Veru Inc (VERU) 2022 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to Veru Inc.'s Investor Conference Call. All participants will be in listen only mode. Should you need assistance, please signal conference specialist by pressing the star key followed by 0. 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. 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, regulatory interactions, 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 Barnett as CFO; Michelle Greco, the CFO and CAO, Michael Purvis, the VP of General Counsel and Corporate Strategy; and Sam Fisch, the 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 oncology. The company has a commercial sexual health program called REV, which includes 2 FDA-approved products in TAF, a new treatment for benign prostatic hyperplasia and FC2 female condom internal condom for the dual protection against unplanned pregnancy and the transmission of sexually transmitted infections. The revenue from the sexual health program is being used partially to fund the clinical development of our late-stage therapeutic candidates, which aim to address multibillion-dollar premium market opportunities. This morning, we will provide an update on our COVID-19 (indiscernible) clinical program, the clinical development of our oncology drug pipeline and the commercialization of our products in the URE program. We will also provide financial highlights for our fiscal fourth quarter and our fiscal year 2022 year-end. First, I will update you on the status of (indiscernible), an investigational drug candidate for the treatment of hospitalized adult COVID-19 patients and high risk for ARDS. We reported positive results from the Phase III COVID-19 clinical trial, which was a double-blind, multi-center, multinational randomized 2:1 placebo-controlled study, evaluating daily oral 9-milligram dose of (indiscernible) for up to 21 days versus placebo and 204 hospitalized monitored severe COVID-19 patients who had high risk for ARDS and death. Both the placebo and subvisible and treatment groups were allowed to receive standard of care treatment, which could include dexamethasone, remdesivir, anti-IL6 receptor antibodies and/or JAK inhibitors. The primary efficacy endpoint of our Phase III trial was a proportion of patients who die on study up to day 60. Key secondary endpoints measured included a proportion of patients alive without (indiscernible) failure, days in the ICU, days on mechanical ventilation, days in the hospital and viral load. On April 8, 2022, the independent data monitoring committee conducted a planned interim efficacy analysis in the first 150 patients randomized in the Phase III COVID-19 study. After reviewing the unblinded clinical data, the independent Data Safety Monitoring Committee unanimously recommended that the Phase III study be halted early due to clear clinical efficacy benefit. The independent data monitoring committee also remarked that no safety concerns were identified. In this interim analysis, (indiscernible) treatment demonstrated a statistically significant 24.9 percentage point absolute reduction and a 55.2% relative reduction in all-cause mortality by day 60. That was the primary efficacy endpoint of the study, and that p-value was 0.0042. The efficacy was further supported by the consistency of the mortality benefit across subgroup analyses of the primary endpoint. Clinically meaningful reductions in deaths with (indiscernible) treatment compared to placebo was observed regardless of the standard care treatment received, baseline WHO ordinal score, sex, age, baseline comorbidities, BMI or geographic location. In the full final data set of 204 randomized patients, the all-cause mortality benefit was similar to the positive clinical results observed in the interim efficacy analysis population, with (indiscernible) treatment resulting in a 51.6% relative reduction in deaths compared to placebo treatment and that p-value 0.0046. Data from the key secondary efficacy endpoints demonstrated that (indiscernible) treatment resulted in a significant reduction in days in the ICU, days on mechanical ventilation, days in the hospital compared to placebo. (Indiscernible) also had an acceptable safety profile, significantly fewer adverse and serious adverse events were reported for (indiscernible) compared to placebo. There were also fewer treatment discontinuations due to adverse events in the (indiscernible) group compared to placebo. The Phase III reported safety profile suggests that cibisabulin treatment may have resulted in fewer COVID-19-related morbidities, especially respiratory failure, pneumothorax, acute kidney injury, cardiac (indiscernible) shock and hypotension. We're proud that the Phase III clinical treatment clinical trial interim efficacy and full study safety results were published in the New England Journal of Medicine evidence in July, which recognizes both the importance of a trial focused on COVID-19 treatment during the ongoing pandemic and the potential clinical benefit of (indiscernible) in hospitalized (indiscernible) COVID-19 patients. We plan to submit a manuscript of the overall 204 randomized subjects to prestigious peer-reviewed medical journal soon. In addition, we are extremely pleased that the clinical results of the Phase III trial of (indiscernible) in COVID-19 patients was highlighted in 2 medical conference presentations this fall, including a late-breaker oral presentation and ID Week. Next, I will share with you our U.S. and ex U.S. regulatory situation and progress regarding (indiscernible) COVID-19. On May 10, 2022, we had a pre-emergency use authorization meeting with FDA. In this meeting, the FDA agreed that no additional efficacy studies would be required to support an emergency use authorization or EUA or an NDA. FDA also agreed that no additional safety data would be required to support an EUA, but the collection of safety data under the EUA, which satisfied the safety requirements for an NDA. Based on that FDA feedback from that meeting on June 6, 2022, we submitted a request for an EU application to FDA. On November 9, 2022, the U.S. FDA's Pulmonary Allergy Drugs Advisory Committee met with the company to review its request for EUA of (indiscernible). Although the advisory committee had a vote of 8 to 5, the known or potential benefits to (indiscernible), when used for the treatment of adult patients hospitalized iCOVID-19, high risk of ARDS do not outweigh the known or potential risk (indiscernible). There was additional discussion by the advisory committee around the possible clinical trial design aspects for a potential confirmatory Phase III clinical trial as a post EUA authorization requirement. FDA will consider the input of the advisory committee as part of their review, but the FDA makes the final decision on the emergency use authorization application. We are in contact with the FDA as they continue to review our request for the EUA. As it relates to our ex-U.S. regulatory updates, on July 27, 2022, we announced that the European Medicine Agency, which is also known as EMAs, emergency Taskforce had informed the company that it has initiated a review of (indiscernible) for the treatment of hospitalized COVID-19 patients at high risk for acute respiratory distress syndrome. The review will assess the 31 EU member states who may consider allowing the use of the medicine before a formal marketing authorization is granted. This review of (indiscernible) is the first to be triggered under Article 18 of the new EU regulation that expanded the role to EMA during public health emergencies in 2022. We have been in active communication with the emergency task force as they complete their review of sizable -- once the emergency task force completes their review, they will submit their formal recommendation to the EMA's Committee for Medicinal Products for Human Use, also known as CHMP. The CHMP then reviews the recommendation and renders an opinion whether (indiscernible) qualifies for emergency use in Europe. On December 2, 2022, we had discussions with the health emergency preparedness and response authority, also known as HarahRA, which is part of the European Commission. Hara is responsible for joint procurement framework contracts, which offers 36 participating countries the possibility to jointly procure medical drugs and countermeasures as an alternative or to complement to procurement at the national level. The joint procurement framework contracts have been previously signed with Gilead, Hoffman La Roche, GSK, and most recently on November 23 with Pfizer. With respect to the United Kingdom on July 25, 2022, we announced that the U.K.'s medicine and healthcare products regulatory agency, again, also known as MHRA, considers that the currently available safety and efficacy data will support an expedited review of the marketing authorization application for the company's (indiscernible) treatment in hospitalized COVID-19 patients at high-risk acute respiratory stress syndrome when the application is submitted. In August of 2022, Australia's Therapeutic Goods Administration, TGA, granted the company an expedited provisional registration and regulatory pathway for (indiscernible) treatment in hospitalized COVID-19 patients at high-risk ARDS -- on November 28, 2022, Veru submitted a regulatory package to the Access Consortium National groups, which includes U.K., Australia and Switzerland. And the Access Consortium is a coalition of these regulatory authorities with therapeutic products that work together to promote greater regulatory collaboration and alignment of regulatory requirements. Also, on November 28, we submitted a regulatory data package with (indiscernible) Health Canada. To recap, we have submitted regulatory data packages and request for emergency use authorizations on an international level to the European Union, the U.K., Australia, Switzerland and Canada as well as South Korea. We are also in various stages of discussions with regulatory agencies in other countries to obtain regulatory emergency expedited authorization to visible in the near term, including Israel, Singapore, Egypt and South Africa. Turning now to (indiscernible) commercialization preparation update. In anticipation of need for potential commercial (indiscernible) drug product, we have scaled up manufacturing processes and have commercial drug supply on hand to address anticipated drug needs following the potential FDA authorization in the U.S. as well as potential authorizations and approvals in other ex-U.S. countries and territories. As an update for the commercialization of Bisio in the U.S.; Joel Batten, our Executive Vice President and General Manager of Veru's U.S. Infectious Disease franchise was hired in May of 2022. Mr. Batten has assembled an experienced leadership team to commercialize ibisibul (indiscernible) in the U.S. This dedicated team consists of 16 employees and 52 contractors that are focused on commercial launch, market access and medical affairs. We have also executed contracts with wholesalers with specialized hospital distribution services for visible -- we are ready for the launches of (indiscernible) hospitals across the U.S. if we are granted emergency use authorization. We also have established Veru International to commercialize (indiscernible) to the rest of the world. Jason Davies joined us in August of 2022 as the Executive Vice President, General Manager of Europe, the Middle East and Africa, Latin America, Canada, U.K. and Asia Pacific for Verus infectious disease franchise for Veru International. Most recently, Mr. Davis held positions as the EMEA Head of Launch Excellence and pharmaceutical portfolio at Janssen, which is Johnson & Johnson Company, where he is responsible for creating and leading a new organization to enhance launch strategy and execution across all of Janssen's EMEA's pharmaceutical portfolio. Over the course of his career, Mr. Dave spent approximately 20 years in several commercial positions of increasing responsibility spread across the Janssen business units, including pharmaceutical business unit P&L responsibility, sales, marketing, market access, integration and strategy with a focus on pharmaceuticals for virology and infectious disease. Veru, Mr. Davis is responsible for developing and leading all aspects of international launch strategy, including government purchase agreements as well as the go-to-market commercial partner and distribution strategy for (indiscernible) and COVID-19 if authorized as well as planned future indications for other viral ARDS-related disease diseases. We received an emergency use authorization from the U.S., EU or in another large market, we plan to initiate in a post emergency use authorization setting any potential additional clinical studies that regulatory agencies request to evaluate (indiscernible) for the treatment of hospitalized moderate to severe covet 19 adult patients in high-risk ARDS and TEF. We're also excited to expand the investigation of (indiscernible) into other infectious disease indications based on the candidate's novel mechanism of action. As we have preclinical data in vivo scientific data that demonstrates that (indiscernible) has activity against H1 and 1 variant of influenza A, also known as swine flu. We plan to conduct a Phase III clinical study to evaluate (indiscernible) in hospitalized adult patients with influenza A, who had high-risk ARDS. Influenza A virus causes up to 52,000 deaths and 710,000 hospitalizations each year in the U.S. alone. We also plan to conduct a Phase III clinical study of (indiscernible) for the treatment of hospitalized adult patients with viral ARDS, kind of in all-comers, which would include respiratory syncytial virus, which alone causes 14,000 deaths and 177 hospitalizations each year in the U.S. As outlined above, (indiscernible) as a novel antiviral and anti-inflammatory agent is positioned to potentially become a valuable treatment option for multiple infectious diseases that can lead to ARDS and life-threatening lung condition that has a high mortality rate. I will now briefly discuss the progress of our oncology drug portfolio focused on advanced breast and prostate cancers. In advanced breast cancer, we are actively enrolling 2 Phase III clinical trials. The first is the RTS registrational clinical study in approximately 210 patients to evaluate enobosarm monotherapy for third-line treatment of AR, ER-positive HER2-negative metastatic breast cancer. Second one is the enabler 2 registration clinical study in approximately 186 patients to evaluate the efficacy and safety of enobosarm and abemaciclib combination therapy versus an alternative estrogen blocking agent in subjects with AR-positive ER-positive HER2-negative metastatic breast cancer who have failed first-line therapy with paplociclic, which is a CD cadence a 4/6 inhibitor plus an estrogen blocking agent and who have sufficient AR expression in their breast cancer tissue. We have a clinical trial collaboration and supply agreement with Lilly for the ENABLE 2 Phase III clinical study. And on the terms of the nonexclusive clinical trial collaboration supply agreement, here is responsible for conducting the clinical trial, while Lilly is supplying abemaciclib for this study. Veru maintains full exclusive and global rights to NovaSom. In the advanced prostate cancer, we are actively enrolling a Phase III and a Phase II clinical trial. We are actively enrolling an open-label, randomized 2:1 multicenter Phase III veracity clinical study, evaluating (indiscernible) 32 milligrams versus an alternative (indiscernible) targeted agent for the treatment of chemotherapy naive men with metastatic castration-resistant prostate cancer who've had tumor progression after previously receiving it least on (indiscernible) targeted agent. The primary endpoint is radiographic progression-free survival. Enrollment for the Phase III of veracity clinical studies on track and ongoing. Our second clinical study in prostate cancer is evaluating VERU-100, a GnRH antagonist 3-month depot formulation in the Phase II dose-finding clinical study for the treatment of hormone-sensitive advanced prostate cancer. Although the study is ongoing, the promising preclinical data demonstrate that VERU-100 has the ability to both induce and maintain castration for 3 months. Veru has a commercial sexual health division called REV, which includes 2 FDA products, FC2 and antatpy. We have built the infrastructure to allow for 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 and highly reputable telemedicine platform companies to bring our FC2 product to patients in the most cost-effective and highly convenient manner. While the telemedicine sector has underperformed across the board this past year, we're anticipating improvement in revenues after a couple of down quarters. Our strategy to drive FC2 sales are as follows: one, we will seek additional telemedicine and Internet pharmacy service partnerships. Two, we have created and launched our own dedicated direct-to-patient telemedicine and Internet pharmacy services platform. We're pleased with its growing source of revenue to date and are committed to expanding its customer base and reach and the website can be reached at fc2condoms.com. We also expect to see continued increase in our U.S. public sector sales through our new agreements with the New York Department of Health and with new distribution partnerships with global protection as well as (indiscernible). We also have in (indiscernible) and FDA approved new treatment for benign prostatic hyperplasia and currently prescribe benign prostatic hypoplasia medicines may lead to the most common side effect of sexual adverse events. And (indiscernible) has demonstrated its faster and more effective treatment option for benign prostatic hypoplasia finasteride alone and does not cause the side effective infinite. We launched this product during the fourth fiscal quarter with a focus on payer agreements as well as executing distribution wholesaler and Medicare contracts. I will now turn the call over to Michele Greco, CFO and CEO, to discuss the financial highlights. Michele?

Thank you, Dr. Steiner. As Dr. Seiner indicated, once again, we have a lot of ongoing activity at Bureau. Now let's review the results for the fiscal year ended September 30, 2022. Overall, net revenues for fiscal year 2022 were $39.4 million compared to $61.3 million in the prior year. The U.S. prescription business net revenues decreased to $30.2 million from $46.5 million in the prior year. The reduction is due to some business challenges experienced by our telemedicine customers during the year, which resulted in a slowdown in orders. Net revenue for the global public health sector business was $9.1 million compared to $13.9 million in the prior year. The decrease in sales in the global public sector during the year is due primarily to 9.7 million units sold to Brazil and 4.9 million more units sold to South Africa in the prior year for tenders, which have ended and therefore, did not repeat in the current year. Overall, gross profit was $30.6 million or 78% of net revenues compared to $47.9 million or 78% of net revenues in the prior year. The reduction in gross profit is driven primarily by the reduction in sales in our U.S. FC2 prescription business. Operating expenses increased to $113.8 million compared to the prior year of $53.4 million. The increase of $60.4 million is primarily due to research and development costs, which increased $37.9 million to $70.6 million from $32.7 million in the prior year and the increase in selling, general and administrative expenses of $22.5 million from $20.7 million in the prior year to $43.2 million in the current year. The increase in research and development costs is due to the increased number of clinical trials. This year, we had 4 Phase III clinical trials in 2 Phase II clinical trials ongoing, while in the prior year, we had 3 Phase III clinical trials in 3 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 TV and potentially (indiscernible) for COVID-19 as well as the launch of the company's own direct-to-patient telemedicine and pharmacy services portal for FC2, resulting in increased compensation, increased stock compensation and increased sales and marketing expenses. Operating loss for the year was $83.2 million compared to operating income in the prior year of $13 million. The change of $96.2 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 and selling, general and administrative expenses during the current year and the reduction in net revenues and gross profit during the year. Non-operating expenses were $316,000 compared to $8.7 million in the prior year, which primarily consisted of interest expense and change in the fair value of the derivative liabilities related to the synthetic royalty financing. For the year, we recorded a tax expense of $236,000 compared to a tax benefit of $3.1 million in the prior year. The tax benefit recorded in the prior year 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 company has net operating loss carryforwards for U.S. federal tax purposes of $112.5 million, with $29.7 million expiring in years through 2042 and $82.8 million, which can be carried forward indefinitely. And the company has U.K. net operating loss carry cords of $63.1 million, which do not expire. The bottom line results for the fiscal year 2022 was a net loss of $83.8 million or $1.05 per diluted common share compared to net income in the prior year, which included the gain on sale of PREBOOST of $7.4 million or $0.09 per diluted common share. Now turning to the balance sheet. As of September 30, 2022, our cash balance was $80.2 million and our accounts receivable balance was $3.6 million. Our net working capital was $63.3 million on September 30, 2022, compared to $136 million on September 30, 2021. As a reminder, during fiscal year 2021, we sold PREBOOST for $15 million in cash and $5 million in notes receivable and completed an underwritten public offering, resulting in net proceeds of $108 million. During the fiscal year ended September 30, 2022, we used cash of $47.5 million for operating activities. The expected future revenues from (indiscernible) for COVID-19 is authorized, the continued revenue from sales of FC2 in the U.S. prescription channel and the global public sector and future revenue from NTT added to our healthy balance sheet should continue to be the primary sources 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, Michele. COVID-19 cases continue to persist worldwide, and hospitalizations and death rates are rising as we head into the winter season. The emergence of COVID-19 variance Q1 and BQ 11 have contributed to this new surge and these mutated strains have the ability to evade immunity, meaning that these variants can affect anyone, including vaccinated individuals. In fact, for the first time, more vaccinated people than unvaccinated people are dying from COVID-19. This (indiscernible) immunity is partly because of the new variants, but also from booster caccines fatigue. Unfortunately, 1,080,000 Americans have died from COVID-19 to date, a series of recent articles, including one by Ariana Cha and Dan Ketan published in the Washington Post entitled COVID-19 becomes a plague of the elderly, reviving a debate over acceptable loss points out nearly 9 of 10 deaths are now in people 65 or older, the highest rate since the pandemic began. With the current standard of care treatment, approximately 300 people are still dying each day. This is unacceptable. We need to do better. We must reduce the risk of death in COVID-19, including in this vulnerable population of individuals over the age of 65, an effective and safe oral therapeutic to treat hospitalized modern to severe over 19 patients who have high risk for ARDS that prevents death is still desperately needed. We strongly believe that (indiscernible) an oral therapy with dual antiviral and anti-inflammatory properties can serve as this new treatment modality that addresses and overcomes a threaded death that hospitalized moderate to severe COVID-19 patients continue to face. While multiple regulatory agencies across the world review (indiscernible) as a potential option for emergency use settings, we are eagerly and proactively preparing multiple work streams in the background. For instance, manufacturing drug supply and scale-up activities are in place. Our U.S. and international commercial infrastructure is ready to provide access to (indiscernible) to hospitalized patients at high-risk ARDS and death in authorized. We continue to live in the world facing a public health emergency as we enter the fourth year of the COVID-19 pandemic. In summary, we continue to advance our core late clinical stage breast cancer and prostate cancer programs with 3 actively enrolling Phase III clinical studies. Our legacy sexual health business comprises of 2 FDA-approved products continues to generate revenue. And if authorized, we expect to have substantial near-term revenue from (indiscernible) 9 milligrams for hospitalized COVID-19 patients in high-risk ARDS. With that, I'll now open the call to questions. Operator?

Thank you. Ladies and gentlemen, at this time, we'll begin the question-and-answer session. To ask a question you may press star then 1 on your telephone keypad. If you're using a speaker phone, 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 2. Please limit yourself to one question and one follow-up. If you have further questions, you may reenter the question queue. Once again, that is star then 1 to enter the question queue. Pause momentarilty to assemble a roster.

Our first question comes from Brandon Folkes from Cantor Fitzgerald. Please go ahead.

Hi. Thank you for taking my question. Congratulations on all the progress. So I guess, no surprise where I'm going to start. But just -- I'll ask my I guess 2 questions that tying kind of roll into each other. So maybe just firstly, can you talk about how much interaction you've had with the FDA post the AdCom and any way to put into context the nature of those interactions? And then secondly, given the proposal to run a potential confirmatory Phase III trial, I'm not saying that's going to happen. But just how quickly could you get a such trial up and running provided it's within the range of maybe what you're expecting the trial to look like, maybe what was proposed. And on that nature, I guess, any risk or how should we think about sort of the one topic of maybe getting U.S. patients and U.S. standard of care? Is there a rush to get it done this winter? Thank you very much...

Okay. So first question has to do with getting a sense of how much interaction we're having with the FDA post ADCOM. And as I said in my prepared comments that we're in contact with the FDA. We are in contact with the FDA on an ongoing basis. And so this is not radio silence by any meeting by any means. So what I can tell you is that we are -- have been actively in communication with the FDA. So that's an important point because as you know, with PDUFA dates, if you don't hear from the FDA, you worry, but we don't have a PDUFA date, but we're hearing from the FDA. So that's number one. So what I can tell you, as I said in my prepared remarks, they are continuing to review the EUA post AdCom. As it relates to the question, I believe the question around the Phase III clinical trials, I guess your assumption is if we have to do the Phase III not under an EUA, post-EUA, you mean just doing it or within it or it doesn't matter.

It doesn't matter. I'm just trying to think about -- if they do ask for additional U.S. exposures, I think with some of the committee members raised, how could continue to get that up and running? And does it need to be this winter versus maybe going to the Southern Hemisphere or having to next year?

Yes. Yes. Well, first of all, if you look at the pattern, we had our surge during the summer, just like Australia. It doesn't seem so far that COVID is really necessarily following the surge concept of other viruses where they tend to happen based on coming together during the winter months. It appears that you're still going to have it even in the summer months when people are going in for air conditioning, I guess, or crowds. But with that said, the strategy this time is to be -- is to have more clinical sites than just U.S., South America and Bulgaria. I wouldn't say there's a rush except the fact that the people dying in standard of care. One of the things that works in our favor. Is that literally thousands of companies have done clinical trials, trying to find a drug for COVID-19 and have failed. And now we're down to a handful of drugs that have emergency use authorization, a full authorization that have a modest at best mortality benefit, (indiscernible) has no mortality benefit and the as the only antiviral in this setting and the anti-inflammatory agents at best with baricitinib, you're getting at about 5.7% absolute benefit in mortality. And so there is an unmet need as the FDA said during the AdCom for a new agent. So I think because we have the data that we have, Phase III study published study, full study to be published that we have a real opportunity with less noise and competition for patients, more clinical sites and with good scientific data showing the mortality benefit that this trial should enroll much more quickly. And our goal is to enroll it as quickly as we can. But the truth of the matter is it still takes about 3 to 6 months to get most of your clinical sites up and running. And the endpoint will be 60 days, so we still have to have 2 months of follow-up after a patient is on the study. And we're even contemplating adding in as a follow-up, not as a primary endpoint, long COVID. You know, long COVID is becoming the next major issue that people are dealing with COVID. So we're going to have a lot of fun with this additional trial in order to answer some of the questions we could not have answered during the ongoing pandemic because we just didn't know those questions to ask. So I think you can look for us to be pretty aggressive in getting that study done. As it relates to the question of -- well, your second question has to do with standard care and rush to get it done. I kind of answered that. So standard of care now, the best we're doing is still dealing with 300, 250 deaths a day on average, and now the hospitalizations are going back up and the lag behind hospitalizations be deaths again. And I think we're also dealing with immunity waning. People are just not getting the booster no matter how much people are asking for boosters. And then we're seeing, quite frankly, that these antibody drugs, particularly the ones in Lilly, that was the only hope that immunocompromised patients had is gone and so they're at risk. So I think what we're seeing is this evolving situation is pointing to standard of care is just not adequate. And rush is that you've got a loved one that's dying and what do you want to do about that. And so I think that as physicians to have this additional tool will be very important.

Thanks, Mitch. I appreciate all. It definitely makes sense. Congrats on the progress.

Our next question comes from Leland Gershell from Oppenheimer. Please go ahead.

Mitch, thank you for the update and for taking our questions. Just to get into specifics to the extent you're able to with respect to the ongoing FDA discussions. Can you say that you are continuing to discuss the design of what may be a confirmatory trial that would be performed under the EUA? Is that a part of the ongoing discussion content?

What I can tell you, which is public, is that the FDA stated in their background package that the design that they laid out was agreed upon by the sponsor. So it's there. And so that's not the top discussion point because that's been agreed upon. I think I can't say much more than that, except right now in the black box of the FDA, they're checking their boxes that they need to check.

Can you comment if there are any particular boxes that are left to check that... That you're working to check?

I can't say much more.

Okay. And then with respect to the other countries, has there been any change in tender in their interest since the advisory committee and whether there has or not or whether you can comment or not, are you aware of any dependence on what the EWaydecision outcome will have in terms of what those ex U.S. decisions may be versus independent -- what could be independent emergency authorizations and other places irrespective or prior to an FDA decision?

Yes. So let's see if I can give you some color on that. So the question is basically, have you noticed any changes in the interactions that we're having with other governments that are reviewing our application based on the advisory committee. And the answer is no. In fact, what we see is an intense discussions with other regulatory agencies outside the U.S. To put this in perspective and using remdesivir as an analog, especially the last 6 months that was reported by Gilead, almost 52% to 53% of their revenue, they reported, I think, revenue of $1.9 billion for the first half of the year was coming from outside the U.S. and a big bulk of that was coming from Europe. The point I'm trying to make is that when you're looking at the COVID-19 drug, the the split of 65% in the U.S. and 35% outside the U.S. that doesn't make sense. It's very different. And when you look at that, the major markets then turn out to be Europe and all the countries that follow Europe. So if Europe gives you an emergency use authorization similar, then 80% of the countries outside of Europe will use that authorization as part of their review or in lieu of their review, okay? Because -- and it makes sense. So if you get U.S., you get Europe, you get both, and those are the major markets, you're good to go and have significant revenue. But I will tell you that there has not been at all any change in the interactions that we've had with -- as I mentioned in the prepared comments, with multiple agencies and the multiple agencies remain engaged and active in their review. And so no, the answer is no. The answer is it appears to be quite independent. And as I mentioned, the FDA is still reviewing the application. So I'm not quite sure what to make out of the outcome.

Okay. And then just one question on the other development programs. Just with our test and veracity, I believe you had indicated around the time that those trials were getting going that we could see enrollment starting to complete kind of in this time frame. Just wanted to ask about enrollment progress with those. And if you do see those either or both trials, perhaps completing enrollment by year-end or what that time frame is looking like?

Yes. So the time frame still looks like data in end of next year kind of time frame, they're event-driven. And so enrollment is still consistent with that. But that's all I can say at this point.

Okay. Thanks for taking the question.

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

Hi, good morning. Thanks for taking the question. I guess two for me. One would be with respect to the FC2 and in TADF part of your business, what measures are you going to take in your own internal hub to kind of combat some of the challenges that your partner had for the telemedicine I guess, to give you confidence that, that will be a sustainable business. And then I guess I'm just curious if you can give us some more color around liquidity and your cash runway in a scenario where (indiscernible) is launched, what would be your cash needs to launch such a drag? And in a scenario where maybe there's a longer delay, how do you see your current cash reserves being deployed against your plan? Okay. Thank you for your questions.

So the first one on FC2 in that part of the business, I'm going to answer, and I'm going to have Michele answer the question on liquidity. As it relates to FC2, so we've had 2 down quarters and the telemedicine market. We have 2 customers that in the telemedicine space that that make up a significant portion of that revenue, and they had a down year, we get to have a down year. If you look across telemedicine, you already know, you can see that they're still going through some pains right now. With that said, I'm happy to report the way we're handling that to maximize our revenue is threefold. One is to make sure to make sure we do everything in our power to help our partners. And I will tell you that the indications at this point is that whatever that hiccup was this last 2 quarters, it's turning around. So they're figuring it out as well. And so our expectation is to see an increase in revenue, increase in orders -- and wherever that new normal is, they're back -- they get their back. So they've gone from struggling to headwinds to -- it looks like they sort of figured it out. And again, time will tell, but it feels good that at least our main customers will get back, which means we'll start to see significant revenue come back. But what we didn't sit on our hands, we went ahead and realized that what would be better than depending on customers to buy product from us would be to have a telemedicine hub of our own. And that really has played out very, very nicely because it puts us in control of our destiny. And so what we've done -- what that means is you have to put all the components together, you have to have the doctors, you have to have the website, we have the product, and you have to have the ability to fill the prescription and you have to have the ability to deal with insurance and all that all that's in place. And what we're finding is there is a direct correlation between marketing spend and people buying the product and wanting the prescriptions. So I'm happy to report that, that looks incredibly viable and we'll really supplement the revenue going forward. And it took us about a year to put it together, but it's -- but it's been pressure tested and now we're going to expand that. So we're again seeing an opportunity for revenue from that standpoint. And TAFD's early days because most of it has been trying to get insurance, Medicare wholesaler contracts in place because of the FDA wanting sort of release criteria, we didn't agree upon until later in the year. We really didn't have but a fiscal year -- fourth quarter fiscal year 2022 as an opportunity to launch. And that's a little behind there, but we'll try to do our best to make up. So UAVs with $39 million in revenue this past year, that's real money that our investors don't have to come up with that we can use to help invest and move our pipeline. With that, I'll turn it over to Michele to talk about liquidity in the event that we've launched (indiscernible).

Sure. So in the event we launched the visible I'd like to point out that our drug spend was around $70 million this year and slightly over half of that was related to COVID. Our COVID trial included in that with over 60% of those costs were related to building up the material to get our drug ready so that when we're ready to launch, we have the drug ready. You can see, as I noted, we built the team. And so we have those expenses that ran through this past year in our fourth quarter. We built a team in the U.S. We've put all the vendor contracts in place. We have the people up and going. We have our strategy ready to deliver -- so from a liquidity standpoint, we've already invested in this drug, and we're ready to go. We're not going to be needing to get additional liquidity other than what we generate from our business. As Mitch indicated, there's a lot of things that we're doing on the ERP side to get things up and going there and working on increasing some of those revenues. In the event that we don't launch the COVID drug, as the company -- as we've demonstrated over the years, -- we're very good at managing our cash and managing and prioritizing all of our drugs under development. Those are the levers that we have to work on is how quick we push different drugs through the trial and how much we can slow them down. So for us, from a liquidity standpoint, we're looking good between our balance sheet and what we can get from URS and how we can manage our business, liquidity is a concern for us, whether we launch the drug or if the drug isn't launched this year.

If you want to ask a question please press star then 1. Our next question comes from Yi Chen from H.C. Wainwright. Please go ahead.

Thank you taking my question. When do you expect the FDA to issue its final decision on the EU application -- and do you think it could occur before the end of 2022?

I will tell you that -- and you can appreciate this, I've given up on guessing when the FDA is going to do make a decision, okay? I just -- the FDA does what the FDA does. And I just scratch my head because we're dealing with an agent that has an incredible mortality benefit -- and so I'm curious I'll give you any sense at all because my guidance initially was that we expect this sooner. And so it's not -- there's a great need out there and even the FCA said so. So this -- I just can't -- I can't give any more color than that. And we just have to look at FDA work through their process. And this is true also for the is also true to the other regulatory agencies. And -- but what I can tell you is that and they're all sincerely doing their work.

Okay. So for the fiscal fourth quarter, there appears to be a sharp decline in terms of revenue from FC2. So could you comment on the the current trend of the U.S. prescription for FC2. And how much revenue contribution you expect to get from the launch of intent going forward? And also, could you also comment on whether the operating expenses will be on the level -- on the same level as observed in the fiscal fourth quarter going forward?

Yes. So if you don't mind me ask Michele to answer those 3 questions. I'll just -- the first question being the FC2 decline and second, being related to the contribution and the third related to operating expenses -- relative contributions in TADF and the third one is our operating expenses. My color to the first question is we're already seeing the turnaround. So we believe that the fourth quarter is hopefully going to represent the bottom. And now with all these other levers have been increasing revenue in place plus seeing actual life coming back to telemedicine. It feels like we're going to see more revenue. But I'll let Michele answer. Michele?

Sure. As Dr. Steiner indicated, yes, we're working with our customers. We've added some customers this year. And we're projecting that we're going to be seeing a turnaround here. The turnaround isn't instant, but the turnaround is coming for the FC2 business, both in the U.S. and the prescription channel in the global public sector in the U.S., we did add a new distributor this year that's really helping drive those increased sales. And then in the global public sector, in the global public sector, it's a matter of timing related to these tenders don't always a strict cadence in agencies on when that happens. But right now, the South Africa tender is we're starting to see sales that are coming back under their newest tender. In TAFD is going to slowly increase Again, a lot of that is getting some of the back office infrastructure in place. And then it's to allocate some money and marketing dollars to spend to push that launch. And right now, as I indicated in discussing liquidity, we're managing our cash spend, and we're looking at the trade-offs and what we're doing with our cash spend. And so that's going to be a trade-off we're going to look at as to how much we're going to put behind marketing spend for TAFD versus what we're going to be doing with that cash to spend for a launch for COVID. As far as the level of operating expenses, as Mitch indicated, we brought on Joe Bettonand he brought on his team, all primarily in our fourth quarter of 2022. So the increase in our SG&A expense in the fourth quarter is driven by building out that team. We've started now to build out an international team, but that's just starting. And so our operating expenses, if we go ahead with the launch are going to be closer to those expenses that you look at in the fourth quarter of this past fiscal year and to continue there and then to build as we build out a commercial team ex U.S.

Okay, thank you.

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.

I appreciate everyone who joined us on today's call, and I look forward to updating you all on our progress at our next investor call. Thank you.

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