Good morning, ladies and gentlemen. Welcome to Veru Inc.'s Investors Conference Call. All participants will be in listen-only mode. [Operator Instructions] After this today's discussion, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Mr. Sam Fisch, Veru Inc.'s Director of Investor Relations. Go ahead.

Good morning. The statements made in this conference call that are not historical in nature are forward-looking statements. Such forward-looking statements reflect the company's current assessment of the risks and uncertainties related to our businesses. Our actual results and future developments could differ materially from the results or developments in such forward-looking statements. Factors that may cause actual results or developments to differ materially include such things as the risks related to the development of the company's product portfolio, risks related to the ability of the Company to obtain sufficient financing on acceptable terms when needed to fund development and company operations, risks related to competition, government contracting risks, and other risks detailed in the Company's press releases, shareholder communications, and Securities and Exchange Commission filings. For additional information regarding such risks, the company urges you to review its 10-Q and 10-K SEC filings. I would now like to turn the conference over to Dr. Mitchell Steiner, Veru Inc.'s Chairman, CEO and President.

Thank you, Sam, and good morning. With me on this morning's call are Michele Greco, CFO and CAO; Phil Greenberg, Executive Vice President, Legal; and Sam Fisch, Director of Investor Relations. Thank you for joining our call. Veru is an oncology and urology biopharmaceutical company with a focus on developing novel medicines for the management of prostate cancer. Before I provide the update on the clinical development of our drug pipeline and the commercialization of our products, as well as provide financial highlights for the third quarter fiscal year 2020, it is important to reflect on the great progress we have made transforming our company into an oncology biopharmaceutical company that's supported in part by a growing revenue cash generating sexual health business. Not only are we planning for 2021 two Phase 3 registration trials; one for VERU-111, our novel oral tubulin targeting agent to treat metastatic castrate resistant prostate cancer, and the other for VERU-100, our three-month GnRH antagonist long-acting depot to treat hormone sensitive advanced prostate cancer, but also we expect to continue to grow our base sexual health business. In fact, we've had 10 quarters of continued significant growth for FC2 and PREBOOST, known by the brand name Roman Swipes, and we plan to submit an NDA for TADFIN, the combination of Tadalafil and Finasteride for BPH, late this year to continue to profits for even more revenue. The model is working. The transformation is near complete. Now, let's focus on the significant progress we have made on the advancement of our drug pipeline. VERU-111 is a novel oral first-in-class tubulin targeting agent that cross links and disrupts alpha and beta tubulin subunits of microtubules. VERU-111 is in its clinical development to treat metastatic castration, a novel androgen receptor targeting, which is Enzalutamide and Abiraterone resistant prostate…

Thank you. Dr. Steiner. As Dr. Steiner indicated, we're off to a great first three quarters of fiscal year 2020. Let's start with the highlights of our third quarter results for the three months ended June 30, 2020. Overall, net revenues were up 6% to $10.3 million from $9.7 million in the prior year third quarter due to the growth in our U.S. FC2 prescription business. The company reported significant FC2 sales growth in its prescription business with net revenues up 23% to $5.4 million from $4.4 million in the prior year third quarter. While, overall FC2 unit sales declined slightly by 3% to 10.5 million units from 10.9 million units in the prior year third quarter. We are pleased with the overall net revenue increase despite the slight decline in overall FC2 units sold. Net revenues for the public health sector business was $4.3 million compared to $4.9 million in the prior year third quarter. Gross profit was $6.5 million or 63% of net revenues, compared to $6.6 million or 68% of net revenue in the prior year third quarter. The decrease in gross profit and gross margin is driven primarily by increased cost of sales recognized during the third quarter, due to the temporary shutdown of the company's manufacturing facility in Malaysia as a result of the COVID-19 pandemic. Additionally, we have seen an increase in labor and equipment maintenance cost as we have ramped up production in huge demand. We are pleased to report that our FC2 Malaysian manufacturing facility is back up and running with volumes consistent with volumes prior to COVID-19 pandemic Malaysian government ordered shutdown. These financial results for the third quarter reflect shipments of $3.6 million units under the new tender orders from South Africa. We previously announced that we want 75% of…

Thank you, Michele. We have enjoyed yet another strong financial quarter, which has allowed us to significantly advance our clinical programs. In fact, we now are into our third year of growth in our fifth FC2 U.S. prescription business. Looking forward to the rest of fiscal year 2020, we expect our revenues to continue to be strong and growing towards a record year. With the improving performance of the sexual health business, we believe that we'll be able to substantially invest in the continuous clinical development of our prostate cancer drug candidates, as well as submit the NDA and if approved commercially launched apps in which we put, which will provide even more revenue adding to the already growing revenue from FC2 and PREBOOST Roman Swipes. We anticipate a steady flow of important positive news for Veru over the next few months to one year, the VERU-111, an oral tubulin targeting agent. We will report open-label efficacy and safety clinical results for the Phase 2 clinical trials of VERU-111 in patients with metastatic castration and androgen receptor targeting agent resistant prostate cancer. We plan to submit the Phase 3 pivotal registration trial protocol in calendar year Q4 2020, and start the Phase 3 registration and clinical trial in calendar year of Q1 2021. With VERU-100, our novel peptide GnRH antagonist 3-month depot formulation, we will complete GMP manufacturing of the clinical supply of VERU-100, submit the IND and initiate a Phase 2 clinical trial and by the second-half of calendar year 2021, we will initiate a Phase 3 pivotal registration clinical trial. For Zuclomiphene, our oral estrogen receptor agonist will have a face-to-face end of Phase 2 meeting with FDA. We plan to complete the Phase 2 clinical program for COVID-19 subjects with high risk to ARGS, submit the NDA for TADFIN. We plan to continue to demonstrate robust growing revenues for commercial products FC2 and PREBOOST/Roman Swipes. We will also have secured partnerships with some of our drug products. We have substantially transformed our company into an oncology biopharmaceutical company supported in part by growing revenue, cash generating sexual health business. The model is working, the transformation is near complete. With that, I now will open the call to questions. Operator?

Ladies and gentlemen, at this time, we will begin our question-and-answer session. [Operator Instructions] Our first question is from Brandon Folkes from Cantor Fitzgerald. Go ahead.

Hi. Good morning, Mitch and team, and thanks for taking my questions, and congratulations on all the progress during the quarter. Firstly, on 111 when we see the Phase 1b data presented in September, will there be any new data, and if so, what do you think are going to be the most pertinent parts of the data received from that 1b, given that we're seeing some of it later in the year? And then secondly, as a follow-on, on 111, and I think as we've spoken in the past, you talked about having a very good indication of what you believe the FDA wants to see from a Phase 3 protocol, and it sounds like that been further concerned with the dialog, but maybe just as the Phase 2 progresses, do you envision any amendments to the Phase 3 protocol, and what are some of the factors there that you are watching in the Phase 2 that could still meaningfully have stick the Phase 3 protocol? Thank you.

Good, okay. So, really the first question is basically you're going to be presenting data at ESMO in the fall, is there anything new that you're going to be presenting? And the answer is yes. What we've presented today, which is sort of highlights of what we had in the study, and so, you'll see more details. Now, interestingly, which is kind of unusual for Phase 1b 2, we were selected for a oral presentation. So, unlike a poster where we can just lay everything out, the oral presentation is going to be limited, that it will be highlighted. So, Dr. Mark Markowski is going to go through additional efficacy and additional safety data that that has not been presented before, and so, I think that's going to be important to look at, and so, as I said, you'll see some more safety and you'll see why we're excited about the safety, and remember safety is critical if a urologist is going to give the medicine over medical oncologist, and if it's an IV product, it's a no-go for urologist, of course, but this is oral, and I think you'll find it interesting, and then I think there'll be some additional tumor pictures that you'll be able to see tumors that have shrunk, and so you can see further evidence of objective tumor responses, and that's about as much as I can say without giving you more data. As it relates to the second question, which is -- and we're excited about it, okay, and that's and that's the reason we went to the FDA and that's why we accelerated our discussions with the FDA because we were able to pick a dose based on safety and efficacy, and we know our patient population, and so, that's a reason why…

Great, thanks very much, Mitch. It's very comprehensive, like putting the data into templates, and maybe just one more if I could sneak in, I will hop back in the queue; on the COVID program, if you tell from the Phase 2, do you think there's a chance of getting emergency use authorization for that product?

We had that debate internally, and it'd be to be fully transparent. We have that debate internally. Some of the folks at Veru feel that it's possible. I don't I think we're going to have to do more work, and so, I'm thinking we're going to get non-dilutive funding, and we'll do a Phase 3 study and we'll see but a lot of it depends on and what are the outcomes and how dramatic they are, and if they're dramatic, then your chances are that you may be able to move forward. If there needs to be confirmed, then you'll do the Phase 3, so it's really hard to say, but I wouldn't rule out emergency use, I just think it's more likely that we'll move to a Phase 3. I wanted to be clear that if we do move to a Phase 3, that that will be with non-diluted dollars. We've to get funding support for that. My guess is given the current environment and if our data supports going to Phase 3, we should be successful in getting that non-dilutive money.

Great, thank you very much.

Thank you.

Our next question is from Leland Gershell from Oppenheimer. Go ahead.

Hey, good morning, Mitch. Thanks for taking my questions. Congrats on all the progress. Once asked, you've been having great success with commercial business, growing revenue, obviously great margins, but you will be facing, increased expenses with the Phase 3 and prostate cancer, probably one of the more expensive if not most expensive trials you're going to take. So just want to ask in terms of how we could think about modeling, would you expect that the commercial would be sufficient to fund the bandwidth to other operations as we think about potential capital financing that may occur perhaps in 2021? And then I have a follow-up. Thanks.

Yes. So, let's make some assumptions first. The first assumption is that if the commercial business continues to grow at this rate and that we're not using any money for marketing and selling for the most part and that all that gross profit and the more we make and the fixed costs are going to take less of that, right, but on a percentage basis. So every additional dollar that we get is pretty much going to drug development, and FC2 and PREBOOST, I'm telling you 2021 looks very, very good, and so, again, continue to grow, and so, if we're in the order of, as we reported three quarters in, and we're $30.8 million in revenue, and it looks like we're going to finish this year off as a record year, and next year is supposed to be another record year. How does that magnitude of money match up with what we would potentially have to spend in a Phase 3 program? So we have two Phase 3 programs that we're facing for next year. One is the big one, bigger one, I should say, which is going to be between 200 and 300 patients, and from a money standpoint, that's probably in the order of about $20 million to $25 million, and then we have 100 patients study, which is going to be the GnRH antagonist, and that one is more like the 100 patients in testosterone's endpoint and all that expensive work with CT scans and all of that. We don't have to do that, and so, that study would be more in the range of about $10 million or something like that. But that's not going to start to the second-half of next year. So if we're start looking into money, if you're between $25 million to $35 million in money that you need over the next 18 months, it's not a far stretch that our commercial business can help pay for a substantial amount of that, and so, it puts us in a very, very good position to be opportunistic, and if people begin to realize the full value of the underlying sexual health business, which on its own clearly has more value in that we're trading at today with that kind of cash and it's continuing to grow in spite of COVID. That base business alone means that if anybody invests in our company, they're getting the drugs for free, and so, my thinking is that we will be opportunistic as it makes sense but if not we are generating enough revenue and cash coming from the sexual health business that over 18 months. We would be able to self-fund a substantial portion of it.

Okay. That's helpful, and then in that same vein, given the success you've had with the sexual health business, I know you'll have TADFIN coming down the pike and that'll be a meaningful increment to that. Would you -- or are you considering adding yet other products to the commercial business just given how you don't need to really worry about sales force costs and things like that. You can kind of plug into the telemedicine channel and benefit from additional revenue. How should we think about those kinds of thoughts?

Yes. So let's take a step back. We started working in telemedicine two-and-a-half years ago, is that right? Two-and-a-half years, something like that, and the reason I say that is everybody is comfortable with telemedicine post-COVID and -- because COVID has forced everybody as a disruptor to start looking at telemedicine as an alternative to visiting doctors, and now people are not even -- doctors not only -- family not allowed to come in when the patient comes to see a doctor. Do you think they're going to let a sales rep in? So, the world has changed, right, and so, I feel sorry for the companies that are launching products in this current environment. Now, we chose telemedicine, and the reason we did that is because it turns out that the new generation are very comfortable using their cellphones or their smartphones to order anything from bottled water they want that evening at their home to prescription products, where they don't want to wait, to get the prescription they don't want to wait to stand in line at the pharmacy, they don't want to wait for the pharmacy to get it. They just push a button and they get it, and female contraception took the lead, and we're able to attract folks to their website through their marketing dollars, and now all of these women that were in colleges were sent home, and so, instead of going to the infirmary to pick up their birth control, they now have to find alternative sources and guess what, they end up getting online and they're starting to move towards a telemedicine platforms, and just like you -- the first day that you went to Amazon and bought something, you said, boy, this is pretty cool. So you're not just going to…

Great, that's really helpful. Thanks for taking the questions and we look forward to the data at ESMO.

Thank you. Appreciate it.

[Operator Instructions] Our next question is from Yi Chen from H.C. Wainwright. Go ahead.

Hi, good morning. Thank you for taking my question. The U.S. prescription sales of FC2 at $5.4 million in fiscal third quarter seems to be lower than $7.0 million in the fiscal second quarter and $6.1 million in the fiscal first quarter. So could you give us some additional color on the dynamics of the U.S. prescription market? And whether there's any seasonal trend or whether it is affected by COVID-19 at all? Thank you.

Yes. Good question. So the question is, it looks like this quarter, there's a little dip in the U.S. prescription sales, even though over the fiscal year, it's clearly we're way ahead. As I mentioned before, 159,000 prescriptions were written last -- 159,000 12 pack units were dispensed in fiscal year 2019, and in just this first three quarters where 200 -- whatever the number is, 239,000, whatever the number is, so it's big, and so, that means this next quarter if it's an even quarter, it's going to be a record year. So that I want to make it very clear that the U.S. prescription business is robust and it is growing. What you are seeing is that the purchase orders that we get from the telemedicine groups don't necessarily fall with the quarters, and so, some of that -- I think you are seeing some of that dislocation, and COVID-19 -- I would argue that COVID-19 helped us with that dislocation rather than not. Meaning that if there was some inventory, the inventory was quickly used up because of the fact that women at home now using the Internet and what we have heard uniformly from the FC2 telemedicine providers or as you say the customers is that COVID-19 did indeed increase their business, and so, I don't think COVID-19 is going away. So, I think our next year is going to look robust as well, but I think some of that dislocation again we have the purchase orders come in, but I will let -- Michele, do you want to add a little color to that?

Sure. The other item that we did see was customers working and building inventory, and so, they were -- and figuring out how much inventory they wanted to keep on hand versus how quickly they place orders and turn it around and have a sell through, and so, we did experience some of that, and as Mitch said, our customers will put in a three-month purchase order, and then, pull down from that as they see fit, and that just doesn't coincide all the time with what we are seeing as we cut off our quarters.

Okay, thank you.

Thank you.

Our next question is from Kumar Raja from Brookline Capital Markets. Go ahead.

Hi, thanks for taking my questions. With regards to the prostate cancer trial, what is your expectation of timing of meeting with the EMA? And how do you think the expectations of EMA would be different compared to the FDA? And do you think you can incorporate the requirements of both the agencies in the single Phase 3 trial you are planning?

Yes. Good question. So, the EMA for everybody is European Medicines Agency, and we are going to be running a global Phase 3 and the intent is that this global Phase 3 which served the registration both in the U.S. and with EMA, and so, with that said, we have to -- you got to pick and choose, and so, the first step is to get FDA input. The FDA and EMA have tried very hard to harmonize their advice globally, but just to be safe, we want to make sure that they agree, and I will tell you that based on some of the other prostate cancer studies that have been done and have met with the EMA that what the FDA is allowing us to do is not specific to us. It seems to be what the FDA has settled in terms of endpoints in this space. So, we are going to meet with EMA probably late this year. We are just starting the [request and part of that] [ph] was we just met with the agency in July. So, this is what you would do, and so, now we are going to submit to EMA and get their advice, but the goal would be that when we start our study in first quarter of calendar year 20 - 21 that would have input from both agencies, and that would serve as a single Phase 3.

And with regards to VERU-100, what remains to be done before you can go ahead and file IND?

So, all we are waiting for that is the -- all the non-clinical is done. Everything is done. Only thing that we are waiting on is GMP manufacturing. As you know when a GMP manufacture a peptide, it's little different. It takes a little bit more time, and you have got other issues all worked out, and so, what we are doing now is just waiting for the final batch to be manufactured so that we can forward, and you can't really file an IND until you have that CMC information, and so, the CMC information as soon as it's available, then we will file in the IND, and as you know, 30 days after that you can start the trial. So, literally just waiting for the last parts of the manufacturing to do be done under GMP, and then we will start the Phase 2, you know, not right at the end of the year, right at the beginning of the year, and that will be a small study, single injection, and that will guide us in what we need to do for the Phase 3. So, we are close.

Thank you.

All right.

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

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

The digital replay of the conference will be available beginning approximately noon Eastern Time today, August 13 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 10146652. Please record your name and company when joining. The conference has now concluded. Thank you for attending today's discussion. You may now disconnect.