Veru Inc. (VERU) Q1 2023 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to Veru Inc. Investor 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 call over to Mr. Sam Fisch, Veru Inc.'s Executive Director, Investor Relations and Corporate Communications. Please go ahead.

Good morning. The statements made on this conference call may be forward-looking statements. Forward-looking statements may include, but are not necessarily limited to, statements of the company's plans, objectives, expectations or intentions regarding its business, operations, regulatory interactions, finances, and development, and product portfolio. Such forward-looking statements are subject to known and unknown risks and uncertainties and our actual results may differ significantly from those projected, suggested or included in any forward-looking statements. Risks that may cause actual results or developments to differ materially are contained in our 10-Q and 10-K SEC filings, as well as in our press releases from time to time. I would now like to turn the conference call over to Dr. Mitchell Steiner, Veru Inc's, Chairman, CEO, and President.

Good morning. With me on this morning's call are Dr. Gary Barnett, Chief Scientific Officer; Michele Greco, the CFO, CAO; Michael Purvis, EVP, General Counsel and Corporate Strategy; and Sam Fisch, the 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 oncology. The company has its commercial sexual health program, called Urev, which includes two FDA approved products; ENTADFI, a new treatment for benign prostatic hyperplasia; and FC2 Condom -- internal condom, for the dual protection against unplanned pregnancy and the transmission of sexually transmitted infections. The revenue from the sexual health program is being used partially to fund the clinical development of our late-stage therapeutic candidates, which aim to address multi-billion dollar premium market opportunities. This morning, we will provide an update on our COVID-19 sabizabulin clinical program, the clinical development of our oncology drug pipeline, and the commercialization of our products in the Urev program. We will also provide financial highlights for our first quarter fiscal year 2023. First, I will update you on the status of sabizabulin, an investigational drug candidate for the treatment of hospitalized adult COVID-19 patients and high-risk for ARDS, which is the lead indication for our infectious disease program. We reported positive results from the Phase III COVID-19 clinical trial, which is a double-blind, multicenter, multinational randomized placebo controlled study evaluating daily oral 9 milligram dose of sabizabulin for up to 21 days versus placebo in 204 hospitalized moderate-to-severe COVID-19 patients who had high risk for ARDS and death. On April 8th, 2022, the Independent Data Monitoring Committee conducted a planned interim efficacy analysis in the first 150 patients randomized in the Phase III COVID-19 study. After reviewing the unblinded clinical data, the Independent Data Monitoring Committee unanimously recommended that the Phase III study be halted early due to clear clinical efficacy benefit. The Independent Data Monitoring Committee also remarked that no safety concerns were identified. In this interim analysis, sabizabulin treatment demonstrated a statistically significant 24.9 percentage point absolute reduction and a 55.2% relative reduction in all-cause mortality by day 60, the primary efficacy endpoint of the study with a P value equal 0.0042. The efficacy was further supported by the consistency of the mortality benefit across subgroup analyses of the primary end point. Clinically meaningful reductions in deaths with Sabizabulin treatment compared to placebo was observed regardless of the standard of care treatment received, baseline WHO, ordinal score, sex, age, baseline comorbidities, BMI or geographic location. In the full final data set of 204 randomized patients the all-cause mortality benefit was similar to the positive clinical results observed in the interim efficacy analysis population with Sabizabulin treatment resulting in a 51.6% relative reduction in deaths compared to placebo -- P Value 0.0046. Data from the key secondary efficacy endpoints demonstrated Sabizabulin treatment resulted in a significant reduction in days in the ICU, days on mechanical ventilation, days in the hospital compared with placebo. Sabizabulin also had an acceptable safety profile significantly fewer adverse and serious adverse events were reported for Sabizabulin compared to placebo. There were also fewer treatment discontinuations due to adverse events in the Sabizabulin group compared to placebo. The Phase 3 reported safety profile suggests that Sabizabulin treatment may have resulted in fewer COVID-19-related morbidities, especially, respiratory failure, pneumothorax, acute kidney injury, cardiac arrest, sceptic shock and hypotension. Next, I will update you on the U.S. and international regulatory progress for Sabizabulin for the treatment of COVID-19. On May 10, 2022, we had a pre-emergency use authorization meeting with FDA. In this meeting FDA agreed that no additional efficacy studies would be required to support an Emergency Use Authorization or an NDA pending review. FDA also agreed that no additional safety data will be required to support in the EUA, but the collection of safety data under the EUA will satisfy the safety requirement for an NDA. FDA confirmed these positions in writing in the meeting minutes, which was sent to us after this meeting. Based on the FDA's feedback from this meeting on June 6, 2022 we submitted a request for an EUA application to FDA. On November 9, 2022, the U.S. FDA's Pulmonary-Allergy Drugs Advisory Committee met with the company to review its request for EUA of Sabizabulin. Although the advisory committee voted eight to five that the known or potential benefits of Sabizabulin when used for the treatment of adult patients hospitalized of COVID-19 and high-risk RDS do not outweigh known or potential risks to Sabizabulin there was additional discussion by the advisory committee around possible clinical trial design aspects for a potential confirmatory Phase 3 clinical trial as a post EUA authorization requirement. FDA is supposed to consider the input of the advisory committee as part of its review of the EUA, but FDA makes the final decision on the emergency use authorization application. We believe we meet the criteria for EUA issuance based on FDA guidance. One, COVID-19 is a serious or life-threatening disease or condition. Two, based on the totality of the scientific evidence available, it's reasonable to believe that Sabizabulin may be effective. Three, risk-benefit analysis the known and potential benefits of Sabizabulin which is the mortality benefit outweigh the known potential risks. There were no adequate approved and available alternatives to the candidate product for treating the disease of condition. It's been three months since the FDA Advisory Committee meeting and we have been in contact with FDA and they have communicated to us they are still reviewing our request for EUA. We however do not know when the FDA will act on our EUA. January 30, 2023 the White House Office of Management and Budget announced that the Biden administration plans to terminate COVID-19 national and public health emergencies on May 11, 2023. The United States Department of Health and Human Services also known as HHS, however, also had declared a national emergency which is a separate one from the White House in 2020, and which is still in effect and based on current information is expected to remain in effect beyond May 11. As HHS governs the FDA, the FDA to avoid confusion also announced on January 31, 2023 that the May 11 termination would not impact FDA's ability to authorize new treatments for emergency use that existing EUAs would remain in effect and that it may continue to issue new EUAs on criteria to issuance or MET. As for our regulatory progress outside the US on July 27, 2022 we announced that the European Medicines Agency, the EMA, Emergency Task Force had informed the company that it has initiated the review sabizabulin for the treatment of hospitalized COVID-19 patients and high-risk for acute respiratory distressed syndrome. The review will assist the 31 EU member states that may consider allowing use of the medicine before a formal marketing authorization is granted. The reviews of sabizabulin are the first to be triggered under Article 18 of the new EU regulation that expanded the role of the EMA during public health emergencies in 2022. We have been in active communication with the Emergency Task Force as they complete the review of sabizabulin, and once the Emergency Task Force completes their review they will submit their formal recommendation to the EMA's Committee for Medicinal Products for Human Use, also known CHMP and CHMP then reviews the recommendation of renders an opinion whether sabizabulin qualifies for emergency use in Europe. If the EMA authorizes if emergency use under Article 18 then the individual nations in the EU may authorize sabizabulin for use. We've also completed our final rolling submission to the access consortium nations, which is composed of the following regulatory agencies. UK's Medicine and Healthcare Products Regulatory Agency, also known as MHRA. Switzerland's Swissmedic, Australia's Therapeutic Goods Administration, known as TGA and the Access Consortium a coalition of certain regulatory authorities with therapeutic products that work together to promote greater regulatory collaboration and alignment of regulatory requirements. This month, we expect to also complete our final rolling submission to Health Canada. In summary, we have submitted regulatory requests for emergency authorizations to the European Union, United Kingdom, Australia, Switzerland and Canada. We're also in various stages of discussions with regulatory agencies and other countries to obtain emergency or expedited authorizations for sabizabulin including South Korea, Israel, Egypt, New Zealand and South Africa. Turning to our US and international special and commercialization preparation update. In anticipation for the potential commercialization of sabizabulin, we have scaled up manufacturing processes and have enough commercial drug supply on hand to address the expected drug needs following the potential authorization in the US and Europe as well as other potential international authorizations and approvals. As an update for the commercialization of sabizabulin in the US, we currently have in place an experienced team to commercialize sabizabulin. We have also executed contracts with wholesalers for specialized hospital distribution services for sabizabulin. We believe we're ready to launch sabizabulin to hospitals across the United States if we're granted emergency use authorization soon. We also have established Bureau International to commercialize sabizabulin to the rest of the world. We are making great progress in the potential international commercialization of sabizabulin. On January of 2023, we had additional discussions with the Health Emergency Preparedness and Response Authority, also known as HERA, which is part of the European Commission. HERA is responsible for joint procurement framework contracts, which offers 36 participating countries the possibility to jointly procure medical drugs and countermeasures as an alternative or complement to procurement at the national level. Joint procurement framework contracts have been previously signed with Gilead, Hoffmann-La Roche, GSK, and most recently on November 23 with Pfizer. Companies also making great progress in signing up international commercial partners to assuming appropriate regulatory approvals facilitate securing Sabizabulin government purchase orders for COVID-19 as well as ensuring seamless flows of Sabizabulin into their countries. So Mezzion Pharma in South Korea, Valeo Pharma in Canada have publicly announced partnerships with Veru. We also have signed commercial partnerships in China, Australia, New Zealand, and Egypt with highly regarded local partners. And although they have not publicly announced these transactions yet, they have been diligently working on the commercial opportunity for several months now. We have been engaged for some time in negotiating partnerships also with Germany, Italy, the United Kingdom, Ireland, Spain, Switzerland, France, Israel and Taiwan. We're also excited to expand the investigation of sabizabulin into other infectious disease indications based on the drug candidate's novel mechanism of action. If we receive an emergency use authorization, the US or other authorizations outside US that leads to substantial new revenue. As we have preclinical in vivo data that demonstrates that sabizabulin has activity against H1N1 variant of Influenza A, also known as swine flu, we plan to conduct a Phase 3 clinical study to evaluate sabizabulin in hospitalized adult patients with influenza A, who had high risk ARDS. Influenza A virus causes up to 52,000 deaths and 710,000 hospitalizations each year in the US. Similarly, as sabizabulin is authorised and commercialize, we also plan to conduct a Phase 3 clinical studies of sabizabulin for the treatment of hospitalized adult patients with viral ARDS, which would include Respiratory Syncytial Virus, which alone causes 14,000 deaths and 177 hospitalizations each year in the US. As we've outlined above, sabizabulin has a novel anti-viral and anti-inflammatory is positioned to potentially become a valuable treatment option for multiple infectious diseases that can lead to ARDS, a life threatening lung condition that has a high mortality rate. I will now briefly discuss the progress of our oncology drug portfolio focused on advanced breast and prostate cancers. In advanced breast cancer, we have been actively enrolling two registration clinical trials, the ARTEST Phase 3 clinical trial in approximately 210 patients to evaluate Enobosarm monotherapy for third-line treatment of AR positive ER positive HER2-negative metastatic breast cancer. And number two, second trial Phase 3 is the ENABLAR Phase 3 clinical study in approximately 186 patients to evaluate the efficacy and safety of Enobosarm and Abemaciclib 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, which is a CDK4/6 inhibitor, plus an estrogen-blocking agent. We have a clinical trial collaboration and supply agreement with Lilly for the ENABLAR-2 Phase 3 clinical study, under the terms of the non-exclusive clinical trial collaboration supply agreement, Veru is responsible for conducting the clinical trial while Lilly is supplying a Abemaciclib for this study. Veru remains full exclusive global rights to Enobosarm. The Phase 3 ENABLAR-2 study has two stages. Stage 1 is a pharmacokinetics and safety assessment of the combination of enobosarm and abemaciclib to make sure there are no drug-to-drug interactions resulting in changes in blood levels of either drug and that there are no added safety concerns for going to Stage 2. Stage 2 is the actual Phase 3 study. We have completed Phase 1 which consists of three patients and there are no changes in expected blood levels for enobosarm or abemaciclib been given in combination and the combination is well tolerated. Interestingly, evidence of objective of antitumor activity was observed in target lesions at the eight-week CT scan in all three patients as follows. The first patient had a 50% reduction of adrenal metastasis. The second patient had a 21% reduction of a liver metastasis, and the third patient had a 71% reduction of liver metastasis. Full trial the Stage 2 portion of the trial as I mentioned is enrolling. In advanced prostate cancer, we have been actively enrolling a Phase 3 and Phase 2 clinical trial. We have been actively enrolling an open-label randomized multicenter Phase 3 VERACITY clinical trial evaluating Sabizabulin on 32 milligrams versus an alternative androgen receptor targeted agent for the treatment of chemotherapy naive men with metastatic castration-resistant prostate cancer, who had tumor progression after previously receiving at least one androgen receptor targeted agent. The primary endpoint is radiographic progression-free survival. Enrollment for the Phase 3 VERACITY clinical study is ongoing. A second clinical study in prostate cancer is evaluating VERU-100 GnRH antagonist three-month depot formulation in a Phase 2 dose-finding clinical study for the treatment of hormone-sensitive advanced prostate cancer. As we will discuss later, we're currently evaluating our clinical trial priorities and spending as we await decisions by FDA European regulatory and other bodies on Sabizabulin for COVID-19 and we're working to conserve cash. When decisions on reprioritization is a suspension of any trials, the termination of any trials, or programs, or any modifications to R&D efforts have been finalized, we will communicate them to you. Veru has a commercial central health program called Urev, which includes two FDA-approved products FC2 and ENTADFI. 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. We have partnered with telemedicine platform sexual health companies to bring FC2 products to patients in a cost-effective and highly efficient highly convenient manner. Fortunately, the telemedicine sector and global public sector order have underperformed across the board this past calendar year. It does appear, however, that market conditions are improving and we are seeing revenues increase in Q2 fiscal year 2023. We also have ENTADFI, an FDA-approved new treatment for benign prostatic hyperplasia. It's currently prescribed BPH medicines may lead to the most common side effects of sexual adverse events. ENTADFI has demonstrated its faster and more effective treatment option for BPH and financial alone and does not cause sexual side effects. We've launched this product during the fourth fiscal quarter of 2022, with a focus on payer agreements as well as executing distribution wholesaler Medicare contracts. In addition to the traditional distribution, we're also seeking distribution to GoodRx and telemedicine partners. I will now turn the call over to Michele Greco, CFO and CAO to discuss the financial highlights. Michele?

Thank you, Dr. Steiner. As Dr. Steiner indicated, we continue to have a lot of ongoing activity at Bureau. Let's review the first quarter results. Overall net revenues were $2.5 million, compared to $14.1 million in the prior year quarter. The US prescription business net revenues decreased to $163,000 from $11.6 million in the prior year period. The reduction is due to some business challenges experienced by our telemedicine customers in recent quarters, which results in a slowdown in orders. Net Revenue for the global public health sector business was $2.3 million, compared to $2.6 million in the prior year period. Overall, gross profit was $700,000 or 28% of net revenues, compared to $11.8 million, or 84% of net revenues in the prior year period. The decrease in gross profit and gross margin is driven primarily by decreased sales in our US FC2 prescription business. Operating expenses for the quarter increased to $36.3 million, compared to the prior quarter of $16.8 million. The increase of $19.5 million is primarily due to research and development costs, which increased $8.7 million to $18.7 million from $10.1 million in the prior year period, and the increase in selling, general, and administrative expenses of $10.8 million from $6.7 million in the prior year period to $17.5 million in the current period. The increase in research and development costs is due to the increased costs associated with the multiple in process, research and development projects, mainly for the Phase 3 Sabizabulin COVID-19 registration trial and manufacturing costs of $8 million for pre launch inventory, and increased personnel costs resulting from increased headcount and an increase in the fair value share based compensation. The increase in selling, general, and administrative expenses is primarily due to commercialization costs of $8.4 million, related to preparations for the potential launch of Sabizabulin for COVID-19 incurred in the first quarter of fiscal 2023, and an increase in share based compensation costs resulting from increased headcount and an increase in the fair value of share based compensation. The operating loss for the quarter was $35.6 million, compared to $5 million in the prior year quarter. The change of $30.6 million is due to the increase in research and development costs and selling, general, and administrative expenses during the current period, and the reduction in the net revenues and gross profit during the period. Non-operating expenses were $1.3 million for the current year quarter and for the prior year quarter, which primarily consisted of interest expense and change in the fair value for derivative liabilities relate to the synthetic royalty financing. For the quarter, we recorded a tax benefit of $68,000 compared to a tax expense of $115,000 in the prior year quarter. The bottom line results for the quarter was a net loss of $36.8 million or $0.46 per diluted common share, compared to $6.4 million or $0.08 per diluted common share in the prior year quarter. The company has net operating loss carry-forwards for US federal tax purposes of $112.5 million, with $29.7 million expiring in years through 2042 and $82.8 million, which can be carried forward indefinitely. And the UK company net operating loss carry-forwards of $63.1 million do not expire. Now, looking at the balance sheet. As of December 31, 2022, our cash balance was $46.9 million and our accounts receivable balance was $3.9 million. Our net working capital was $32.9 million at December 31, 2022, compared to $63.3 million to September 30, 2022. During the quarter ended December 31, 2022, we use cash of $34.5 million for operating activities. The expected future revenues from Sabizabulin for COVID-19, if authorized, and the continued revenue from the sales of FC2 in the US prescription channel and the global public sector added to our current cash balance, should continue to be the primary sources of funds we use for commercial activities and to invest in our promising pharmaceutical clinical development programs, as we continue to focus on developing novel medicines for COVID-19 and other viral and ARDS related diseases and for the management of breast and prostate cancers. If sabizabulin is not authorized in the US, or elsewhere, in this current calendar, then we may have to seek additional sources of funding if we are unable to reduce our spending to a sufficient degree. Now, I'd like to turn the call back to Dr. Steiner.

Thank you, Michele. In January of 2023, the Los Angeles Times published an article by Doyle McManus entitled "Biden said the pandemic is over, but the pandemic won't cooperate." McManus further states, "But the pandemic isn't over. We're just pretending it is". So last month WHO, so the World Health Organisation, has concluded that COVID-19 remains a public health emergency of international concern. This declaration underscores that the COVID-19 virus and its resulting impacts warrant long term public health action as we enter the fourth year of this COVID-19 pandemic. According to the CDC in the United States, there have been 1,106,824 deaths related to COVID. Currently, the weekly average for new deaths is 3,452 people or approximately 500 deaths per day. The weekly average for new primary COVID-19 hospitalizations is 24,213 Patients or 3,459 new admissions per day. COVID-19 is the third leading cause of death in the United States behind heart disease and cancer. COVID-19 is a serious disease. And an effective and safe oral therapeutic to treat hospitalized moderate-to-severe COVID-19 patients who had high-risk for ARDS that prevents death is desperately needed. We strongly believe that sabizabulin, an oral therapy with dual antiviral and anti-inflammatory properties can serve as this new treatment modality that addresses and overcomes the threat of death that hospitalized moderate-to-severe COVID-19 patients continue to face. We have pivoted our company to establish an infectious disease program with sabizabulin as the lead drug candidate. In a Phase 3 study, sabizabulin demonstrated clear clinical benefit in hospitalized moderate-to-severe COVID-19 patients high-risk for ARDS and death and because of sabizabulin’s mechanism of action, it has the potential to treat other virally induced ARDS. ARDS remains a worldwide unmet serious medical need. In addition, we continue to advance our late -- core late clinical stage breast cancer and prostate cancer programs. For our cash burning position, we have been able to pause some of our spending, as we're now in a waiting mode, while multiple regulatory agencies across the world review sabizabulin as a potential option for emergency use. Over the past few months, we have been proactively preparing multiple work streams for commercialization in the background. For instance, manufacturing, drug supply and scale up activities are in place. Our US and international commercialization infrastructure is ready to provide access to sabizabulin to hospitalized COVID-19 patients and high-risk for ARDS and death, if authorized. We're working to prioritize our clinical development portfolio. We have begun to slow our clinical development spend, and we continue to evaluate the appropriate timing and spending of our planned clinical studies. Furthermore, we have a near-term strategy to drive FC2 sales as follows: we will seek to initiate additional and strengthen current telemedicine and internet pharmacy service partnerships. We have created and launched our own dedicated direct-to-patient telemedicine and internet pharmacy services portal. We're pleased with the telemedicine portal as a growing source of revenue, making this strategic move has allowed us to both supply FC2 to other telemedicine providers and to have our own dedicated FC2 telemedicine portal that we can control and grow. The website can be reached at fc2condoms.com. We expect to continue to increase US public sector sales through our new agreements with the New York Department of Health and the new distribution partnerships with global protection as well as faxes. And we're also starting to see again an increase in global public health sector orders. As I mentioned, we're seeing improvements in FC2 revenues in our second quarter fiscal year 2023 and ENTADFI may also generate revenue and authorized we expect to also have substantial near-term revenue from sabizabulin 9 milligrams for hospitalized COVID-19 patients and high-risk ARDS. With that I'll now open the call to questions. Operator?

Yes, thank you. Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions] And the first question comes from Brandon Folkes with Cantor Fitzgerald.

Hi, thanks for taking my question. So, maybe the first one from me. What gives you confidence that HHS won't follow the White House in winding down the COVID emergency? Have they been public about anything? Is there any precedence -- obviously that's a tough one there? And then secondly maybe just on the cash situation can you just elaborate when you paused spending? Was this post quarter end or during the quarter? And then any color on the magnitude of the spend you've been able to reduce and maybe just the urgency to either pour some of the clinical trials or shore up the capital situation? Thank you.

Thank you. So, make sure I understand your first question is around HHS correct?

Correct.

Yes. So, HHS as I mentioned in my remarks, they're a separate group and they govern the FDA and they declare their own declaration of emergency. And so based on that, the FDA came out the same day the Biden administration made the comment they're going to stop the national and public health, which more has to do with policy and payments and that kind of stuff in May 11th, 2023. The FDA stated that in no way are they going to not be able to continue to issue new EUAs and furthermore, EUAs that are in effect remain in effect until HHS decides otherwise. So, everything I've seen at this point, if you go back, it's called -- 524 is the name of the public health declaration and they have very, very specific times that for example HHS decides that they want to pull the declaration then Medicare and Medicaid and some of these other things will continue until the end of that calendar year. Also interestingly the Omnibus bill that was passed also contains provisions to help transition from emergency use national declaration by the government to a non-emergency. So, for example, for COVID drugs and they mentioned specifically Part D that they can go until the end of 2024 and actually be paid for. And so even though May 11 is the date, so there are transition provisions to not lose anything that we've done that has been helpful and not go back into chaos. As it relates to your second question, our biggest spend was as you would imagine in the first few months after we heard about the go-ahead and submit your EUA. And as you know when we met with the FDA, we submitted the EUA very, very quickly and then we went on the wait. But we knew that we could hear at any time, so it means that even back in the summer we were increasing our spend to put the US commercial team in place and put a commercial team, a small commercial team in Europe and more importantly get ready for commercialization of our product, which is the manufacturing piece of it, which means that we have to scale up. So we can provide commercial drug as soon as the FDA told us; you are authorized. We hear from many of those then we're ready to go. So the spend happened then. Once the spend was done then we're basically in a holding pattern. And as you've seen we've had a couple of planned clinical trials that we just have not initiated there's two in breast cancer for example. And we're just holding on because we've got a whole -- cash is that we want to make sure we can hold on to the cash so that we can understand at the time we hear an authorization, or not that we know what our situation is if we've got revenue coming in from sabizabulin anywhere in the world that's going to be significant then that will help us judge what we can do going forward. Priorities, for example, is that as you heard from the AdCom, one of the discussions was around the agency being interested in a condition for EUA would be that you have to do a Phase 3 confirmatory study. So we've been again proactive in putting together the Phase 3 study and submitting it to the FDA. But in terms of the number and the scope and all that stuff we just don't know at this point do we have full agreement. So there's a lot of unknowns, but our focus is going to be on doing what we need to do to take a valuable drug like sabizabulin and get it to patients, and then to focus on our oncology programs that will get us to the finish line sooner and then to focus on driving revenue in our base business. Michele, do you want to add anything to that?

I would just add that as Mitch indicated, we needed to ramp up. I mentioned during my comments we spent $8 million during the quarter to get enough drug in place. And as we've been working on our prioritization and pushing back on cash that started, we believed we were going to be hearing soon. So that we start talking about that making lists, prioritizing things towards the end of our quarter and now into this quarter here. So a lot of the spend takes time for it to come through and materialize but we're actively working on this.

Okay. Thank you.

Thank you. And the next question comes from Leland Gershell with Oppenheimer.

Good morning. Thank you for taking my questions. Just wanted to ask as you control the spend, as we await the potential EUA, with respect to spend on the enrollment in the oncology trials. Are you kind of pulling back there? Is that enrollment now expected to take a bit longer? If you could just kind of let us know what the timelines may be for updates on the oncology trials. Thanks.

Yes. So the answer to that is that as soon as we have a better understanding of what's coming in and what's coming out and we're evaluating, as I said, actively evaluating. I mean we did not expect to be sitting here seven to eight months later and not hearing from the FDA. Now there is precedent. There's a company called Sobi Pharmaceuticals that submitted their EUA to the FDA back in January of 2022 and it took them 11 months and it was not until November of 2022 they heard that they have the EUA. So we're completely at the mercy of the regulatory bodies to make a decision. And so what we have done now that we've entered this phase where we're still waiting and they're still reviewing that – and you can see we still have sufficient cash but we want to make sure the cash lasts. And as you know, because we have cash coming in and as I mentioned our second quarter, fiscal year second quarter numbers are starting to move towards where we would expect them to be after having a little bit of headwinds over the last three quarters then we got own money coming in too. And as you know, we've done very well matching our expenses with what we bring in but we just have to spend a little bit more time and then we'll roll out what we're thinking.

Great. Thank you.

Thank you. [Operator Instructions] And the next question comes from Yi Chen with H.C. Wainwright.

Thank you for taking my questions. So without waiting for FDA response? Can the company advance Sabizabulin into a clinical trial for hospitalized patients with ARDS but excluding COVID-19 patients?

It's a very good question. If we do that then that would have a – so – so far our discussions have been under the EUA and then if we did that that would go under an NDA. And technically it doesn't matter, right because you have to do a study before you can get into for example ARDS-related to influenza and that kind of stuff. And so you touched on a very important point. I mean the thing that we cannot lose sight of is that we have an agent that even after all of these COVID drugs have been tried over the last three years and whether they're new drugs, whether the drugs have been repurposed, whether they're biologics, at the end of the day here we are now in the fourth year of the pandemic and there's not much we can say. I mean in fact we have fewer drugs today than we had when we started because all the monoclonal antibody drugs have been pulled because they don't have activity against the current strain. And the best we can do is dexamethasone at 2.8% in baricitinib and tocilizumab and again they're marginal. And that's what we have. In comes Sabizabulin and Sabizabulin has a completely different profile, and it has a different absolute and relative risk reduction in the sickest patients. And we also know that the mechanism by which it happens is a similar mechanism that you see with influenza RSV and many of the viruses that use microtubules to get in and out of the cell, and also set off the cytokine storm that's responsible for ARDS. And right now we don't have great ARDS treatments. So in some ways the reason we pivoted to ARDS, is because it's such an unmet need people are still dying. When people die from flu, and they die from RSV and dying from COVID the dying at the end the multi-organ failure and ARDS and we could make a big difference. So your point is well taken. That is that the company should be focused on the long-term which is we'll see what happens with the emergency. But more importantly, out of the ashes of COVID comes, a drug that came from nowhere basically because we were developed and its oncology. And so yes, I think we do have a responsibility, just like I said in my earnings calls before, we were duty bound to keep moving with Sabizabulin and it turned out, it played out to be a highly significant clinically meaningful drug and it deserves to go into other ARDS. So what we need to do now is to pause and we need to get past some of these regulatory decisions. You have to believe they have to come soon. But again, Sobi waited 11 months but I'm not -- I have no information to say that I know exactly when. Once we get clarity, then, the assets are as it's an asset that's going to give resources now through potentially multiple regulatory bodies saying, yes. But it's also an asset that if it doesn't qualify for emergency use as well established itself as an asset that should be continued to go into the big unmet need of ARDS and people at high risk for ARDS and death. So yes, influenza, it's definitely one of the -- as I mentioned in my comments, it's definitely one of the studies, because we're still stuck with a shot once a year. It still affects the elderly. We still have to modify it. And there's still the death rate has been depending on the year because it's seasonal can be up to 60,000 people a year dying and as I mentioned over 0.5 million in hospitalizations. And most of the ARDS, is virally induced they don't even check and see what virus it is most of the time. And so, it's just a big area to go into. So the wake-up cough of Veru, is that we have a real asset and we're going to do everything in our power to get it out there.

Got it. My next question is, do you expect the FC2 sales to return to the levels seen in the fiscal first and second quarter of 2022? And if so, how soon do you expect to return to that level?

It's a good question. I'll have Michele, answer that.

For this quarter, we're starting to see our revenues coming back to that level that we saw in our quarters, first quarter and second quarter. As we've said before, our customers experienced some headwinds as Mitch said, one of them had some issues. They had leadership changes. They had rebranding issues. They've rebranded again. And so it's taken them a while to fix some of their internal issues. Another customer had similar internal changes, and some other problems that they've been sorting through and it's taken them a while. It sounds like, they've worked all that out. We stay in close contact with these customers. We've pushed through some of the issues as we've developed our own portal. We've had some issues to tackle. We've been working on those and clearing those up so that we're starting to see, an increase. But our visibility right now is into the second quarter, where things look good for the third and fourth quarter, but a lot of it is still dependent on how quick that do you see their customers fix their issues but all signs are pointing to it coming back to those levels.

Thank you. And my last question is just to confirm that Veru, may terminate one of the ongoing breast cancer or prostate cancer trial, due to budgeting priority. Is that, correct?

Again, we have not made a decision and we're looking at all options sometimes, one other extreme is just modifications or that kind of stuff. That's why I said, it's just too early to say. But what I can tell you, is that we want to decrease our spend, we want to prioritize the ones that are closest to the finish line. We want to ensure that we do everything we can to focus on that, because at the end of the day what matters is data. So we've got to get the clinical data. And then we'll put a strategy in place to do that so that 2023 is sort of the year of enrollment and 2024 will be the year of data. Especially now that COVID-19, even though it's still around, it really impacted all clinical trials by all companies, because of all the rules that were put in place for COVID-19 management, the lockdowns and all that stuff, it affected everything. But now, it's kind of moving the other way. Even though the endemic numbers are pretty high, but we're definitely seeing that the world is starting to come back. And a lot of these sites were fatigued, because they were pulled to help with the pandemic. And you've heard over and over about the craziness that's going there. But again, that's kind of passing as well. So let us spend the time to come up with a plan to understand how we want to position our oncology program. What I can say for sure is Sabizabulin and infectious disease is here to stay. We have a real opportunity. Oncology, we're committed to oncology. That's our other core asset. We have unique assets that need to make their way through. And as it relates to sexual health business, it's always been a good source of revenue, so that we can partially fund our clinical development and we're not beholden to the marketplace. It feels good after seeing the Q2 numbers, the fiscal year Q2 numbers. As Michele said, it's kind of moving back to a position where a significant revenue will come in, and so that we can move these trials forward and offset some of that cost with what we bring in ourselves.

Thank you.

Okay.

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

Thank you. I appreciate everyone who joined us on today's call, and I look forward to updating all of you on our progress in our next investor call. Thank you again.

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