Veru Inc (VERU) 2022 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to Veru Inc.'s Investor Conference Call. (Operator Instructions) I'd now like to turn the conference call over to Mr. Sam Fisch, Veru Inc.'s Executive Director of Investor Relations and Corporate Communications. Please go ahead.

Good morning. The statements made on this conference call may be forward-looking statements. Forward-looking statements may include, but are not necessarily limited to, statements of the company's plans, objectives, expectations or intentions regarding its business, operations, finances and development and product portfolio. Such forward-looking statements are subject to known and unknown risks and uncertainties, and our actual results may differ significantly from those projected, suggested or included in any forward-looking statements. Risks that may cause actual results or developments to differ materially are contained in our 10-Q and 10-K SEC filings as well as in our press releases from time to time. I would now like to turn the conference call over to Dr. Mitchell Steiner, Veru Inc.'s Chairman, CEO and President.

Good morning. With me on this morning's call are Dr. Gary Barnette, Chief Scientific Officer; Michele Greco, the Chief Financial Officer and CFO; Michael Purvis, Executive VP, General Counsel and Corporate Strategy; and Sam Fisch, Executive Director of Investor Relations and Corporate Communications. Thank you for joining our call. Veru is a biopharmaceutical company focused on developing novel medicines for COVID-19 and other viral and ARDS-related diseases and for the management of breast and prostate cancers. The company has a commercial sexual health division called Urev, which includes 2 FDA-approved products in ENTADFI and new treatment for benign prostatic hyperplasia and the FC2 Female Condom internal condom for the dual protection against unplanned pregnancy in the transmission of sexually transmitted infections. The revenue from the sexual health division is being used to largely fund the clinical development of our late-stage drug candidate assets, which aim to address multibillion-dollar premium market opportunities. This morning, we will provide an update on the COVID-19 Sabizabulin clinical program and franchise, the clinical development of our oncology drug pipeline and the commercialization of our products. We will also provide financial highlights for our third quarter fiscal year 2022. First, I will update you on the status of our investigational drug candidate, Sabizabulin for the treatment of hospitalized COVID-19 patients at high risk for ARDS. We conducted a successful Phase III COVID-19 clinical trial, which was a double-blind, multicenter, multinational randomized 2-to-1 placebo-controlled study, evaluating daily oral 9-milligram dose of Sabizabulin for up to 21 days versus placebo in 204 hospitalized moderate to severe COVID-19 patients who had high risk of ARDS and death. Both the placebo and sabizabulin-treated groups were allowed to receive standard of care, which could include dexamethasone, remdesivir, anti-IL-6 receptor antibodies and JAK inhibitors. Moderate to severe COVID-19 infection patients are those who are hospitalized and require supplemental oxygen with at least 1 comorbidity , noninvasive ventilation force oxygen or mechanical ventilation. Furthermore, patients must have had a peripheral capillary oxygen saturation, less than equal to 94% at room air and hospital admission. The goal was to select patients with high risk for progression to ARDS and death. The primary endpoint was the proportion of patients who die on study up to day 60, not to date 29 like the other Phase III clinical studies reported in the literature. Having a primary endpoint at on day 60 allowed us to capture a more accurate and potentially greater number of deaths caused by COVID-19 infection. Key secondary endpoints measured included the proportion of patients without respiratory failure, days in the ICU, days on mechanical ventilation, days in the hospital and viral load. The study was conducted in the U.S., Brazil, Argentina, Mexico, Colombia and Bulgaria and the COVID-19 infections in the study included both the Delta and Omicron variants.

On April 8, 2022, the independent Data Monitoring Committee conducted a planned interim analysis in the first 150 subjects randomized in the Phase III COVID-19 study. After reviewing the unblinded clinical data, the independent Data Monitoring Committee unanimously recommended that the Phase III study be halted early due to clear clinical efficacy benefit. The IDMC also remarked that no safety concerns were identified.

In this interim analysis, sabizabulin treatment demonstrated statistically significant 24.9 percentage point absolute reduction and a 55.2% relative reduction in all cause mortality by day 60, which is the primary endpoint of the study with an odds ratio of 3.23, 95% confidence interval of 1.45 to 7.22 with a p value equals 0.0042. The beneficial effects of sabizabulin were observed starting as early as day 3 after dosing. And by day 15, statistically significant reductions in mortality were observed. The beneficial effects of sabizabulin treatment on mortality were maintained through date 29, a standard time point for other studies that other studies have used as the efficacy endpoint with a mortality rate of 35.2% for placebo compared with 16% for sabizabulin, which is an absolute reduction of 19.2 percentage points and a relative reduction of 54.5%.

From day 29 to day 60, the death rate increased by 9.9 percentage points in the placebo group and by only 4.2 percentage points in the sabizabulin-treated group, showing that the mortality benefit of sabizabulin was still clinically evident. This efficacy is further supported by the consistency of the mortality benefit across subgroup analyses of the primary endpoint.

Clinically meaningful reductions in death with subisibulin treatment compared to placebo was observed regardless of standard of care treatment received baseline WHO ordinal score, sex, age, baseline comorbidities, BMI or geographic location. In the full overall final data set of 204 randomized patients, the all-cause mortality benefit was similar to the results observed in the interim efficacy analysis population with sabizabulin treatment resulting in a 51.6% well reduction in deaths compared to placebo treatment. In both the interim analysis efficacy and the overall 204 patient study groups, the key secondary efficacy endpoints demonstrated that sabizabulin treatment resulted in a significant reduction in days in the ICU, days on mechanical ventilation, days in the hospital compared with placebo.

Sabizabulin had an acceptable safety profile. Significantly fewer adverse and serious adverse events were reported for sabizabulin compared to placebo. There were also fewer treatment discontinuations due to adverse events in the sabizabulin group compared to placebo. The Phase III reported safety profiles suggests that sabizabulin treatment may have resulted in fewer COVID-19-related morbidities, especially respiratory failure, pneumothorax, acute kidney injury, cardiac arrest, septic shock and hypertension.

The Phase III clinical trial interim efficacy and full study safety results were recently published in the New England Journal Medicine evidence online on July 6, 2022. We're now completing the final clinical study report for the overall study of 204 randomized subjects, and we plan to submit a manuscript of the full data set to a major peer review medical journal soon.

On May 10, we had a pre-emergency use authorization meeting with FDA to discuss the next steps, including the submission of an emergency use authorization application. We were told by FDA to submit the request for EUA. On June 6, we submitted a request for EUA to FDA. As you know, there is no preset PDUFA date to have a decision on a request for an EUA. We know FDA is actively reviewing the application. We have received and have responded to several requests for additional information to help their ongoing review.

FDA has conducted a successful pre-approval inspection of one of our manufacturing facilities. FDA has also already audited 2 U.S. clinical sites with no adverse findings and has scheduled audits of a clinical site in Bulgaria and 1 in Brazil, which should both be completed by the end of August. FDA has informed us that our request for an EU application is a high priority.

Other major regulatory updates. On July 25, we announced that the United Kingdom's Medicines and Healthcare Products Regulatory Agency, the MHRA, considers that the currently available safety and efficacy data will support an expedited review of the marketing authorization application for the company's sabizabulin treatment in hospitalized COVID-19 patients at risk high for acute respiratory distress syndrome when the application is submitted.

On July 27, we announced that the European Medicines Agency, EMA, emergency task force has informed the company that has initiated the review of sabizabulin. For the treatment of hospitalized COVID-19 patients and high-risk for Acute Respiratory Distress Syndrome. The emergency task force's formal press release stated, "The review will look at all available data, including data from the study involving hospitalized patients with modern severe COVID-19 with high risk for acute respiratory distress syndrome and death." The results of this study, which is the New England Journal Medicine evidence publication, would indicate that sabizabulin treatment reduces the number of deaths in these patients compared with placebo."

The review will assist the EU member states who may consider allowing use of the medicine before possible approval. The review is the first -- this review is the first to be triggered under Article 18 of the new EU regulation that expanded the role of EMA during public health emergencies. Not only have we subsequently submitted an application, but we have also -- we also had active discussions with the emergency task force.

We are also in various stages of discussion with regulatory agencies in other countries to obtain regulatory emergency expedited optimization for sabizabulin. Furthermore, we have made great progress in our discussions for advanced purchase agreements with government officials outside the U.S.

As for the commercial manufacturing status for sabizabulin drug product, we have scaled up manufacturing processes and should be able to produce commercial drug supply to address the anticipated drug needs following a potential FDA authorization in the U.S. and potential subsequent authorizations and approvals in other countries and territories.

With sabizabulin and U.S. commercial update, we have hired Joel Batten as Executive Vice President and General Manager of Veru U.S. Infectious Disease Franchise effective May 23, 2022. And most recently, Mr. Batten has been the head of the respiratory syncytial virus RSV franchise at Sobi North America where he's responsible from Synagis business with revenue of approximately $600 million and a team of over 160 employees. Mr. Batten led strategy for the RSV franchise as well as market access, distribution and patient access services. Prior to Sobi, he spent approximately 20 years in a number of positions of increasing responsibility in AstraZeneca MedImmune and Sanofi Aventis in the virus infectious disease franchises, including commercial infrastructure build-out, sales management, marketing, public health sales and government affairs. He has put the core U.S. infectious disease commercial leadership in place. We have contracts executed with the commercial launch teams, market access, medical affairs and distribution services for sabizabulin. We are ready for the launch of sabizabulin to hospitals and for granted emergency use authorization.

We recently presented scientific results in the Phase III sabizabulin clinical program at the International Conference on Emerging Infectious Diseases in 2022 in August 8 in Atlanta, Georgia. The presenter was Michael -- Dr. Michael Gordon, who's Chief Medical Officer and Honor Health Research and Innovation Institute, Scottsdale, Arizona. So here we are. COVID-19 global cases, hospitalization and deaths are on the rise again with an unexpected summer surge. The emergence of serious COVID-19 variants BA4 and BA5 have led to this new surge and these mutated strains have the ability to infect vaccinated patients. The White House warrants that expect over 100 million new cases in the fall and winter.

Over 1 million Americans have died from COVID-19. We must reduce the risk of death in COVID-19. Vaccines are not enough. Antivirals Paxlovid, Molnupiravir target the non-hospital general population who've experienced less than 5 days of symptoms with a narrow therapeutic window of opportunity. Paxlovid cannot prevent COVID-19 infections and is not effective in low-risk population. Antivirals like Molnupiravir do not work in hospitalized moderate to severe COVID-19 patients.

U.S. stats on COVID-19 are now averaging 500 deaths a day and these patients are dying in the hospital. The death rate is unacceptable. It is clear that an effective and safe oral therapeutic to treat hospitalized moderate to severe COVID-19 patients who had high risk with RDS that prevents death is desperately needed. We strongly believe that sabizabulin with its dual antiviral and anti-inflammatory properties can be that greatly needed oral therapy for hospitalized moderate to severe COVID-19 patients as the new standard of care.

We plan to initiate additional clinical studies to evaluate sabizabulin treatment in other populations at risk for death from COVID-19 infection and as a treatment for other viruses that cause ARDS, including influenza A virus, which causes up to 52,000 deaths and 710,000 hospitalizations each year and respiratory syncytial virus, which causes 14,000 deaths and 177,000 hospitalizations each year in the U.S. These additional clinical studies if successful will allow us to expand sabizabulin into other large serious infectious disease indications.

Some of these planned clinical trials include a Phase III randomized, placebo-controlled efficacy and safety study as sabizabulin for the treatment of severe -- the treatment of COVID-19 hospitalized patients who are -- who 3s, which means they're in the hospital, in trouble, but not on oxygen and also the -- who 4s without the presence of a co-morbidity, and so that allows us to approach the other 50% of patients that are hospitalized.

Phase III -- the other trial was a Phase III randomized placebo-controlled efficacy and safety study of sabizabulin for the treatment of hospitalized patients with acute respiratory distress syndrome due to any viral illness.

I will now briefly discuss the progress of our oncology drug portfolio that's focused on breast and prostate cancers. For patients with greater than equal to 40% AR expression, we're actively enrolling a global phase III ARTEST registration clinical trial in approximately 210 patients who evaluate Enobosarm Monotherapy for third-line treatment of AR+ER+HER2- metastatic breast cancer. We've also moved the Enobosarm therapy earlier in the treatment sequence into second-line treatment setting for AR+ER+HER2- metastatic breast cancer. We are actively enrolling in a Phase III, multicenter, open-label, randomized active control registration ENABLAR-2 clinical study to evaluate the efficacy and safety for enobosarm and abemaciclib combination therapy versus an alternative estrogen blocking agent in subjects with AR+ER+HER2- metastatic breast cancer who have failed first line theraprior with palbociclib which is a CDK 4/6 inhibitor plus an estrogen blocking agent who have greather than equal to 40% AR expression in their breast cancer tissue. We plan to enroll approximately 186 subjects in this Phase III clinical study.

We have a clinical trial collaboration and supply agreement with Lilly for this ENABLAR-2 Phase III clinical study. The term of the nonexclusive clinical trial collaboration and supply agreement, Veru is responsible for conducting the clinical trial where Lilly is supplying Abemaciclib for the study. Veru maintains full exclusive global rights to (inaudible)

We've also made good progress in our prostate cancer program. Our first indication is evaluating sabizabulin for third-line treatment of metastatic castration-resistant prostate cancer in the Phase III VERACITY study. We have recently published in clinical cancer research the clinical results of the positive Phase Ib/II study of sabizabulin in naïve men with metastatic castration-resistant prostate cancer who have progressed on at least 1 novel antigen receptor targeted agent. A summary of the results published was that the maximum tolerated dose was not reached in the Phase Ib and the recommended Phase II dose was set at 63 milligrams a day. The most common adverse events, which is greater than 10% frequency at the 63-milligram oral daily dosing in the combined Phase Ib/II data were predominantly Grade 1, 2 events, greater than 3 events included diarrhea at 7.4%, fatigue at 5.6% and alanine aminotransferase and the aspartate aminotransferase elevations of 5.6% and 3.7%, respectively. Neurotoxicity and neutropenia were not observed. Preliminary efficacy clinical data in patients treated with greater than 1 continuous cycle of 63 milligrams or higher, including an objective response rate in 6 of 29 or 20.7% in patients with measurable disease, which is 1 complete and 5 partial responses, and 14 of the 48 or 29.2% of the patients have PSA declines.

Most importantly, the Kaplan-Meier median radiographic progression-free survival was estimated to be 11.4 months with an N of 55 patients and we had durable responses lasting greater than 2.75 years.

These data support the ongoing Phase III VERACITY trial sabizabulin in men with metastatic castration-resistant prostate cancer. So we're actively enrolling an open-label, randomized, 2:1 multicenter Phase III VERACITY clinical study evaluating sabizabulin 32 milligrams versus an alternative anti-receptor targeted agent for the treatment of chemotherapy-naive men with metastatic castration-resistant prostate cancer who have had tumor progression after previously receiving at least 1 androgen receptor targeted agent. The primary endpoint is radiographic progression-free survival. Enrollment for the Phase III VERACITY clinical study is on track, and we expect to enroll approximately 245 patients from 45 clinical centers in the U.S.

Our second clinical study in prostate cancer is evaluating VERU-100, the GnRH antagonist 3-month depot formulation in a Phase II dose-finding clinical study for the treatment of hormone-sensitive advanced prostate cancer. Although this study is ongoing, the preliminary clinical data continues to be promising. As you can see, we have an exciting and treatment paradigm-changing late clinical stage oncology portfolio of drug candidates making great progress in advanced breast and prostate cancers.

Veru has a commercial sexual health division called UREV, which includes 2 FDA-approved products, FC2 for the dual protection against unplanned pregnancy and transmission and sexual transmitted infections; and the FDA-approved ENTADFI tadalafil and finasteride capsule, a new treatment for benign prostatic hyperplasia, also known as BPH. We have built the infrastructure to allow broad market access to FC2 across the U.S. As a result, FC2 is now available through multiple sales channels. We have partnered with fast-growing, highly reputable telemedicine platform companies to bring our FC2 product to patients in a cost-effective and highly convenient manner. Our strategy to continue to drive FC2 sales is as follows: one, we will seek additional telemedicine and Internet pharmacy service partners. Two, we created and launched our own dedicated direct-to-patient telemedicine and Internet pharmacy services platform. This telemedicine platform is now up and running and is expected to be a new source of revenue. The website address is fc2condoms.com. Three, we've increased the U.S. public sector sales by our new agreements with distribution partnerships with global protection as well as (inaudible) We also have ENTADFI FDA-approved new treatment for benign prostatic hyperplasia. The most common side effects of currently prescribed BPH medicines of sexual adverse events, including. (inaudible) ENTADFI has shown to be faster and more effective for the treatment of benign prostatic hyperplasia and finasteride alone without causing impotence. I'm happy to report that we have officially launched ENTADFI and the product is available for pharmacies to dispense. We have partnered with GoodRx, a U.S.-based digital resource for health care to reach their almost 20 million monthly visitors, which includes both consumers and health care providers to build awareness about ENTADFI. There are over 45 million prescriptions filled annually for drugs to treat BPH. We plan to augment our own marketing and sales efforts by seeking additional partners in the U.S. and ex U.S.

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

Thank you, Dr. Steiner. As Dr. Steiner indicated, we have a lot of activity at Veru. Let's start our highlights with the third quarter results for the 3 months ended June 30, 2022. Overall, net revenues were $9.6 million compared to $17.7 million in the prior year third quarter. The prescription business net revenues decreased from $13.5 million in the prior year third quarter to $6.7 million. The reduction is due to business challenges experienced by our telemedicine customers during the quarter, which resulted in a slowdown in orders during the current quarter.

Global Public sector net revenues were $2.9 million compared to $4.2 million in the prior year third quarter. The decrease in sales in the global public sector during the third quarter is due to the timing of tenders. In the prior year, we sold 2.8 million units to Brazil for tenders which have ended and therefore did not repeat in the current year. Gross profit was $7.1 million or 74% of net revenues compared to $13.9 million or 79% of net revenues in the prior year third quarter. The reduction in gross profit and gross margin is driven primarily by the reduction in sales in our U.S. FC2 prescription business. Operating expenses for the quarter increased to $28.9 million compared to the prior year quarter of $16.7 million. The increase of $12.1 million is primarily due to research and development costs, which increased $6.9 million to $18.1 million compared to $11.2 million in the prior year quarter, and the increase in selling, general and administrative expenses of $5.2 million from $5.6 million to $10.8 million in the current period.

The increase in research and development costs is due to the increased number of clinical trials. This quarter, we had 4 Phase III clinical trials and 2 Phase II clinical trials ongoing, while in the prior period, we had 2 Phase III clinical trials in 2 Phase II clinical trials ongoing. The increase in selling, general and administrative expenses is primarily due to the increase in headcount related to the preparations for the commercial launch of ENTADFI and sabizabulin for COVID-19, resulting in increased compensation, increased stock compensation and increased sales and marketing expenses. The operating loss for the quarter was $21.8 million, compared to $2.9 million in the prior year quarter.

Nonoperating expenses were $234,000 compared to $2.7 million in the prior year third quarter and primarily consisted of interest expense and change in the fair value of the derivative liabilities related to the synthetic royalty financing. For the quarter, we recorded a tax expense of $138,000 compared to a tax benefit of $2.9 million in the prior year third quarter. The tax benefit recorded for the prior year quarter is primarily due to the increased value of the U.K. net operating losses due to an increase in the U.K. tax rates from 19% to 25%. The bottom line results for the third quarter of fiscal 2022 was a net loss of $22.2 million or $0.28 per diluted common share compared to a net loss of $2.7 million or $0.03 per diluted common share in the prior year third quarter.

Turning to the results for the 9 months ended June 30, 2022. For the first 9 months of fiscal 2022, total net revenues were $36.8 million compared to $45.6 million in the prior year period. Net revenues from the U.S. prescription business were $29.9 million compared to $32.9 million in the prior year period. Net revenues for the global public health sector business was $6.9 million compared to $11.8 million in the prior year period. The reduction in the prescription net revenues is due to the business challenges experienced by our telemedicine customers in the third quarter. The decrease in sales in the global public sector during the period is due primarily to 9.7 million units sold to Brazil and 2.8 million more units sold to South Africa in the prior year period for tenders which have ended and therefore did not repeat in the current year.

Overall, gross profit was $30.1 million or 82% of net revenues compared to $35.6 million or 78% of net revenues in the prior year period. The increase in gross margin is due primarily to the mix in sales with the U.S. prescription business comprising a larger percentage of total net revenues. Operating expenses increased by $29.4 million to $68.6 million compared to the prior year period of $39.2 million. The increase is primarily driven by research and development costs, which increased by $19.3 million to $43.8 million from $24.4 million in the prior year period. The increase in research and development costs is due to the increased number of clinical trials, which I discussed previously.

Operating loss for the period was $38.6 million compared to an operating income of $14.8 million from the prior year period. The change of $53.4 million is primarily due to the gain on sale of PREBOOST of $18.4 million in the prior year period. The increase in research and development costs during the current year period and the reduction in net revenues and gross profit, which occurred during the third quarter.

Nonoperating expenses were $4 million compared to $5.9 million in the prior year period and primarily consisted of interest expense and the change in the fair value of the derivative liabilities related to the synthetic royalty financing. For the 9-month period, we recorded a tax expense of $225,000 compared to a tax benefit of $2.8 million in the prior year period. The company has net operating loss carryforwards for U.S. federal tax purposes of $38.8 million with $29.7 million expiring in years through 2040 and $9.1 million which can be carried forward indefinitely. Our U.K. subsidiary has net operating loss carryforwards of $63.5 million which do not expire. The bottom line results for the first 9 months of fiscal 2022 was a net loss of $42.8 million or $0.53 per diluted common share compared to net income in the prior year period, which included the gain on sale of PREBOOST of $11.7 million or $0.14 per diluted common share.

Turning to our balance sheet. As of June 30, 2022, our cash balance was $100.6 million and our accounts receivable were $8.3 million. Our net working capital was $100.6 million on June 30, 2022, compared to $136 million at September 30, 2021. During the 9 months ended June 30, we used cash of $26.6 million for operating activities compared with $14.8 million used for operating activities in the prior period. The expected future revenues from sabizabulin for COVID-19, the continued revenue from sales in the U.S. FC2 prescription business and global public sector business, coupled with the expected future revenue from the launch of ENTADFI, and added to our strong balance sheet should continue to be the source of funds we use for commercial activities and to invest in our promising pharmaceutical clinical development programs as we continue to focus on developing novel medicines for COVID-19 and other viral and ARDS-related diseases and for the management of breast and prostate cancers.

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

Thank you, Michelle. In summary, we continue to advance our core, deep, late-clinical-stage breast cancer and prostate cancer programs with 3 actively enrolling Phase III clinical studies, and we have significant revenue generated from our base sexual health business and have authorized, we expect to have substantial future revenue sabizabulin 9 milligrams for hospitalized COVID-19 patients at risk of ARDS. Being opportunistic and successful in developing sabizabulin to COVID-19 has led to the most eventful and transformative period in Veru's history. We are preparing for the U.S. and global commercial launch of sabizabulin 9 milligrams for the treatment of hospitalized moderate to severe COVID-19 patients with high-risk ARDS. As you can see from our balance sheet, we have the resources with these launch activities in the U.S. and global if granted emergency use authorization. Again, we believe this will be an opportunity for significant near-term revenue to Veru.

With that, I'll now open the floor -- the call to questions. Operator?

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

Congratulations on all the progress. Just from me, I guess first up a multipart question. Can you just elaborate on the orders of these clinical sites and how typical this is inserted EUA approval? Any indication at this stage that the 2 upcoming ex-U.S. site audits would be the last? And do you believe the agency may look to continue to order conditional facilities? And then within that, were these facilities picked randomly, gone to the FDA commentary? Or are there any data outliers that may have driven the selection of these orders?

Okay. And make sure I understand the first question, so say it again, the clinical trials, you're talking about the new additional ones?

The clinical sites.

Your first question, it was always about clinical sites. Okay, my bad as they say. So no, I don't -- so first of all, our expectation is that the FDA after they audit these 2 sites, there's no indication that they're going to be auditing additional sites. They've been pretty clear.

As it relates to why they pick these sites, there's no indication that any particular site has an issue. This is done on the GCP. We have an excellent CRO clinical trials. And the impression that we get is that the FDA is checking their boxes as they go through this very important review. And so I see this as routine. I do have with me Dr. Gary Barnette, who's our Chief Scientific Officer. And do you want to add comments to that?

This is generally a standard practice under NDA review where they go into these clinical sites and they pick the clinical sites. The review team selects the clinical sites for things like the number of patients that they put in the study and that kind of thing. So the 2 in the U.S. have been completed without any findings, adverse findings. The 2 outside, it does take a little longer for the FDA to schedule sites outside the United States for audit because of all of the political things that have to go along with that. But we expect these sites to do very well in those audits. But as Mitch mentioned, we do not believe that there'll be any additional audits of clinical sites after these.

Great. I appreciate the additional color. And then maybe just, should you receive an EUA, how should we think about how quickly you can get the product into the hands of the hospitals?

Yes, great question. So we have done a lot of work, thanks to the internal team. And we quickly assembled the team, but it's a robust team. And for things that we can't do internally, i.e., bring -- we brought in sort of the chiefs. We're contracting out with very reputable groups. One of the things that we've also done is we've also signed up a very reputable and massive distribution wholesaler. And because that's really -- that's the way hospitals work, that's where you need to drop ship your product and that distributor is the one that gets it to all the hospitals, and it's very routinely done and very efficiently done.

The one that we picked also is a big player with government contracts as well. And so it's pretty robust. So with that said, if we get the EUA, when we get the EUA and get the word go, we believe it will be somewhere between 9 days to 14 days that we will have the drug available with dispense in hospitals in the U.S.

That's very helpful. Best of luck and congrats.

The next question comes from Leland Gershell from Oppenheimer.

Must be very busy days for Veru. Few questions for me. First, just again with respect to FDA activities heading into the EUA decision. You'd mentioned there had been an inspection of one of the manufacturing facilities. If you could just remind us how many others there may be and if there have been inspections scheduled for those? And how critical those would be for the EUA that you already have one that's been expected. I've got a couple more.

Sure. So to answer your question, we have -- essentially, it was really 3 factors. So we have the API, which is manufactured by Olon Recirca, and they have a facility in Italy and in the U.S. Olon Recirca has clearly been audited by the FDA on numerous occasions, and this is the same API group that makes Molnupiravir for Merck.

And so usually, the FDA doesn't go back to a site that's been recently inspected and they're happy. And so this site, we do not believe will be further inspected by FDA. The second facility is CoreRx, which is the group that put together the drug product and puts into capsules. That group is out of Clearwater, Florida. And they have 8 commercial products, including our product in ENTADFI. And so we know they've been recently audited and inspected, I should say, and they did great. And so we're not expecting another audit, another inspection because they've just been recently inspected. So we're not expecting FDA to go through that group.

We have a packaging manufacturing facility called [Althena]in the U.S., and they have not been inspected by the FDA recently. And so the FDA chose that site to do a pre-approval inspection. And as I mentioned in my comments, that went well. And so from a manufacturing standpoint, I think we're set.

Okay. Great. And then with options for the most severe patients in the hospital, high risk with COVID-19 remaining limited and given the compelling Phase III data, I wanted to ask as you have discussions with both private and public entities out there that will be interested in getting cold and (inaudible) And can you comment on any interest in securing certain amounts upfront? Could you see any APA advanced purchase agreements or any other such agreements to secure supply of visible perhaps materializing for the EUA?

Yes. So the answer to the question, just so we're clear, in the U.S., hospital-based COVID-19 products are handled differently than nonhospital-based COVID-19 products or vaccines. So vaccines, drugs like PAXLOVID and molnupiravir, because it's Part D, D as in dog Medicare, they're handled by government purchases that are then distributed by government, okay?

In the hospital setting, it's much, much more efficient to work through the hospital system. So when you look at all of the hospital-based EUA drugs, they're managed by the DRG payment what they call an NCTAP, which is basically a new technology, COVID technology added payments through Medicare. And they have all other kinds of sweeteners to help the hospitals deal with the complicated DRG -- complicated patients, COVID-19 patients that obviously, the DRG alone is not going to cover it. So they have additional sweeteners.

It seems to work. I mean if you look at remdesivir, which is under the system last year, they brought in almost $1.65 billion in the system. And so I could see why mess with the distribution system. By the way, that's Part A as in alphabet. So that means the hospitals, and this is an important point, that means that the hospitals have to seek reimbursement, not the company. So the company provides product to the wholesaler, and we do that. We book sale. The wholesaler sells it into the hospital. The hospital gets the reimbursement for the DRG, not for the drug itself. And so once it leaves our hands, then we can book it. So it's a very interesting system.

Ex U.S., however, there is -- I mean, ex U.S., there is definitely an advanced purchase agreement system where government, whether it's hospital-based, whether it's out of the hospital, not hospital-based, they buy. And so we, as I said in my comments, we have been contacted and we have been in active discussions literally across the world with groups that are getting ready to understand the drug, to understand how much they want to purchase. And so we're working through that, like I said, across the world.

What's also interesting about that is starting to give us an indication a little bit about demand so that we can make sure that we've made enough for the world. We will have to allocate. As we get into the next year, we will catch up. And -- but one of the things that sort of an interesting wrinkle is that Europe, which has its expanded Article 18, was a little bit of a surprise to us because we didn't really know what the Article 18 was.

And Article 18, it turns out to be a very, very important article because in January of 2022, the EMA recognized they need something similar to an EUA. And consequently, they allow the emergency task force to come up with a preliminary opinion that will allow and provide cover for the 31 member states of the EU to basically order directly on Veru. And that would mean a separate contract with each country that's interested in buying the product, which, as you know, is a different strategy than if you were going to launch commercially in Europe you typically pick certain countries to launch and that kind of stuff. So this is really different. And so that has been triggered and we're in active discussions with the emergency task force in the EU. Same thing with MHRA. And then we've also been in discussions with other groups that have set up either expedited a provisional type processes. So it is -- it does feel different. I mean this is -- the world is preparing for the emergency. They're starting to see the summer surge. They're concerned about the winter and the fall and the winter coming up. For example, in Korea, which is public information, Korea has said publicly in the newspapers they're reviewing sabizabulin. And Korea is the tenth largest economy who's approaching the small country of 50 million people starting to see about 100,000, 110,000 new cases of COVID-19 a day. Their hospitalization rates are going up and their death rates are going up, and they're very worried. And when we speak to them, they're always wearing masks. So they have -- they kept their masks on.

And so we are expecting -- I think it's fair to say we are expecting APAs from multiple locations around the world, territories and countries. However, I think it's clear to say that many of these APAs are going to be triggered by either the EUA authorization in U.S., EMA authorization, emergency use authorization and MHRA authorization. So they're looking for cover in 1 of those 3 agencies. So I think that's clear. Will we have one-offs with certain agencies that do their own work? I'm just getting the impression now having gone to going through this that they really look to the FDA, and they look to the EMA, and they look to MHRA that used to be part of the EMA for guidance. But any 1 of those 3, it'll open up the 80% of the countries that are out there that are interested in getting new drug.

Great. With that Phase II having been up and running for some time, but we may see data from that trial around this time. Just wondering if you could just share any thoughts to expectations as to when we may see any data from that VERU-100.

Yes. So VERU-100 continues to go well. The challenge there is -- it turns out the reason nobody else has figured it out because it's very complicated biologically. You have to -- it turns out for GnRH antagonist that you give us a depot. You have to have a certain level to cause the castration and you have to have another blood level that maintains that castration. And they're different. And we're asking a single injection to do both. And I'm happy to report we can do that. So now we're just optimizing the dose. And I feel very confident that this is going to be a very interesting product for prostate cancer because we know the agonists have their issues. And so we can have an antagonist that can go beyond 1 month. And we have patients clearly beyond 1 month and approaching -- we have some who approached 3 months. So we -- that's why I said in my comments it's promising. But we're optimizing so that this way when we go to the 100 patients in the Phase III, every one of those patients will castrate immediately and maintain their castration for 3 months. So sit tight. I'll be able to provide more clarity, I hope, over the next few weeks.

The next question comes from Chris Howerton from Jefferies.

Great. I guess 2 for me. One would be with respect to the kind of distribution and government assistance with respect to COVID-19 in the United States. I guess how should we be thinking about the status of the public health emergency? And what are some of the influences that we can expect in terms of the categorization of those things and the viability of path forward for the EUA and those reimbursement parameters that you discussed earlier, Mitch?

And then the second question that I have would be related to your capital strategy. Obviously, the female condom business has been excellent and certainly cash producing, a little bit of a slowdown that we detect this quarter. So just wondering if you have any updates in terms of prioritization in terms of cash deployment given that observation?

Yes. All right. So let me answer the first question. So the first question is basically, that's great. You've got the sweetness in. In the hospital setting, it works for remdesivir and other hospital-based products. Essentially what you have is a DRG that has an outlier payment, has a 20% sweetener for COVID. And then on top of that, you have this NCTAP, which is a COVID-added payment that also provides more resources so that hospitals can get close to 75% plus covered. And that's wonderful. I'm glad we have that. But the question -- and it works. And the question is what happens when the emergency goes away?

So first of all, the first fact is that these programs will stay in place until the end of that calendar year. So we're going into the fall and the winter, and we're commercializing the product. The programs will stay in place until the end of that calendar year. It turns out that the emergency is then pushed into the next year, and we've been in this for 2.5 years. And it just doesn't feel like it's going away. And the death rate is pretty close to -- it's been year 1, year 2. So it feels like it will continue. Then that will mean if it goes into January of next year, then they'll be required to pay until the end of January of 2023.

The reason they do that is there are other programs that you can transition into like instead of NCTAP, this is called NTAP. So NTAP has been in place. And again, it's new technology added payment. And NTAP will only work if we have a full approval. So we'll be doing full approval to an NDA. So obviously, what we would be doing it after the EUA is have a meeting with FDA for a pre-NDA meeting and the pre-NDA meeting will allow us to find out whether some of the additional information we need for labelling, et cetera, that will allow us to go from an emergency use authorization to a full approval, and the full approval will then allow us to trigger the NTAP and some of those payments. So there is a strategy to allow us to continue to see robust reimbursement.

As it relates to the capital strategy, yes, we saw a slowdown in FC2. It reminded us why it's important for us not to be reliant on customers, and that's why we created our own direct-to-consumer portal. I think it was a timely move on our part because. It takes time, and it's in, and it's working. It feels good because we are seeing revenue coming in from that portal. And it allows us to be in control of our own destiny as it relates to getting capital. And so in addition to full expectation based on our communications with our customers, the whole telemedicine group across the board got hit as people have transitioned from staying at home to going back out and going back home probably at some point, but being -- it's turning around. And we're expecting fourth quarter to be better, and next year to be even better.

With that said, anything can happen, but that's the signals that we're seeing. And our own portal allows us to have control. ENTADFI is completely new revenue. And as I've said in my comments, we are in discussions with a large telemedicine group that can help us with that. And plus, we're moving very, very actively at GoodRx and market access. And this is an easy one to sell. If you talk to urologists about ENTADFI, which is a combination of erectile dysfunction medicine and a medicine that shrinks the prostate, but it shrinks prostate faster and more effectively than finasteride alone, they get it. And I think this will be, again, another source of revenue.

With that said, the reason we still have $100 million in the bank and we raised that money almost 18 months, 20 months ago is because we've been able to match our spend with the money we bring in. So we know the levers to pull. And so we would do the same thing. So as we -- so we're not waiting for revenue to catch up. We're going to -- we're managing our business so that we can So that we can be efficient in clinical trial, recruitment and getting to commercialization. But again, as you mentioned, we have to prioritize.

So at this point now, we're focused highly on the Novazyme in a second-line setting, in a third-line setting. We have the VERACITY study going. It's Phase III recruiting. And VERU-100 is one of those that is just such an established market that once we can get there that could be a nice cash cow. In the meantime, if the emergency use authorization is granted and we get resources when we drop ship product to the distributor and we're not worrying about reimbursement because that's not what we do. It's not like Part D where you wait for the prescription to be filled. In this situation, once it goes into the wholesaler, we can get the money. Then there is a real opportunity to see significant revenue within 2 weeks or so from the time we get to EUA, which means that we'll have the capital to continue the new Phase III studies for COVID-19 and to maintain our business and become profitable. So we're still -- we still have the fundamental company in place. We have a core oncology business that's doing great. We have the resources to match the spend. And even with the extra spend, as you heard from Michelle, getting ready with the COVID-19 infectious disease franchise, we've done very well to have those resources ready to go. And we didn't have to do a raise and dilute. So I think we've done a good job managing our finances.

I would agree. And congratulations.

(Operator Instructions) Our next question comes from Yi Chen from H.C. Wainwright.

Just to clarify, has the U.K. MHRA already started reviewing package for sabizabulin?

To clarify, what we do first, the way the process works is you have to meet with their COVID-19 task force. So we have to submit the materials to begin that process. And so when we met with them, as we said in the press release, they were so excited about the medicine that the entire task force basically said, you submit because there's a process in MHRA. You submit and we're going to support it for expedited review. And they're the only ones that can do that.

And however, you have to submit. And so what we were waiting for before we submit to the U.K. is the entire data set for all 204 patients, which we've now received. And so we're -- as we speak now, the application is being prepared for submission and then they can start the clock. Once they start the clock, and again, the clock is unclear at this point. But once we have more clarity, I'll be able to share that with you. But that's in place.

So the U.K. MHRA review process and EMA's repeat review process are completely independent from FDA's EUA review process, correct? They will now wait fo FDA's decision to affect their own decision, right?

Yes. So if you look at the emergency use authorizations for molnupiravir, it turned out that the MHRA approved -- had the emergency use authorization done before U.S. So they are very independent. And so just to be very clear, MHRA is independent. EMA, independent. FDA is independent. And if any one of those 3 organizations authorize sabizabulin and about 80% of the countries in the world will take that as a trigger to authorize it in their country.

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

Thank you. I appreciate you joining us on today's call. I look forward to updating you all on our progress in our next investors call. Thank you.

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