Veru Inc (VERU) Q2 2024 Earnings Call Transcript Highlights: Strategic Focus and Financial Recovery
Net Revenues: $4.1 million for Q2 FY2024, down from $6.6 million in the same quarter the previous year.
Net Income: Net loss of $10 million for Q2 FY2024, compared to a net loss of $33.8 million in Q2 FY2023.
Earnings Per Share: Loss of $0.07 per diluted common share for Q2 FY2024, improved from a loss of $0.42 per diluted common share in Q2 FY2023.
Gross Margin: 16% for Q2 FY2024, a decrease from 62% in Q2 FY2023.
Operating Expenses: Decreased to $10.6 million in Q2 FY2024 from $38.5 million in Q2 FY2023.
Research and Development Costs: Reduced to $3 million in Q2 FY2024 from $17.9 million in Q2 FY2023.
Cash Balance: $34.7 million as of March 31, 2024.
Net Working Capital: $35.6 million as of March 31, 2024.
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Veru Inc (NASDAQ:VERU) has initiated a Phase 2b clinical study for enobosarm in combination with semaglutide, targeting high-quality weight loss by preserving muscle mass while reducing fat.
The company reported a substantial reduction in net loss for the quarter, decreasing from $33.8 million in the previous year to $10 million, indicating improved financial management.
Veru Inc (NASDAQ:VERU) has a strong focus on developing enobosarm for weight loss, which is seen as a potential multi-billion dollar opportunity in the global obesity and overweight drug market.
The company has sufficient financial resources on hand, including recent financing net proceeds of $35.2 million, to complete ongoing clinical trials.
Veru Inc (NASDAQ:VERU) has a large safety database for enobosarm, involving 27 clinical trials and 1,581 participants, showing it is generally well tolerated without significant side effects.
Negative Points
Veru Inc (NASDAQ:VERU) experienced a decrease in overall net revenues, dropping from $6.6 million in the previous year to $4.1 million this quarter.
The company's U.S. prescription business saw a significant decline in revenue, primarily due to the loss of sales to the Pill Club following its bankruptcy.
Veru Inc (NASDAQ:VERU) reported a decrease in gross profit margin from 62% in the previous year to 16% this quarter, attributed to changes in sales mix and increased cost of sales.
The company's drug development for other programs has been paused, focusing resources on enobosarm, which could limit its portfolio diversification.
Veru Inc (NASDAQ:VERU) faces the challenge of needing additional external funding or pharmaceutical partnerships to advance its oncology and infectious disease pipelines.
Q & A Highlights
Q: Can you discuss the duration of therapy for enobosarm and whether it is considered a chronic therapy? A: Mitchell Steiner, CEO of Veru Inc, explained that enobosarm is intended for chronic management of obesity or overweight patients. This is due to the continuous need to protect and preserve muscle mass when using glucagon receptor agonist drugs, which can lead to muscle loss.
Q: Are there plans to include additional functional endpoints in the Phase 2 trial, such as the six-minute walk test or grip strength? A: Mitchell Steiner, CEO, clarified that the focus is on strength-related functional endpoints rather than endurance, as these are more sensitive to changes in muscle strength. The stair climb test is recognized by the FDA and will be used, focusing on its correlation with leg strength.
Q: What is the potential design for a Phase 3 trial? Will it include various glucagon receptor agonists? A: Dr. Gary Barnette, Chief Scientific Officer, suggested that while the Phase 2 trial uses only semaglutide to reduce variability, a Phase 3 trial might include different glucagon receptor agonists, with stratified randomization to manage variability.
Q: How does the FC2 business fit within the overall strategy of Veru Inc? A: Mitchell Steiner, CEO, stated that the FC2 business, originally a legacy product, has generated significant cash flow used for clinical trials. While it continues to generate cash, the primary focus of Veru Inc is now on pharmaceuticals, particularly enobosarm for obesity.
Q: What feedback have you received from investigators or patients about the Phase 2 trial and the approach to minimize lean muscle loss? A: Mitchell Steiner, CEO, reported high enthusiasm for the trial, with many patients and sites eager to participate. This enthusiasm underscores the recognized need to address muscle loss associated with glucagon receptor agonist drugs.
Q: How do you view the potential paths forward for targeting other populations with the enobosarm platform? A: Mitchell Steiner, CEO, indicated that while the Phase 2b focuses on older patients, future Phase 3 programs would include a broader range of patients, potentially embedding special populations to explore functional benefits further.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
