VERU (2020 - Q1)

Good morning, ladies and gentlemen and welcome to Veru Inc.’s 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 Inc.'s Director of Investor Relations. Please go ahead. Sam Fisc

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

Thank you, Sam and good morning. With me in this morning’s call are Michele Greco, the CFO and CAO; Phil Greenberg, Executive Vice President, Legal; and Sam Fisch, Director of Investor Relations. Thank you for joining our call. Veru is an oncology and urology biopharmaceutical company with a focus on developing novel medicines for the management of prostate cancer. Today, we will update you on the clinical development of our drug pipeline and the commercialization of our products as well as provide financial highlights for the first quarter fiscal year 2020. It is estimated by the American Cancer Society that in 2020 there will be about 191,930 men with newly diagnosed prostate cancer which is a 10% increase from 2019. There will be an estimated 33,330 deaths from prostate cancer in 2020, a 13% increase from 2018. After following for two decades, this is the second year in a row that we have seen an increase in deaths from prostate cancer suggesting that men with advanced prostate cancer are progressing through current treatments and new effective treatments are urgently needed. We are delivering on our strategy to be the prostate cancer company. We are responding to this call to action and are dedicated to the development and commercialization of products to address unmet medical needs for the management of prostate cancer. The markets for prostate cancer management are well established as multi-billion dollar markets and given our core expertise and the number and type of drugs in our pipeline, we are uniquely positioned to understand, develop and commercialize medicines for these unmet medical needs of prostate cancer patients. Here is a brief update on the advancement of the prostate cancer drug pipeline. We have made significant progress with our open-label Phase 1b/2 clinical trial for VERU-111, a novel proprietary first-in-class oral selective antitubulin agent for metastatic castration-resistant prostate cancer patients who have also become resistant to the novel androgen blocking agents enzalutamide or abiraterone, but prior to IV chemotherapy also referred to as the pre-chemotherapy stage. These are the patients whose prostate cancer is progressing that is spreading after exhausting the benefits of currently available injectable and oral prostate drugs, but before they are offered IV Cabazitaxel taxane chemotherapy. Unfortunately, there is a large number of these affected men. According to the published scientific report, about 12% to 25% of men who have metastatic castration-resistant prostate cancer and who have been started on a novel androgen blocking agent will not respond at all to this therapy. And about 75% of men will initially respond to the treatment with an androgen blocking agent, but their tumor will start progressing in about 9 to 15 months. So essentially by 1 year, the majority of these men will have tumor progression and will be ready for the next therapy by VERU-111 to control their advancing prostate cancer. This pre-chemotherapy space in men who have failed in ADT and a novel androgen blocking agent is currently the fastest growing unmet medical need segment in advanced prostate cancer. According to Accuvia, oral drugs, abiraterone, enzalutamide for advanced prostate cancer had over $6 billion in 2018 global annual sales. Men who have failed these novel blocking agents or the patients that VERU-111 is currently targeting, which we estimate represents a $4.5 billion annual global market. There are currently no FDA approved, oral or IV drugs for the indication of men with advanced prostate cancer who have failed both ADT and one of the novel androgen blocking agents. In the Phase 1b clinical trial, we have treated 39 men to-date who have metastatic castration and androgen blocking agent resistant prostate cancer and have shown evidence of cancer progression by rising PSA levels and the spread of prostate cancer by CT and/or bone scans by the study design which is called a 3+3 design, the maximum tolerated dose or some side effect that indicates that higher doses may not be tolerated is determined by treating 3 patients in the time with an oral daily dose of VERU-111 for 7 days followed by 2 weeks off-drug which treatment schedule represents 1 cycle. For patients to tolerate treatment, we increased the schedule to 2 weeks on drug and 1 week off and then 3 weeks continuously on drug until there is evidence of prostate cancer progression. This will allow us to assess the durability of the anti-cancer response. The escalating doses of VERU-111 tested to-date of 4.5, 9, 18, 27, 36, 45, 54, 63, 72 and 81 milligrams a day. As for safety, VERU-111 appears to be generally well tolerated. There are no reports of neutropenia up to and including 72 milligrams which is the dose-limiting toxicity typically seen for IV taxanes. There have been no reported complaints of neurotoxicity or hypersensitivity reactions, which were also common side effects that occur with the IV taxanes. There have been a few isolated mild liver enzyme changes that in some instances, resolved while still on drug. There have been reported side effects consistent with VERU-111s and other antitubulin cytotoxic effects such as mild-to-moderate diarrhea, nausea and vomiting which appear to be dose-dependent. Further, we know that through oral dosing VERU-111 is being absorbed into the blood stream from the stomach as levels of VERU-111 are measurable in the blood which means VERU-111 has good bioavailability. VERU-111 concentrations are higher with increasing oral drug doses. In fact, we have achieved VERU-111 blood concentrations in humans that match the efficacy concentrations we have measured in the preclinical animal models with prostate cancer tumors shrunk. Although this is a safety study, we do see preliminary evidence of anti-tumor activity as we have mentioned in our prior earnings calls. As historically reported from the literature, men with metastatic castration-resistant and androgen blocking agent resistant prostate cancer have a median of 3.7 months before their CT and/or bone scan evidence of new cancer progression. This is called imaging based progression-free survival. In our Phase 1b, we have 20 men in the study that had the potential to be treated for 4.5 months. Even without having determined an optimal dose or a dose schedule yet, there are 4 men who are still ongoing in the trial with no tumor progression at 12, 10.4, 10.4 and 7.6 months. All of these men have experienced PSA reductions from peak or base values, another 6 men have progressed to 4.2 months. The patients still in the trial of 12 months has had a PSA reduction of 63% from peak and had two of its cancerous lymph node shrink as measured by an initial follow-up CT scan and confirmed by another follow-up CT scan 3 months later. We also have another patient who at the time of enrollment had progressing prostate cancer bone metastases now showing improvements of these bone metastases based on a bone scan following treatment with VERU-111. There was also evidence that these anti-cancer effects in the study have a dose and schedule response meaning higher doses and 3-week treatment cycles have more activity. Based on these results demonstrated from these preliminary clinical data, VERU-111 is a promising anticancer compound with a good safety margin and without the typical side effects seen with IV taxanes. Accordingly, VERU-111 appears to be a good candidate for an oral anticancer therapy in men with metastatic castration and novel androgen blocking agent resistant prostate cancer in the pre-chemotherapy space. An advantage of VERU-111 is that can be also potentially prescribed by the urologist who is the usual physician managing this type of patient. Once the Phase 1b is completed, we will present the full clinical dataset at an upcoming major scientific meeting. We are approaching a significant and an important clinical milestone in the development of VERU-111. We are finishing up the last cohort of the Phase 1b portion of the Phase 1b/2 clinical study and will continue to collect long-term clinical data from this portion of the clinical trial. We will soon initiate the Phase 2 portion of the clinical trial enrolling approximately 26 men with metastatic castration and novel androgen blocking agent resistant prostate cancer using the dose and schedule selected from the Phase 1b. Moreover, given the current efficacy and safety profile of VERU-111, we plan to expand the clinical program of VERU-111 in 2020 into Phase 2 studies with 2 to 3 additional tumor types or indications where anticancer activity was shown in preclinical animal models. We will update you further when we have more information on these studies showing anti-tumor activity in other tumor types, will increase the overall value of VERU-111 program. Next, I will update you on VERU-100, our proprietary peptide drug candidate for the treatment of hormone-sensitive advanced prostate cancer, an established multibillion dollar global market. The target product profile of VERU-100 is commercially and scientifically compelling as having a number of anticipated advantages over currently available androgen deprivation therapies. VERU-100 is a long acting gonadotropin releasing hormone, GnRH antagonist, designed to be administered at a small volume subcutaneous 3-month depot injection without a loading dose. As a GnRH antagonist, it is intended to immediately suppress testosterone with no testosterone surge upon initial or repeated administration and no testosterone micro increases which may adversely affect patient outcomes. This is a problem which potentially occurs with the approved LHRH agonist drugs like Lupron, Zoladex and Eligard. Currently, there are no GnRH antagonists commercially available for the treatment beyond 1 month making VERU-100, if approved, the only commercially available GnRH antagonist 3-month depot an attractive choice for androgen deprivation therapy. We have received agreement from FDA that the development program from VERU-100 may follow an expedited pathway. Based on this FDA input, the company plans to commence a single open-label, multi-center, dose-finding Phase 2 clinical trial in approximately 60 men followed by a single open label multi-center Phase 3 clinical trial in only approximately 100 men. VERU is in the process of scaling up GMP manufacturing drug products to prepare for the clinical trials of VERU-100. The company intends to submit an investigational new drug application in early 2020. So we can commence the open label Phase 2 clinical study by early summer. As it is an open label Phase 2 study, we will be able to periodically update you on our progress towards reaching the primary endpoint which is the reduction of testosterone to castrate levels in real time during 2020. The planned development pathway for VERU-100 agreed upon by FDA represents a lower cost investment opportunity for a major product that could address the shortfalls of the current $2.6 billion global ADT market. Our next product candidate in a clinical trial is zuclomiphene, a novel proprietary oral non-steroidal estrogen receptor agonist being evaluated to treat hot flashes, the most common side effect in men on androgen deprivation therapy for advanced prostate cancer and a major reason why men want to stop androgen deprivation therapy. We have enrolled 93 men in a multi-center double-blind placebo dose-finding Phase 2 clinical trial evaluating two doses, 10 milligrams and 50 milligrams of zuclomiphene versus placebo. We reported positive top line interim results a few weeks ago. We determined that the 10 milligram dose with the no effect dose and the 50 milligram dose of zuclomiphene demonstrated estrogenic activity and a reduction in the frequency of hot flashes from baseline at Day 42. We also reported on the safety from the current blinded aggregate clinical database from our placebo-controlled trial. And based on the study’s interim findings, zuclomiphene appears to be well-tolerated. We have not received any reports of gynecomastia, painful breasts or venous thromboembolic events, which are common side effects seen in men treated with high doses of estrogen. After having an end of Phase 2 meeting with FDA for the zuclomiphene program and obtaining agreement on the trial design that will be acceptable for approval. Our plan is to initiate a pivotal Phase 3 clinical study. We will provide details of the design and timing of this study after we have the FDA meeting. The expectation is that the Phase 3 design, will be very similar to the Phase 2 study and that will be a 12-week treatment study. Veru has determined that the peak U.S. revenue potential for zuclomiphene citrate is between $580 million to $630 million. This projection assumes a 25% to 33% of all ADT patients who experienced hot flashes take zuclomiphene with an annual patient cost between $4,000 and $5,000. This estimate is determined based on research estimates from Accuvia, medical marketing economics and DelveInsight. This independently confirmed as zuclomiphene with the indication of treatment of hot flashes in men on androgen deprivation therapy for advanced prostate cancer is a major market opportunity. Currently, there are no FDA approved drugs for this indication. We are very excited about our progress with zuclomiphene for this unmet indication. Veru’s ability to advance the clinical development of our proprietary prostate cancer drugs that address unmet medical needs in large markets is being substantially supported by investments from two commercial sources of revenue; the FC2 female internal condom as well as PREBOOST/Roman Swipes, which is a 4% benzocaine wipes for premature ejaculation. As you can see from the earnings release, in Q1 fiscal year 2020, we continue to have significant growth in revenue and gross profits from these commercial products. Although Ms. Greco will cover the detailed financial results highlights in a few moments, I would like to make a few comments. We continue to have robust grow in fiscal year 2020 and expect further increases of FC2 sales in both the public sector and prescription sales in the U.S. for the rest of the year as we have signed new agreements to supply FC2 by prescription through telemedicine companies. The strong growth in the U.S. FC2 prescription business remains noteworthy as it allows us to be less reliant on the intermittent ordering patterns typically seen in our traditional FC2 public sector business. We had $6.1 million in revenue from the prescription business for Q1 fiscal year 2020 compared to $2.4 million for Q1 fiscal year 2019, an increase of 148%. In fact, to give you a sense of our growth trajectory for all of fiscal year 2019, we achieved 159,000 FC2 prescriptions and for just Q1 of fiscal 2020, we had 81,000 FC2 prescriptions. For our premature ejaculation product marketed as Roman Swipes, the company entered into a multiyear U.S. distribution agreement with Roman Health Ventures, a premier and fast-growing men’s health and telemedicine company, that discreetly sells men’s health products via the Internet website called www.getroman.com. We have begun to see these revenues grow too. Focusing now on Veru’s commercial segment, which is FC2 PREBOOST/Roman Swipes and drug commercialization costs, we had net revenue increases in Q1 fiscal year 2020 to $10.6 million compared to $6.4 million in Q1 fiscal year 2019, which is up 66%. Gross profits for fiscal year 2020 were $7.3 million compared to $4.6 million in fiscal year 2019, which was up 57%. Our income from operations in this segment of the business was $5.8 million for Q1 fiscal year 2020, up from $3.4 million in Q1 fiscal year 2019, an increase of 73%. As you can see, our base commercial business is doing very well and as a standalone business would be quite valuable experiencing significant growing revenue. With continued revenue growth and profit and positive cash flow from this base commercial business, we have been able to substantially fund the development of our prostate cancer clinical programs and our urology specialty pharmaceuticals for the past year. We intend to continue this revenue growth trajectory with not only the current growth of revenues from FC2 and PREBOOST, but also from the revenues that we expect to generate in the commercialization of the company’s proprietary tadalafil, finasteride combination capsule for the treatment of the symptoms of BPH called TADFIN. We expect this to be the company’s first pharmaceutical urology asset to move into commercialization. We are collecting 12 month stability data on TADFIN manufacturing batches and expect to submit the NDA by the end of 2020. In the U.S., we are exploring commercially launching TADFIN through telemedicine channels. As you have seen, we have had great success with our products using this sales channel. We were also in discussions with potential commercial partners outside the U.S. and having TADFIN revenues from U.S. sales and potential partnerships with upfront payments and royalties from outside the U.S. should add substantial near-term revenues with high gross margins to the existing and growing revenues from FC2 and PREBOOST/Roman Swipes products. 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 started off the year with a great first quarter. FC2 unit sales totaled $10.1 million, up 36% over the prior year first quarter of $7.4 million. FC2 net revenues for the quarter totaled $10.4 million, an increase of 65% from the prior year quarter of $6.3 million. In the U.S., FC2 prescription channel net revenues were $6.1 million, an increase of 148% over the prior year quarter of $2.4 million. Net revenue for the public sector business also increased to $4.4 million from $3.9 million in the prior year quarter. Net revenues for PREBOOST/Roman Swipes were $153,000 compared to $47,000 in the prior year quarter. Gross profit increased $2.7 million to $7.3 million for a gross margin of 69% compared with $4.6 million for a gross margin of 73% in the prior year quarter. The reduction in the gross margin is due to an increase in labor transportation and equipment maintenance costs. FC2 net revenue per unit was $1.04 compared to $0.86 in the prior year quarter. The increase in U.S. prescription volumes resulted in the increase in our net revenue per unit and the increase in our gross profit. This increase in revenue provided the company with cash to continue funding its research and development projects. Research and development costs were $5.3 million compared to $2.4 million in the prior year quarter, an increase of $2.9 million. Operating expenses increased $3.4 million to $9.1 million from the prior year quarter of $5.7 million. The increase in operating expenses is primarily due to the increase in research and development expenses for our multiple advancing drug product candidates. The operating loss for the quarter was $1.8 million compared to $1 million in the prior year quarter. During the quarter, non-operating expenses increased approximately $553,000 compared to the prior period primarily due to the changes in the fair value of derivative liabilities. For the quarter, we had a tax benefit of $77,000 compared to a tax expense of $92,000 in the prior year quarter, which was primarily due to the changes in the valuation allowance recorded against U.S. net operating losses. After income taxes, the bottom line result for the quarter was a net loss of $3.3 million or $0.05 per share compared to a net loss of $2.1 million or $0.03 per share in the prior year quarter. The increase in the net loss of $1.2 million is primarily due to the increase in the research and development costs. The company has net operating loss carry-forward for U.S. federal tax purposes of $42.7 million with $14.4 million expiring in years 2022 through 2038 and $28.3 million which can be carry-forward indefinitely. And our UK subsidiary has net operating loss carry-forwards of $61.7 million, which did not expire. Now, turning to our balance sheet. As of December 31, 2019, our cash balance was $4.2 million and our accounts receivable was $6 million compared to a cash balance of $6.3 million and accounts receivable of $5 million at September 30, 2019. During the quarter ended December 31, 2019, we used cash of $2.5 million for operating activities compared with using cash of $1.5 million in the prior period. Overall, we are delighted to see the continued increases in sales in the U.S. FC2 prescription market, the increasing global public sector sales as well as the increasing sales of PREBOOST/Roman Swipes to Roman Health Ventures. These revenue sources will continue to be a source of funds to invest in our promising pharmaceutical clinical programs as we continue to transform our company into the prostate cancer company. Now, I would like to turn the call back to Dr. Steiner.

Thank you, Michele. We have enjoyed yet another strong financial quarter which has allowed us to significantly advance our clinical programs. In fact, we have now had nine strong quarters of growth in our FC2 U.S. prescription business. Looking forward to the rest of fiscal year 2020, we expect our revenues to continue to be strong and growing towards a record year. With the improving performance of commercial products and a strengthening of the balance sheet, we believe that we will be able to substantially invest in the continued development of our prostate cancer and other cancer drug product candidates as well as submit NDAs and if approved commercially launch TADFIN, which would provide either more revenue to the already growing revenues from FC2 and PREBOOST/Roman Swipes. We anticipate a steady flow of important positive news for Veru over the next few months to 1 year. For VERU-111, our oral anti-selective antitubulin, we will report open label efficacy and safety clinical results with the Phase 1b and the Phase 2 clinical trials for VERU-111 for the pre-chemo metastatic castration and novel androgen blocking agent resistant prostate cancer. We will initiate new open-label Phase 2 clinical studies in other indications and tumor types. For VERU-100, our novel peptide GnRH antagonist 3-month depot formulation, we will complete GMP manufacturing of the clinical supply of VERU-100 submit the IND and complete the Phase 2 clinical trial. For VERU – excuse me, for zuclomiphene, our oral estrogen receptor agonist, we will have an end of Phase 2 meeting with FDA and initiate a pivotal Phase 3 clinical trial evaluating zuclomiphene for the treatment of hot flashes in men with advanced prostate cancer in androgen deprivation therapy. We will submit the NDA for TADFIN who have secured partnerships with some of our drug products and we will continue to demonstrate robust growing revenues for our commercial products, FC2 and PREBOOST/Roman Swipes. We are committed to driving shareholder value by becoming the prostate cancer company. We are also committed to providing substantial benefits to prostate cancer patients by developing commercializing products to address unmet medical needs in the management of this disease. With that, I will now open the call to questions. Operator?

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

Hi, thanks for taking my questions and congratulations on all the progress during the quarter. Firstly, is there any additional color perhaps on the baseline characteristics of the 4 men on VERU-111 that you callout that have responded very well? And then secondly, can you just talk – I know it’s jumping a bit ahead, but about the competitive environment you would expect for VERU-111 when it comes to market within prostate cancer? Thank you.

Thank you. Alright. So the first question can I give you some more color on the baseline characteristics of the four men that have shown good I guess imaging progression free survival meaning they have not progressed and you are clearly well beyond what you would have expected for the patients of this type. I can’t provide color on the individual patients, but I will give you some color about the patients in general that have entered the study. In that, in prostate cancer, the most common place that prostate cancer spreads is lymph nodes and to bone and when it spreads to visual disease like the liver and that kind of stuff, that’s called visual disease. So, in this study, almost all the patients either bone metastasis nodes or both and that’s why I commented on a node in one patient for example, shrinking and with confirmed with the follow-up CT scan and the bone scan that got that improved. And so that kind of gives you a flavor of a typical patient that a urologist sees. Now when the patient starts getting visual disease meaning it goes into the liver and the adrenal glands and that kind of stuff and those patients are further along in the disease and most likely will be followed by the medical oncologists. As it relates to the question about the competitive market, right now, this is the fastest segment that’s growing and the best way to kind of layout the competitive market is to think about kind of the treatment modalities that are coming in. At this point, just to be very, very clear, there are no drugs approved for patients that fail ADT and fail one of these androgen blocking agents. And I will also say that almost every patient is starting to get treated with these agents even as early as non-metastatic disease, which means when they get their first metastatic lesion whether it’s the bone or the lymph node, they are going to have gone through ADT and they would have gone through one of these androgen blocking agents and in fact, first line therapy is wide open for treating these patients, because all these drugs have moved so early. And the other important point is once you use one of these androgen blocking agents whether it’s abiraterone, enzalutamide, apalutamide, darolutamide, bicalutamide, you can’t use them again, because you are not going to get much benefit from squeezing testosterone done even lower. So, you need a drug or an approach that’s a new mechanism. So, those kinds of drugs really leave only at this point that approved the metastatic castrate-resistant prostate cancer are going to be docetaxel and cabazitaxel, which is a taxane. And as we know that means the patient has to leave oral therapy and go to a medical oncologist and that’s a bad day in the office, because that’s basically passing the patient off and saying that we have exhausted everything we can do in the urologist office. So that’s a bad day. We are trying to make – VERU-111 I think has got a tremendous competitive advantage, because we are a cytotoxic therapy without some of the side effects of the cytotoxic therapy. So, for example, taxanes are cytotoxic therapies, they work, but you have the dose-limiting neutropenia, febrile neutropenia, sepsis, neurotoxicity meaning they can’t feel their fingers and toes and other side effects, hypersensitivity you have to get an IV, you have to sit in an IV chair, you have to be pre-medicated with prednisone. You have to – you get the picture. So if you had an oral drug we can now say based on the Phase 1b that we are not seeing the neurotoxicity to neutropenia and those kinds of side effects and that can be given at home, then it opens up a whole world for the urologists to step in. So, in my opinion, the others will have to come in and chip away that basic therapy and that will be, for example, the PARP inhibitors that I think will be very effective in patients that have germ line/somatic mutations with BRACA 2 for example, but that patient population is less than 5%. I think what we are going to see in prostate cancer just like we have seen in lung cancer and the breast cancer and other cancers that over time we are going to have subpopulations of this heterogeneous class called prostate cancer that we are going to be able to pick away with effective drugs. So, for example, as I mentioned the PARP inhibitors will come in and you will take that 5% of patients and treat them, but what do you do for the other 95%. And so that’s where we step in. As it relates to immunotherapy, immunotherapy really has not made big headway into this patient population and I am looking forward to seeing in the future. What will happen in the meantime, we want to part of the bread and butter, right? Bread and butter, ADT first, ADT plus and androgen blocking agent, second, VERU-111 third and that’s it and then everything else picks away that big group. So I think the competitive landscape for VERU-111 because of the drug and now because we know about the side effect profile I think it places us very, very nicely as being the next go to drug before all these other ones will be used I will make one last comment about the nuclear radioisotope treatments that are in development and is IFCO and those kinds of drugs. Typically, those are given much later when patients have widespread metastatic disease in the bones or etcetera. Well, they have to be PSMA positive. So that has to - that remains to be seen, and I still think that is going to be done later because it is not the urologist medical oncologists it's a nuclear medicine doctor that prescribes that one and so that has a different complexity so hopefully Brandon answers your question.

Right guys. Thank you very much. Could I may be just sneak in one more just housekeeping how should we think about the spend for the rest of the year going forward?

You broke up say that one more time.

How should we think about operating expenditure for the rest of the year going forward? Thank you.

So the way I would look at it is now having to show comment as well the way that we have the Phase 3 in the budget the Phase 2 is in the budget the VERU-100 the way we are planning our budget for the year it looks like our revenues and gross profits in the cash coming off the business will meet our needs and so we feel pretty good about that and as we guided last year, we did not do a raise. This year, we are feeling pretty good next year possibly but I think right now it is a balance between making the money match versus accelerating programs that have promising good news and so that’s the fine line that we walk so, right now we are fine but then I hope to keep accelerating because that gets us to the patient’s sooner than later.

Thank you very much.

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

Hey, good morning Mitch. Thanks for taking my questions. Just a question on 111, two questions, if you could remind us the two to three indications that you are looking at in addition to your current focus and also when might we see the first presentation of data, perhaps at a medical meeting this year? And then just a quick follow up? Thanks.

Yes. So for the two to three indications you have heard me mention on the previous call that we were looking at pancreatic cancer and breast cancer and post taxane prostate cancer. And so where we are right now is those are all still on the table and what we are trying to do right now is say lets just focus on getting the prostate one done and this will answer your second question as well, and I'll come back and tell you the other indications the idea is for us for the other indication if you look in the literature either at VERU111 you will see that we have had activity in pancreas we have activity in ovarian, cervical, breast, triple negative breast, of course, prostate is in different flavors, taxane and non taxane cell lines. It doesn't matter. We work in taxane so want to become resistant taxane so we have a lot of flexibility so what we want to do first is get going we have got the answer to your second question when we are going to present the information as scientific meeting it is maturing very, very nicely the Phase Ib. And we're finishing up the last cohort, which means that we can quickly initiate the Phase 2 because it is all part of the same plan in other words the IOB’s and everything approved the Phase 1b/2 so going to the Phase 2 just literally requires getting your sides which we already have and starting to study so that’s what I said in the call that we reach an important milestone we are closing one chapter and opening another the other important thing to understand is even though we are closing the first chapter those patients that are on our drug and they are responding to the drug we are not taking them of the drug they are going to stay on the drug so we are going to get some information about the durability of the response and more information about long term safety so even in the future when we announce the full data set so you can see what we are seeing in a scientific meeting we can update it until every patient has progressed so what we are thinking right now is that it is actually case then we are wrapping to sting up this quarter and as you know for the scientific meetings, you don’t just say, I mean, even the light breaker means you need 8 weeks before you can submit and then it gets presented. So once we pull this thing together, I will guide, which is the important scientific meetings we are going to get into. ASCO, I mean, the deadline has already passed. GU ASCO is this weekend, but we will find a major scientific meeting that we can present the full dataset. And again for the other indication we are going after Phase 2s and other indications. We just want to make sure that we have the best chance for success. And so as I said, the shortlist will be pancreatic cancer, triple negative breast cancer, lung cancer, because that’s the other one, we have shown activity and potentially ovarian or cervical cancer. So it will be from that list. And I will come back and let you know as we get a little closer to starting that. And of course, it will be done here in the first half of 2020. But again, all you have to do is do an amendment to the protocol that we have now and start that study. So there is not much from regulatory or a clinical supply standpoint to get this thing up and running, it literally is just get the prostate one going and then switch to the other two Phase 2s.

Okay, great. And then with the Phase 3 in zuclomiphene set to start after you end of Phase 2 with FDA, if you can remind us the size, the sample size you would expect based on powering assumptions from the data you have and then when might we see the Phase 3 from that program? Thanks.

Yes. So the way we are thinking about it now is after the end of the Phase 2 meeting, we will be able to layout the exact assumptions, effect size and the size of the study. But we are thinking we are looking at about 120 patients per arm, so the study will be about a 240 patient study, something like that, 240 to 260. And as you know, it’s a 12-week treatment period. So that’s going to be pretty consistent. And so I think that gives you sort of sense of the trial. We believe it will take us 6 to 9 months to enroll that study, if not a little bit longer. And then you have to have 12 weeks that goes by. We will be able to talk about the efficacy part and then the patients will then roll into safety, longer term safety piece of it. So if we meet with the FDA and then start the study sort of by summer, then we are looking at data coming in approximately a year and some change.

Well, great progress. Thanks very much.

[Operator Instructions] And the next question comes from Kumar Raja of Brookline Capital Markets. Please go ahead.

Thanks for taking my questions. So Mitch, on VERU-111, I just wanted to get a sense with regard to as you are dose-escalating, what kind of correlations are you seeing in terms of the efficacy versus the side effect profile? And also how this can be leveraged in terms of the follow-on trials with the other indications?

To make sure, I answer the second question. The second question is based on what we learned from the Phase 1b, how was that relevant to the other tumor types, is that what you are asking?

Yes, that and also like how you can leverage, yes, yes, I think yes, that’s what I am asking, yes?

Yes, I’ve got you. Okay. So let me answer the second question first and the answer is that in our animal models, it turns out that the concentrations that we saw of almost every tumor type whether its pancreatic lung cancer, triple negative breast, it was always in the same human equivalent dose and was dose-dependent, which means if you were low, you got less of a tumor response in the animals. If your concentration in the blood was higher, you get a better response. So you definitely had the dose response and our doses that we are treating 54 and beyond are in that range. And so we have reached as I said in the call, prepared comments in the call that we have reached the concentration there. So we stay in that concentration range. It will get a broad spectrum of different tumor types, if the animal model translates into the human model. As it relates to what we are seeing, we are seeing interestingly that we are changing two levers, one is dose, so we went from 4.5 up to 81 and the other thing we are changing schedule. Patients get treated 1 week on, 2 weeks off, 2 weeks on, 1 week off, 3 weeks continuous. And so we have two levers that we are pulling. What I can tell you is that using PSA as a biomarker, there's no question that the higher the dose and the more it is given so continuous is better than two weeks on and one week off and two weeks on and continue is a better than taking one week on and two weeks off so we are seeing dose and schedule changes consistent with a dose response with the product with VERU-111 As it relates to the side effects, there appears to be a window in which we are in the concentration required to see anti cancer effects that we have seen in the preclinical model. Now we're seeing in the human model, where the side effects profile looks pretty good so well tolerated as you go to the highest, highest doses that’s is when we start seeing what you expect for a cytotoxic agent on the GI tract. Because as you know, the GI tract is where the cells divide pretty rapidly and so that’s when we're starting to see the nausea, vomiting and the diarrhea all manageable but the highest doses you see more of this so even that side effect is dosed dependent as it relates to as I said we are not seeing neurotoxicity, so I can't comment on that as it relates to relates to effects on neutrophils. I'm telling you, unless we keep pushing this drug I mean the effects on neutrophils are going to be mild so it is already a different side effect profile than a taxane.

Okay, thank you. And one more question with regard to the female condom looks likes the business in the U.S. is doing well what I am trying to get here is like obviously we are seeing decent growth but in terms of the potential where do we stand there like in terms of continued growth how long do you expect to see them and in terms of the potential where do we stand like what are your expectations in terms of long term growth?

Great question and I think I don’t want to be this is going to sound little corny but it’s a blue ocean out there right and this is what we have been able to do is tap into a very interesting way to sell interesting sales channel for FC2 so by using sales channel called telemedicine, it's allowed our company not spend any money on marketing and selling I mean that is an important point so we have this kind of revenue coming in without a sales person and without a marketing budget and you said, well, Mitch, how can that be? Well, it turns out that these telemedicine groups are using their resources to market products and market people to come to their website and then in their website is when they interact with the physician whatever mechanism in that website does that and then some of these websites also play role in filling the prescription sending the product to the patient and following-up the patient over time, just like traditional CVS or Walgreens would do if we came in with a prescription in a brick and mortar place for some reason and I think it has to do with the fact that women’s health is such an important issue particularly contraception there are so many of these telemedicine sites that are opening up literally once a week we hear about a new one You've heard of Feraheme, it's in the pill club and others like that and you have heard are not going to get Roman for men, so Ferahemes for men. So these websites are growing rapidly and we are just literally taking advantage of this in the sense that that’s the patient’s that are accessing our product and those numbers are just slackening in terms of what an internet based sales team can do versus a Brick and mortar marketing and selling team where a single salesperson will be lucky if he sees 400 scripts to the 1,000 scripts a month. With telemedicine, it is not unusual because some of these telemedicine groups have 30,000 to 40,000 prescriptions a month not our product but women's health products in general. So it's - I don't know what the ceiling is going to be on this one all I can tell you is we have had nine quarters of significant growth that has allowed us meet our cash needs to run our clinical progress - excuse me invest in our clinical programs and this is going to be a record year for us and I hope the year after that would be a record year as well so with this kind of trajectory, I mean, I don’t know. I will tell you that where 1% female condom business in the U.S. is about less than 0.1% of the male condom business. And so we have a lot of room to go as women use these products and enjoy these products and begin to take control of their sexual health, there is a blue ocean. So I think that’s all I can say at this point. And I feel very bullish that we are going to continue to see growth and this has been one of the reasons we have held on to this asset.

Okay, great. Thank you so much.

The next question today comes from Peter McMullin, a Consultant.

Can you hear me, Mitch?

I hear you, Peter. How are you doing?

Good. Thank you. Mine is more of a marketing question, I believe you are going to ASCO over the next few days, what are you doing there, how much of the odd ends to Veru? What’s the opportunity to kind of like expand your fan club?

Great question. So as you know we have taken the approach that it’s better to show then to tell. And so we now have information that’s coming out of our cancer programs where we can show. And so that’s allowing us now to – and this has been a record year to begin to get a new fan club, a base. And as you know Dr. Harry Fisch and myself, both urologists and particularly in our history with urology community and particularly in prostate cancer, we have a big footprint. And so we are beginning to engage with these thought leaders to get them on board. That’s how come I know, for example that they are very excited about VERU-111, because urologists want to maintain these patients. And just by way of how this is going now and when I was a resident, if somebody was diagnosed with advanced prostate cancer they had 18 months to live, in some cases today, its 20 years or more. And so these advanced – and because of all these new drugs, these advanced prostate clinics are opening up across the country. They demand mostly by urologists. They have their own pharmacies. And this is what they do. They manage these patients effectively so that we can get as much time and quality as we can. And so now there is a new renewed interest in new drugs, because before we had nothing and now with these clinics that are opened around ADT that opened around novel androgen-blocking agents and now the patients are starting to fail these agents, what’s the next thing? What else can we do to keep these patients? So this is where we are coming in. So this new meeting comes up GU ASCO, I am going to hop on to plane after this call to go to GU ASCO. We are presenting two abstracts at GU ASCO. One of them and this is in the press release, our earnings release one is on GnRH antagonist showing the proof-of-concept of where we basically able to, with a single injection castrate mice – rats for over 6 to 9 months. It’s a very effective product. And so everybody can see the data. And then we are also presenting a very interesting prostate cancer research institute survey that we sponsored in about 218 patients that have hot flashes and it really answers a lot of questions like how many of those patients really have hot flashes, whether the hot flashes, they just go away or they stay and what is the preferred way to get the treatment for their ADT and that kind. So it was a lot of marketing information there as well, but it’s being presented in the scientific forum. So those abstracts have been selected. I will personally be standing by those abstracts and those posters at the meeting to interact. So it will be a very big weekend for us as we begin almost a kickoff. And as we move from a Phase 1b to Phase 2 with VERU-111 that’s also going to allow us to have data to show people and to talk about it. And the Phase 2, I really do believe that Phase 2 is going to enroll pretty quickly, which means that, I didn’t mention this on my call, but we are looking for significant data this year. And so that will be on top of the Phase 1b data. So stay tuned, we have reached the point in our company that we have gone from, I tell you I am going to do this, so now I can show them what we have. And so it should be a very interesting year.

When is the dates covered and when do you actually present? Does it go through the weekend or is it Thursday, Friday and people go home….

Yes. I think it’s going to be like Thursday, Friday exactly. It’s what it is and one each day. And if you look on the GU ASCO or the [indiscernible] oncology ASCO meetings, it will have – I think it can actually get into the schedule and see. And do we have a press release coming? Yes. So we have a press release. Somebody in the room was telling me that we will put a press release out. We will tell you the dates, the times and we’ll give you summary of each abstract. And it’s already out. It’s on the website. Can we put – are we going to do a press release or not?

It already went out.

Went out. Okay, alright. So, good, so it’s already gone out. So, you go to our website evidently, it’s already out.

Well, good luck on that and take your trumpet.

Thank you. Appreciate it.

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

Thank you, operator. I appreciate you joining us on today’s call and I look forward to updating all of you on our progress at our next investors call. Thank you.

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