VERU INC

Previous wording

As discussed in the section titled “Restatement” in Note 1 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, the financial information as of September 30, 2023 and for the three and six months ended March 31, 2023 included herein has been restated. The following discussion and analysis of our financial condition and results of operations incorporates the restated amounts.

Current wording

As discussed in the section titled“Restatement”* in Note 1 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, the financial information as of September* 30, 2023 and for the three and nine months ended June 30*, 2023 included herein has been restated. The following discussion and analysis of our financial condition and results of operations incorporates the restated amounts.*

Previous wording

We are a late clinical stage biopharmaceutical company focused on developing novel medicines for the treatment of metabolic diseases, oncology, and ARDS. Our drug development program includes two late-stage new chemical entities, enobosarm and sabizabulin. Enobosarm, a selective androgen receptor modulator (“SARM”), is being developed for two indications: (i) enobosarm initiallyas a treatment to augment fat loss and to prevent muscle loss in sarcopenic obese or overweight elderly patients receiving a GLP-1 RA who are at-risk for developing muscle atrophy and muscle weakness and (ii) subject to the availability of sufficient funding, enobosarm plus abemaciclibfor the treatment of androgen receptor positive (AR+), estrogen receptor positive (ER+) and human epidermal growth factor receptor 2 negative (HER2-) metastatic breast cancer in the 2 nd line setting. Sabizabulin, a microtubule disruptor, is being developed for the treatment of hospitalized patients with viral-induced ARDS. We do not intend to undertake further development of sabizabulin for the treatment of viral-induced ARDS until we obtain funding from government grants, pharmaceutical company partnerships, or other similar third-party external sources. We also have an FDA-approved commercial product, the FC2 Female Condom® (Internal Condom), for the dual protection against unplanned pregnancy and sexually transmitted infections.

Current wording

We are a late clinical stage biopharmaceutical company focused on developing novel medicines for the treatment of metabolic diseases, oncology, and viral-induced ARDS. Our drug development program includes two late-stage new chemical entities, enobosarm and sabizabulin. Enobosarm, a selective androgen receptor modulator (“SARM”), is being developed in two different programs: (i) obesity- enobosarm in combination with GLP-1 RA to augment fat loss, to prevent muscle loss, and maintain physical function for higher quality weight loss and (ii) breast cancer- enobosarm plus abemaciclib for the 2 nd line treatment of androgen receptor positive (AR+), estrogen receptor positive (ER+) and human epidermal growth factor receptor 2 negative (HER2-) metastatic breast cancer, subject to the availability of sufficient funding. Sabizabulin, a microtubule disruptor, is being developed for the treatment of hospitalized patients with viral-induced ARDS. We do not intend to undertake further development of sabizabulin for the treatment of viral-induced ARDS unless we obtain funding from government grants, pharmaceutical company partnerships, or other similar third-party external sources. We also have an FDA-approved commercial product, the FC2 Female Condom® (Internal Condom), for the dual protection against unplanned pregnancy and sexually transmitted infections.

Previous wording

Our metabolic drug pipeline is focused on the clinical development of enobosarm, an oral SARM, initially as a treatment to augment fat loss and to prevent muscle loss in sarcopenic obese or overweight elderly patients receiving a GLP-1 RA who are at-risk for developing muscle atrophy and muscle weakness.

Current wording

Our metabolic drug pipeline is focused on the clinical development of enobosarm, an oral SARM, initially as a treatment to augment fat loss and to prevent muscle loss in sarcopenic obese or overweight elderly patients receiving a GLP-1 RA who are at-risk for developing muscle weakness.

Previous wording

Overweight and obese patients treated with GLP-1 RA drugs have significant weight loss composed of reductions in both fat mass and lean body mass (muscle). Up to 20-50% of the total weight loss caused by GLP-1 RA treatment is attributable to muscle loss. According to the CDC, 41.5% of older adults are obese and could benefit from weight loss medication. Up to 34.4% of obese patients in the United States over the age of 60 have sarcopenic obesity. Sarcopenic obese patients are patients who have both obesity and age-related low muscle mass at the same time and are potentially at the greatest risk for developing critically low muscle mass when taking a currently approved GLP-1 RA drug. Patients with critically low muscle mass may experience muscle weakness leading to poor balance, decreased gait speed, mobility disability, falls, bone fractures, and increased mortality that may be accelerated or exacerbated by treatment with GLP-1 RA.

Current wording

Overweight and obese patients treated with GLP-1 RA drugs have significant nonselective tissue weight loss composed of loss of both fat mass and lean body mass (muscle). Up to 20-50% of the total weight loss caused by GLP-1 RA treatment is attributable to loss of lean mass. According to the CDC, 41.5% of older adults are obese and could benefit from weight loss medication. Up to 34.4% of people over the age of 60 with obesity in the United States have sarcopenic obesity. Patients who have sarcopenic obesity have both obesity and age-related low muscle mass at the same time and are potentially at the greatest risk for developing critically low muscle mass when taking a currently approved GLP-1 RA drug. Patients with critically low muscle mass may experience muscle weakness leading to poor balance, decreased gait speed, mobility disability, falls, pelvic and hip fractures, and increased mortality that may be accelerated or exacerbated by treatment with GLP-1 RA. While older adults are at higher risk for sarcopenia and sarcopenic obesity, in discussions with the FDA, Veru intends to ultimately seek an approval in the broadest population that could benefit in all ages rather than limiting the indication to patients over the age of 60 years as younger patients (including females of child-bearing potential) with obesity on GLP-1 receptor agonists could benefit from the potential muscle-preserving effects of enobosarm.

Previous wording

We believe there is an urgent unmet medical need for a drug when given in combination with a GLP-1 RA that could prevent the loss of muscle, while preferentially reducing fat in not only overweight or obese patients, but especially for sarcopenic obese or overweight elderly patients who are at-risk for developing muscle atrophy and muscle weakness leading to frailty. We believe that enobosarm, our novel small molecule, oral SARM, may potentially address this unmet medical need.

Current wording

We believe there is an urgent unmet medical need for a drug when given in combination with a GLP-1 RA that could prevent the loss of muscle, while preferentially reducing fat in not only all patients who are overweight or obese, but especially for elderly patients who have sarcopenic obesity who are at-risk for developing muscle weakness. We believe that enobosarm, our novel small molecule, oral SARM, may potentially address this unmet medical need.

Previous wording

Enobosarmhas been studied in five clinical studies involving 968 older men and postmenopausal women as well as older patients who have muscle wasting because of advanced cancer. Advanced cancer simulates a “starvation state” where there is significant loss or wasting of muscle like what is observed with GLP-1 RA treatment. These clinical trials include two Phase 2 clinical trials in 168 healthy older or sarcopenic subjects and one Phase 2b clinical trial and two Phase 3 clinical trials in 800 subjects who have muscle loss caused by cancer. We believe the totality of the clinical data from these five clinical trials provide strong clinical rationale for the co-administration of enobosarm and a GLP-1 RA in at-risk sarcopenic obese or overweight elderly patients as the combination has the potential to ameliorate the muscle wasting effects of currently approved GLP-1 RA therapies and also allow for preferential loss of fat mass. In addition, we believe there is also clinical rationale for the administration of enobosarm to “rescue” at-risk sarcopenic obese or overweight elderly patients who may be forced to discontinue treatment with a GLP-1 RA due to the muscle loss depleting their muscle mass to critically low amounts resulting in muscle weakness and physical function limitations. In one of the Phase 2 clinical trials, enobosarm was evaluated in 120 elderly men over 60 years old and postmenopausal women treated for 12 weeks, patients receiving 3mg dose of enobosarm (n=24) demonstrated a statistically significant (i) increase in total lean body mass (average increase of 1.25 kg (p = < 0.001)) and (ii) decrease in total fat mass (average decrease of 0.32 kg (p=0.049)). When measuring physical function by stair climb test, patients receiving 3mg dose of enobosarm in this trial also demonstrated statistically significant improvements compared to placebo (p=0.049).

Current wording

Enobosarm has been studied in five clinical studies involving 968 older men and postmenopausal women as well as older patients who may have muscle loss because of advanced cancer. Advanced cancer simulates a “loss of appetite state” where there is significant loss or wasting of muscle like what is observed with GLP-1 RA treatment. These clinical trials include two Phase 2 clinical trials in 168 healthy older or sarcopenic subjects and one Phase 2b clinical trial and two Phase 3 clinical trials in 800 subjects who have muscle loss caused by cancer. We believe the totality of the clinical data from these five clinical trials provide strong clinical rationale for the co-administration of enobosarm and a GLP-1 RA in at-risk sarcopenic obese or overweight elderly patients as the combination has the potential to ameliorate the muscle loss associated with the currently approved GLP-1 RA therapies and also augment the loss of fat mass. In one of the Phase 2 clinical trials, enobosarm was evaluated in 120 elderly men over 60 years old and postmenopausal women treated for 12 weeks, patients receiving 3mg dose of enobosarm (n=24) demonstrated a statistically significant (i) increase in total lean body mass (average increase of 1.25 kg (p = < 0.001)) and (ii) decrease in total fat mass (average decrease of 0.32 kg (p=0.049)). When measuring physical function by stair climb test, patients receiving 3mg dose of enobosarm in this trial also demonstrated statistically significant improvements in stair climb power compared to placebo (p=0.049).

Previous wording

Although these five clinical trials were not specifically conducted in an obese population, an ad hoc subset analysis was performed on obese patients, who had a BMI of 30 or greater and were 60 years of age or older, who were enrolled in the Phase 3 placebo-controlled 504 clinical study which evaluated enobosarm 3mg treatment in metastatic lung cancer patients on chemotherapy. Even though a small sample size of 29 subjects, notable differences consistent with an obesity drug that preserves muscle and decreases fat were observed. At 12 weeks, enobosarm 3mg treated subjects had 4.96% increase in total lean body mass compared to placebo and a 5.77 % reduction in fat mass compared to placebo. By 21 weeks, enobosarm 3mg treatment resulted in a 14.4% loss in total fat mass and a 4.51% loss of total DEXA body weight compared to placebo while maintaining total lean mass. It should be noted that these results were from the short-term treatment of enobosarm alone.

Current wording

Although these five clinical trials were not conducted specifically in an obese population, an ad hoc subset analysis was performed on obese patients who had a BMI of 30 or greater, were 60 years of age or older, and were enrolled in the Phase 3 placebo-controlled 504 clinical study which evaluated enobosarm 3mg treatment in metastatic lung cancer patients on chemotherapy. Even though a small sample size of 29 subjects is available for assessment, notable differences consistent with an obesity drug that preserves muscle and decreases fat were observed. At 12 weeks, enobosarm 3mg treated subjects had 4.96% increase in total lean body mass compared to placebo and a 5.77 % reduction in fat mass compared to placebo. By 21 weeks, enobosarm 3mg treatment resulted in a 14.4% loss in total fat mass and a 4.51% loss of total DEXA body weight compared to placebo while maintaining total lean mass. It should be noted that these results were from the short-term treatment (21 weeks) of enobosarm alone.

Previous wording

Although no preclinical studies or clinical trials evaluating the combination of enobosarm and a GLP-1 RA have been completed to date, we believe that the patient efficacy and safety data that were generated from these five enobosarm clinical trials in both elderly patients and in patients with a cancer induced starvation-like state provide strong clinical rationale that enobosarm may address this unmet medical need.

Current wording

Although these five clinical trials were previously conducted under investigational new drug applications not sponsored by Veru, Veru owns all this clinical data as part of our enobosarm exclusive global in-license agreement. Although no preclinical studies or clinical trials evaluating the combination of enobosarm and a GLP-1 RA have been completed to date, we believe that the patient efficacy and safety data that were generated from these five enobosarm clinical trials in both elderly patients and in patients with a cancer induced loss of appetite provide strong clinical rationale that enobosarm may address this unmet medical need.

Previous wording

We submitted an Investigational New Drug Application (IND) for enobosarm for a Phase 2b clinical study in January 2024. In February 2024, the Company received FDA clearance to initiate the Phase 2b, multicenter, double-blind, placebo-controlled, randomized, dose-finding clinical trial designed to evaluate the safety and efficacy of enobosarm 3mg, enobosarm 6mg, or placebo as a treatment to augment fat loss and to prevent muscle loss in approximately 90 sarcopenic obese or overweight elderly patients receiving a GLP-1 RA who are at-risk for developing muscle atrophy and muscle weakness. The primary endpoint is total lean body mass, and the key secondary endpoint is total body fat mass at 16 weeks. In April 2024 the Company announced that it had enrolled its first patients in the Phase 2b clinical study with the topline clinical results from the trial expected at the end of the fourth calendar quarter of 2024. The purpose of the Phase 2b clinical trial is to select the optimal dose of enobosarm in combination with a GLP-1 RA that best preserves muscle and reduces fat after 16 weeks of treatment to advance into a Phase 3 obesity or overweight clinical trial.

Current wording

We submitted an Investigational New Drug Application (IND) for enobosarm for a Phase 2b clinical study in January 2024. In February 2024, the Company received FDA clearance to initiate the Phase 2b, multicenter, double-blind, placebo-controlled, randomized, dose-finding QUALITY clinical trial designed to evaluate the safety and efficacy of enobosarm 3mg, enobosarm 6mg, or placebo as a treatment to augment fat loss and to prevent muscle loss in approximately 150 sarcopenic obese or overweight older (>60 years of age) patients receiving semaglutide (Wegovy®). The primary endpoint is total lean body mass, and the key secondary endpoints are change from baseline in total body fat mass, total body weight, insulin resistance, and physical function as measured by stair climb test at 16 weeks. In April 2024 the Company announced that it had enrolled its first patients in the Phase 2b QUALITY clinical study. The Phase 2b QUALITY study is actively enrolling patients from up to 15 clinical sites with the topline clinical results from the trial expected at the end of the fourth calendar quarter of 2024. The purpose of the Phase 2b QUALITY clinical trial is to select the optimal dose of enobosarm in combination with semaglutide (Wegovy®) that best preserves muscle and reduces fat after 16 weeks of treatment to advance into a Phase 3 obesity clinical trial.

Previous wording

After completing the efficacy dose-finding portion of the Phase 2b clinical trial, it is expected that participants will then continue into a Phase 2b extension trial where all patients will stop treatment with the GLP-1 RA drug, but continue taking placebo, 3mg of enobosarm, or 6mg of enobosarm in a double-blind fashion for 12 weeks to determine the ability of enobosarm to maintain muscle and prevent fat and weight rebound after stopping a GLP-1 RA. The results of the separate Phase 2b extension clinical study are expected in the second quarter of calendar year 2025.

Current wording

After completing the efficacy dose-finding portion of the Phase 2b QUALITY clinical trial, it is expected that participants will then continue in double-blind fashion into a Phase 2b extension trial where all patients will stop treatment with semaglutide (Wegovy®), but will continue taking placebo, 3mg of enobosarm, or 6mg of enobosarm for 12 weeks. The Phase 2b extension clinical trial will evaluate whether enobosarm can maintain muscle and prevent the fat and weight regain that generally occurs after discontinuing a GLP-1 RA. The topline results of the separate blinded Phase 2b extension clinical study are expected in the second quarter of calendar 2025.

Previous wording

Enobosarm is a new class of endocrine therapy for advanced breast cancer. Enobosarm is an oral, new chemical entity, selective androgen receptor modulator designed to activate the AR in AR+ ER+ HER2- metastatic breast cancer and thereby suppress tumor growth without the unwanted masculinizing side effects. Enobosarm has extensive nonclinical and clinical experience having been evaluated in 27 separate clinical studies in approximately 1,580 subjects dosed, including three Phase 2 clinical trials in advanced breast cancer involving more than 191 patients. In one of the Phase 2 clinical trials conducted in women with AR+ ER+ HER2- metastatic breast cancer, enobosarm demonstrated significant antitumor efficacy in heavily pretreated cohorts that failed estrogen blocking agents, chemotherapy and/or CDK 4/6 inhibitors and was well tolerated with a favorable safety profile.

Current wording

Enobosarm is a new class of endocrine therapy for advanced breast cancer. Enobosarm is an oral, new chemical entity, selective androgen receptor modulator designed to activate the AR in AR+ ER+ HER2- metastatic breast cancer and thereby suppress tumor growth without the unwanted masculinizing side effects. Enobosarm has extensive nonclinical and clinical experience having been evaluated in 27 separate clinical studies in 1,581 subjects dosed, including three Phase 2 clinical trials in advanced breast cancer involving more than 191 patients. In one of the Phase 2 clinical trials conducted in women with AR+ ER+ HER2- metastatic breast cancer, enobosarm demonstrated significant antitumor efficacy in heavily pretreated cohorts that failed estrogen blocking agents, chemotherapy and/or CDK 4/6 inhibitors and was well tolerated with a favorable safety profile.

Previous wording

On March 30, 2023 and November 3, 2023, we met with the FDA to discuss the design of our Phase 3 clinical trial in patients with AR+ ER+ HER2- metastatic breast cancer who have tumor progression while receiving palbociclib (a CDK 4/6 inhibitor) plus an estrogen blocking agent (nonsteroidal aromatase inhibitor or selective estrogen receptor degrader). The design of the Phase 3 clinical trial was amended following our November 3, 2023 meeting with the FDA to implement the recommendations that were provided by the FDA.

Current wording

On March 30, 2023 and November 3, 2023, we met with the FDA to discuss the design of our Phase 3 clinical trial in patients with AR+ ER+ HER2- metastatic breast cancer who have tumor progression while receiving palbociclib (a CDK 4/6 inhibitor) plus an estrogen blocking agent (nonsteroidal aromatase inhibitor or selective estrogen receptor degrader). The design of the Phase 3 clinical trial was amended following our November 3, 2023 meeting with the FDA to implement the recommendations that were provided by the FDA. The primary endpoint for the Stage 1 portion of the Phase 3 clinical trial is objective tumor response rates (“ORR”).

Previous wording

Subject to the availability of sufficient funding, we expect to have topline data from Stage 1b of our Phase 3 ENABLAR-2 clinical trial by early 2026. If enobosarm monotherapy or abemaciclib + enobosarm combination therapy compared to estrogen blocking agent (active control) demonstrates significant improvement in ORR, which is considered a surrogate endpoint for clinical benefit, then we may meet with the FDA to consider an accelerated approval regulatory pathway based on the clinical data from the Stage 1b portion of the Phase 3 clinical trial. Granting accelerated approval for investigational products is within the discretion of the FDA. Accordingly, even if we believe that one of our product candidates meets the criteria for this approval pathway, the FDA may disagree and instead determine not to make such designation. Further, even if we receive a designation, such designation for a product candidate may not result in a faster development or regulatory review or approval process compared to products considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of our product candidates qualifies for these designations, the FDA may, among other things, later decide that the product candidates no longer meet the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. There can be no assurances that the FDA will accept our proposed trial design, that we will be able to cost-effectively continue development of enobosarm, or that enobosarm will receive FDA approval or be commercialized, for this application.

Current wording

Subject to the availability of sufficient funding, we expect to have topline data from Stage 1b of our Phase 3 ENABLAR-2 clinical trial by early 2026. If enobosarm + abemaciclib combination therapy compared to estrogen blocking agent (active control) demonstrates significant improvement in ORR, which is considered a surrogate endpoint for clinical benefit, then we may meet with the FDA to consider an accelerated approval regulatory pathway based on the clinical data from the Stage 1b portion of the Phase 3 clinical trial. Granting accelerated approval for investigational products is within the discretion of the FDA. Accordingly, even if we believe that one of our product candidates meets the criteria for this approval pathway, the FDA may disagree and instead determine not to make such designation. Further, even if we receive a designation, such designation for a product candidate may not result in a faster development or regulatory review or approval process compared to products considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of our product candidates qualifies for these designations, the FDA may, among other things, later decide that the product candidates no longer meet the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. There can be no assurances that the FDA will accept our proposed trial design, that we will be able to cost-effectively continue development of enobosarm, or that enobosarm will receive FDA approval or be commercialized, for this application.

Previous wording

However, we currently plan to prioritize the use of our internal cash and the net proceeds of any future financings for the development of enobosarm, with a primary near-term focus on funding the proposed Phase 2b clinical trial to evaluate the safety and efficacy of enobosarm as a treatment to augment fat loss and to prevent muscle loss in sarcopenic obese or overweight elderly patients receiving a GLP-1 RA who are at-risk for developing muscle atrophy and muscle weakness, and to seek external funding through government grants, pharmaceutical company partnerships, or similar sources to advance the development of sabizabulin as a treatment for viral-induced ARDS. Without such external funding, we do not plan to advance the Phase 3 development of sabizabulin as a treatment for viral-induced ARDS.

Current wording

However, we currently plan to prioritize the use of our internal cash and the net proceeds of any future financings for the development of enobosarm, with a primary near-term focus on funding the proposed Phase 2b clinical trial to evaluate the safety and efficacy of enobosarm as a treatment for obesity, and to seek external funding through government grants, pharmaceutical company partnerships, or similar sources to advance the development of sabizabulin as a treatment for viral-induced ARDS. Without such external funding, we do not plan to advance the Phase 3 development of sabizabulin as a treatment for viral-induced ARDS.

Previous wording

We expect revenue from the U.S. prescription channel to demonstrate growth both from our dedicated FC2 telehealth portal and from the addition of new commercial distribution strategies. We intend to continue leveraging relationships with entities in the U.S. public health sector such as state departments of health and 501(c)(3) organizations.

Current wording

We expect revenue from the U.S. prescription channel to demonstrate growth from our dedicated FC2 telehealth portal as we continue to refine the infrastructure of the portal. We intend to continue leveraging relationships with entities in the U.S. public health sector such as state departments of health and 501(c)(3) organizations.

Previous wording

In the global public health sector outside the U.S., we market FC2 to entities, including ministries of health, government health agencies, U.N. agencies, nonprofit organizations and commercial partners, that work to support and improve the lives, health and well-being of women around the world. After the COVID-19 pandemic, there has been an increase in interest to resume distribution of FC2 in the global public sector. We are currently supplying a large multi-year South African tender for female condoms, which is expected to continue until 2025 and have been successful in securing supply under a new tender in Brazil, which we expect to start supplying in the current fiscal year.

Current wording

In the global public health sector outside the U.S., we market FC2 to entities, including ministries of health, government health agencies, U.N. agencies, nonprofit organizations and commercial partners, that work to support and improve the lives, health and well-being of women around the world. We are currently supplying a large multi-year South African tender for female condoms, which is expected to continue until 2025 and have been successful in securing supply under a new tender in Brazil, which we expect to start supplying in the current fiscal year.

Previous wording

On April 24, 2024, the Company entered into a Forbearance Agreement (the "Forbearance Agreement") with BWV, relating to certain defaults under the BWVPromissory Notes. Pursuant to the Forbearance Agreement, (a) BWV agreed to make a payment of $50,000 of the principal payable under the April 2024 Promissory Note not later than April 29, 2024, which was paid on April 25, 2024, and (b) the Company agreed, subject to the terms and conditions set forth in the Forbearance Agreement, to forbear from exercising its rights and remedies on account of the failure by BWV to pay the amounts due under the April 2024 Promissory Note on the due date of April 19, 2024, and on account of any failure by BWV to make any mandatory repayment under the BWV Promissory Notes that may have become due or may become due in connection with certain transactions relating to BWV’s acquisition of Proteomedix AG, in each case for a period (the “Forbearance Period”) commencing on April 24, 2024 and ending on the earlier of (a) March 31, 2025 and (b) the occurrence of an Event of Default (as defined in the Forbearance Agreement). The Company also agreed that during the Forbearance Period the default provision in the BWV Promissory Notes relating to insolvency of BWV will not apply.

Current wording

On April 24, 2024, the Company entered into a Forbearance Agreement (the "Forbearance Agreement") with BWV, relating to certain defaults under the BWV Promissory Notes. Pursuant to the Forbearance Agreement, (a) BWV agreed to make a payment of $50,000 of the principal payable under the April 2024 Promissory Note not later than April 29, 2024, which was paid on April 25, 2024, and (b) the Company agreed, subject to the terms and conditions set forth in the Forbearance Agreement, to forbear from exercising its rights and remedies on account of the failure by BWV to pay the amounts due under the April 2024 Promissory Note on the due date of April 19, 2024, and on account of any failure by BWV to make any mandatory repayment under the BWV Promissory Notes that may have become due or may become due in connection with certain transactions relating to BWV’s acquisition of Proteomedix AG, in each case for a period (the “Forbearance Period”) commencing on April 24, 2024 and ending on the earlier of (a) March 31, 2025 and (b) the occurrence of an Event of Default (as defined in the Forbearance Agreement). The Company also agreed that during the Forbearance Period the default provision in the BWV Promissory Notes relating to insolvency of BWV will not apply.

Previous wording

BWV agreed in the Forbearance Agreement to make the following required payments during the Forbearance Period towards the remaining principal balance of the April 2024 Promissory Note: (1)monthly payments equal to 15% of cash receipts of BWV or its subsidiaries from certain sale or licensing revenues or payments; and (2) payment of 10% of the net proceeds from certain financing or other transactions outside the ordinary course of business completed by BWV or any of its subsidiaries during the Forbearance Period. The remaining balance of the April 2024 Promissory Note will be due at the end of the Forbearance Period.

Current wording

BWV agreed in the Forbearance Agreement to make the following required payments to Veru during the Forbearance Period towards the remaining principal balance of the April 2024 Promissory Note: (1) monthly payments equal to 15% of cash receipts of BWV or its subsidiaries from certain sale or licensing revenues or payments; and (2) payment of 10% of the net proceeds from certain financing or other transactions outside the ordinary course of business completed by BWV or any of its subsidiaries during the Forbearance Period. The remaining balance of the April 2024 Promissory Note will be due at the end of the Forbearance Period.

Previous wording

We have developed our own telehealth portal to grow revenues from the U.S. prescription channel to compensate for lost revenues from our former telehealth customers that are no longer in business. The Company is exploring additional commercial distribution strategies and expects to continue generating revenue from global public health sector agencies who purchase and distribute FC2 for HIV/AIDS prevention and family planning. The Company has experienced revenue growth from the U.S. public sector through its relationship with distributors and will continue to work with these distributors to identify future growth opportunities.

Current wording

We have developed and continue to refine our own telehealth portal to grow revenues from the U.S. prescription channel. The Company is exploring additional commercial distribution strategies and expects to continue generating revenue from global public health sector agencies who purchase and distribute FC2 for HIV/AIDS prevention and family planning. The Company has experienced revenue growth from the U.S. and global public sector through its relationship with distributors and will continue to work with these distributors to identify future growth opportunities.

Previous wording

Conducting research and development is central to our obesity and overweight, oncology, and infectious disease programs. The Company has several products under development and management routinely evaluates each product in its portfolio of products. Advancement is limited to available working capital and management’s understanding of the prospects for each product. If future prospects do not meet management’s strategic goals, advancement may be discontinued. We have invested and expect to continue to invest significant time and capital in our research and development operations. Our research and development expenses were $3.0 million and $17.9 million for the three months ended March 31, 2024 and 2023, respectively, and $4.6 million and $38.5 million for the six months ended March 31, 2024 and 2023, respectively. The decrease in expenses in the three and six months ended March 31, 2024 is due to the termination of various trials that had been ongoing during the three and six months ended March 31, 2023 as a result of the Company’s updated strategy to refocus development efforts on those drug candidates which it believes have the best opportunity to lead to long-term success and shareholder value creation. We expect to continue investing significant resources in research and development in the future due to advancement of our drug candidates.

Current wording

Conducting research and development is central to our metabolic diseases, oncology, and infectious disease programs. The Company has several products under development and management routinely evaluates each product in its portfolio of products. Advancement is limited to available working capital and management’s understanding of the prospects for each product. If future prospects do not meet management’s strategic goals, advancement may be discontinued. We have invested and expect to continue to invest significant time and capital in our research and development operations. Our research and development expenses were $4.9 million and $8.8 million for the three months ended June 30, 2024 and 2023, respectively, and $9.5 million and $47.3 million for the nine months ended June 30, 2024 and 2023, respectively. The decrease in expenses in the three and nine months ended June 30, 2024 is due to the termination of various trials that had been ongoing during the three and nine months ended June 30, 2023 as a result of the Company’s updated strategy to refocus development efforts on those drug candidates which it believes have the best opportunity to lead to long-term success and shareholder value creation. We expect to continue investing significant resources in research and development in the future due to advancement of our drug candidates.

Previous wording

The Company generated net revenues of $4.1 million and net loss of $10.0 million, or $(0.07) per basic and diluted common share, for the three months ended March 31, 2024, compared to net revenues of $6.6 million and net loss of $33.8 million, or $(0.42) per basic and diluted common share, for the three months ended March 31, 2023. Net revenues decreased 37% compared to the prior period.

Current wording

The Company generated net revenues of $4.0 million and net loss of $11.0 million, or $(0.07) per basic and diluted common share, for the three months ended June 30, 2024, compared to net revenues of $3.3 million and net loss of $12.5 million, or $(0.14) per basic and diluted common share, for the three months ended June 30, 2023. Net revenues increased 18% compared to the prior period.

Previous wording

Substantially all of the Company’s net revenues for the six months ended March 31, 2024 and 2023 were derived from sales of FC2 in the U.S. prescription channel and global public health sector. In the U.S. prescription channel, the Company’s customers include primarily telehealth providers. In the global public health sector, the Company’s customers are primarily health care distributors, large global agencies, non-government organizations, ministries of health and other governmental agencies that purchase and distribute FC2 for use in HIV/AIDS prevention and family planning programs.

Current wording

Substantially all of the Company’s net revenues for the three months ended June 30, 2024 and 2023 were derived from sales of FC2 in the U.S. prescription channel and global public health sector. In the U.S. prescription channel, the Company’s customers include primarily telepharmacy providers that are fulfilling prescriptions through our telehealth portal and wholesale distributors. In the global public health sector, the Company’s customers are primarily health care distributors, large global agencies, non-government organizations, ministries of health and other governmental agencies that purchase and distribute FC2 for use in HIV/AIDS prevention and family planning programs.

Previous wording

For the six months ended March 31, 2024 and 2023, the Company had net revenues from the U.S. prescription channel of $1.2 million and $4.3 million, respectively, and net revenues from the global public health sector of $5.0 million and $4.8 million, respectively. There was a change in the sales mix with the U.S. prescription channel representing 20% of total FC2 net revenues in the current year period compared to 47% in the prior year period and the global public health sector representing 80% of total FC2 net revenues in the current year period compared to 53% in the prior year period. Global public health sector sales are at a lower sales price per unit. The Company experienced a decrease compared to the prior year period of 71% in FC2 net revenues in the U.S. prescription channel and an increase compared to the prior year period of 6% in FC2 net revenues in the global public health sector. The decrease in FC2 net revenues in the U.S. prescription channel is due to sales in the prior year to The Pill Club of $3.9 million, which was 91% of net revenues from the U.S. prescription channel in the prior year. The Pill Club filed for Chapter 11 bankruptcy in April 2023. We recorded a provision for credit losses during the six months ended March 31, 2023, which offset the net revenues from The Pill Club during such period.

Current wording

For the three months ended June 30, 2024 and 2023, the Company had net revenues from the U.S. prescription channel of $0.6 million and $0.9 million, respectively, and net revenues from the global public health sector of $3.4 million and $2.5 million, respectively. There was a change in the sales mix with the U.S. prescription channel representing 14% of total FC2 net revenues in the current year period compared to 26% in the prior year period and the global public health sector representing 86% of total FC2 net revenues in the current year period compared to 74% in the prior year period. Global public health sector sales are at a lower sales price per unit. The Company experienced a decrease compared to the prior year period of 36% in FC2 net revenues in the U.S. prescription channel and an increase compared to the prior year period of 37% in FC2 net revenues in the global public health sector. The decrease in FC2 net revenues in the U.S. prescription channel is due to a decrease in sales volume.

Previous wording

Cost of sales increased to $3.5 million in the three months ended March 31, 2024 from $2.5 million in the three months ended March 31, 2023 primarily due to an increase in unit sales and an increase in the provision for obsolete inventory of $0.6 million related to inventory in the U.S. prescription channel, partially offset by a decrease in cost per unit sold primarily attributed to decreased overhead costs.

Current wording

Cost of sales increased to $2.6 million in the three months ended June 30, 2024 from $2.1 million in the three months ended June 30, 2023 primarily due to an increase in unit sales and an increase in the provision for obsolete inventory of $0.5 million related to inventory in the U.S. prescription channel, partially offset by a decrease in cost per unit sold primarily attributed to decreased overhead costs.

Previous wording

Gross profit decreased to $1.8 million in the six months ended March 31, 2024 from $4.8 million in the six months ended March 31, 2023. Gross profit margin for the fiscal 2024 period was 29% of net revenues, compared to 53% of net revenues for the fiscal 2023 period. The decrease in the gross profit and gross profit margin is primarily due to the change in our sales mix, which included a decrease in FC2 net revenues in the U.S. prescription channel due to The Pill Club, which have higher profit margins and due to the increase in cost of sales, as discussed above.

Current wording

Gross profit increased to $1.3 million in the three months ended June 30, 2024 from $1.2 million in the three months ended June 30, 2023. Gross profit margin for the fiscal 2024 period was 34% of net revenues, compared to 37% of net revenues for the fiscal 2023 period. The decrease in the gross profit and gross profit margin is primarily due to the change in our sales mix, which included a decrease in FC2 net revenues in the U.S. prescription channel, which have higher profit margins.

Previous wording

Research and development expenses decreased to $4.6 million in the six months ended March 31, 2024 from $38.5 million in the same period in fiscal 2023. The decrease is due to the Company’s updated strategy to refocus development efforts on those drug candidates which it believes have the best opportunity to lead to long-term success and shareholder value creation. The Company did not have significant research and development activity during the six months ended March 31, 2024 as it was preparing to submit an IND for enobosarm for a Phase 2b clinical study for weight loss and the development of its other programs has been paused. The Company incurred $22.6 million of expenses in the prior year period related to sabizabulin for COVID-19 and the Company’s related emergency use authorization application. Additionally, personnel costs included in research and development expenses decreased by $2.6 million due to a reduction in headcount.

Current wording

Research and development expenses decreased to $4.9 million in the three months ended June 30, 2024 from $8.8 million in the same period in fiscal 2023. The decrease is due to the Company’s updated strategy to refocus development efforts on those drug candidates which it believes have the best opportunity to lead to long-term success and shareholder value creation. The Company initiated its Phase 2b clinical study for enobosarm as a treatment to augment fat loss and to prevent muscle loss during the quarter ended June 30, 2024. The Company incurred $3.8 million of expenses in the prior year period as it wound down activities related to sabizabulin for COVID-19 subsequent to the FDA's declination decision on the Company's emergency use authorization application and incurred $2.4 million of expenses in the prior year related to its other programs that were canceled as part of its updated strategy.

Previous wording

Selling, general and administrative expenses were $15.9 million in the six months ended March 31, 2024, which is decreased from $30.4 million in the six months ended March 31, 2023. The decrease is due primarily to commercialization costs incurred in the prior year of $12.1 million related to the preparation for the potential launch of sabizabulin for COVID-19, which did not occur. Additionally, administrative personnel costs decreased by $0.7 million due to a reduction in headcount.

Current wording

Selling, general and administrative expenses were $7.5 million in the three months ended June 30, 2024, which is a decrease from $10.9 million in the three months ended June 30, 2023. The decrease is due primarily to a decrease in share based compensation expense of $1.2 million due to a reduction in headcount and reduction in the fair value of the stock options, selling costs of $0.7 million related to ENTADFI, which was sold in the prior year, and a decrease in commercialization costs incurred in the prior year of $0.8 million related to the preparation for the potential launch of sabizabulin for COVID-19, which did not occur.

Previous wording

The Company recorded a gain on sale of ENTADFI assets of $0.9 million in the six months ended March 31, 2024, related to the receipt of the shares of BWV Preferred Stock. Refer to Note 15 to the financial statements included in this report for additional information.

Current wording

The Company recorded a gain on sale of ENTADFI assets of $110,000 in the three months ended June 30, 2024, a decrease from the gain of $4.7 million in the three months ended June 30, 2023. The Company recognizes a gain on sale of ENTADFI assets as nonrefundable consideration is received. Refer to Note 15 to the financial statements included in this report for additional information.

Previous wording

Interest expense, which is related to accretion of the liability for the Residual Royalty Agreement, was $0.1 million in the three months ended March 31, 2024, compared with $0.7 million in the three months ended March 31, 2023. The decrease relates to a decrease in actual and projected FC2 sales.

Current wording

Interest expense, which is related to accretion of the liability for the Residual Royalty Agreement, was $0.1 million in the three months ended June 30, 2024, compared with $0.6 million in the three months ended June 30, 2023. The decrease relates to a decrease in actual and projected FC2 sales.

Previous wording

The gain associated with the change in fair value of the embedded derivative related to the Residual Royalty Agreement was $21,000 in the three months ended March 31, 2024, compared to $1.2 million in the three months ended March 31, 2023. The liability associated with embedded derivative represents the fair value of the change of control provisions in the Residual Royalty Agreement. See Note 3 and Note 8 to the financial statements included in this reportfor additional information.

Current wording

The gain associated with the change in fair value of the embedded derivative related to the Residual Royalty Agreement was $83,000 in the three months ended June 30, 2024, compared to a gain of $1.8 million in the three months ended June 30, 2023. The liability associated with embedded derivative represents the fair value of the change of control provisions in the Residual Royalty Agreement. See Note 3 and Note 8 to the financial statements included in this report for additional information.

Previous wording

The loss associated with the change in fair value of equity securities for the six months ended March 31, 2024 was $0.6 million. This is due to the change in fair value of the shares of BWV Preferred Stock, primarily driven by an increase in the probability of dissolution of BWV. See Note 3 to the financial statements included in this report for additional information.

Current wording

The loss associated with the change in fair value of equity securities for the three months ended June 30, 2024 was $0.1 million. This is due to the change in fair value of the shares of BWV Preferred Stock, primarily driven by an increase in the probability of dissolution used in the fair value calculation. See Note 3 to the financial statements included in this report for additional information.

Previous wording

Income tax expense in the three months ended March 31, 2024 was $182,000, compared to income tax benefit of $67,000 in the three months ended March 31, 2023. The income tax expense is primarily due to an increase in taxable income during the period for the Company’s subsidiary in the U.K. The U.S. continues to have a full valuation allowance on its deferred tax assets; therefore, activity in the U.S. has no effect on income tax expense or benefit.

Current wording

Income tax expense in the three months ended June 30, 2024 was $162,000, compared to income tax expense of $58,000 in the three months ended June 30, 2023. The income tax expense is primarily due to an increase in taxable income during the period for the Company’s subsidiary in the U.K. The U.S. continues to have a full valuation allowance on its deferred tax assets; therefore, activity in the U.S. has no effect on income tax expense or benefit.

Previous wording

The Company generated net revenues of $6.3 million and net loss of $18.3 million, or $(0.15) per basic and diluted common share, for the six months ended March 31, 2024, compared to net revenues of $9.1 million and net loss of $72.5 million, or $(0.90) per basic and diluted common share, for the six months ended March 31, 2023. Net revenues decreased 31% compared to the prior period.

Current wording

The Company generated net revenues of $10.2 million and net loss of $29.3 million, or $(0.22) per basic and diluted common share, for the nine months ended June 30, 2024, compared to net revenues of $12.4 million and net loss of $85.0 million, or $(1.02) per basic and diluted common share, for the nine months ended June 30, 2023. Net revenues decreased 18% compared to the prior period.

Previous wording

Substantially all of the Company’s net revenues for the three months ended March 31, 2024 and 2023 were derived from sales of FC2 in the U.S. prescription channel and global public health sector. In the U.S. prescription channel, the Company’s customers include primarily telehealth providers. In the global public health sector, the Company’s customers are primarily health care distributors, large global agencies, non-government organizations, ministries of health and other governmental agencies that purchase and distribute FC2 for use in HIV/AIDS prevention and family planning programs.

Current wording

Substantially all of the Company’s net revenues for the nine months ended June 30, 2024 and 2023 were derived from sales of FC2 in the U.S. prescription channel and global public health sector. In the U.S. prescription channel, the Company’s customers include primarily telehealth providers. In the global public health sector, the Company’s customers are primarily health care distributors, large global agencies, non-government organizations, ministries of health and other governmental agencies that purchase and distribute FC2 for use in HIV/AIDS prevention and family planning programs.

Previous wording

For the three months ended March 31, 2024 and 2023, the Company had net revenues from the U.S. prescription channel of $0.6 million and $4.1 million, respectively, and net revenues from the global public health sector of $3.5 million and $2.4 million, respectively. There was a change in the sales mix with the U.S. prescription channel representing 14% of total FC2 net revenues in the current year period compared to 63% in the prior year period and the global public health sector representing 86% of total FC2 net revenues in the current year period compared to 37% in the prior year period. Global public health sector sales are at a lower sales price per unit. The Company experienced a decrease compared to the prior year period of 86% in FC2 net revenues in the U.S. prescription channel and an increase compared to the prior year period of 45% in FC2 net revenues in the global public health sector. The decrease in FC2 net revenues in the U.S. prescription channel is due to sales in the prior year to The Pill Club of $3.9 million, which was 95% of net revenues from the U.S. prescription channel in the prior year. The Pill Club filed for Chapter 11 bankruptcy in April 2023. We recorded a provision for credit losses during the three months ended March 31, 2023, which offset the net revenues from The Pill Club during such period.

Current wording

For the nine months ended June 30, 2024 and 2023, the Company had net revenues from the U.S. prescription channel of $1.8 million and $5.2 million, respectively, and net revenues from the global public health sector of $8.4 million and $7.2 million, respectively. There was a change in the sales mix with the U.S. prescription channel representing 17% of total FC2 net revenues in the current year period compared to 42% in the prior year period and the global public health sector representing 83% of total FC2 net revenues in the current year period compared to 58% in the prior year period. Global public health sector sales are at a lower sales price per unit. The Company experienced a decrease compared to the prior year period of 66% in FC2 net revenues in the U.S. prescription channel and an increase compared to the prior year period of 17% in FC2 net revenues in the global public health sector. The decrease in FC2 net revenues in the U.S. prescription channel is due to sales in the prior year to The Pill Club of $3.9 million, which was 76% of net revenues from the U.S. prescription channel in the prior year. The Pill Club filed for Chapter 11 bankruptcy in April 2023. We recorded a provision for credit losses of $3.9 million during the nine months ended June 30, 2023, which offset the net revenues from The Pill Club during such period.

Previous wording

Cost of sales increased to $4.4 million in the six months ended March 31, 2024 from $4.3 million in the six months ended March 31, 2023 primarilydue to an increase in the provision for obsolete inventory of $0.6 million related to inventory in the U.S. prescription channel, partially offset by a decrease in cost per unit sold primarily attributed to decreased overhead costs.

Current wording

Cost of sales increased to $7.1 million in the nine months ended June 30, 2024 from $6.4 million in the nine months ended June 30, 2023 primarily due to an increase in the provision for obsolete inventory of $1.2 million related to inventory in the U.S. prescription channel, partially offset by a decrease in cost per unit sold primarily attributed to decreased overhead costs.

Previous wording

Gross profit decreased to $0.7 million in the three months ended March 31, 2024 from $4.1 million in the three months ended March 31, 2023. Gross profit margin for the fiscal 2024 period was 16% of net revenues, compared to 62% of net revenues for the fiscal 2023 period. The decrease in the gross profit and gross profit margin is primarily due to the change in our sales mix, which included a decrease in FC2 net revenues in the U.S. prescription channel due to The Pill Club, which have higher profit margins and due to the increase in cost of sales, as discussed above.

Current wording

Gross profit decreased to $3.2 million in the nine months ended June 30, 2024 from $6.0 million in the nine months ended June 30, 2023. Gross profit margin for the fiscal 2024 period was 31% of net revenues, compared to 48% of net revenues for the fiscal 2023 period. The decrease in the gross profit and gross profit margin is primarily due to the change in our sales mix, which included a decrease in FC2 net revenues in the U.S. prescription channel due to The Pill Club, which have higher profit margins.

Previous wording

Research and development expenses decreased to $3.0 million in the three months ended March 31, 2024 from $17.9 million in the same period in fiscal 2023. The decrease is due to the Company’s updated strategy to refocus development efforts on those drug candidates which it believes have the best opportunity to lead to long-term success and shareholder value creation. The Company did not have significant research and development activity during the three months ended March 31, 2024 as it was preparing to submit an IND for enobosarm for a Phase 2b clinical study for weight loss and the development of its other programs has been paused. The Company incurred $9.7 million of expenses in the prior year period related to sabizabulin for COVID-19 and the Company’s related emergency use authorization application. Additionally, personnel costs included in research and development expenses decreased by $1.1 million due to a reduction in headcount.

Current wording

Research and development expenses decreased to $9.5 million in the nine months ended June 30, 2024 from $47.3 million in the same period in fiscal 2023. The decrease is due to the Company’s updated strategy to refocus development efforts on those drug candidates which it believes have the best opportunity to lead to long-term success and shareholder value creation. The Company had reduced research and development activity during the nine months ended June 30, 2024 due to a pause in the development of its drug programs as the Company was preparing to submit an IND for enobosarm for a Phase 2b clinical study for weight loss, which was initiated during the quarter ended June 30, 2024. The Company incurred $26.4 million of expenses in the prior year period related to sabizabulin for COVID-19 and the Company’s related emergency use authorization application. Additionally, personnel costs included in research and development expenses decreased by $2.7 million due to a reduction in headcount.

Previous wording

Selling, general and administrative expenses were $7.6 million in the three months ended March 31, 2024, which is decreased from $12.8 million in the three months ended March 31, 2023. The decrease is due primarily to commercialization costs incurred in the prior year of $3.7 million related to the preparation for the potential launch of sabizabulin for COVID-19, which did not occur. Additionally, administrative personnel costs decreased by $0.8 million due to a reduction in headcount.

Current wording

Selling, general and administrative expenses were $23.4 million in the nine months ended June 30, 2024, which is a decrease from $41.3 million in the nine months ended June 30, 2023. The decrease is due primarily to commercialization costs incurred in the prior year of $12.9 million related to the preparation for the potential launch of sabizabulin for COVID-19, which did not occur; administrative personnel costs, which decreased by $1.2 million due to a reduction in headcount; and the Company incurred selling costs of $1.2 million in the prior year related to ENTADFI, which was sold in April 2023.

Previous wording

Interest expense, which is related to accretion of the liability for the Residual Royalty Agreement, was $0.3 million in the six months ended March 31, 2024, compared with $1.6 million in the six months ended March 31, 2023. The decrease relates to a decrease in actual and projected FC2 sales.

Current wording

Interest expense, which is related to accretion of the liability for the Residual Royalty Agreement, was $0.4 million in the nine months ended June 30, 2024, compared with $2.2 million in the nine months ended June 30, 2023. The decrease relates to a decrease in actual and projected FC2 sales.