Veru Inc (VERU) 2025 Q4 法說會逐字稿

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

The statements made on this conference call may be forward-looking statements. Forward-looking statements may include, but are not necessarily limited to, statements of the company's plans, objectives, expectations or intentions regarding its business, operations, regulatory interactions, finances, and development of 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 Chief Administrative Officer; Philip Greenberg, General Counsel; and Sam Fisch, Executive Director of Investor Relations and Corporate Communications. Thank you for joining our year end fiscal year 2025 earnings call. Veru is a late clinical stage biopharmaceutical company focused on developing novel medicines for the treatment of cardiometabolic and inflammatory diseases.

Our drug development program consists of two new chemical entity small molecules, enobosarm and sabizabulin. First one is enobosarm, an oral selective androgen receptor modulator, SARM, is being developed as a next-generation drug that makes weight reduction by GLP-1 receptor agonist drugs more tissue selected at fat loss with preservation of lean mass. This activity is intended to lead to greater weight loss by improved body composition and physical function compared to a GLP-1 receptor agonist treatment alone with a focus on older patients with obesity.

Our second asset is sabizabulin, a microtubule disruptor and is being developed as a broad anti-inflammatory agent to reduce vascular plaque inflammation to slow the progression of promoted regression of atherosclerotic cardiovascular disease. This morning, we will focus on the update of our obesity program, and we'll also provide the financial highlights for our year-end fiscal year 2025.

Now let's set the stage with the recent FDA guidance on obesity drug development. The FDA defines obesity as a disease of excess body fat and as such, the medical objective to treat obesity should be to reduce excess body fat, not to reduce lean mass. Reduction of fat mass ultimately leads to the improvements in morbidity and mortality associated with obesity.

GLP-1 receptor agonist have been shown to produce significant weight loss in patients who are overweight or have obesity. Unfortunately, the weight loss is tissue nonselective with the indiscriminate loss of both significant lean mass and fat. Of the total weight loss up to 50% is attributable to lean mass. Although the GLP-1 receptor agonist treatment results in profound weight loss, the strategy for the next generation of obesity drugs should be a combination therapy with GLP-1 receptor agonist to only lose fat while preserving lean mass in physical function for a quality weight reduction.

Now when we started our Phase IIb quality clinical trial evaluating enobosarm as a muscle preserving drug in patients with obesity receiving a GLP-1 receptor agonist for weight reduction about two years ago, it was unknown at the time how any muscle anabolic drug would perform in this unique new patient population.

The companies that were in Phase II testing stage were Lilly, Versanis, Scholar Rock and Regeneron with injectable agents in the myostatin inhibitor class and Veru with an oral enobosarm from a different class called SARM. Fast forward to today, all these companies, including Veru have reported their Phase II clinical results.

In fact, Veru was the first company to report these clinical data in January of 2025. And by September of 2025, Veru also obtained FDA regulatory clarity to advance the clinical development of enobosarm in combination with GLP-1 receptor agonist as a muscle preservation agent in augment fat loss. Our completed positive Phase IIb quality clinical trial results were critical as they demonstrated that oral enobosarm could be that next-generation drug in combination with GLP-1 receptor agonist to make the weight loss journey more selective by losing fat while preserving lean and physical function in older patients who have obesity with a positive safety profile.

Now turning to the results of the Phase IIb clinical trial, this time with a focus on the 3-milligram enobosarm dose that has been selected for the next clinical trial. First, I will highlight the results for the 16-week active weight loss period of the treatment with enobosarm 3-milligrams or placebo in combination with semaglutide. The enobosarm 3-milligram plus semaglutide group met the primary endpoint of the study, preservation of total lean mass with a statistically significant 100% average preservation of total lean mass compared to placebo plus semaglutide treatment group at 16 weeks.

The enobosarm semaglutide treatment resulted in a dose-dependent greater loss of fat mass compared to placebo plus semaglutide with the enobosarm 3-milligram group having a 12% greater fat loss at 16 weeks. Even with having preserved lean mass, enobosarm 3 milligrams for semaglutide treatment resulted in a similar mean body weight loss and semaglutide alone at 16 weeks.

However, it should be noted in a subset analysis of the subjects receiving enobosarm 3 milligrams who had a baseline BMI of greater than equal to 35, incremental weight loss was observed at 16 weeks. This was weight loss of 4.7% for semaglutide versus a minus 5.58% for enobosarm 3 milligrams plus semaglutide treatment group. But when you look at the proportion of patients that lost at least 5% of the body weight at 16 weeks, it was 47.4% for semaglutide versus 65.4% for enobosarm 3 milligrams plus semaglutide treatment group.

This weight loss occurred even with 84% preservation of lean mass in the subset of patients receiving semaglutide on enobosarm 3 milligrams. Now the tissue composition of the total body weight loss on average was 34% lean mass and 66% fat mass in the placebo semaglutide group, whereas for enobosarm 3 milligrams and semaglutide group, the weight loss was 0% lean and 100% fat mass.

Now we measured physical function by the stair climb test. This was a prespecified responder analysis, and this was conducted using greater than 10% decline in stair climb power as a cutoff at 16 weeks, which is a decline that represents approximately seven to eight years of loss of stair climb power that naturally occurs with aging, but it occurred in this case in 16 weeks.

Semaglutide alone resulted in a loss of physical function as much as 44.8% of the placebo plus semaglutide group had at least a 10% decline in stair climb power at 16 weeks. The Phase IIb QUALITY study is the first to confirm that older patients with obesity receiving a GLP-1 receptor agonist indeed had a significant and relevant physical function decline and picked up as early as 16 weeks on treatment.

In contrast, enobosarm 3-milligram treatment reduced the proportion of patients receiving semaglutide to 17.6% who experienced a greater than 10% decline in stair climb power. This represents a 59.8% relative reduction in the proportion of patients receiving enobosarm who experienced a greater than equal 10% decline in stair climb power.

Now for the maintenance extension portion of the study, where all patients discontinued semaglutide treatment but continued receiving placebo enobosarm 3 milligrams as monotherapy for 12 weeks, results were - for the placebo monotherapy group, they actually regained 43% of their body weight that was previously lost during the active weight loss period of the Phase IIb QUALITY study, the mean percentage change of 2.57%, basically 5 pounds, they gained back in body weight compared to 1.41% or 2.73 pounds for the 3-milligram enobosarm group.

This means that the 3-milligram enobosarm monotherapy significantly reduced body weight regained by 46% after discontinuing the semaglutide.

But by the way, the mean tissue composition of the body weight that was actually regained was 100% lean mass, not fat for the enobosarm 3-milligram group compared to 28% fat and 72% lean mass in the placebo group. In fact, by the end of the 28-week study, the enobosarm 3-milligram plus semaglutide arm followed by the enobosarm 3-milligram monotherapy regimen was more effective in preserving 100% lean mass and losing 58% more fat compared to the group receiving placebo plus semaglutide followed by placebo monotherapy alone.

As for safety, at the end of the 16-week active weight loss period, enobosarm and semaglutide combination had a positive safety profile and enobosarm did not have any added gastrointestinal adverse events compared to semaglutide alone. For the maintenance extension period of the clinical trial, where semaglutide was stopped for 12 weeks, enobosarm monotherapy also had a positive safety profile. And after discontinuation of semaglutide, there were essentially no gastrointestinal side effects.

No evidence of drug-induced liver injury, no increases in obstructive sleep apnea were observed at any dose of enobosarm compared to placebo monotherapy. There were no adverse events related to masculinization in women, and there was no adverse events related to increases in prostate-specific antigen, which is PSA, in men.

So in summary, Phase IIb QUALITY clinical trial confirms that by preserving lean mass and physical function with enobosarm plus semaglutide led to greater fat loss during the active weight loss period and after semaglutide was discontinued, enobosarm monotherapy significantly prevented the regain of body weight and fat mass such that by the end of the 28-week study, there was a greater loss of fat mass while preserving lean mass for higher quality weight reduction compared to the placebo group.

Next, I will update you on the enobosarm clinical development plan. Because this field is very new, the regulatory landscape continues to evolve for muscle preservation drugs for the treatment of obesity. According to the FDA feedback on Veru's clinical development program for enobosarm, FDA has guided us that there are at least two possible regulatory pathways forward for the development of enobosarm in combination with GLP-1 receptor agonist that are based on incremental weight loss.

First, incremental weight loss with at least a 5% placebo-corrected weight loss difference at 52 weeks of maintenance treatment with enobosarm in combination with GLP-1 receptor agonist treatment compared to GLP-1 receptor treatment alone is an acceptable primary endpoint to support efficacy for approval.

Second, and alternatively, if the incremental weight loss difference of less than 5% is less than 5%, including similar weight loss is observed at 52 weeks of maintenance treatment, but you have a clinically significant positive benefit such as a clinically beneficial preservation in physical function, enobosarm in combination with a GLP-1 receptor agonist may also be acceptable to support efficacy for approval.

Accordingly, with this feedback from the FDA and building on the clinical data from the Phase IIb clinical -- excuse me, Phase IIb QUALITY study, what would be the best patient population with obesity to target with a combination of enobosarm and a GLP-1 receptor agonist.

An emerging common and serious clinical and therapeutic challenge with GLP-1 receptor agonist monotherapy is that most patients with obesity by the end of one year of GLP-1 receptor agonist maintenance treatment hit a weight loss plateau. The weight loss plateau occurs when the patient with obesity stops losing additional weight while on the GLP-1 receptor agonist.

In the SURMOUNT-1 clinical study conducted by Eli Lilly and Company, about 88% of patients with obesity receiving tirzepatide reached a weight loss plateau by 60 to 72 weeks. Unfortunately, 62.6% of these patients still had clinical obesity at the time they reached the weight loss plateau.

Further, if they start the GLP-1 treatment with a baseline BMI of greater or equal to 35, then these patients was, on average, still found to have clinical obesity at the time they hit the weight loss plateau. Interestingly, one of the therapeutic interventions being considered for this patient population is bariatric surgery to address the GLP-1 receptor weight loss plateau.

To address this growing weight loss plateau population, a novel combination of a GLP-1 receptor agonist, which works by telling the brain to reduce appetite, combined with enobosarm, which is designed to directly burn fat and to directly preserve muscle to increase physical function and burn more calories could break through this weight loss plateau, leading to incremental weight reduction, thereby increasing the number of patients with obesity who actually achieve and maintain a normal BMI and weight.

Our next study will target this patient population. The planned Phase IIb PLATEAU clinical trial will measure incremental weight loss in this target population who have more weight to lose with a BMI greater than 35 and more at risk for physical decline in physical limitations, aged greater than equal to 65 to assess the ability of enobosarm treatment to break through the weight loss plateau and help us also to better inform the design of the Phase III development program.

Now for the planned Phase IIb PLATEAU clinical trial, we will evaluate the effect of enobosarm 3 milligrams on total body weight, physical function and safety in approximately 200 patients who have obesity, BMI greater than equal to 35 and who are older, age greater than equal to 65 and are initiating a GLP-1 receptor treatment for weight reduction. The primary efficacy endpoint of the study will be the percent change from baseline in total body weight at 72 weeks. An interim analysis will be conducted at 36 weeks to assess the percent change from baseline lean body mass and fat mass as measured by DEXA scan.

Since we want to continue to evaluate enobosarm as a muscle preservation and body composition drug, the key secondary endpoints will be function endpoints, physical function stair climb test, mobility disability status, which is functional limitations and patient-reported outcome questionnaires for physical function such as the SF36, PF10 and the IWQOL-lite CT physical function PROs. As well as body composition endpoints, total fat mass, total lean mass, and bone mineral density.

As for our financial position to fund the Phase IIb program, as of September 30, 2025, our cash and cash equivalents and restricted cash balance was $15.8 million and subsequent to September 30, 2025. On October 31, 2025, we completed a public offering that resulted in net proceeds to the company of approximately $23.4 million. The clinical study is expected to begin in the first quarter of calendar year 2026.

An interim analysis to assess change in lean mass and fat mass as measured by DEXA will be conducted at 36 weeks and is anticipated to be in the first quarter of calendar year 2027. I will now turn the call over to Michele Greco, CFO, CAO, to discuss the financial highlights. Michele?

Thank you, Dr. Steiner. On December 30, 2024, Veru sold the FC2 Female Condom business to Clear Future Inc. The purchase price was $18 million in cash, subject to adjustment as set forth in the purchase agreement for the transaction. Net proceeds from the sale of the FC2 Female Condom business were approximately $16.5 million after selling costs and other purchase price adjustments, but before a change of control payment of $4.2 million owed to SWK Holdings pursuant to a residual royalty agreement for a 2018 financing transaction.

The loss on the sale of the FC2 Female Condom business was approximately $4.1 million. The difference between the estimated net proceeds of $16.5 million and the total carrying value of the FC2 business of $20.6 million. On December 30, 2024, the carrying value of the FC2 Female Condom business was comprised primarily of deferred income tax assets of $12.3 million, accounts receivable of $4.6 million and inventory of $3.4 million, partially offset by accrued expenses and other current liabilities of $1.5 million. Liabilities associated with the residual royalty agreement, which totaled $9.9 million at September 30, 2024, were extinguished.

The sale of the FC2 Female Condom business represented a change in strategy, allowing the company to focus all its efforts exclusively on drug development and also affects how we present our operations and financial results. In our financial statements, all direct revenues, costs and expenses related to the FC2 Female Condom business are classified within loss from discontinued operations net of tax in the statement of operations.

On October 31, 2025, the company completed an underwritten public offering of 1.4 million shares of our common stock, prefunded warrants to purchase up to 7 million shares of our common stock, accompanying Series A warrants to purchase up to 8.4 million shares of our common stock and accompanying Series B warrants to purchase up to 8.4 million shares of our common stock at a public offering price of $3 per common share of stock and the accompanying Series A and B warrants. Net proceeds to the company from this offering were approximately $23.4 million after deducting underwriting discounts and commissions and costs paid by the company.

Now let's review the results for the fiscal year ended September 30, 2025. Research and development costs increased to $15.6 million in fiscal 2025 from $12.8 million in the prior year. The increase is due to an increase in expenses incurred related to the company's Phase IIb QUALITY clinical study for enobosarm as a treatment to augment fat loss and to prevent muscle loss, partially offset by a decrease in expenditures related to the company's other drug development programs that were terminated in previous years and a decrease in personnel costs.

Selling, general and administrative expenses were $19.9 million in fiscal 2025 compared to $24.6 million in the prior year. The decrease is primarily due to a decrease in the expense related to share-based compensation. We recognized a gain on sale of ENTADFI assets of $10.8 million in fiscal 2025 compared to a gain of $1.2 million in the prior year, which is based on nonrefundable consideration received related to promissory notes due to Veru.

During the year, the company entered into a settlement agreement with Onconetix, whereby the company received a cash payment of $6.3 million in Series D preferred stock and a warrant, which had a combined fair value of $2.5 million.

In conjunction with the sale of the FC2 Female Condom business, we recorded a gain on extinguishment of debt of $8.6 million related to the termination of the residual royalty agreement. This represents the difference between the change of control payment of $4.2 million and the net carrying amount of the extinguished debt of $12.8 million. which included an embedded derivative for the change of control provision at fair value of $4.7 million.

The loss associated with the change in fair value of equity securities in fiscal 2025 was $0.3 million compared with $0.2 million for fiscal 2024. This is due primarily to the change in the fair value of the shares of Onconetix common stock we previously held, which were sold during fiscal 2025.

The bottom line result from continuing operations for the fiscal year was a net loss of $15.7 million or $1.07 per diluted common share compared to a net loss of $35.3 million or $2.61 per diluted common share in the prior year. For fiscal 2025, net loss from discontinued operations, net of taxes related to the FC2 business were $7 million or $0.48 per diluted common share, including the $4.1 million loss on the sale of the FC2 business compared to a net loss of $2.5 million or $0.19 per diluted common share in the prior period.

The increase in the net loss from discontinued operations of $4.5 million is due to the loss on the sale of the FC2 Female Condom business of $4.1 million, a reduction in gross profit of $4.3 million and an increase in the loss from the change in fair value of the derivative liabilities of $2.9 million, partially offset by a decrease in operating expenses of $5.5 million.

Now looking at the balance sheet. As of September 30, 2025, our cash, cash equivalents, and restricted cash balance was $15.8 million compared to $24.9 million as of September 30, 2024. The restricted cash as of September 30, 2025, was $54,000 related to the sale of the FC2 Female Condom business. Subsequent to September 30, 2025, we completed a public offering that resulted in net proceeds to the company of approximately $23.4 million. Our net working capital was $11.1 million on September 30, 2025, compared to $23.4 million on September 30, 2024.

The company is not profitable and has had negative cash flow from operations. We will need additional capital to support our drug development candidates. Based on the company's current operating plan, our cash as of the issuance date of these financial statements is sufficient for the company to fund operations through the interim analysis in the Phase IIb PLATEAU clinical study to assess percent change from baseline in lean body mass and fat mass as measured by DEXA scan.

During the year, we used cash of $30 million for operating activities compared with $21.7 million used for operating activities in the prior year. We generated cash from investing activities of $25.1 million for fiscal 2025 compared with $0.1 million from investing activities in the prior year. The cash generated in the current year relates to net proceeds from the sale of the FC2 Female Condom business of $16.5 million and proceeds of $8.3 million from the sale of the ENTADFI assets.

We used cash in financing activities for fiscal 2025 of $4.2 million related to the change of control payment pursuant to the residual royalty agreement, which terminated in conjunction with the sale of the FC2 Female Condom business. In the prior year, we generated $36.8 million from financing activities. Now I'd like to turn the call back to Dr. Steiner. Dr. Steiner?

Thank you, Michele. And with that, I'll now open the call to questions. Operator?

(Operator Instructions)

William Wood, B. Riley Securities.

Congrats on a successful year. I'm just kind of curious, in your press release for PLATEAU, you noted that there's going to be an inclusion of GLP-1 whereas at least in the past, you've spoken of using only tirzepatide, which is highlighted in your most recent deck. During PLATEAU, there's the potential for 2.4 mg sema, 7.2 mg sema 25 mg oral sema and then oral and then obviously also tirzepatide to all be approved. So I'm just curious, will any GLP-1 be allowed in your Phase IIb? Or will it be limited to just tirzepatide?

And curious how we should sort of view the potential to achieve this 5% weight loss bar when placed with various agents. Do you feel that, that remains the same or it sort of lower or higher initial weight loss better to sort of set you up for success.

Great question. Thank you for the question. So basically, the question is, we're seeing GLP-1 receptor agonist. We get -- we're putting tirzepatide. in the placeholder in the study, raise the question, are you going to allow both semaglutide and tirzepatide, which are the two approved GLP-1 receptor agonists that are out there right now.

And the answer is we have to pick one, because they are different. And the last thing you want to do is add variability to the study by having tirzepatide and semaglutide together. We're in the process of chatting and trying to secure one or the other. And so based on that, we'll determine ultimately which one it will be. At this point, the placehold is tirzepatide, but it could be semaglutide. But in either case, it should be one or the other and not allowing for both.

Got it. That's helpful. And then also, when thinking about sort of the Phase I to Phase III transition. Do you have any insight on -- I know you said that the FDA would allow for -- if you don't achieve that 5% bar, they would allow to incorporate or to look towards, say, a functional improvement like strength, specifically stair climb. But how does that set up in Phase III?

Is that set up a dual endpoint in Phase III where you have to have where it's sort of an and or dual primary endpoint? Or would they allow just a functional endpoint? How should we be thinking about that?

So I'll tell you exactly how to be thinking about it. It's a great question. So the reason we didn't go to Phase III is because we wanted to answer that question before you move to an expensive Phase III, okay? So the idea is do a Phase IIb and make the primary endpoint incremental weight loss. And so we know exactly how this agents are going to behave just like in a Phase III setting.

So they have the titration period, the maintenance period of 52 weeks, same exact criteria that the FDA wants through the Phase III. So it's basically a mini Phase III. And so -- then we'll know exactly what that incremental weight loss over time will be.

Then to make sure that it's very clear that we're focusing on body composition and function the second -- key secondary end points, as I mentioned in my comments, are going to be heavily weighted on getting an understanding of what happens at 72 weeks. So basically, your titration period followed by your maintenance period. Again, understand exactly what's going to happen in the Phase III setting in the Phase II -- using the Phase II setting. So we'll know exactly which of these points.

Is it going to be stair climb power? Is it going to be the clinical outcome measure? Is it going to be bone mineral density? Is it going to be functional limitations, patients come in with functional limitation, mobility disability question. There's two questions.

And do they improve and not improve? So we're learning a lot of information in what happens on 16 weeks, but what happens now at 72 weeks. And so based on that, and to be very clear, we found that the FDA's feedback was very positive because it gave us options now that can range from incremental weight loss you hit, and you can bring all the physical function body composition stuff in, if clinically meaningful in the label. And you're different. You're not an incretin within incretin okay? Or it becomes clear incremental weight loss, it could be a challenge. We don't think it will be, but let's say it is, you're not dead in the water.

Now you have your physical function endpoints that can serve as your primary endpoint, your primary endpoint in the Phase III. So you can see how we're using our Phase II to guide us in our Phase III program.

Yes. No, that's helpful. And I guess just actually one quick last one. I know you've mentioned in the past again that you were going to sort of go for all comers but stratify. It looks like you're only targeting the greater than 65 patient population now in PLATEAU, and that's actually sort of up from the greater than 60 years old in QUALITY.

So maybe just clarify what population you're targeting? And was that more FDA guidance or Medicare reimbursement dynamics or just sort of the most in-need population kind of (technical difficulty).

So the way to think of it is if we hit our incremental weight loss, okay? Then you feel more comfortable. And if you hit on incremental weight loss in patients over 65, you're going to be finding the incremental weight loss in patients less than 65, okay?

But for physical function, which is where we see ourselves benefiting and showing clinical meaningfulness, then the greater than 65 in our Phase IIb QUALITY study with the patients that were most in need, meaning they probably have a touch or more than a touch of sarcopenia and they already have physical limitations. They're the most informative population for physical function. If you go back and say, oh, if I look at STEP 1 or look at SURMOUNT studies, the performance looks better in patients that lose weight. It does because the average age is like 50.

But if you go over 65, I haven't seen a single study in which they take out patients that are 65 and older and ask the same question. They don't. And so the purpose of the Phase II is to find the patient population that's most in need. The FDA has guided that if you choose as a primary endpoint, physical function, and body composition endpoints, that being older greater than 65 and quite frankly, even being younger than 65, there's no indication. So even if you hit incremental weight loss and you want a secondary endpoint of physical function, you have to say what patient population has to be prespecified.

If you read the guidance, it says you have to prespecify it. So in other words, if a 32-year-old linebacker, if you're going to lose weight and not have to get into trouble because they have a lot of muscle reserve, then that will be a bad patient to tell you whether or not you're going to make the functional limitations better.

So even in the setting where incremental weight loss you hit and you want your secondary endpoint to be physical function, you can do a prespecified subset and put that into the full Phase III. So you do all comers and then you prespecify a subset, in this case, greater than 65.

So by having this Phase IIb PLATEAU study, we'll know exactly how that patient population will behave. And so we hit incremental weight loss, we expanded to all patients, and we prespecify an older patient population that we want to have functional endpoints measured. Again, you read the guidance, that's acceptable.

On the other hand, if you don't hit incremental weight loss and you go forward being older than 65 is not a disease. And so therefore, you have to say, older than 65 and functional limitations, older than 65, something in the patient problems with average activity of daily living, problems with functional tests like stair climb.

So this Phase IIb really will give us the information that we need to make sure that if we go with a primary endpoint of physical function that we have the right indication in the right patient population. So as you see, we set ourselves up for all the options. And now on the study, take a step back between the Phase IIb QUALITY study and the Phase IIb PLATEAU study. Now you're going to feel pretty good you derisk the program for multiple opportunities -- multiple options going forward.

So again, incremental weight loss with a secondary endpoint, physical function in the right patient population or physical function is your primary endpoint, incremental weight loss is not because you're at the same weight loss. But you have the right patient population, sarcopenic obese patient over the age of 65 that is afraid to go on GLP-1s.

Can you help that patient population, which by the way, 44 million Americans on Part D of Medicare, of which half can benefit from a weight loss drug. It's a massive market. So we're playing with big numbers.

Got it. Makes sense. Very helpful. I'll hop back in the queue.

While we're waiting for the next question, I just have a couple of comments to make. So first of all, as we reflect back over the year because this is year-end, maybe some personal comments from me. First of all, we went into a field that was completely unknown. We had data in cancer patients. We had data in older patients, but are these patients with pharmacological induced low-calorie situation different?

And guess what, they are different. They are different. And so much so that when you look at these myostatin inhibitors because now these other companies have reported, if not complete Phase II, partial Phase II data, it's hard to hold on to lean mass. It's hard to hold on to lean mass. And you'll see the six-month data and even the year data. So this is a different patient population. With that said, enobosarm performed very nicely.

So we were able to show 100% lean mass, we burn fat, good physical function. And then the statement came back, how about safety because safety took us some more time to get safety because the study was still blinded. Safety came back great. And in fact, we look like we make GI toxicity better for the GLP- and so we're very, very excited about that.

So from a year -- looking back at the year, we did -- I think we achieved what we needed to do with the trial. Then the competitive landscape, the other companies, Scholar Rock, Regeneron, Versanis, Lilly reported. And that was very, very helpful. Remember, we're oral, they're an injectable. And they have their own unique interesting safety signals. And that's because myostatin inhibitors are very ubiquitous and we're still learning about them. But the point is that we learned from that. What do we learn?

One of the things I heard over and over, oh Mitch, if you hold on to muscle, muscle weighs more than fat, that you're going to have people that actually gain weight on your anabolic agent. And forget about incremental weight loss, you may be in a situation where you have to accept less weight loss. It didn't happen. It didn't happen for us, it didn't happen for them.

So if you give an anabolic agent, there's not an instance where you loss less weight, in fact, with time and with time and holding on to more lean mass, as shown by the Versanis Lilly data that by 72 weeks, they had a 6.4% incremental weight loss 6.4% incremental weight loss.

What that's supporting is that if you hold on to metabolic muscle that burns more calories every day than other tissue that ultimately the turtle wins the race, not the rabbit, the turtle wins the race and you end up with more weight loss. So that was important. Then the statement came back, okay, now we need regulatory clarity. Well, guess what? Yes, it's evolving.

Yes, the FDA changed their mind because why would we do a 16-week study if incremental weight loss was the primary endpoint. That makes no sense. But that's because the FDA told us that incremental weight loss by itself would not work in the case of our drug functional endpoints, it function and should be the endpoint. That's what we did.

Why did we pick 16 weeks? Because in all the previous five other studies in 1,000 patients, 16 weeks will show it. Guess what? It did. And then the FDA changed their thinking and actually gave us an option to -- now that we know incremental weight loss and anabolic agents can happen, and we saw in some of our data that we saw weight loss in some of the cancer patients who are obese.

This could be very, very interesting. This is -- sometimes I say the FDA moves to goal posts. In this case, they moved to assist us because they gave us an opportunity to have multiple ways to get the physical function information into the label. So I'm very happy about that.

And so our new trial design, as I just went through with questions from Dr. Wood. You'll see that we've set this up to have multiple opportunities for us to understand what the Phase III program could be from an extreme. Everybody in a subset of physical function to just the patients most in need that need a GLP-1, but can't take it because they have sarcopenic obesity, and that's a big number.

And finally, we raised money. We have money. We raised -- we had a public offering. We had money in the bank. We put ourselves in a position to move forward on the trial. So we're very happy that's behind us. Some pushback was the IP. The IP, okay, we're a new chemical entity, our method of use patents, which are now about five of them, if issued, will get us to 2043. 2043 is a long time from now. And then to be sure, we made sure we made a new formulation of enobosarm.

We've reported that we have that new formulation of enobosarm. We filed patents on that new formulation. That will take it to 2046 expiry. And in the Phase III in commercial, that will be the only formulation that will be used. Enobosarm is a new chemical entity. It doesn't exist out there. It's never been approved. So we put ourselves in a good position.

And finally, pharma validation. And so we're working on. And so I think we've checked all the boxes to show that we have a robust program. And this year has been a really pivotal year to put us in a very strong footing to be an oral agent that could be potentially combined with some of the oral agents that are being developed by big pharma, where they're noticing that the oral agents aren't quite matching the injectables in terms of weight loss. So an oral agent, small molecule that's for weight loss incretin in combination with enobosarm could be very interesting.

And particularly if you can potentially have similar weight loss with the combination therapy as you do with the injectables.

Rohan Mathur, Oppenheimer.

This is Rohan on for Leland. Thanks for the update, just one question for me. As you think about the different outcomes from the PLATEAU study and the obvious benefits of the enobosarm, do you expect there to be any flexibility around regulatory discussions that would follow when it comes to showing a certain degree of weight loss from muscle function?

Yes. So the degree of weight loss, this stake in the ground looks like 5% or greater placebo-corrected gets you the incremental weight loss. And if you have the incremental weight loss and all the secondary stuff will come in based on clinical meaningfulness. And so that gets to the next question, that is for a part of our homework in the Phase IIb PLATEAU study, and you can see we put a lot of options on physical function. We did physical function test, which is stair climb test, function test.

They don't like strength tests. We're doing clinical outcomes questionnaires that have been used in many of these STEP 1, SURMOUNT studies as well. So we have data there. And if we can show an older patient population, there's an improvement. And in terms of clinical meaningfulness.

And then what's interesting new one is this mobility disability assessment. It turns out that there's an ICD code to diagnose clinicians use to diagnose frailty in older patients and for mobility, disability that contains two questions. Question one is, can you walk through city blocks?

And question two is, can you climb stairs, something like that. And so to assess patients coming into our Phase IIb PLATEAU study, and show that we can make people with functional limitations coming into study better, that could be interesting. And so there's multiple ways to come back and present our case for the best way to measure physical function. One of those or all of those.

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

Great. Thank you, operator. I appreciate everyone who joined us on today's call. I look forward to updating all of you on our progress in the next investors call. Thank you for being with us.

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