Veru Inc. (NASDAQ:VERU) Q1 2024 Earnings Call Transcript

Veru Inc. (NASDAQ:VERU) Q1 2024 Earnings Call Transcript February 8, 2024

Veru Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, ladies and gentlemen, and welcome to the Veru Inc. Investor Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference call over to Mr. Michael Purvis, Veru Inc.’s Executive Vice President, General Counsel, and Corporate Strategy. Please go ahead.

Michael Purvis: 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 Mitchell Steiner, Veru Inc’s, Chairman, CEO, and President.

Mitchell Steiner: Good morning. With me on this morning’s call are Dr. Gary Barnette, Chief Scientific Officer, Michele Greco, the CFO and Chief Administrative Officer, Michael Purvis, the Executive Vice President, General Counsel and Corporate Strategy, and Sam Fisch, Executive Director of Investor relations and Corporate Communications. Thank you for joining our Q1 fiscal year 2024 earnings call. Veru is a late clinical stage biopharmaceutical company focused on developing innovative medicines for high quality weight loss, oncology, and ARDS. The company’s drug development program includes two late-stage novel orally administered small molecules, Enobosarm and Sabizabulin. Our weight loss pipeline leads off Enobosarm, also known as Ostarine MK-2866, GTx-024, S-22, and VERU-024.

These are all the identical same molecule Enobosarm, which is an oral selective androgen receptor modulator. Enobosarm is being developed as a treatment in combination with weight loss drugs to augment fat loss and to avoid muscle loss in overweight or obese patients for chronic weight management. In our oncology pipeline, we’re developing Enobosarm as a treatment for antigen receptor positive, estrogen receptor positive, and human epidermal growth factor two negative metastatic breast cancer in the second line set setting. In our infectious disease pipeline, which is pending additional external funding or pharma partnership is Sabizabulin, a microtubule disruptor, which is being developed as a Phase 3 in a Phase 3 clinical trial for the treatment of hospitalized patients with viral induced ARDS.

The company also has an FDA-approved commercial product, the FC2 female condom internal condom for the dual protection against unplanned pregnancy and sexually transmitted infections. This morning, we’ll provide an update on our company’s primary focus, the development of Enobosarm and oral SARM, in combination with weight loss drugs like glucagon-like peptide 1 receptor agonist, which we’re going to refer to as GLP-1 receptor agonist. These are being used to avoid – Enobosarm in combination is used to avoid muscle loss and physical function loss to augment fat loss and potentially result in higher quality weight loss. We’ll also provide financial highlights for our first quarter fiscal year of 2024. Now, GLP-1 receptor agonists like Ozempic, Wegovy, Zepbound, and Mounjaro, are very effective weight loss drugs.

Unfortunately, clinical studies have shown that up to 50% of the total weight loss comes from muscle, which is problematic as muscle is necessary for metabolism, strength, and physical function. Loss of muscle may be also one of the reasons why patients on GLP-1 drugs reach a weight loss plateau, meaning they cannot lose any more weight while taking the GLP-1 receptor agonist drug. According to the CDC, 41.5% of older adults have obesity in the United States, and could benefit from weight loss medication. Up to 34.4% of these obese patients over the age of 60 have sarcopenic obesity. This large subpopulation of sarcopenic obese patients is especially at-risk when taking a GLP-1 receptor agonist drugs for weight loss, as they already have critically low amounts of muscle due to age-related muscle loss.

Further loss of muscle mass when taking a GLP-1 receptor agonist medication, may lead to muscle weakness, leading to poor balance, decreased gait speed, mobility, disability, loss of independence, falls, bone fractures, and increased mortality. This can lead to a condition similar to age-related frailty. Because of the magnitude and speed of muscle loss while on a GLP-1 receptor agonist therapy for weight loss, GLP-1 receptor agonist drugs may accelerate the development of frailty in obese, overweight, elderly patients. We believe there’s an urgent unmet medical need for a drug when given in combination with a GLP-1 receptor agonist that can prevent loss of muscle while preferentially reducing fat in not only all overweight or obese patients, but especially for the large subpopulation of sarcopenic or overweight elderly patients who are at-risk for developing muscle atrophy and muscle weakness, leading to frailty.

We believe that Enobosarm, a novel oral selective androgen receptor modulator, may be the best drug candidate to address this unmet medical need. Enobosarm has been previously studied in five clinical studies involving 960 older men and postmenopausal women, as well as older patients who have muscle wasting because of advanced cancer. Advanced cancer simulates a starvation state where there’s significant unintentional loss or wasting of both muscle and fat mass like what is observed with the GLP-1 receptor agonist treatment. The totality of the clinical data from these five clinical trials demonstrates that Enobosarm treatment leads to dose-dependent increases in muscle mass, with improvements in physical function, as well as significant dose-dependent reductions in fat mass.

The patient data that were generated from these five Enobosarm clinical trials in both elderly patients and in patients with a cancer-induced starvation-like state, provides strong clinical rationale for Enobosarm. Our hypothesis is that Enobosarm, in combination with a GLP-1 receptor agonist, would potentially augment the fat reduction and total weight loss, while avoiding muscle loss. In addition, Enobosarm has a large safety database, which includes 27 clinical trials involving 1,581 men and women dosed with Enobosarm, with a duration of treatment in some patients for up to three years. In this large safety database, Enobosarm was generally well tolerated and no increase in gastrointestinal side effects. This is important, and there’s already significant and frequent gastrointestinal side effects with a GLP-1 receptor agonist treatment alone.

As for our Enobosarm clinical program for high quality weight loss, this week, I’m happy to report that FDA has cleared our investigational new drug application for our Phase 2b multicenter double-blind placebo controlled randomized dose finding clinical trial designed to evaluate the safety and efficacy of Enobosarm, three milligrams, six milligrams of placebo as a treatment to augment fat loss and prevent muscle loss in approximately 90 randomized sarcopenic obese or overweight elderly patients receiving Semaglutide, who are at-risk for developing muscle atrophy and muscle weakness. The purpose of the Phase 2b trial is to select the optimal dose of Enobosarm in combination with a GLP-1 receptor agonist that best preserves muscle and reduces fat after 16 weeks of treatment to advance into a Phase 3 obesity or overweight clinical trial.

The primary endpoint to the Phase 2b clinical trial will be the change in lean body mass from baseline to 16 weeks, and key secondary endpoints will be the change in baseline to 16 weeks in total fat mass, insulin resistance, total body weight, and physical function, as measured by (caerulein) tests. We plan to initiate the Phase 2b clinical study in April of 2024, and the clinical study will be conducted in approximately 15 clinical sites in the United States. The top line clinical results in the Phase 2b clinical trial are expected at the end of calendar year 2024. We believe that assessing the effect of Enobosarm on lean body mass and fat mass at 16 weeks should be adequate to demonstrate significant loss of muscle in the Semaglutide plus placebo cohort.

Support comes from the step one study reported by Wilding, et al, in the New England Journal of Medicine publication. In the step one study, he evaluated Semaglutide for weight loss in overweight and obese patients and showed that 49% of the total weight loss in the 68-week study actually occurred by week 16, and 40% of the total weight loss was attributable to muscle loss. After completing the 16-week efficacy dose finding portion of the Phase 2b clinical trial, it is planned that participants will then continue into an open label extension trial where all patients will receive six milligrams from the Enobosarm monotherapy for 12 weeks to determine the ability of the Enobosarm to rescue or to reverse the muscle loss and prevent fat and weight rebound after stopping a GLP-1 receptor agonist.

The results of the separate Phase 2b open-label extension study are expected in calendar Q2 2025. In summary, our Phase 2b clinical program is designed to provide clinical data to support the development of the Enobosarm for high quality weight loss for two possible patient populations. The first population, Enobosarm dose-finding will be evaluated in the large at-risk subpopulation of obese overweight patients who are the sarcopenic, obese, overweight, elderly patients receiving GLP-1 receptor agonists for weight loss. The Enobosarm GLP-1 receptor agonist combination therapy has the potential to augment weight loss by preferentially increasing fat loss while preventing muscle loss and improving physical function, potentially leading to higher quality weight loss.

Second, a Enobosarm monotherapy treatment for the at-risk sarcopenic, obesity, overweight, elderly patients who discontinue a GLP-1 receptor agonist. In this case, Enobosarm may rescue the patient by increasing muscle mass and improving physical function while preventing the rebound in weight and fat gain that typically occurs when the GLP-1 receptor agonist is stopped. We believe we have sufficient financial resources on hand, which includes a recent financing of net proceeds of $35.2 million to complete and provide results for both the Phase 2b clinical trial and the open label extension clinical trial. I’ll now turn the call over to Michele Greco, CFO, CAO, to discuss the financial highlights. Michele?

Michele Greco: Thank you, Dr. Steiner. Overall, net revenues were $2.1 million compared to $2.5 million in the prior year’s first quarter. The US prescription channel net revenues increased to $634,000 from $163,000 in the prior year’s first quarter, as a result of increasing sales through our telehealth portal. Global public sector net revenues decreased to $1.5 million compared to $2.3 million in the prior year’s first quarter due to the timing of orders and shipments. Gross profit was $1.2 million or 54% of net revenues, compared to $702,000 or 28% of net revenues in the prior year’s first quarter. The increase in gross profit and gross margin is driven primarily by the change in the sales mix, with our US FC2 prescription channel representing 30% of net revenues in the current period, compared to 7% in the prior period.

Sales in our US prescription channel have a higher profit margin. On December 18th, 2023, we completed an underwritten public offering of our common stock, which included the exercise in full of the underwriter’s option to purchase additional shares. Net proceeds to the company from this offering were approximately $35.2 million after deducting underwriting discounts and commissions and costs incurred by the company. All the shares sold in the offering were offered by the company. As of December 31st, 2023, our cash balance was $40.6 million, compared to $9.6 million on September 30th, 2023. We believe our current cash balance will be adequate to fund the planned operations of the company as we continue to focus on developing Enobosarm for high quality weight loss.

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

Mitchell Steiner: Thank you, Michele. It has only been recently that the significance of clinical need to avoid adverse effect of significant muscle loss caused by GLP-1 receptor agonists has been appreciated. All the GLP-1 receptor agonists work by creating a starvation state that non-selectively reduces both muscle and fat tissues to cause weight loss. Using a muscle-preserving drug in combination with a GLP-1 receptor agonist, would potentially allow for a higher quality weight loss. I want to emphasize that Enobosarm is not competing with GLP-1 receptor agonist drugs that are already on the market or under development for weight loss. The expectation is that Enobosarm may be potentially combined with any one of the many GLP-1 receptor agonist drugs to avoid muscle loss and to augment fat loss.

This is truly a new indication. We believe Enobosarm is the best investigational drug candidate to address the muscle loss caused by GLP-1 receptor drugs for weight loss. Enobosarm is a first-in-class, has oral once-a-day dosing, has demonstrated tissue selectivity and utilizes a well-known mechanism of action, the androgen receptor, favorably change body composition. Activation of the androgen receptor increases muscle mass, improves physical function, and decreases fat mass to potentially achieve a higher quality weight loss. Enobosarm has favorable safety profile and would not add to the gastrointestinal side effects that are already observed with a GLP-1 receptor agonist treatment. Global obesity and overweight drug market is projected to be $100 billion by 2030.

It should be emphasized that Enobosarm may potentially be combined with any one of the GLP-1 receptor agonist weight loss drugs, not only for older or overweight at-risk patients, but also all overweight or obese patients who want to avoid muscle loss while taking a GLP-1 receptor agonist for weight loss. The combination of Enobosarm with a GLP-1 receptor agonist potentially represents a multi-billion dollar global opportunity. We are very excited about the prospects of Enobosarm to address this new and important unmet medical need. With the FDA go ahead, we are looking forward to the initiation of this important and timely Phase 2b clinical study. With that, I’ll now open the call to questions. Operator?

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Q&A Session

Operator: [Operator Instructions] Our first question comes from Dennis Ding with Jefferies. Please go ahead.

Dennis Ding: Hi, good morning. Thanks for taking our question and congratulations on all the progress. Just one for me around the OPC program. Given various GLP-1s have different levels of weight loss as well as muscle wasting, what’s a clinically meaningful level of muscle preservation, and what’s clinically meaningful additional weight loss that you guys are looking for in your Phase 2b, and how do you define success from that trial? Thank you.

Mitchell Steiner: Thank you. Good question. So, the first question relates to how we’re going to view muscle loss, and particularly in the context of a Phase 2. So, you’re absolutely right. All the GLP-1s have muscle loss associated with them because the mechanism is hyper caloric calorie, in other words, low calorie amounts, and that’s why muscle waste and fat waste is not specific to one tissue type. They all do it, but the range is about 20% to about 50%. And a lot of it depends on the potency of the GLP-1 receptor agonist. The more potent it is, the more muscle you lose. With that said, success for us at 16 weeks is to show that we can basically maintain muscle because we know we’re going to be losing about 40% of muscle with a Semaglutide.

And we picked in our Phase 2b study only one GLP-1 receptor agonist so that we don’t have the confounding concern that each GLP-1 receptor agonist may have a different muscle loss amount. So, we’re using a Semaglutide, which is Wegovy. And so, the expectation based on the step one study is about 40% of the muscle loss of the half of – the 50% of weight loss that occurs in the first 16 weeks will be at that point. We will define success as you’re stopping the decline. And so, the delta is going to be the difference between what we maintain and what is lost. And if we can maintain and stop decline in function and maintain function, that’s considered a success. The other success, and this is important, is that fat loss and total body fat loss correlates with weight loss ultimately week 48, we chose to go to 16 weeks because we’re using the DEXA scan, think of this as a biomarker.

We know if we maintain muscle at 16 weeks, you’ll be maintaining muscle at 48 weeks. If you lose fat and preferentially lose more fat at 16 weeks, you expect to see a deeper fat loss at 48 weeks. So, the idea is, don’t spend the 48 weeks now in the Phase 2. Get the information you need, which could – because there’s examples of other drugs in which they showed the maintenance of muscle and showed the reduction of fat at 16 weeks, and it was fine. Now, it must find meaning at 48 weeks, you start further decline in fat and further decline in weight loss. With that said, success for us is, again, focusing on lean body mass being maintained, and greater fat loss at the 16 -week time point. Now, in terms of total weight loss, if we had a situation where we had a weight loss comparable in both arms, that would be great, because what you’re basically saying is in one arm you lost all fat, and that would be the Semaglutide.

You lose fat and you lose muscle, and in the treated arm with Enobosarm, you maintain the muscle. You lost fat, but you have the same weight loss. That’s a high quality of weight loss, but the expectation is if you leave the muscle alone, you can get a deeper weight loss. As I mentioned in my comments, the concern is that, and you can look at any one of these 48-week to 70-plus week studies, and in the late press, people will tell you that after about 16 to 20 weeks on a GLP-1 receptor agonist, they hit a plateau. They just can’t lose any more weight. What’s happening there is they’ve lost enough muscle that it kicks back in their appetite. And that’s why people are saying they do resistant exercise, take protein. All these studies have that same plateau.

How do you get beyond that plateau? And the answer is, if you can maintain muscle, you can have a much deeper weight loss. The fat compartment in an obese patient is so much larger than the muscle compartment. It’s just we can’t get to it because for every pound of fat you take, you pay with a pound of muscle, the 50%. So, success for us would be if we can show comparable weight loss with a different kind of body composition at 16 weeks, the expectation that that would ultimately translate into a greater weight loss at 48 weeks, which is what the Phase 3s would be studying. With that said, the agency has made it clear that what they’ll be looking for, if you look at total weight loss as your end point in 48 weeks, is a incremental increase in weight loss.

But the incremental increase in weight loss is about 5% of the total weight loss by the control arm. So, it’s not five percentage points greater. It’s 5% of. So, it’s a low bar to hit, but if we can do that same low bar or greater and maintain muscle, which means most of that weight loss was fat, that would be success at 48 weeks. So, hopefully, that answers your question.

Dennis Ding: Yes. And maybe a quick follow up. Can you remind us some of the statistical assumptions from the Phase 2b and whether the study is powered to show stat safe? Thank you.

Mitchell Steiner: Yes, I’ll be happy to. So, what I’m going to do is I’m going to have Dr. Gary Barnette answer that question. So, Gary, can you talk about the sample size and power?

Dr.Gary Barnette: Yes. This Gary Barnette. The way we did is we looked at the step one study. Step one study lost about six kilos of lean mass over a 68-week period, that if you just do – assume a linear loss of muscle, that would be 0.102 kilos per week. Multiply that by 16 weeks, you get approximately 1.6 kilos of loss of lean mass in the first six weeks – in the control arm, meaning the GLP-1 plus placebo. If we look at our data that we have in obese patients, obese patients with cancer – as Mitch mentioned, cancer has a tendency to create a hypocaloric state, much like a starvation state. We basically maintain lean mass in that patient population. So, it’s a 0.3 kilo loss to a 0.4 kilo increase. So, what we did is we used alpha 0.052 sided 80% power, comparing a 1.6 kilo expected loss in the control arm versus a minus three kilo or minus 0.3 kilo loss in the treaty group.

And that’s approximately 26 subjects per arm we powered at 30. Now, let me also say this. As Mitch mentioned, 49% of the loss of weight occurs in the first 16 weeks of GLP-1 treatment. So, what happens, if you use that number and say that 49% of the muscle also is lost, that’s over three kilos of lean mass that we’re expected to lose, but we’re being conservative in our sample size calculation, using negative 0.3 versus negative 1.6.

Mitchell Steiner: Right. So, the expectation is you’re going to have a much greater muscle loss than we put into the numbers to be conservative in the arm that’s getting the Semaglutide without Enobosarm.

Dennis Ding: Got it. Thank you. That was very helpful.

Operator: The next question comes from Leland Gershell with Oppenheimer. Please go ahead.

Leland Gershell: Hey, good morning, Mitch. Thanks for taking our questions. If you could just review with us how you’re going to define the eligibility in terms of what it means to be sarcopenic for entry into the trial. Thanks.

Mitchell Steiner: Yes. So, what we’re doing to make sure we get the biggest patient population as possible is restricting it to age. So, if you look at it, we say greater than the age of 60 puts you in that population of 42% of patients that could potentially use a obesity drug because they’re obese and overweight. So, that gets you a wide net. We also know, and this comes from my previous experience in frailty, and let me pause for a moment. I mean, Dr. Gary Barnette and myself and Domingo Rodriguez, and Gary Bird, these are all people here, we worked on – we’ve been working on the space of frailty for at least 15 years with Enobosarm in these patient populations that we have shared the data, both in frailty patients, post-menopausal women, and also cancer-wasting patients that are older.

The reason I bring that up is that we have to deal with all the endpoints that the FDA wants, physical function. We had to understand the amount of muscle that somebody loses from the age of 60 to age of 80. And what’s a critical amount of muscle that gets you to a point that you have problems with functional limitations, you end up with functional limitations, mobility, disability. So, we bring all of that history with us as we look at this accelerated development of frailty that occurs in older patients. So, the fact that you’re 60, you’re already beginning the decline in muscle. And so, the idea is rather than trying to come up with a sarcopenic definition for a population, which there are many, just allow patients over the age of 60. They’re going to have reduced muscle mass.

Follow them along for the 16 weeks. And if you’re going to lose, as Dr. Barnette said, you could lose as much as three kilos, 3.5 kilos on a Semaglutide alone, you’re accelerating frailty. You’re going to see problems. So, we want to have a wide net. So, the way to think of it is, we used greater than 60 as the eligibility. If they’re overweight, obese, that patient population is enriched for the patients that’ll get into trouble.

Leland Gershell: All right, that’s very helpful. And then just to follow up, being that from what we understand that to maintain benefit from weight loss from the GLP-1 therapy, one has to stay on that therapy for long term, effectively for life. How do you view the ultimate use of Enobosarm, assuming approval over time? Would it be used as well kind of the entire time that the GLP-1 is used, or would it be used only during the time that the weight loss is actually occurring, then once the patient achieves their target weight or their plateau weight, they could go off since they wouldn’t be losing any more mass? How should we think about that?

Mitchell Steiner: Yes, so, part of the reason we’re doing the Phase 2b the way we’re doing it is to get some questions answered to address that question. So, for example, the first part, which is the primary study is, in combination with a GLP-1. how does Enobosarm work? Can we maintain muscle? How much additional fat do we lose? And so, that gives you that information, and of course, physical function, seeing how we can prevent the decline of physical function and that. Second part, the open label study is kind of addressing the question you’re asking, and that is, if you stop the GLP-1 for the patient that did not take Enobosarm in combination and they’ve lost muscle, and the fear is if you stop the GLP-1, you get the rebound weight gain, which is almost all fat, that you’ve actually made them worse because now they have less muscle and they have the same weight, but it’s all fat and weaker.

And so, it would be nice to see what the effect of Enobosarm is in that situation to rescue and prevent the rebound weight gain, fat gain. And those pieces of information will allow us to think more globally at a higher level like you’re thinking, and that is, how would you use it? So, here’s some examples. One, could Enobosarm, which by itself has a direct effect of reducing fat and maintaining muscle in combination with a GLP-1 receptor agonist, be used in combination? So, you can use less of a GLP-1 receptor agonist. As you know, GLP-1 receptor agonists have GI toxicity. And that’s the reason why people have all kinds of gastrointestinal pain, nausea, vomiting, diarrhea and bloating and that kind of stuff. And we can decrease some of those with an agent like Enobosarm that doesn’t have any of that.

Then you could have a situation where the combination of a GLP-1 with Enobosarm, you can have less of the GLP-1, potentially. The other way to think of it is the biggest problem that is occurring now is everybody got onto GLP-1s and they’re recognizing they hit this plateau. And the plateau, as I mentioned in my former comments, is because particularly in the sarcopenic obese patient or an elderly patient where they have very little muscle reserve, happens because when muscle goes down to a critically low level, it kicks off the appetite mechanism. Appetite mechanism is pretty powerful. It won’t let you die. And so, that happens, then you basically have a push me, pull you with the GLP-1 that’s making you lose weight while the appetite’s asking you to put the weight back on all because the muscle has triggered that.

If you maintain muscle, then the question is, could you have a deeper fat loss? If you have a deeper fat loss, then again, the combination of our drug plus GLP-1 would be a higher quality, but better from the point of view that you mention, and that is, what is the target weight loss that you want? So, if you want a target weight loss that’s beyond what your muscle will allow, again if you do the 50-50 rule, for every pound of fat you lose, you lose a pound of muscle. That’s a lot to pay for, but you don’t have to make that payment and you can lose a lot more of the fat, then you can have a better success in getting to your target weight potentially. And so, that could be very interesting in getting rid of the plateau. And so, again, I would see Enobosarm in combination with GLP-1, will allow you to manipulate the GLP-1 to reduce dose potentially and to potentially get to your target weight without hitting the plateau.

Now, what happens if you want to stop? The chronicity of GLP-1, do you take it for the rest of your life? And some people wanted to get off of it because of side effects. So, if you could have a drug like Enobosarm that could be given almost like you’re cycling. So, you stop the GLP-1, keep the Enobosarm going, then you maintain muscle, and Enobosarm has direct effects on fat. So, decrease the potential for the rebound of fat, and then bring back the GLP-1 if you want to get back to your target weight again and keep avoiding that accelerated rebound and just have a more gentler weight loss. And that’s – when I say high quality, high quality means weight loss where your muscle and fat body composition is such that the appetite mechanism that gets you into trouble.

So, summary, I see this being used in combination with a GLP-1 chronically, potentially changing the GLP-1 dose, potentially using the drug to help you decide how you want to stop the GLP-1 and add it back in. And then furthermore, for those patients that got into trouble that did not start with Enobosarm and took a GLP-1 and want to discontinue the drug, then they have an opportunity to build their muscle back if they lost significant muscle, or to potentially stop the fat rebound weight regain. So, it’s a lot of information there, but I think the Phase 2b, again, it’s not meant to be the Phase 3 study where you say, okay, I’m going to look at weight loss at 48 weeks, and am I 5% greater than the weight loss of the control arm? No, this is asking the very critical questions of how ultimately do we want to use Enobosarm?

And the very high level, the two areas are with a GLP-1 and second area is to rescue somebody on a GLP-1.

Leland Gershell: Got it. Thanks for the added information.

Operator: [Operator instructions]. Our next question comes from Yi Chen with H.C. Wainwright. Please go ahead.

Yi Chen: Thank you for taking the questions. Just to clarify, because Enobosarm has the ability to preserve muscle mass, that in the Phase 2b trial, it is possible that within the first 16 weeks of Enobosarm plus GLP-1 drug combo versus GLP-1 drug alone, that for the combo arm, we could see patients lose less total weight versus GLP-1 drug alone arm. Is that right?

Mitchell Steiner: No, I don’t think so. I think what you’re going to see in this situation is what’s missing in your characterization of Enobosarm is Enobosarm does two things. One, it preserves muscle, and two, it also augments the fat loss. So, GLP-1 receptor agonist by itself is muscle and fat. And so, if we have a situation where you maintain the muscle – again, we’re not trying to make Arnold Schwarzeneggers. We’re not trying to pick a dose that you put so much muscle on that that has to counteract the amount of fat that you’ve lost. Part of it is can you dial down the muscle part so that you maintain muscle, but you make it up by reducing the fat even more than a GLP-1 by itself. That’s the idea. If it didn’t have direct effects on fat, I would say, okay, I don’t know what’s going to happen, but it has direct effects on fat.

And so, it could be possible the higher dose of Enobosarm, I mean, you have the same muscle, similar muscle maintained, but you have a greater fat loss. So, we’re going to learn that in the Phase 2b at 16 weeks. And so, again, the key thing here is, can we maintain the muscle, get a deeper fat loss, and the Semaglutide is going to take muscle and fat equally. By 16 weeks or so, it’s starting to hit the plateau.

Yi Chen: Would it be meaningful to have an arm receiving Enobosarm alone in this trial?

Mitchell Steiner: So, we’ve thought about that because Enobosarm alone would be very, very interesting. But we have again, not in obese patients, but we have in patients that are normal postmenopausal elderly patients. So, we have – we know a lot about Enobosarm in that setting as monotherapy. And we do have data from a 504 study in a subset of patients that were obese in the lung cancer study that pretty much falls in line with what I just said. And that is what we saw in that study where the cancer causes basically a starvation state, that we saw we were able to maintain muscle. Muscle was about 0.3 kilos where the GLP-1 lost about, I guess in that study, about three kilos or something of that sort. And we looked at total weight at 21 weeks.

There was much greater weight loss in the Enobosarm arm than the placebo arm in that patient population. What we saw, the weight loss was due to the fat loss because you maintain the muscle. So, we do have data like that. I think for purposes of this study here, we’re not trying to make Enobosarm by itself the weight loss drug. I think where we need to get clarity, and again, no company out there at this point now has clinical data in combination with GLP-1 with their drugs, is to get that information because that’s more important, understanding what is the magnitude of the hypocaloric influence and what is the dose we need to counter that? And then that’ll allow us to ask additional questions later.

Yi Chen: Got it. You mentioned that in a future Phase 3 trial, the endpoint could be measured at 48 weeks. Is that correct? And I also wonder, how many patients could be required for a future Phase 3 trial and whether Veru plans to conduct a trial by itself or potentially with a partner? Thank you.

Mitchell Steiner: Yes, so the answer is we’re absolutely seeking a partner, but the way we’re designing this study is, the way we’re thinking about it is, we have a Phase 3 that is potentially an all-comers study, in which case weight loss is your endpoint. And the weight loss endpoint, all you have to show is 5% incremental increase, which means that would be again, the standard endpoint of 48 weeks. The FDA wants it to be at least a year. However, embedded in that study of the patients that are in our Phase 2b, greater than 60 years of age. And the reason we picked that patient population is because physical function and potentially lean body mass could be interesting endpoints in itself. So, depending on how our discussions go with the FDA, do we focus on a subpopulation of which the clinical benefit risk ratio is different and the endpoints are going to be different potentially, or do you go after a weight loss population, and in which case you’re not worried about muscle, just get the muscle function, because that’ll be something that you can put in your label, and I think that will be important.

But get the endpoint of 5% better decrease in weight at week 48 and you get it. Gary, do you want to add to that?

Dr.Gary Barnette: No, I think that the outcome of this study that we’re running will dictate that, will dictate where we go and how big that study will be, what the primary endpoint will be, whether the FDA is just purely looking at weight loss, or whether they’re looking at weight loss, as Mitch mentions, with a component of body composition. Increasing or maintenance of lean mass and increasing fat reduction would be, in my opinion, a very positive outcome for these patients. And that quality, what I’m going to term is quality weight loss, would be very important for overall health benefit.

Mitchell Steiner: But the fact that we’re measuring physical function, we know the FDA likes how patient feels, functions, and survives. And so, that’s why the stair climb test, which is a key component of the Phase 2b, is important because I think that will also influence how we think about endpoints in a Phase 3. Ultimately, we think Enobosarm is a kind of a programmatic molecule, meaning that you’re looking at rescue. You’re looking at decreasing doses of GLP-1s. You’re looking at being used in combination with the whole population, used in combination with a at-risk population, could potentially be used in combination with a myostatin inhibitor. It can potentially be used. So, I think this can be pretty interesting. And so, we are active in trying to find a partner that has the resources to allow us to explore all these possibilities.

Yi Chen: Thank you.

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

Mitchell Steiner: Thank you, operator. I appreciate everybody who joined us on today’s call, and we’re very, very excited about the prospects of Enobosarm. I look forward to updating you on our progress in the next investors call. Thank you.

Operator: A digital replay of the conference call will be available beginning approximately noon Eastern Time today, February 8, by dialing 1-877-344-7529 in the US, and 1-412-317-0088 internationally. You’ll be prompted to enter the replay access code, which will be 8260066. Please record your name and company when joining the conference. The call has now concluded. Thank you for attending today’s discussion.