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

Good morning. The statements made on 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. We have made several important and exciting announcements this morning. It's been a busy quarter. We actually released two separate press releases this morning, our earnings release and an update on our oncology drug pipeline. This morning we will discuss these new announcements and its impact on Veru’s business strategy, the clinical development of our drug pipeline, and the commercialization of our products. We will also provide financial highlights for our record fourth fiscal quarter and record year-end fiscal year 2020. Veru has made the transformation into a late clinical stage oncology biopharmaceutical company focused on developing novel medicines for the management of two of the most prevalent cancers; prostate cancer and breast cancer. We continue to invest cash generated from our sexual health commercial business into the clinical development of our high value oncology drug candidates, so that our current shareholders can realize the maximum value of our oncology biopharmaceutical company. In fiscal year 2017, the year that the Female Health Company acquired Aspen Park Pharmaceuticals to create Veru, the annual revenues were $13.7 million. And this year, I'm pleased to report that we had a record year of $42.6 million in revenue. In fact, we expect fiscal year 2021 revenue generation will continue to grow robustly to what could be another record year. We accomplished this great and significant company milestone because we set a new commercial strategy for FC2 and launched PREBOOST. We focused on creating an FC2 commercial sector in the U.S. And in the U.S., we launched FC2 as a prescription product to retail pharmacies and partnered with…

Thank you Dr. Steiner. As Dr. Steiner indicated, we had a record breaking fourth quarter and a record breaking year. Let's start with our fourth quarter results for fiscal year 2020. Overall net revenues were up 35% to $11.7 million from $8.7 million in the prior year fourth 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 of 87% to $8.7 million from $4.7 million in the prior year fourth quarter. We are pleased with the overall net revenue increase, despite the decline in FC2 unit sales to 5.3 million units from 9.8 million units in the prior year fourth quarter, due to a decline in low margin public health sector unit sales. Net revenues for the public health sector were $2.2 million, compared to $3.8 million in the prior year fourth quarter. Overall, gross profit was $9.6 million or 81% of net revenue, compared to $5.8 million or 67% of net revenues in the prior year fourth quarter. The increase in gross profit and gross margin is driven primarily by increased sales in our U.S. FC2 prescription business, partially offset by an increase in labor and equipment maintenance costs as we have ramped up production to meet demand. During the fourth quarter, we recorded a non-cash impairment charge of $14.1 million related to in process research and development, associated with the acquisition of Aspen Park Pharmaceuticals in fiscal 2017. The charge is primarily a result of deferred development timeline, and the decision to cease development work in tamsulosin DRS, VERU-722 for male infertility and VERU-112 for Gout, in response to management's strategic decision to prioritize the development of our premium oncology drug product candidates, which are highly differentiated unique new chemical entities or…

Thank you, Michelle. We have enjoyed a record financial quarter and a record year which has allowed us to significantly advance our clinical oncology programs. In fact, we are now into our third year of growth in our FC2 prescription business. With the improving performance of our sexual health business, we believe that we'll be able to substantially invest in the continuous clinical development of our prostate and breast cancer drug product candidates, as well to submit the NDA and if approved, commercially launch TADFIN which would provide even more revenue, adding to the already growing revenues from FC2. We have created a very valuable sexual health business. We had a profitable Q4 fiscal year 2020, before the adjustment for impairment, record revenue fiscal year 2020 and sold PREBOOST for $20 million. Looking forward to fiscal year 2021, we expect our revenues to continue to be strong and growing towards yet another record year. And as a consequence, the company expects to have sufficient resources generated from our sexual health business and existing sources of cash to fund the clinical development of all of our currently planned registration clinical trials, without the need for new equity financing through the end of fiscal year 2022. With resources in place, we will continue to advance our late clinical programs to and through the highest value point, which is enrolling Phase 3 clinical studies and having Phase 3 positive clinical results. Registration oncology clinical studies are ideal as a typically are single clinical studies with premium large global markets. As such, we anticipate a steady flow of important positive news for Veru over the next few months to one year. We have four registration studies planned to commence in calendar year 2021. So VERU-111 for the metastatic castration resistant prostate cancer, we will…

[Operator Instructions] The first question today comes from Brandon Folkes of Cantor Fitzgerald. Please go ahead.

Hi, thanks for taking my questions and congratulations on all the progress and the deal. Sorry if I missed this, but can you just maybe elaborate a little bit on the economics of the premium oncology deal? Any color on the upfront royalty milestones. And then, just any color on the size of the trial you're thinking for that product. And then maybe just one sort of clarification question, does cash runway through the end of 2022 -- does that just contemplates FC2 sales and the cash flow generation from that or do you contemplate any sale of assets in net cash run rate? Thank you.

Okay, good. So the first part has to do with enobosarm and have we disclosed any the deal terms. And the answer is, it's undisclosed, but it was -- enobosarm is a late stage asset for the University of Tennessee and Ohio State. So, I will tell what I can tell you is that it's a very favorable deal for the company that includes very reasonable milestones and a low-single-digit royalty on net sales. So, it's a very good deal for our company, but we haven't disclosed the rest of it, but it's a good deal for the company, given the size of the market and where we're going. And I think everybody's going to be very, very happy once we get past this next trial, which gets to your next question. And that is have we told you about the size. We believe that the size of the enobosarm ER+/HER2- metastatic trial in endocrine resistant women, it's going to be about 240 patients. 240 patients is the number, and it's a one to one randomization. So it's not a huge study. And that's again, the single open label study should be sufficient for the successful approval. So that's why we're excited about it. And interestingly, with the other 20 -- just to make a comment with the other 25 studies, all of the studies that you would expect for Phase 1, like the drug-drug interaction studies, the QT studies, renal impairment, liver impairment studies, all that's been done. There's no QT issues, [Indiscernible] effect issues. I mean, it's a really nice clean profile on this drug. And so you can imagine for a cancer product having that kind of clean profile, this could be very, very attractive as another endocrine therapy for women that just want to avoid the…

Great. Thank you very much.

All right. Thank you.

The next question comes from Yi Chen of H.C. Wainwright. Please go ahead.

Hi, thank you for taking my questions and congratulations for in-licensing of the new candidate. So my first question is, could you give us some more color on the existing population of the ER ER+/HER2- breast cancer patients in the U.S. and the new occurrences every year? And my second question is related to the sales of FC2, could you provide us with some breakdown in terms of private prescription sales versus public sales? Thank you.

Yes, so I'm going to have Michele answer the second question, which is FC2 breakdown, RX versus public, you want public global or public U.S. or both?

Both. Thank you.

Both, okay. So while Michele is getting that, I'll answer your first question. We have not said much about the market size except to say that the market size is very similar to the CDK4/6 inhibitors, because the CDK4/6 inhibitor is an endocrine, it's a therapy that's done in combination with the endocrine therapies. And so, I will tell you that 85% of women, so if you go back and look at the number of women with breast cancer that I quoted in my presentation, 85% of those women are going to have ER+ disease. So, automatically that's our patient population. And 15% will have triple negative breast cancer, which will be ER negative. So, that’s 276,480 new cases a year, which 85% of those cases will be ER+. And so I would say, we're going to continue to do the market research, but it ends up being at about, by the time you take in the metastatic cases, you ending up at about 30,000 to 40,000 cases a year. And the good news is, they're not dying, with endocrine therapy you're continuing to treat them, and they're looking for the next thing and the next thing they're looking for the IV chemo. And so we're trying to take a step before that. But we're going to continue to give you some more granularity on the market size, except to tell you that if we price like a CDK4/6 inhibitor, which is a surrogate, if you will, for that market that's a $6 billion worldwide market right now. And we're going after those patients that fail a nonsteroidal lung patient inhibitor, which is usually what they get first fulvestrant, which is what they get second, they usually get one or the other in combination of CDK4/6 inhibitor, so we could be either second line or third line. So that's still a big piece of the pie. And who would not want to take another endocrine therapy that has some potential benefits besides treating the tumor and not be virilizing and to avoid IV chemo. So I think it's going to be a very attractive area. Michele, would you like to answer the question on the FC2?

Sure. In the U.S. prescription channel, as we've indicated, revenues are $27.1 million. And the public sector, the U.S. we had about $1.2 million, the rest of the world we had about $12.2 million for a total of $13.4 million. And as we saw, we had sales of around $2 million for PREBOOST for the year. So that's our $42.6 million.

Got it. Thank you.

Okay.

[Operator Instructions]. The next question comes from Leland Gershell of Oppenheimer. Please go ahead.

Hey, good morning, Mitch. Thanks for taking my question. I wanted to ask, as the company continues to refine its profile and with the sale of PREBOOST and also as recognized by the impairment charge shifting strategy away from some other assets. I want to ask about any thoughts of perhaps monetizing the FC2 business through a similar type transaction and the interest you have had there? And then I have follow-up. Thanks.

Yes. So good question. And so, as I said a couple of times during the paired comments, that the PREBOOST model is a great model. I mean, we were able to monetize PREBOOST, and see those resources for what's important to us, which is as a company strategy, which is to be in clinical development of premium cards new products, big markets with a single study, you can you can access those big markets globally. And so, that's what we need to do. And so the smaller products doesn't make sense to put the resources behind it, because the accounting products dwarf it in terms of the potential. And so, putting our bet and our confidence in the two prostate programs and two breast cancer programs make the most sense. With that said, we have also been able to do that. And the model works, I mean, we've been able to do that with primarily the money we're generating on our own or like we just monetized PREBOOST, so it makes perfect sense, that here we are now with $42.6 million in revenue. And I told you, the gross profit is about 72%. This is a very valuable business. And, as I mentioned in my other call, I even think our market cap is reflecting just the base business. Forget about the enterprise value of the drugs. And so I made the point that, there's so much potential here. And to unlock that potential, we have to take a serious look at how to take the base business and create enough cash and cash resources so that we would be completely independent as we move forward, independent financially, as we move forward with going into these markets. I mean, Immunogenic [ph] just sold their product Trodelvy. They have accelerated approval…

All right, great. And then another question just on TADFIN with that product on track to come to market in about a year's time. I wanted to ask about just how the company is going to approach, given that it's going to be going to telemedicine. And it's probably going to be seen as kind of a more convenient and better alternative to what our two generic drugs are taken together quite frequently. How the company's new approach is making that product visible, growing awareness? What that will look like? And how we should think about expenses?

Yes. Let me tell you how I'm thinking about that. It's a great question, okay. And I think what we were able to tap into and we've been successful with FC2 and with PREBOOST, is we tapped into the telemedicine market, okay. And a telemedicine market is growing exponentially now, particularly because of COVID-19. And so, what would have taken 10 years is now happening in months. And what it has done is a whole world has moved away from I want to go to CVS and take two generic drugs with a copay, two, if I can punch a number in my phone, it can show up by Amazon the next day discretely, then that would be wonderful. And so you see a lot of these [Indiscernible] and other companies, get Roman and others, they are taking basically generic erectile dysfunction products and they are selling the hell out of them, okay. And for some of these groups, they are seeing $200 million to $300 million in revenue. I mean it's just unbelievable for what you and I would have call a generic product, okay. And so, there is a completely untapped group of men into the case of TADFIN, that if they have this available through telemarketing and it can be sent to their home discreetly, and we price it appropriately that's the key thing. It's a whole new universe, okay. And if I would have told you I went with FC2 when we did marketing and selling with 12 salespeople, and they ran around there, visiting OB-GYN doctors, we got 400 prescriptions a month for 12 people. In telemedicine, I don't know, we just reported with 348,000 prescriptions in this past year and the year before that 158,000 prescriptions. You don't realize the power of the internet.…

Great. Thanks so much for the color, Mitch.

Thank you.

The next question comes from Kumar Raja of Brookline Capital Markets. Please go ahead.

Congratulations on the licensing and thanks for taking my questions. For enobosarm Phase 3 trial, are you planning to go forward with the 9 milligram dose or the 18 milligram dose? What can you share with regards to the safety and efficacy profile for both those doses? And also, what needs to be done before you can start the Phase 3 trial? Do you have enough drug supply? And how easy or difficult is it to manufacture this drug?

Good. Thank you for both the question. So this refers to the new acquisition enobosarm. The Phase 2 study has 9 milligram and 18 milligram doses. Today the presentation will happen at 9, no tomorrow. Tomorrow is the presentation on that part of it, so stay tuned. So I can't give you the actual details. But I can give you some general comments. General comments after being in 25 trials, now this is a very well tolerated drug. Naïve cancer just as a [ph] drug in general, even if it was a quality of life drug, I mean, it's amazingly well tolerated. And so we're going to announce the safety there. And things that you would worry about within an agent of this sort would be hematocrit increases, liver toxicity, you worried about virilization in women and we just don't see that. And so we will share with you the exact safety profile in the future right after that presentation. So the presentation, that spotlight presentation at the San Antonio will have that information and they will put it out subsequently so everybody can get access to it, if they're not getting into the program. So with that said, it's very well tolerated. Now with that said, the 9 milligram and 18 milligram you'll see the efficacy. And again, I don’t want to share much more than that, except to say that like the first Phase 2, that was done in 22 patients it's a good activity and you're going to see that. But we are going to go with the 9 milligram and you'll see the reason why after the presentation, and that's where we met with the FDA. The FDA agreed to the 9 milligram. So drug definitely has activity in a heavily pretreated patient population. When I say heavily pretreated not only at multiple lines of endocrine therapy, but also chemotherapy. And so these are patients that are not the patients that are going to be in our Phase 3, in which who would not have had chemotherapy and they'll be even more likely to respond to enobosarm. As it relates to what are we waiting for, we had to meet with the FDA. And we got that out of the way. And the next thing is, you're absolutely right, we do have to have the 2b marketed drug a product. And so we're doing that now. It's not hard to make, but you have to go through the process where you want to bridge from the new 2b marketed forum into the forum that was used in the other 25 trials. And so it's not complicated, it just takes time. And so with all that's happening as we speak right now, and so we are on target to start in the first-half, hopefully by early summer, we'll get started with the actual Phase 3 part of it. And so it'll take us takes about a quarter, quarter and a half to do the GMP stuff.

Okay, thank you so much.

Thank you.

The next question comes from Peter McMullin of Peter McMullin Consulting. Please go ahead.

Congratulations, Mitch.

Thank you, Peter.

When you talk about maximizing assets and if you were to sell off the FC2, for example, how would you propose to maximize the tax losses which are considerable going forward?

Yes, that’s great question. So I'm going to let Michele answer that question. And Michele, would you like to take that one on?

Sure. Peter, we would be selling the company in the UK, which holds the $63 million in NOL. And so we would take that into consideration when we look at the value that we're looking for if we were to sell the FC2 business.

Good thought. And what about the U.S. side?

The U.S. side, if we were to sell the FC2 business, it's just assets in the U.S. All the NOLs will be retained by Veru.

Okay. Thank you.

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

Thank you, Operator. Again, I appreciate everybody joining us on today's call and I look forward to updating all of you on our progress in our next Investors call. Have a Merry Christmas, Happy New Year. And hopefully 2021 will look a lot different than 2020. Thank you.

The digital replay of the conference will be available beginning approximately noon Eastern Time today, December 9th 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 10149625. Please record your name and company when joining. The conference has now concluded. Thank you for attending today's discussion. You may now disconnect.