't know at this point except maybe time. In other words, looking at 16 weeks, would you be able to go to 80%? We are already at 83%. Can you reduce that by another 50% if you go another month? It is hard to say except that people start muscle mass at different levels, right? Some have more, some have less. We may be getting those patients that have less muscle mass coming in. I do think with time, as muscle mass, we have seen some internal consistencies that when lean mass comes back, function comes back. Stay tuned.

Chance to send the questions to the question is, do you still have 17% of your patients in the 3 milligram group that has a greater than 10% of their clients? They're going about right? Yeah. So, is there something about that group that makes them different? And I would say, I don't know at this point except maybe time. So in other words, you know, looking at 16 weeks, you know, would you would you be able to go to, you know, 80%, you know, uh, were very 83%. So can you go to can you can you reduce that by another 50% if you go another month. So so it's hard to it's hard to say except that people start the muscle mass at different levels.

Operator: On your extension study for the Phase 2, you had some pretty robust results when enobosarm became a monotherapy. It seems like there is quite a large swing of population. I think I read something like 11% of the adult population in the United States has non-obese sarcopenia. Is that a group of people that you would consider using enobosarm as a monotherapy at some point?

Write some have more, some have less. And uh so we may be, you know, getting those patients after less muscle mass coming in. Uh, but I do think with time is muscle mass, you know we've seen some internal consistencies that were the only mass comes back function comes back so uh so stay tuned.

Mitchell Steiner: Yeah, it's a great question. So, it starts out with the strategy as follows, and we'll see how it plays out. The strategy is to start out with a higher risk patient population, older patients over the age of 60 that are obese but not diabetic. That's the first patient population. The second patient population is younger patients that are obese. Then the third population are going to be older patients and younger patients with diabetes because, as you know, diabetes, GLP-1s are indicated. They may not be obese. They may be taking it for diabetes, and they could get into trouble. Then the other special populations would be, for example, osteoporosis because at this point now, you know, enobosarm could be, you know, potentially used for monotherapy with osteoporosis and for frailty. But the point I'm trying to make is there's so many populations that we can go into.

Uh, in the Boston became a monotherapy. Um, it seems like that, um, there is quite a large suite of populations. I think I read 11 or something like 11% of the adult population in the United States. Has uh non-obese sarcopenia. Is that uh a group of people that you would consider using um in a Barren as a as a monotherapy at some point.

Yeah, to a great question. So uh so the start starts out with uh a strategies as follows and we'll see how it plays out. Strategy is a start out with a higher risk, patient population older patients, over the age of 60 uh that that are obese but not diabetic. And that's a, that's the first patient population. The second patient population uh, is younger patients that are obese. And then the third population, we're going to be older patients and younger patients with diabetes because as, you know, diabetes, G, lp1s or indicated, and they may not be obese. They may be taking in food diabetes and they could get into trouble.

Mitchell Steiner: So, if we can start out with the population that we're doing right now, which has a very, very defined clinical benefit risk population, that's why we selected them. We selected them because we felt that they'll be more informative in terms of function. So, in other words, if you took 32-year-old linebackers that want to lose weight and you're looking for function detriment, it's going to take a little bit more time to show detriment than, for example, a 75-year-old male that has, you know, baseline loss of muscle with age. So, we picked the older population to be informative, and guess what? They were informative. It turns out 44% of them did have accelerated loss of lean and accelerated loss of physical function.

And then the other special populations would be for example, osteoporosis because at this point now uh you know notice arm could be, you know, potentially used for monotherapy or osteoporosis and for Frailty. But but the point I'm trying to make is there's so many populations that we can go into. So if we can start out with the population that we're doing right now, which has a a very very

Mitchell Steiner: So, that's key because, you know, to this date, up to date, most of the data has been in all patients, including young patients, and I think you're going to mask the full effect of the problem until you look at the right patient at the right time. I think that's what we did.

Define clinical benefits of Rich population, that's why we selected them. And we selected them because we found found that there will be more informative in terms of function. So in other words, if you took 32 year old linebackers that want to lose weight and, uh, and you're looking for function detriment, it's going to take a little bit more time to show detriment. And, for example, a 75 year old male that has, um, you know, Baseline loss of muscle with age so. So we picked the older population to be informative and guess what they were informative. If it turns out 44% of them did have accelerated loss of lean accelerated, loss of physical function. So so that's key because, uh, to, you know, to to this date up to date.

Most of the data has been in all patients, including young patients. And I think you're going to mask the form of a factor to the of the problem, until you look at the right patient, at the right time, and I think that's what we did.

Operator: Thanks. One more question. How much, when you start to execute on Phase 3, how much capital do you think you need to, or do you estimate you need to raise?

Mitchell Steiner: At this point now, I think we are so close to getting FDA feedback. I think we should wait and get the feedback because that will sort out what we think the absolute capital raise, capital needs will be. What we have said, what we propose is based on effect size in our Phase 2b, and assuming the effect size will drive, and dropouts will drive your Phase 3 development, we believe that Phase 3 will be in the neighborhood of about 400 patients, 200 per arm. If that is the case, then we are looking at $40 million over 18 months. We just do not know at this point until we talk to the FDA.

Yeah. Thanks uh 1 more question. Uh how much uh when you go when you I'll start to execute on phase 3 how much uh Capital do you think you need to um do you estimate? You need to raise

Well, at this point. Now I I think we're so close to getting FDA feedback. I think we should, we should wait and get their feedback because that that will that will sort out. What we think. The absolute caps will raise Capital needs will be. And uh, what we've said, what we propose is based on um based on effect size in our phase, 2B and assuming

Operator: Yeah, I understand. Got it. Okay, thanks for answering my questions.

The effect size will drive, you know, dropouts will drive your phase 3 development. Now we believe the the the phase 3 will be in the neighborhood of about 400 patients, 200 per arm. And uh if that's the case, then we're looking at a 40% but we just don't know at this point in 2 weeks, talk to the FDA.

Mitchell Steiner: Great, thank you.

I understand got it. Okay, thanks for answering my questions. Great, thank you.

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

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

Mitchell Steiner: I appreciate everyone who joined us on today's call. I look forward to updating all of you on our progress in the next Investors Call. Of course, when we get FDA feedback, we will make sure we communicate that as well. Thank you so much for being on today's call.

I appreciate everyone who joined us on today's call and I look forward to updating all of your progress and next investors call. And of course when we get FDA feedback we'll make sure we communicate that as well. Thank you so much for being on today's call.

Michael Purvis: The digital replay of the conference call will be available beginning approximately 12:00 P.M. Eastern Time today, August 12th, 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 218-4944. Please record your name and company when joining. With that, the conference call has now concluded. Thank you for attending today's discussion. You may now disconnect.

The digital replay of the conference call will be available beginning, approximately 12:00 p.m. eastern time today, August 12th by dialing 1-877-, 3447529 in the US. And 1 1412 317000000888 internationally.

You will be prompted to enter the replay access code which will be 2184944. Please record your name and Company when joining

And with that, the conference call has now concluded. Thank you for attending today's discussion. You may now disconnect.