Veru Inc. (NASDAQ: VERU) has undergone a remarkable transformation in recent years, transitioning from a predominantly condom-focused company to a late-stage biopharmaceutical firm with a promising pipeline of innovative medicines targeting cardiometabolic and inflammatory diseases. The company's strategic pivot, marked by the divestment of its FC2 female condom business, has allowed it to sharpen its focus on developing novel therapies that could significantly improve patient outcomes.
Business Overview and History Veru Inc. was founded in 1991 as The Female Health Company, initially focusing on the development and marketing of the FC2 Female Condom, an FDA-approved product for dual protection against unplanned pregnancy and sexually transmitted infections. The company went public in 1997, marking an important milestone in its growth. In 2016, Veru made a significant strategic move by acquiring Aspen Park Pharmaceuticals, which expanded the company's focus into drug development and brought in a clinical-stage pipeline, including the drug candidate enobosarm, an oral selective androgen receptor modulator (SARM).
The year 2017 saw the company change its name from The Female Health Company to Veru Inc., reflecting its expanded scope of operations beyond the FC2 product. This rebranding signaled the company's commitment to its new direction in biopharmaceutical development. However, Veru faced challenges in 2021 when it had to restate its previously issued financial statements due to material weaknesses identified in its internal controls over financial reporting. This led to additional costs and regulatory scrutiny, prompting the company to work diligently to remediate these issues and restore investor confidence.
Despite these setbacks, Veru continued to focus on advancing its drug development efforts. The company's biopharmaceutical pipeline now consists of two late-stage clinical-stage assets: enobosarm, a selective androgen receptor modulator (SARM), and sabizabulin, a microtubule disruptor. Enobosarm is being developed as a treatment to augment fat loss and prevent muscle loss in sarcopenic obese or overweight elderly patients receiving glucagon-like peptide-1 (GLP-1) receptor agonist therapy for weight reduction. Sabizabulin, on the other hand, is being explored as a broad anti-inflammatory agent to slow the progression or promote the regression of atherosclerotic cardiovascular disease.
Financial Performance and Ratios Veru's financial performance has been mixed in recent years, reflecting the challenges associated with its transition from a medical device company to a biopharmaceutical firm. In the fiscal year ended September 30, 2024, the company reported total revenue of $16.89 million, a decrease from $16.30 million in the previous fiscal year. However, this decline was primarily attributable to the divestment of the FC2 business, which accounted for a significant portion of Veru's revenue prior to the sale.
The company's net loss from continuing operations in fiscal 2024 was $37.80 million, compared to a net loss of $93.15 million in the prior fiscal year. This improvement can be attributed to the company's focus on cost optimization, as evidenced by a decrease in operating expenses from $111.90 million in fiscal 2023 to $55.02 million in fiscal 2024.
For the quarter ended December 31, 2024, Veru reported a net loss of $8.95 million, compared to a net loss of $8.28 million in the prior year period. The increase in net loss was primarily due to the $4.20 million loss on the sale of the FC2 business and $8.95 million net loss from discontinued operations related to the FC2 business. Research and development expenses increased to $5.72 million from $1.66 million, primarily due to costs related to the ongoing Phase 2b QUALITY study for enobosarm. Selling, general and administrative expenses decreased to $5.23 million from $6.65 million, driven by a reduction in share-based compensation and personnel costs.
Liquidity Veru's balance sheet as of December 31, 2024, shows a working capital position of $23.36 million and a current ratio of 4.47, indicating a strong liquidity profile. The company's debt-to-equity ratio stood at 0.43 as of September 30, 2024, suggesting a moderate level of financial leverage.
As of December 31, 2024, Veru had cash, cash equivalents, and restricted cash of $26.61 million, compared to $24.92 million as of September 30, 2024. The increase was primarily due to $17.25 million in net cash provided by investing activities, partially offset by $11.33 million in net cash used in operating activities. The investing cash inflows were mainly from the $16.16 million in net proceeds from the sale of the FC2 business on December 30, 2024.
The company's management has stated that they have sufficient cash to fund operations through the end of calendar year 2025, which is beyond the expected readout of the enobosarm Phase 2b extension study in the second quarter of 2025.
Enobosarm's Phase 2b Success and the Path Forward One of the most significant developments for Veru in recent months was the positive topline results from the Phase 2b QUALITY clinical study evaluating enobosarm in combination with semaglutide (Wegovy®) for the treatment of sarcopenic obesity. The study met its prespecified primary endpoint, demonstrating a statistically significant and clinically meaningful benefit in the preservation of total lean body mass in all patients receiving the enobosarm-semaglutide combination compared to semaglutide alone.
Notably, the enobosarm 3 mg plus semaglutide group achieved a greater than 99% mean relative reduction in the loss of lean mass, with a p-value of less than 0.001. Additionally, the enobosarm-semaglutide treatment resulted in a dose-dependent greater loss of fat mass compared to semaglutide alone, with the 6 mg dose showing a 46% greater relative loss of fat mass (p=0.014).
The study also demonstrated improvements in physical function, as measured by the Stair Climb Test. There was a statistically significant and clinically meaningful 54.4% mean relative reduction in the proportion of subjects that lost at least 10% stair climb power in the enobosarm plus semaglutide group compared to placebo plus semaglutide.
These compelling results have paved the way for Veru to request an end-of-Phase 2 meeting with the FDA to discuss the regulatory path forward for enobosarm in this indication. The company plans to advance the program into a larger Phase 3 clinical trial, which is expected to evaluate the long-term benefits of enobosarm on body composition and physical function in older patients receiving GLP-1 receptor agonist therapy.
Sabizabulin's Potential in Atherosclerotic Cardiovascular Disease In addition to the progress with enobosarm, Veru has also shifted its focus to explore the potential of sabizabulin, its oral microtubule disruptor, as a treatment for inflammation associated with atherosclerotic cardiovascular disease. This strategic decision was driven by the significant unmet medical need in this area, as well as sabizabulin's favorable safety profile and mechanism of action, which is similar to that of colchicine, a recently approved anti-inflammatory drug for reducing cardiovascular events.
Veru plans to initiate a Phase 2 clinical study to evaluate the effect of sabizabulin on the progression or regression of coronary atherosclerosis, using coronary CT angiography imaging as the primary endpoint. The company believes that sabizabulin's ability to broadly suppress inflammatory mediators, coupled with its stable pharmacokinetics and low potential for drug-drug interactions, may position it as a more viable option compared to colchicine in the treatment of this condition.
The company plans to submit an Investigational New Drug (IND) application for the Phase 2 study of sabizabulin in atherosclerotic cardiovascular disease in the first quarter of 2026, subject to the availability of sufficient funding.
Risks and Challenges Despite Veru's promising pipeline and strategic repositioning, the company faces several risks and challenges that investors should be aware of. As a late-stage biopharmaceutical firm, Veru is heavily dependent on the successful development and regulatory approval of its drug candidates, which can be a lengthy and capital-intensive process. Delays or setbacks in the clinical trials or regulatory review of enobosarm or sabizabulin could have a significant impact on the company's financial performance and future prospects.
Additionally, Veru's transition from a medical device company to a biopharmaceutical entity has introduced new operational complexities and risks, such as the need to build out its internal drug development and commercialization capabilities. The company's ability to effectively manage this transformation will be crucial to its long-term success.
The recent sale of the FC2 female condom business in December 2024 has eliminated a steady revenue stream, making Veru more dependent on the success of its drug development programs. This shift in focus also means that the company's geographic market is now primarily concentrated in the United States, where its biopharmaceutical operations are based.
Conclusion Veru's transformation from a predominantly condom-focused company to a biopharmaceutical powerhouse with a promising pipeline of cardiometabolic and inflammatory disease therapies is a testament to the company's strategic vision and execution. The positive topline results from the Phase 2b QUALITY study for enobosarm and the company's plans to explore sabizabulin's potential in atherosclerotic cardiovascular disease have positioned Veru as a compelling investment opportunity in the rapidly evolving healthcare landscape.
The company's financial position, with $26.61 million in cash at the end of December 2024, provides a runway to fund operations through the end of calendar year 2025. This timeframe allows Veru to advance its key programs, including the expected readout of the enobosarm Phase 2b extension study in the second quarter of 2025.
However, investors should carefully consider the risks and challenges associated with the company's transition, as well as the inherent uncertainties in the drug development process. Veru's ability to navigate these obstacles and successfully advance its pipeline will be crucial in determining its long-term success. As the company moves forward with its focused strategy on biopharmaceutical development, the outcomes of its clinical trials and regulatory interactions will be key drivers of its future value and potential impact on patient care in the cardiometabolic and inflammatory disease space.