Veru Inc. (VERU) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to Veru Inc.'s Investors Conference Call. [Operator Instructions] Please note that this event is being recorded. 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 Michele Greco, CFO and CAO; Dr. Gary Barnette, Chief Scientific Officer; Dr. Domingo Rodriguez, EVP Global Clinical Operations; Dr. Gary Bird, EVP Quality and Regulatory Affairs; Dr. Harry Fisch, Vice Chairman and Chief Corporate Officer; Michael Purvis, EVP, General Counsel and Corporate Strategy; and Sam Fisch, Executive Director of Investor Relations and Corporate Communications. Thank you for joining our call. Veru is dedicated to the development of novel medicines for the management of the 2 most prevalent cancers, breast cancer and prostate cancer. One of our anticancer drugs, sabizabulin, has dual antiviral and anti-inflammatory effects, so it was also being developed for the treatment of hospitalized moderate-to-severe COVID-19 patients at high risk for acute respiratory distress syndrome and death, which remains a global dire unmet medical need. This morning, we announced that the independent data monitoring committee has conducted a planned interim analysis of our Phase III COVID-19 clinical trial and unanimously recommended early stopping of the study because of evidence of overwhelming positive efficacy. Sabizabulin disrupts intracellular transport of the coronaviruses along microtubules. This is a highly conserved biological process that is required by all variants of COVID-19 including Omicron to cause infection. While this -- while there have been recent developments evaluating, including the Merck drug molnupiravir and the Pfizer drug Paxlovid, for the treatment of unhospitalized patients with COVID-19 who had a relatively lower risk of dying, Sabizabulin, in contrast, is being developed for hospitalized moderate-to-severe COVID-19 patients who are at high risk for ARDS and death; patients for whom there are currently no clearly effective treatment and a population in which the Merck drug molnupiravir did not demonstrate efficacy. Based on our positive Phase II clinical study in hospitalized moderate-to-severe COVID-19 patients at high risk for acute respiratory distress syndrome that showed that sabizabulin treatment resulted in a significant reduction in deaths compared to placebo, we conducted a Phase III COVID-19 clinical trial, which is a double-blind, multicenter, multinational randomized 2:1 placebo-controlled study, evaluating daily oral 9-milligram dose of sabizabulin for up to 21 days versus placebo in approximately 210 hospitalized moderate-to-severe COVID-19 patients with high risk for acute respiratory distress syndrome 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 symptoms means patients that are hospitalized, which means WHO criteria greater than or equal to 4, and require supplemental oxygen up to mechanical ventilation of ECMO -- or ECMO, per the Board, one of the inclusion criteria is the patient must have a peripheral capillary oxygen saturation of less than or equal to 94% on room air. This is a very sick patient population at high risk of ARDS and death. The prespecified primary efficacy endpoint is the proportion of patients who die on study up to Day 60. Secondary endpoints include the proportion of patients without respiratory failure, days in the ICU, WHO ordinal scale for clinical improvement change from baseline, 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 COVID-19 infections in the study included the Delta and Omicron variants. In January, the FDA granted Fast Track designation to the Phase III COVID-19 registration program. Fast Track designation aims to expedite the development and review of new drugs that are intended to treat serious or life-threatening conditions and demonstrate the potential to fill unmet medical needs. Filling an unmet medical need is defined as providing a therapy where none exists or providing a therapy which may potentially be better than available therapy. Thus having Fast Track designation is a distinction that underscores the urgent need for new, novel and effective therapies to use along with vaccinations to combat this COVID-19 pandemic. On April 8, 2022, the Independent Data Monitoring Committee conducted a planned interim efficacy analysis in the first 150 subjects enrolled 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 overwhelmingly positive efficacy. They also remarked that no safety concerns were identified. The prespecified primary endpoint was death at or before Day 60. Sabizabulin treatment resulted in a clinically and statistically meaningful 55% relative reduction in deaths with a p-value of 0.0029 in the intent-to-treat population. The placebo group with ANA-52 had a 45% mortality rate compared to a 20% mortality rate in the sabizabulin-treated group, n=98. The placebo group rate of 45% -- placebo group death rate of 45% underscores how sick these patients really are. The poor outcomes demonstrate the inadequacy of the current standard of care, which could have included dexamethasone, Remdesivir and anti-IL-6 receptor antibodies and JAK inhibitors. Again, the addition of sabizabulin reduced death by 55% in this critically ill population. The secondary efficacy end points are still being analyzed at this time. Sabizabulin treatment was well tolerated in this patient population, with no clinically relevant safety observations in the sabizabulin-treated group compared to placebo. The company plans to meet with FDA to discuss next steps, including the submission of the Emergency Use Authorization application. We will also begin to plan for regulatory submissions outside the United States. The company has scaled up manufacturing processes to produce commercial drug supply to address anticipated drug needs following any potential FDA authorization. We have been in discussions with BARDA and other U.S. government agencies in an effort to secure an advance purchase agreement of drug product for the U.S. Global 19 -- excuse me, COVID-19 global cases, hospitalizations and deaths continue to be high. New variants of COVID-19 are brewing. COVID-19 surges will happen. New York and Washington, D.C., have seen a doubling of new cases of COVID-19. Vaccines are not enough. Some of the antibody drugs are not effective against the Omicron variant BA.1 and BA.2. COVID-19 is surpassing 2 years as a pandemic. It does not appear to be going away. It is clear that an effective and safe oral therapeutic that prevents deaths in hospitalized patients with moderate-to-severe COVID-19 infection with high risk for ARDS and death is desperately needed. We strongly believe that sabizabulin, with its dual antiviral and anti-inflammatory properties and with these Phase III efficacy and safety results, can be that greatly needed oral therapy for hospitalized patients with moderate-to-severe COVID-19 as a new standard of care. We will continue to update you on the regulatory progress towards the emergency use authorization, manufacturing, additional clinical data releases and publications, BARDA discussions, our U.S. and global distribution plans and our partnership discussions. We're committed to driving shareholder value by developing and commercializing novel medicines addressing significant unmet medical needs. And with a positive Phase III study, we will advance to seek regulatory approvals and the commercialization of sabizabulin 9 milligrams to the hospitalized moderate-to-severe COVID-19 patients with high risk for acute respiratory distress syndrome and death. Sabizabulin has the potential to satisfy an important unmet medical need and to become a new tool against moderate-to-severe COVID-19 and potentially for other serious viruses that utilize microtubules to cause infection and death, including influenza virus, Ebola virus and many others. Finally, I would like to say I'm so proud of our team that has stepped up to the challenge. We were duty bound, we fought and we succeeded. I would like to thank Dr. Gary Barnette, Chief Scientific Officer; Dr. Domingo Rodriguez, the EVP of Global Clinical Operations; Dr. Gary Bird, EVP of Quality and Regulatory Affairs; Amy O'Brien, the Senior Manager, Clinical Operations, responsible for the Phase III clinical study; Chris Hitchens, Denise Pattavina, Johannah Sanchez-Adams, [indiscernible], [ Adam Mann ], Worldwide Clinical Trials, [ Argus Research ], CoreRx and Olon Ricerca. I would also like to thank all those folks at Veru that supported the effort. With that, I'll now open the call to questions. Operator?

[Operator Instructions] Our first question comes from Leland Gershell from Oppenheimer.

My congratulations on this terrific data. Very much needed. I wanted to ask a couple of questions. First, Mitch, could you comment on how long on average patients were on sabizabulin? And also wanted to ask if you could just kind of walk us through the emergency use timelines, FDA meeting and thereafter, when could we see the availability of this drug?

Sure. So as you know, we just got the data on Friday. So we're still capturing it all. I can tell you in the Phase II study it was about 10 days on average. And we think it's going to be similar in this study. So it shows you how potent this agent is, that even though the patients could be on it for 21 days, with 10 days on average, we were able to see this dramatic effect. As it relates to your second question, again, I will tell you, since we were fast tracked -- we have Fast Track designation, we have been in constant dialogue with FDA. And so what we're doing now is we're pulling together the documentation that we need to have the first interaction -- formal interaction with the FDA. And so hopefully that will happen this month. And then -- I'll say it differently, it will happen this month. And then at that point, we're going to get to work to get this EUA application in. And the timing is depending on the FDA. As you know, an EUA application is not the same thing as an NDA, where you have PDUFA dates and all that stuff. So they can be pretty short about it. They can take their time. But again, in a patient population where for the last 2 years nothing has really stepped up to a disease like COVID-19, that's probably the #1 threat in the world. And the threat is the people that are dying, and this is where we -- this is this space that we're in. If you look at the CDC guidelines, it's remdesivir and dexamethasone. That's it, for 2 years. So this really represents a big step forward, and I'm hoping that that will be reflected in the speed in which the FDA evaluates the EUA.

The next question comes from Brandon Folkes from Cantor Fitzgerald.

Congratulations on the data. Maybe just firstly, at this stage, can you just elaborate potentially on any difference in the 2 treatment arms and placebo arms on potentially different standard of cares used in those arms? Was it pretty balanced across the arms? Just trying to parse out if there's sort of any difference in the standard...

Yes. To answer your question, we did get that data. So -- even though it was the first look. So there are no imbalances with males and females and with standard of care is exactly, I mean, the system works. So the randomization works. So there are no imbalances.

Fantastic. And then maybe just, Mitch, just to follow up on your comment on the manufacturing capacity. You talked about that you have scaled up. Are you looking to partner this, just given how big it could be? I guess, is it great getting up and manufacturing, what does that address, maybe, just given how large the potential could be?

Yes. Well, so again, we're very fortunate that, unlike some of these other agents, it's a 9-milligram dose once a day. That's it. You're not talking about a handful of pills every day and taking pills to knock out P-glycoprotein and all that stuff. It's 1 pill a day. It's -- actually it's a capsule. And so the capsule can be opened up and put to an NG tube for somebody that's in the ICU or they can take it orally if they can. And so -- and it doesn't require cold storage, and it's not an IV. So -- and I'm going through this because part of manufacturing is all of the controls and ways that you have to treat the material to get it from Point A to Point B. So without the cold storage, I mean you put -- I exaggerate the point to make the point -- you put on backpacks and get it to areas of the world that can't get it. And it's a pill, so you don't have to give an IV, and it doesn't require cold storage and the whole bit. So from that standpoint, it's really a simple small molecule. And so since it's a simple small molecule, then the manufacturing process is pretty straightforward. I believe that it takes about 5 steps or 4 steps to make the -- 5 steps to make the drug. We have been incredibly robust in our manufacturing practices. And so we are in place to scale up to meet the world's demand, and we've -- as I mentioned, Olon Ricerca is helping us with the U.S. -- excuse me, helping us with the API and CoreRx is helping us with the capsules. Both the Olon Ricerca and CoreRx will be U.S.-based, and so that we can control in the U.S. manufacturing of our products. So we're not looking for API coming from China, India. It will be U.S. And so from that standpoint, it is not as overwhelming as you think. I think the manufacturing part of it is the easiest part. The second is -- and we can do that and we've done that and it's in place. The next part is distribution. And I think the most important thing about distribution is that this is hospital based. This is not getting a doctor in a practice to write a prescription and sending a patient to a pharmacy. This is a patient that's hospitalized, on oxygen, going down the slippery slope. So the hospital formularies is where this drug will be. As you know, hospital formulary distribution is pretty standard. And once you plugged into the GPOs and all that stuff and you're on their formularies, they just order it from the chart. And so the patients in the ICU, and this is part of the standard-of-care algorithm, then it will be part of standard-of-care algorithm filled automatically in each of the hospitals. Hospital filling distribution is very different than trying to get every pharmacy to have it stocked. And so it's a much smaller number, much more manageable number. It doesn't require a sales force, I mean a few account managers follow up. Now with that said, yes, it is big. What we -- I mean, again, this is the biggest threat in the world right now is COVID-19. It's not only a threat to life, but it's crippling economies. It's been kind of -- I mean as much as we want to wish it to go away, it just feels like it's not going away. Even China, where COVID-19 originated, is shutting down again in big blocks and because -- even with the most drastic public health policies, they can't get it under control. And so with that said, we would -- we're going to do everything in our power to keep moving things. It's doable for us to move it, but it makes a lot of sense to partner where it makes sense, or more, so that we can make sure that this drug gets to every place in the world that you can get to and that we get through the regulatory processes, if it's the U.S. and outside the U.S., as efficiently and quickly as possible. And this is where hopefully government will step in. And for every one of these drugs that have come out, the Merck drug, the Pfizer drug, the vaccines, BARDA and other government agents have stepped up with an advanced purchase order agreement. And we're looking forward to the same thing, because this is the one that actually is -- its endpoint is death. Not hospitalizations, days in the hospital, ICU days, it's death, and you can't fake a death. And so it's -- the efficacy is highly effective and more effective than what appears to be out there now today. So we're up for the challenge, and we're going to push hard. But yes, partnerships along the way, whether it's regional or global, is just another way to get this important drug to patients.

Our next question comes from Chris Howerton from Jefferies.

I will also offer my congratulations. Really much needed, absolutely. So I guess in addition to what's already been asked, Mitch, can you help us understand what the kind of revenue stream would look like? I think at the beginning of the call you mentioned that you're in negotiations with BARDA around a supply agreement. Would that be the primary avenue for revenues, or would there be opportunities to negotiate directly with hospitals and providers? Just a little more understanding on what that opportunity would look like would be helpful.

Yes. Yes. So the way to think of it is the government preorders and -- but that's not -- that's scratching the surface. The revenue stream will be coming directly from hospitals and ICUs across the country and across the world. And so when you think of the government, the way I would think of governments right now is 2 things. One is they're going to prime the pump. And so maybe $2.5 billion-plus or more, because you're dealing with different pharmacoeconomics here. This is not treating somebody who's got some symptoms of COVID-19 and treating thousands of patients to go from 7% -- 14% to 7% reduction in deaths and hospitalizations. This is reduction in deaths in patients in the ICUs and in hospitals that are requiring tremendous resources to keep them alive. And unfortunately, half of them will go on to die anyway. And that's what's overwhelming the system, and that's what's costing the most money. And that's where we're going. And so if we can reduce that by 55%, then you can see that the revenue should be significant, and $2.5 billion, you're really just scratching the surface in terms of that. Now with that said, the expectation is that governments will, in addition to priming the pump, so to speak, to get into hospitals and start dealing with the pandemic, the most important part, which is the part that's missing, which is to save people from dying, is that have already gone down their path of -- slippery slope, is stockpiling. So our expectation is that we don't want to be caught when COVID-23 and COVID-24 and COVID-25 come along. And we know there are at least 2 additional strains that are brewing out there right now that we're trying to understand. We're still trying to get our arms around BA.2. And I heard this morning, 29 states have already reported an increase in COVID-19. So it's coming back another surge. So with that said, stockpiling so that they're ready for the next epidemic, is probably going to be another piece of the revenue that we can count on for our company. So this is just, as I mentioned in my opening comments, this is the singularly biggest threat to the world right now, and we've come up with an agent that's an antiviral, anti-inflammatory that deals with patients that have a viral issue and the concomitant triggered inflammatory issue that leads to their demise.

Yes, absolutely. And I think to that point, Mitch, maybe just to put a bow on that, what level of long-term stability do you have on sabizabulin right now? And I know you said you want me to hop back in the queue, but I'll just ask it anyway, which is: does this change any of your plans in terms of sabizabulin development in oncology? I'm just trying to think if there's any sequelae for pricing or exposure or anything else that we should consider down the line?

Good question. So where we are with stability right now is we're at 12 months. I think that will get you a 2-year expiry or something like that. It's -- usually that's typically what you have to provide. So we'll be good with that. And I can tell you the stability of sabizabulin is such that we would be very surprised ultimately if we can't get 5 years. But right now, I would think the launch -- the product would be around 2. As it relates to your question about affecting the other programs, fortunately we have a really -- we've done a great job pulling together a great team to stay on top of the clinical trials in oncology. And as you know, we have a robust prostate cancer and robust breast cancer programs. And so we're going to continue to -- those are going to continue as planned. And so we're not expecting any changes there. There's no question that this is a big, monumental next step for our company. But again, as I said in my comments, we're up for the task. We will do what we need to do. We're very fortunate that we're still incredibly well capitalized. As I mentioned in previous calls, last call, the last public information from our last quarter ending, so it would be the money on hand is about $116 million in the bank, and we've got a product -- some products that are generating revenue. So we're fine. And so a lot of what we're going to be doing right now is the resources are going to be regulatory resources and manufacturing resources, and that's not expensive. We're not running clinical trials for -- additional clinical trials, large clinical trials in cancer. I mean we're set. And so all that's in the budget. So with that said, I think we're in good shape. So the impact is, yes, we're going to be highly focused on getting this drug market -- or getting sabizabulin to market, but we're not going to take our eye off the ball on the oncology products that are in late-stage clinical development.

[Operator Instructions] Our next question comes from Kumar Raja from Brookline Capital Markets.

Also, congratulations on the data. So with regard to the age of the patients, what can you share in regards to patients who are 65 and older? And also with regard to the stratification data on Delta with Omicron and age and country, when do you think that would be available?

I'm going to ask Dr. Gary Barnette to answer that question.

Yes. So we just have some analyses. We haven't obviously gotten all the data yet. However, the age is equally distributed across the 2 treatment groups. The mean and standard deviation are identical. The average age in the study was in the low 60s. And as far as stratification, we have equal balance of all the WHO scores, 4, 5, 6, et cetera. We also have an equal balance, as Mitch mentioned, in standard of care across the treatment groups. And as far as Omicron and Delta and what variant, we know that patients in both groups in the study had Omicron and Delta. We have not done any analysis on how those 2 broke out between the 2 treatment groups. However, in this type of study, you would expect it to be fairly similar between the treatment groups.

So as I mentioned in my comments, no imbalances, and also the p-value that we announced in the interim takes into account all of the information you just asked about.

That's right.

That's great. And also, what are your thoughts on potentially exploring the drug in early infections so as to prevent hospitalization? Are you guys thinking about it? Or do you think that this should be good enough?

To make sure I understand the question, using it in other patient populations?

Earlier.

Yes. So I'm going to answer it 2 ways. The first thing is we've got a plateful getting this thing out in the area that has the greatest need, which is patients that are dying in the hospital, and that's the part that scares everybody because that's going to lag the incidence. As the incidence goes up and then you get your hospitalizations and you get your deaths and it just keeps happening. And when you look at the number of deaths approaching 500,000 to 600,000 in the U.S., it scares you, okay? Because that's unbelievable. And we're sitting around and saying, well, maybe we should just drop our masks because that's okay. And so anyway, I would say to you that if we can get into the hospitalized space, moderate-to-severe COVID-19, we'd make a major change in the battle that's ahead of us. And with that said, the science, the mechanism of the drug, is that it's both an antiviral and anti-inflammatory agent. And we're using it in cancer patients at very high doses. And I can tell you that the safety looks very good. And in this patient population, you'll see the safety data eventually, and I think you're going to be incredibly surprised how well it's tolerated. And with that said, because it's so well tolerated, you can go earlier and could this be a standard of care for prevention or something of that nature when somebody thinks they've been exposed, and you're not having to take 40 pills with P-glycoprotein inhibitors, like ritonavir and all that stuff. One pill a day, or even maybe a lower dose if possible. But again, our focus is -- our primary focus is to get this indication across the finish line.

Our next question comes from Roni Rabin from the New York Times.

Some of my questions were answered. But just to clarify, these results were from a randomized double-blinded placebo-controlled trial? And if you could say anything more about the mechanism of the drug, how it works?

Sure. And so thank you for calling in. The mechanism of the drug is that it is a small molecule that binds to microtubules. Microtubules are a structure in cells that are responsible for transporting, whether they're viruses or receptors, in the cell. So a cell's not like a bag of soup with things just floating around where it wants to go. It's highly structured, and the network -- the trafficking that occurs in the cell and the highways that cause that trafficking to occur is the microtubules. So when a virus infects a cell, it binds the microtubule and it's actually brought on that railroad track, if you want to call it that, into the nucleus, where it divides into more viruses. And then the viruses can't just float out, they have to get back on that track and get -- and make their way back to the outside of the cell where it gets liberated to infect additional cells. So the reason why we're not variant dependent is because that's such a critical process for a virus to get into a cell, get replicated and go back out, that if they had a mutation that wouldn't let them stick on to the highway, they could not get -- they couldn't infect. And so whether you have a blue bus, a red bus, a car, you use the highway, you're going to be effective. And we see that. I mean, Omicron or the Delta variant, it just doesn't matter. And that's why we feel that we have almost like a broad-spectrum antibiotic concept. It's a broad-spectrum antiviral, because it's just -- it's not so specific like an antibody, where as soon as the virus mutates, the antibody doesn't work. This is pretty broad. So the mechanism is it disrupts these highways and breaks them down so that the virus can't get from Point A to Point B. And that same mechanism is how the cell causes the cytokine storm. So the cytokine storm is a bunch of bags filled with inflammatory proteins that the cell has to push outside the cell. And the way it does that is it puts these vacuoles onto the highway, the microtubules, and releases them into the -- outside the cell to create inflammation. And so what our compound does by disrupting the microtubules, it also makes it such that the cytokines can't get liberated. That's why it's an anti-inflammatory antiviral. Same mechanism, it disrupts the microtubules, the highway, so things can't get in, things can't get out.

And to follow up your first question, yes, this was a double-blind placebo-controlled study conducted in accordance with current GCPs.

The next question comes from Max Bayer from Fierce Biotech.

You mentioned that some of this interim analysis covers both the Delta and Omicron period. I'm wondering if you have any top line efficacy differences based off of those variants? And I was also wondering if, among the patient population, you had any data on the percent or the number of patients that were immunocompromised and if there are any differences among those patients?

Okay, Gary?

Yes, this is Gary. We don't have the data right now, top line data on anything related to the proportion of what happened in the various variants. We just don't have that yet. We will analyze that as we go forward. As far as -- so basically, that is part of the analysis of the data that would be going forward and -- but right now, we know that Omicron and Delta both were included in the study.

As it relates to immunocompromised patients, again, we are not seeing any groups of patients that are imbalanced between the treated and the untreated. So it's -- so we're not seeing that, not seeing males, females. It all was very, very balanced. So the randomization process looked like it went well. And all of those potential differences were accounted for and looked at in the top line data. So we feel pretty good and the Independent Data Monitoring Committee also voted unanimously that after they reviewed the data that moving forward is just unethical. I mean we saw overwhelming efficacy, so they stopped the study, and they looked at the same kinds of data that you're mentioning now.

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

Thank you. I appreciate all of you joining us on today's call. I look forward to updating you on all our progress. I will tell you that COVID-19 remains the biggest single threat to the world right now across the board. 2 years into the pandemic, sabizabulin has emerged as a drug that can go right into the hospitalized world of patients, that's where patients are dying, and make a difference. And it's a new chemical entity. It's not a repurposed drug. And so we're looking forward to moving that across the finish line. And this positive Phase III data is a transforming event for Veru in our fight against the COVID-19 pandemic. So thank you for joining us today.

The digital replay of the conference call will be available beginning approximately noon Eastern Time today, April 11, by dialing 1 (877) 344-7529 in the U.S. and 1 (412) 317-0088 internationally. You will be prompted to enter the replay access code, which will be 5820166. Please record your name and company when joining. The conference call has now concluded. Thank you for attending today's discussion.