Veru Inc. (VERU) Q2 2022 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to Veru Incorporated Investor Conference Call. All participants will be in a 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 Incorporated, Executive Director, Investor Relations and Corporate Communication. 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 our 10-K SEC filings, as well as in our press releases from time to time. I'd now like to turn the conference call over to Dr. Mitchell Steiner, Veru Inc's, Chairman, CEO and President.

Good morning. With me on this morning's call are Dr. Gary Barnette, Chief Scientific Officer; Michele Greco, the CFO and CAO; 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 a biopharmaceutical company focused on developing novel medicines for COVID-19 and other viral and ARDS related diseases, and for the management of breast and prostate cancers. The company has a commercial sexual health division called Urev, which includes two FDA approved products ENTADFI, a new treatment for benign prostatic hyperplasia and the FC2 female condom, internal condom for the dual protection against unplanned pregnancy and the transmission of sexually transmitted infections. The revenue from the sexual health division is being used to largely fund the clinical development of our late-stage drug candidate assets, which aim to address multi-billion dollar premium market opportunities. This morning we will provide an update on the COVID-19 Sabizabulin clinical program and franchise, the clinical development of our oncology drug pipeline and the commercialization of our products. We will also provide financial highlights for our second quarter fiscal year 2022. While there have been recent emergency use authorizations for antiviral drugs [indiscernible] from Pfizer for the treatment of un-hospitalized patients with COVID-19 with less than five days of symptoms who have relatively lower risk of dying, Sabizabulin in contrast is being developed for hospitalized moderate to severe COVID-19 patients who had high risk of acute respiratory distress syndrome and death. Patients for whom there is currently no clearly effective treatment and the population which [indiscernible] the antiviral agent for Merck did not demonstrate efficacy. Sabizabulin disrupts intra cellular transport of Coronavirus’s along the microtubules. This is a highly conserved biologic process that's required by all variance of COVID-19, including Omicron to cause infection. We conducted a Phase III COVID-19 clinical trial, which was a double-blind multicenter, multinational randomized two to one placebo-controlled study evaluating daily oral nine 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 ARDS and death. Both the placebo and Sabizabulin treated groups were allowed to receive standard of care which could include Dexamethasone, Remdesivir, anti-IL6 receptor antibodies and JAK inhibitors. Moderate to severe COVID-19 symptoms in this study means patients that were hospitalized and required supplemental oxygen, force oxygen or mechanical ventilation. Furthermore, one of the inclusion criteria is that, patients must have a peripheral capillary oxygen saturation of less than or equal to 94% on room air. This is a very sick patient population and high risk to ARDS and death. The prescribed -- the pre-specified primary efficacy endpoint is the proportion of patients who die on study up to day 60, not up to day 29 like other studies reported in the literature. Our day 60 endpoint allowed us to capture a more accurate number of deaths caused by COVID-19 infection. Secondary endpoints included, 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 United States. Brazil, Argentina, Mexico, Colombia and Bulgaria and COVID-19 infections in the study included the Delta and Omicron variance. In January of 2022, 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 need. Filling an unmet medical need is defined as providing a therapy would none exist or providing a therapy which may be potentially better than an available therapy. Thus having Fast Track is a distinction that underscores the urgent need for new novel and effective therapies to be used alongside with vaccines to combat this COVID-19 pandemic. On April 8, 2022 the Independent Data Monitoring Committee conducted a planned interim analysis in the first 150 subjects randomized in the Phase III COVID-19 study. After reviewing the unblinded data, the Independent Data Safety Monitoring Committee unanimously recommended that the Phase III study be halted early due to overwhelming efficacy. They also remarked that no safety concerns were identified. The pre-specified primary endpoint was death at or before day 60. Sabizabulin treatment resulted in a clinically and statistically meaningful 55.2% relative reduction in death, p-value equal to 0.0043 and the intent to treat population. Placebo group [indiscernible] 52 had a 45% mortality rate compared to the 20% mortality rate in the Sabizabulin treated group of 98. At day 29, the death rate in the placebo group in our study was 35% which is the same death rate as reported in the Lancet publication in May 2021 for the placebo group of a similar hospitalized patient group, consisting of 2094 patients for the Tocilizumab recovery study. Furthermore, one could expect the death rate in the placebo group at day 60 to be higher than day 29 death rate. The placebo group at day 60 death rate of 40%, and our study underscores how sick these patients will be were. Moreover patients in the Phase III COVID-19 study were allowed to receive standard of care which was balanced between the Sabizabulin and placebo groups with approximately 80% receiving dexamethasone and about 30% received remdesivir. Thus high death rates in the placebo group demonstrate the inadequacy of the current standard of care. We plan to publish the secondary efficacy endpoints in the peer-reviewed medical journals and in practical Sabizabulin treatment was well tolerated in this patient population with no clinically relevant safety observations in the Sabizabulin treated group compared to placebo. We had a pre-emergency use authorization meeting with FDA on May 10 to discuss next steps, including the submission of an Emergency Use Authorization Application. The outcome of this meeting is as follows. FDA agreed that no additional efficacy studies are required to support an EUA or a full NDA. FDA agreed that no additional safety data required to support an EUA and collection of safety data under the EUA will satisfy the safety requirement for a full NDA. Therefore, FDA agreed that the request for EUA is supported by efficacy and safety data from our positive Phase III COVID-19 study in hospitalized moderate to severe COVID-19 patients with high risk of ARDS and no additional clinical studies are required to support a NDA submission. We plan to submit the EUA application in this quarter. Furthermore, we have scaled up manufacturing processes to produce commercial drug supply to address the anticipated drug needs following a potential FDA authorization in the US and a potential subsequent authorizations in other countries and territories. We're also making progress building out our own US commercial infectious disease franchise, we are actively seeking an advanced purchase agreement with the US government, in fact we’re meeting with government officials, usually an advanced purchase agreement is awarded after emergency use authorization is received. We're also moving forward to submit regulatory application to the MHRA in Britain, and to the COVID-19 European Medicines Agency Pandemic Task Force for the European Union, as well as other countries. We are in discussions with numerous potential distribution partners. COVID-19 global cases, hospitalizations and death is on the rise again. We have reached a sad milestone over 1 million Americans have died from COVID-19. We must reduce the risk of death in COVID-19. New variance of COVID-19 are brewing. COVID-19 surges will happen, vaccines are not enough and some of the antibody drugs are not effective against Omicron variant BA1 or BA2. And as I've already pointed out, anti-viral specs a little bit among the peer review target the pre-hospital generally -- general population who have experienced less than five days of symptoms in narrow window of opportunity. It is clear that an effective and safe oral therapeutic that prevent deaths in hospitalized patients with mild-to-severe COVID-19 infection with high risk to ARDS and death is desperately needed. We strongly believe that Sabizabulin with its dual anti-viral and anti-inflammatory properties can be the greatly needed oral therapy for the hospitalized moderate-to-severe COVID-19 patients as a new standard of care. We will continue to update on the -- update you on the regulatory progress towards EUA in the US and other countries, manufacturing additional clinical data release and publications, BARDA and other government agency discussions, US and global distribution plans and partnership discussions. Furthermore, given these exceptional clinical efficacy and safety results, we plan to initiate new clinical studies against other viruses that cause ARDS, including influenza A virus, which causes up to 52,000 deaths and 710,000 hospitalizations each year and Respiratory Syncytial Virus, also RSV which causes 14,000 deaths and 177,000 hospitalizations each year in the United States. These new clinical studies will allow us to expand Sabizabulin to other large serious infectious disease indications. I will briefly discuss the progress of our oncology drug portfolio focused on breast and prostate cancers. For patients with greater than or equal to 40% AR expression, we are actively enrolling a global Phase III ARTEST registration clinical study in approximately 210 patients to evaluate Enobosarm monotherapy for the third-line treatment of AR positive, ER positive HER2-negative metastatic breast cancer. In January of 2022, FDA granted Fast Track designation to our Phase III ARTEST registration program. We're also moving Enobosarm therapy earlier in the treatment sequence into the second-line treatment setting for AR positive ER positive HER2-negative metastatic breast cancer. We are actively enrolling the Phase III multicenter open label randomized one-to-one active control registration of ENABLAR-2 clinical study to evaluate the efficacy and safety of Enobosarm and Abemaciclib in combination therapy versus an alternative estrogen-blocking agent in subjects with AR positive ER positive HER2-negative metastatic breast cancer who have failed first-line therapy with palbociclib, a CDK4/6 inhibitor plus an estrogen-blocking agent who have greater than or equal to 40% AR expression in a breast cancer tissue. We plan to enroll approximately 186 subjects in this Phase III clinical study. We recently announced that we've entered into a clinical trial collaboration and supply agreement with Lilly for the ENABLAR-2 clinical -- ENABLAR-2 Phase III clinical study. And under the terms of the non-exclusive clinical trial collaboration and supply agreement, Veru is responsible for conducting the clinical trial, while Lilly will supply abemaciclib for the study. Veru maintains full exclusive global rights to Enobosarm. We've also made great progress in our prostate cancer programs. Our first indication is evaluating Sabizabulin for the third-line treatment of metastatic castration-resistant prostate cancer in the VERACITY Phase III study. We will be presenting final clinical data from the positive Phase 1b/2 study of Sabizabulin in 80 men with metastatic castration-resistant prostate cancer who have progressed on at least one novel androgen receptor targeted agent at the ASCO Conference being held in June of 2022 in Chicago, Illinois. We are actively enrolling an open label randomized two to one multicenter Phase III VERACITY clinical study evaluating Sabizabulin 32 milligrams versus an alternative antigen receptor targeted agent for the treatment of chemotherapy naive men with metastatic castrate-resistant prostate cancer who had tumor progression after previously receiving at least one antigen receptor targeted agent. The primary endpoint is radiographic progression-free survival, enrollment for the Phase III VERACITY clinical study is on track and we expect to enroll approximately 245 patients from 45 clinical centers in the US. Our second clinical study in prostate cancer is evaluating VERU-100 GnRH antagonist 3-month depot formulation in a Phase II dose finding clinical study for the treatment of hormone-sensitive advanced prostate cancer. We are conducting the Phase II dose finding clinical study VERU-100 androgen deprivation therapy in 45 men with hormone-sensitive advanced prostate cancer. Although this study is ongoing, the preliminary clinical data are promising. The Phase III registration clinical study design is already been agreed upon with FDA. It will be a single-arm study which will enroll approximately 100 men, maintenance of castrate blood concentrations of testosterone is the primary endpoint. And after the Phase II dose finding study is completed, we will initiate the Phase III clinical study. Veru has a commercial sexual health division called Urev, which includes two FDA approved products, the FC2 for the dual protection against unplanned pregnancy and transmission of sexual transmitted infections and the recently FDA approved ENTADFI, which is tadalafil and finasteride capsule and new treatment for benign prostatic hyperplasia. We have built the infrastructure to allow for broad market access to FC2 across the US. As a result, FC2 is now available through multiple sales channels. In particular, we have partnered with fast growing, highly reputable telemedicine platform companies to bring our FC2 product to patients in a cost effective highly convenient manner. Our strategy to continue to drive robust FC2 sales is not only to seek additional telemedicine and internet pharmacy service partners, but also to create our own direct to patient telemedicine and internet pharmacy services platform. This telemedicine platform is now up and running and is expected to be a new source of revenue. We've also developed ENTADFI, a new treatment of BPH. The most common side effects of currently prescribed BPH medicines of sexual adverse events, including impotence. ENTADFI has been shown to be more effective for the treatment of BPH than finasteride alone without causing impotence. ENTADFI was approved by FDA in December of 2021. The plan is to officially launch ENTADFI next quarter. We are waiting for the FDA to sign off on the manufacturing release criteria for the ENTADFI commercial products. ENTADFI is expected to be marketed and distributed by a third-party direct to patient telemedicine and internet pharmacy services platform partnership. We have also partnered with GoodRx, a US based digital resource for healthcare to reach there almost 20 million monthly visitors, which include both consumers and healthcare providers to build awareness about ENTADFI. There are over 45 million prescriptions filled annually for drugs to treat BPH. We plan to augment our marketing and sales efforts by seeking additional partners in the US and ex-US. I will now turn the call over to Michele Greco CFO, CAO to discuss the financial highlights. Michele?

Thank you, Dr. Steiner. As Dr. Steiner indicated, we're having a great year. Let's start our highlights with the second quarter results for the three months ended March 31, 2022. Overall, net revenues were $13 million compared to $13.3 million in the prior year second quarter. The company reported quarterly sales for its US prescription business of $11.6 million, an increase of 12% from $10.3 million in the prior year second quarter. Overall gross profit was $11.2 million or 86% of net revenues, compared to $10.9 million or 82% of net revenues in the prior year quarter. This was our highest gross margin for any quarter. The increase in gross profit and gross margin is driven primarily by increased sales in our US FC2 prescription business. We saw a decrease in sales in the global public sector during the quarter due primarily to 2.8 million units sold to Brazil in the prior-year period for tenders, which have ended, and therefore did not repeat in the current year. Operating expenses for the quarter increased to $22.9 million compared to the prior year quarter of $12.4 million. The increase of $10.5 million is primarily due to research and development costs, which increased $7.9 million to $15.5 million compared to $7.6 million in the prior year quarter. The increase in research and development costs is due to the increased number of clinical trial. This quarter, we had four Phase III clinical trials and two Phase II clinical trials ongoing. While in the prior year period we had two Phase III clinical trials ongoing. The operating loss for the quarter was $11.8 million, compared to $1.5 million in the prior year quarter. Non-operating expenses were $2.4 million, compared to $1.4 million in the prior year second quarter, and primarily consisted of interest expense and the change in the fair value of the derivative liabilities related to the synthetic royalty financing. For the quarter, we recorded a tax benefit of $27,000 compared to a tax expense of $22,000 in the prior year second quarter. The bottom line results for the second quarter of fiscal 2022 was a net loss of $14.2 million or $0.18 per diluted common share, compared to a net loss of $2.8 million or $0.04 per diluted common share in the prior year second quarter. Now turning to highlights for the results for the six months ended March 31, 2022. For the first six months of fiscal 2022, total net revenues were $27.2 million, compared to $28 million in the prior year period. Net revenue from the US prescription business was up 19% to $23.2 million from $19.4 million in the prior year period. Overall gross profit was $23 million or 85% of net revenues, compared to $21.7 million or 78% of net revenues in the prior year period. The increase in profit and gross margin is due primarily to increase in the US prescription business. We saw a decrease in sales in the global public sector during the first half of the year due primarily to 6.9 million units sold to Brazil and 1.8 million more units sold to South Africa in the prior-year period for tenders, which have ended and therefore did not repeat in the current year. Operating expenses increased by $17.3 million to $39.7 million compared to the prior-year period of $22.4 million. The increase was primarily driven by research and development costs, which increased by $12.3 million to $25.6 million from $13.3 million in the prior year period. The increase in research and development costs is due to the increased number of clinical trials, which I previously discussed. Operating loss for the period was $16.7 million compared to an operating income of $17.7 million in the prior year period. The change of $34.4 million is primarily due to the gain on sale of PREBOOST of $18.4 million in the prior year period and the increase in research and development cost during the current year period. Non-operating expenses were $3.7 million compared to $3.2 million in the prior year period, and primarily consisted of interest expense and the change in the fair value of the derivative liabilities related to the synthetic royalty financing. For the six month period, we recorded a tax expense of $87,000 compared to $100,000 in the prior year period. The company has net operating loss carry-forwards for US federal tax purposes of $38.6 million, with $29.5 million expiring in years through 2040 and $9.1 million, which can be carried forward indefinitely. And our UK subsidiary has net operating loss carry-forwards of $63.5 million, which do not expire. The bottom line results for the first six months of fiscal 2022 was a net loss of $20.6 million or $0.26 per diluted common share compared to net income in the prior period, which included the gain on sale of PREBOOST of $14.4 million or $0.18 per diluted common share. Turning to our balance sheet. As of March 31, 2022, our cash balance was $112 million and our accounts receivable were $8.1 million and our note receivable related to the sale of PREBOOST was $2.5 million. Our net working capital was $119.3 million on March 31, 2022 compared to $136 million at September 30, 2021. During the six months ended March 31, 2022, we used cash of $12.6 million for operating activities compared with $1.9 million used for operating activities in the prior period. The expected future revenues from Sabizabulin for COVID-19, the continued revenue from sales in the US FC2 prescription business and the global public sector business, coupled with the expected future revenue from the launch of ENTADFI and added to our strong balance sheet should continue to be the source of funds we use to invest in our promising pharmaceutical clinical development program as we continue to transform our company into a premium biopharmaceutical company focused on developing novel medicines for COVID-19 and other viral and ARDS related diseases, and for the management of breast and prostate cancers. Now I'd like to turn the call back to Dr. Steiner.

Thank you, Michelle. In summary, we continue to advance our deep late clinical stage breast cancer and prostate cancer programs with three actively enrolling Phase III clinical studies and we will continue to grow revenue from our base sexual health business and if authorized the future revenues from Sabizabulin for hospitalized COVID-19 patients at risk for ARDS. Being opportunistic and successful in developing Sabizabulin COVID-19 has led to the most eventful and transformative quarter in Veru's history. We are preparing for the global commercial launch of Sabizabulin nine milligrams for the treatment of hospitalized moderate to severe COVID-19 patients who had high risk for ARDS. We have created an infectious disease franchise for this purpose. This is anticipated to be a worldwide multi-billion dollar opportunity. This will be a real chance for significant near-term revenue for Veru. I would like to directly respond to several criticisms that had been made about the Phase III COVID-19 clinical trial. Concern, number one. The mortality rate is too high in the placebo group. Not true. The placebo death rates in our Phase III study are consistent with what has been reported in the literature for similar patients at day 29. As mentioned previously, at day 29 the death rate in the placebo group in our study was 35%, which is the same death rate as reported in The Lancet publication for May 2021 for the placebo group of similar hospitalized patients, consisting of 2094 patients with the Tocilizumab study. Furthermore, one would expect the death rate in the placebo group at day 60 of our trial to be higher than the day 29 death rate. Concern number two. Death rates were higher in the ex-US clinical sites than for the US clinical sites. Not true. The death rates in the placebo group were higher in the US clinical sites compared to clinical sites outside the US. Furthermore, the reduction in the risk of death between the US and ex-US clinical sites by Sabizabulin was the same in the US compared to ex-US. This will be clear when our data published in a peer-reviewed medical journal. Concern number three. Our phase clinical trial held no standard of care requirements. Not true. Standard of care was allowed for both the placebo and treatment groups, standard of care was well balanced between the treatment and placebo groups. Approximately 80% receive dexamethasone and about 30% received remdesivir, other agents including anti-IL6 antibodies and JAK inhibitors were also allowed. Sabizabulin demonstrated clear benefit over standard of care. Concern number four. There is a high risk that the FDA will not accept an EUA application because our Phase III study was too small. Not true. As we have previously reported, we've had a pre-EUA meeting with FDA on May 10, 2022. FDA agreed that no additional efficacy studies are required to support an EUA or an NDA. FDA agreed that no additional safety data required to support an EUA and a collection of safety data under the EUA will satisfy the safety requirement for an NDA. Therefore FDA agreed that the request for EUA is supported by efficacy and safety data from our positive Phase III COVID-19 study in hospitalized moderate to severe COVID-19 patients with high risk for ARDS and no additional clinical trials are required to support an NDA submission. Short-sellers might like to lob on unfounded criticisms. But our audience is the FDA, who will help the study design and who I have now told us that the data are sufficient to proceed. As patients are waiting we will work diligently to prepare and to submit the EUA application now that we received the green light and encouragement to do so from FDA. With that, I'll now open the call to questions.

Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions] The first question today comes from Brandon Folkes with Cantor Fitzgerald. Please go ahead.

Thanks for taking my questions and congratulations on all the progress. Maybe just sort of two focused on the same thing for me. So you sound very confident on the manufacturing side. Can you just give us some additional detail in terms of how you thought about the addressable market? I guess what capacity do you need to satisfy the FDA on EUA? And then secondly, along those lines, with your partner are you putting any capital at risk for reservation of capacity or anything like that ahead of the EUA? Thank you.

Good. Thank you. So the first question is basically about manufacturing, and so I’m going to answer in two ways. One, I'm going to answer how we -- what we think the patient numbers are going to be if this was a pandemic -- more like an endemic. This doesn't include the surge, it doesn't include a stockpiling, and it doesn’t include any of that. So just this where you have a rule of thumb, a benchmark. So in the United States right now, when we did the analysis we said the hospitalization rate is about 100 -- 1,955 new admissions a day. That number by the way has gone up to 2,597 as I looked at it this morning. About -- but we're going to stick with the lower number, the 1,955. And the number of -- the patients that are hospitalized that were fit with supplemental oxygen, force oxygen or ventilation is about 52% of hospitalizations. And so that means for that week, if you look at it per week, it's about 7,116 patients a week. And so for the month, you're looking at close to 28,464 patients. Okay. And that's before this new surge is becoming. So if you think -- if you say the rule of thumb is that, we've got -- in the US, we've got to hit about 30,000 patients, that will give you a feel for how well we've been able to accelerate our manufacturing. So I'm going to ask Dr. Gary Barnette to give you some insight and how robust our manufacturing is and how we'll be ready. And there is no capital at risk, there is no capital at risk. Go ahead.

Yeah. So we've been planning for this EUA, and right now in the month of July, we would have approximately 50,000 patients worth of drug. This is assuming a patient gets about 12 doses, which is approximately the average number of doses that each patient in the treated group got in our Phase III study. In August, we would have sufficient drug, an additional 100,000 patients and then from September moving forward, up to approximately 250,000 patients worth of drug every 30 days. That we believe that this will satisfy and cover the addressable market in the United States, as well as the rest of world.

And also will hop towards stockpiling, so people can be prepared for the surge. If there is a surge and we're going to -- as you saw with the surge we just had, right now the palm of course that we have is that, people taking home testing. And so we don't really understand where the hospitalizations may peak and we'll just have to watch that. But at this point now assuming that the authorization -- if authorized will happen in sort of mid-summer, then will be ready.

Great. Thanks so much and all the best for the submission.

Thank you.

The next question comes from Chris Howerton with Jefferies. Please go ahead.

Excellent. Thank you so much for taking the questions. And I will also offer my congratulations.

Thank you.

Yeah, so for -- I guess, Mitch, with respect to the Sabizabulin program in COVID-19, I wanted to follow up on the manufacturing question just to kind of understand if there was any inspections that might be required. And I think at least it's a little vague to me in terms of the process of CMC evaluation for an EUA. So I guess if you could just help us understand what procedural steps from your understanding might be happening on the CMC side for the review that would be really helpful.

Yeah. We'll do that. So, Gary.

Yeah. The FDA have to have regulatory rigor in kind of authorization or approval. However, with what we believe to be the accelerated process of the EUA, we believe that that will -- the inspection piece will be minimal, of course, these sites that we're using have a long record with FDA inspections and a history of quality at their sites. So we do believe that as we move forward to the NDA, the FDA will probably do a pre-approval inspection of our facilities. But right now I suspect that they will rely on the long history that they have with these facilities to support the application.

One of the interesting things I was able to take away from the meetings from the FDA is, how they view this process as sort of ultimately getting to a full NDA sort of a rolling process. So rolling process means, if you have an -- if you file -- if you submit an NDA under normal circumstances you have to have everything done, buttoned up, in it goes and the full application comes in 75 days later, they review everything and they tell you, we can review and you can move forward. With the Fast Track designation and with the potential for the EUA it's more along the lines of -- get this thing reviewed as quickly as we can, get to patients as quickly as we can. You can -- during the review process, and during the movement towards a full NDA, you can keep sending new information and additional information -- additional information. So it's really a rolling kind of situation. So so inspections and other things all that have to be done can be done a real-time as opposed to, you have to get everything together and throw it in and then you hold your breath. So we're going to have -- it is going to be a very active process where success one will be the authorization and ultimately success two will be full NDA and then -- and then it’s done then you're ready to go.

Excellent. Well, that's really helpful. Thank you. And then if I may, as a follow-up, what do you think -- how should we be considering pricing for Sabizabulin in the context of COVID-19 and perhaps broader ARDS?

It's a great question. So first of all, I will tell you that the numbers we've used and you'll see on our website is purely assumptions right now. We're doing the formal work to get our arms around what should be the appropriate price. I will tell you something very interesting for ARDS in general. There is no drug on the market that has the reduction in death that this drug demonstrated in our Phase III study. And ARDS is what's killing these patients. And so for the first time it's interesting as it sounds, and people are now recognizing this antiviral anti-inflammatory effect is leading to an unprecedented reduction in death in the ICU and critical care for patients with ARDA, end of story. And if you go back and look they have supportive care just like we do for COVID-19 for other virally induced ARDS and you have other than that they've got some antivirals and we already know antivirals are weak [indiscernible] which is an antiviral that’s being used in the pre-hospitalized setting was -- they had an IDMC meeting, an Independent Data Monitoring Committee meeting and the conclusion in that group -- that committee was, they stoped the study because there's no efficacy. So it's -- they think about ARDS is, the virus triggers this cytokine storm that creates this allergic response, your ling start to fill with fluid to a point they become fibrotic and if it's fill the fluid and the oxygenation goes down, the patient dies. And usually that will happen after you have the viral part. So at some point the viral load doesn't matter. We've already triggers the immune response and the immune response is what's leading to the demise of the patient, almost like a bee sing causing an anaphylactic reaction, they pull the stinger out, what do you give a patient epinephrine which is not an anti-viral and it saves to patients life. And so from that standpoint ARDS is wide open and we want to go after it. With that said, for COVID what we're doing now is, we've commissioned a group to do a formal pricing analysis. We're also going to be looking at how it impacts other things in society. So for example, remember death is the last step. I mean the whole reason we're afraid of COVID is not because you get sniffles, we are afraid of COVID because you're going to die and you are afraid of dying -- that you are afraid of dying. And vaccines helped, but herd immunity didn't work and the vaccinating 80% of the patients, still the patients can get COVID. I think he had symptoms of COVID, they can die with COVID, they can pass COVID. It helps, vaccines are important, don't take it wrong, but it didn't solve the problem. Anti-virals coming in, in the pre-hospitalized setting and hopefully somebody gets a sniffle for three or four days, you get them in that window and it's an effective drug. But that's a tight window to get into the doctor, get the prescription, get the prescription filled and start to medicine. So right now we're at the last stop, the last opportunity to rescue a patient is in the hospital. So when a patient comes in hospitalized on oxygen and you'll see when the publication comes out, the peer review publication comes out I will tell you that there is now going to be no surprises in the secondary endpoints. Secondary endpoints all go the way you expect. If you reduce deaths, you're going to reduce ICU, you are going to reduce a mechanical ventilation, you're going to reduce days in the hospital. I mean, it's intuitive and it's proven. And so, what I'm trying to tell you is that all of those metrics can be used to understand the impact of the hospital system in terms of what a drug like this can do. And so all of those factors will be built in to coming up with the price. So it's hard. I didn't give you the answer, which is, what is the price? But as you can see we've got -- we've got to understand the balance between saving major resources for the system, because if you think about it, the biggest expenditure for a patient sick with COVID is the hospital. That's the biggest, that's the most intense resources people, time, money, I mean, materials. I mean that's where it's happening. And so what we're saying is, we want to come up with a fair price and the system will benefit, but we need to understand what that is.

Okay. All right. Well, thanks for those thoughts, Mitch. Really appreciate it. Thank you.

Thank you.

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

Good morning. Thanks for taking my questions. Mitch, I want to ask, as you prepare for the EUA request submission, and the manuscripts that will detail the fuller data from the Phase III, are there any pieces of data that you are still awaiting to collect from the site sort of compile perhaps viral load data on the patients? And also wanted to ask, if you see -- with the possible that you may see of having the manuscript published prior to what may be the EUA granted by the FDA, which presumably could be sometime in the next few months or over the summer. Thank you.

Yeah. So to answer your question -- the first question is basically what's outstanding. And as I mentioned to you that we're going to have a few -- we just got the data. And it was three weeks ago or something like that. And so there are going to be a few -- when I say say outstanding, it's things like PK and other things that sparse sampling PK and that kind of stuff. What we understand from the submission for the EUA is [indiscernible] as I mentioned in my earlier comment, that's real time. You're allowed to continue to submit information as you get it, so the EUA [indiscernible] what you have, you submit it and then you continue as the data comes from the CRO and you continue to supplement that information while they are doing their review. So that's a really critical point. So that's why we have an aggressive timeline to submit to EUA -- the request for EUA is being in this quarter, because we got what we need. We're going to put it together, we are going to submit it. So from that standpoint we won't hold this up. As it relates to the question about the manuscript, the manuscript is written, it's done. Okay. And so -- and I think that's record time as well. And so, it's in the process of being reviewed and our job is to sit and wait for the peer review process. And that's a little harder to tell, but my guess is, it will be an online publication initially. So it gets out as quickly as possible. And the idea would be, hopefully that it's coordinating in such a way that the manuscript and the EUA authorization happen around the same time, so that you guys can see the information. And -- that's -- we're on track for that.

Great. And just a follow-up, as you see an eventual NDA possibility for Sabizabulin in COVID-19. I wanted to ask, given the performance of the drug in the Phase III population, perhaps there could be similar benefit to non-COVID patients with ARDS, wondering if this encourage you to look into any further clinical development in non-COVID-19 ARDA types of conditions? Thanks.

As I mentioned in my prepared remarks, absolutely, I mean, when I went back and review the literature I was shocked to see that ARDA remains an incredibly important critical care problem. And that the viral induced ARDS is incredibly common, influenza A and RSV are the two big ones that come to mind. Influenza A, which we all can relate to, we've accepted to the endemic, which is roughly 52,000 deaths and about several hundred thousand hospitalizations a year and you have to get a new shot, new booster shot, a new flu shot every year. So that's the model that COVID ends up hitting. And from an endemic standpoint, that's a huge market if we're in an endemic disease. And if we -- and by the way, influenza A virus follows the same life cycle, if you will, as COVID-19. Meaning that, it goes through -- bind to the outside of the cell, it uses microtubules to go into the cell, it uses microtubules to take the new viruses and get it out of the cell, and then of course the cytokine storm is what it triggers that cause ARDS, very similar pathogenesis and pathophysiology as COVID-19. And so, yes, we've already started writing the protocols for the clinical development, so that would be the first one we rollout, because it's so is such an obvious one, and we have something that's different than what's out there. So again, as you can imagine the situation where we’ll allowed standard of care, supportive care versus Sabizabulin plus supportive care. And that would really greatly expand our patient population. And then second, RSV is the other area. And when I gave the numbers in the presentation, it was for RSV not in children, it was RSV in the greater than 65-year-old, and -- but we have to think about children as well as a potential population. And in fact we've been asked to supply a protocol to move this into children by FDA. And so we're going to be clearly responsible and intelligent in doing that. And -- but ARDS is an interesting group to go into. Also because of the anti-inflammatory activities we're getting interest and going after the more aggressive inflammatory diseases where something with this kind of anti-inflammatory/side effect profile could be useful. So stay tuned. I think there is a lot of room for Sabizabulin being an oral agent with this kind of side effect profile to play a role in virally induced ARDS and potentially some of the anti-inflammatory -- some of the inflammatory diseases.

Thank you, Mitch.

Thank you.

The next question comes from Yi Chen with HC Wainwright. Please go ahead.

Thank you for taking my questions. My first question is, once you obtain the EUA for Sabizabulin in the US, how easy would it be to obtain similar authorizations in other countries and territories?

Great question. So if you look at Pfizer, and again, I'm just getting this in the news, as I don't know any secrets, but they have something like 60 EUAs that are been granted. Okay. And so usually what happens is that, the two big regulatory agencies of the world looks to do the work and do what they would do in their own regulatory agencies is US and EU and specifically the EMA. So we get US approval, then about 80% countries will follow that lead and also very quickly expedited an approval in their country. And if you get the EU 80% of the country -- roughly 80% of the countries will do the same, but it may not be the same 80%. And so the goal would be and our strategy is, US and now we're starting in EU and the MHRA, because of Brexit, because Britten is a big market. We've already started that process. We're working in Brazil and the neighboring countries that follow the treaty. So that -- South America and we are looking into South Africa now because that's the most hard hit country and also the country that has the most resources to direct this kind of therapy to their folks. And then, furthermore, again, each of those have regulatory but again US regulatory will go a long way. So we think that if we can get US -- we believe that once we have US regulatory and we're starting the process to get the other countries, at least the information into their system that we should see a series of EUAs after we get the formal EUA authorizations from US.

Thank you. And my follow-up question is, recent news report showed that patients who received Pfizer’s new COVID drug Paxlovid in the outpatient setting, they have symptoms rebound after the treatment, potentially showing that Paxlovid is not such a effective drug. So is that -- do you have any plans to use your drug to capture the patients in the outpatient setting?

Yeah. The answer is yes. We believe Sabizabulin could have activity in the pre-hospital setting, so the general population. The reason we went into the hospitalized setting is, the FDA told us to. So, the FDA said that you're clinical benefit risk ratio would be best in patients that are dying in the ICU and dying in the hospitals. If you can show something there, then that's going -- that would be great. And of course, a lot of drugs tried to do that, a lot drugs have failed or they showed something less than a 5% mortality benefit. And this is the first one that shows a 25% absolute reduction and 55.2% relative reduction in death. So -- but because the mechanism of anti-viral anti-inflammatory we do believe that we can go earlier and it's something to think about in the future. But you raise a good point. And that is, we're still trying to understand rebound phenomenon. So it kind of makes sense if you're some somebody an anti-viral and when you stop the anti-viral you are not curing that patient and we stop the anti-viral then the cells that have the virus in and will start growing again. And so rebound may happen and we're seeing that. And so there is going to be room even in the pre-hospital general population to augment the vaccines. And now the BA$ or BA5 variance coming out of South Africa, again, we always hear this, they always try to scare you to think it's going to circumvent the vaccine and it may. This one looks like it may, but still the vaccine is in the final answer, because people could still pass it, people can still get it. And so it's not uncommon to get COVID-19, and hopefully be less severe, the immunocompromised for patients with severe -- major comorbidities, it's still becoming -- is still a big problem. So, yeah, we could potentially go earlier.

Got it. Thank you.

Thank you.

[Operator Instructions] The next question comes from Kumar Raja with Brookline Capital Market. Please go ahead.

Thanks for taking my questions and also congratulations. So it looks like you need to follow the patients for safety once you have the EUA, what are your expectation in terms of like how many patients or how long they have to be followed for the safety data with regard to the potential NDA filing?

So I'm going to ask Dr. Gary Barnette, our Chief Scientific Officer who handles regulatory to answer that question. So this way you see what the process under the EUA.

Yes. So under the EUAs you are obligated to collect what they call spontaneous reporting of adverse events. And we believe that that is exactly what does follows the normal EUA process. We do that for NDA approved drugs as well. And let’s call it, Med watch form and it's very formal and they submit these things to the FDA and they submit these adverse events, and serious adverse events in the sponsor. Spontaneous reporting in a fully NDA approved product is sparse. I mean, a lot of times the physicians don't comply with that requirement. But under an EUA they follow it pretty well. And then we will of course encourage our investigators or PIs to fall of these things. And so that's what we're planning. We're planning on collecting the standard EUA safety requirements, which is spontaneous reporting of serious adverse events during the EUA, process.

And let me just also remind you that we're very -- this program isn't just about the COVID-19 program. We do have a history with Sabizabulin in our oncology program. So in prostate cancer between the 80 patients in the Phase 1b2 and then in the Phase -- and then in the Phase III I think we are able to count something like 250 patients that have been exposed to nine milligrams or higher, and in some cases, particularly in the cancer products they are getting 32 milligrams a day for three years. So this drug is well tolerated. And so we you add that plus the data from the Phase II and Phase III COVID-19 and we have 199 patients in the Phase III total data set that we have safety data on. And then now you add in after the EUA, during the EUA period, you will in all the spontaneous reporting that will take place -- that, all of that is sufficient and as I said in my comments, we were told that no additional safety clinical trials will be required.

That's great. And in terms of the negotiations regarding stock piling, how is that going to work as the EUAs kind of most through the tunnels?

Well, the good news is, we have been incredibly active with government. We started as you can remember from our comments from the Phase II, we have started discussions with BARDA. We have made some good friends with BARDA. So we talk to BARDA on a regular basis. As you know, they have a tech watch group, many people involve in tech watch and it's like how many agencies.

It's 15 to 28.

Yeah. 15 to 20 agencies that a part of the tech watch and we presented the information. And so -- and then furthermore, our company has hired several lobby groups to also helped us navigate through a government. And so what we are hearing loud and clear is, don't look at what's happening in Congress of the $10 billion. I mean of $33 billion that will be earmarked next year, I mean you can see the reason that Republicans have added Democrats because the states have tons of money that is sitting on that was allocated for COVID and they wanted to spend some of their money. And then there are other budgets that they're allowed to go 5% -- 5% of their budget and move it to something that wasn't originally earmarked. So what we're hearing is, a drug like this, which is a therapeutic that reduces deaths and the last opportunity you have to grab a patient. I mean -- and again let me dream for a moment, if we reach 1 million deaths this year. I mean, 1 million deaths this year from 2.5 years of the pandemic, it's a terrible milestone, but if our drug was available at the beginning of the pandemic, that means 150,000 people could be home right now. I mean, that's like four -- that's like half the population of San Francisco or Seattle. So the discussions we're hearing is, guys, get your EUA. Once the AUA is authorized then it will trigger a series of events that will give government cover to move politically towards the money.

Okay, great. Thanks so much.

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. Thank you, operator. I appreciate you all joining us today -- on today's call. I look forward to updating you all on the progress in our next Investors call. We're very, very excited about our progress with COVID-19 and we look forward to continuing to update you specifically on Sabizabulin. Thank you.

The digital replay of this conference call will be available beginning approximately noon Eastern Time today, May 12 by dialing 1877-344-7529 in the US and 1412-317-0088 internationally. You will be prompted to enter the replay access code, which will be 8215063. Please record your name and company when joining. The conference has now concluded. Thank you for attending today's discussion.