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What changed in VERU INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of VERU INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+456 added−462 removedSource: 10-K (2024-12-16) vs 10-K (2023-12-08)

Top changes in VERU INC.'s 2024 10-K

456 paragraphs added · 462 removed · 347 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

101 edited+33 added−45 removed156 unchanged
Biggest changeSubject to receiving clearance of our IND, we plan to conduct a 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 sarcopenic obese or overweight elderly patients receiving a GLP-1 RA who are at-risk for developing muscle atrophy and muscle weakness, with the first data from the trial expected in the second half of 2024. 11 Table of Contents A diagram of the proposed Phase 2b clinical trial design is shown in the figure below: We expect that the primary endpoint of the clinical trial will be change in lean muscle mass from baseline to three months and key secondary endpoints will be change from baseline to three months in total fat mass, insulin resistance (homeostatic model assessment for insulin resistance or HOMA-IR), total body weight, and physical function.
Biggest changeIn 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 sarcopenic obese or overweight older (>60 years of age) patients receiving semaglutide (Wegovy®).
Up to 85% of breast cancers are ER+, and consequently, estrogen is one of the main drivers of breast cancer proliferation, tumor progression, and metastasis.
Estrogen is one of the main drivers of breast cancer proliferation, tumor progression, and metastasis. Up to 85% of breast cancers are ER+, and consequently, estrogen is one of the main drivers of breast cancer proliferation, tumor progression, and metastasis.
We have completed positive Phase 2 and positive Phase 3 COVID-19 clinical trials, which have demonstrated that sabizabulin treatment resulted in a mortality benefit in hospitalized moderate to severe patients with COVID-19 viral lung infection at high risk for ARDS and death. The FDA granted Fast Track designation to our COVID-19 program in January 2022.
We have completed positive Phase 2 and positive Phase 3 COVID-19 clinical trials, which have demonstrated that sabizabulin treatment resulted in a mortality benefit in hospitalized moderate to severe patients with COVID-19 viral lung infection at high risk for ARDS and death. The FDA granted Fast Track designation to our COVID-19 program in January 2022.
On May 10, 2022, we had a pre-EUA meeting with the FDA to discuss next steps including the submission of an EUA application regarding sabizabulin for COVID-19. In June 2022, we submitted a request for FDA Emergency Use Authorization. In February 2023, the FDA declined to grant our request for Emergency Use Authorization for sabizabulin.
On May 10, 2022, we had a pre-EUA meeting with the FDA to discuss next steps including the submission of an EUA application regarding sabizabulin for COVID-19. In June 2022, we submitted a request for FDA Emergency Use Authorization. In February 2023, the FDA declined to grant our request for Emergency Use Authorization for sabizabulin.
Our business activities must comply with numerous healthcare laws, including but not limited to, the federal health care program anti-kickback statute (the “AKS”) and state equivalents, the Federal False Claims Act and state equivalents, federal and state health care practitioner payment sunshine laws, federal and state health information privacy laws, state price increase transparency laws, and various federal laws requiring price reporting or discounted pricing to the government. 22 Table of Contents The AKS prohibits, among other things, any person or entity from knowingly and willfully offering, paying, soliciting, or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for purchasing, leasing, ordering, or arranging for the purchase, lease, or order of any item or service reimbursable under Medicare, Medicaid, or other federal healthcare programs.
Our business activities must comply with numerous healthcare laws, including but not limited to, the federal health care program anti-kickback statute (the “AKS”) and state equivalents, the Federal False Claims Act and state equivalents, federal and state health care practitioner payment sunshine laws, federal and state health information privacy laws, state price increase transparency laws, and various federal laws requiring price reporting or discounted pricing to the government. 18 Table of Contents The AKS prohibits, among other things, any person or entity from knowingly and willfully offering, paying, soliciting, or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for purchasing, leasing, ordering, or arranging for the purchase, lease, or order of any item or service reimbursable under Medicare, Medicaid, or other federal healthcare programs.
Our management team has significant expertise and experience in urology, oncology, endocrine, and infectious diseases as well as drug development, regulatory matters, marketing and sales, and business development which we believe facilitates effective management of our preclinical studies and clinical trials of drug candidates, potential launch planning, effective collaboration activity and product commercialization.
Our management team has significant expertise and experience in urology, oncology, endocrine, cardiometabolic, and infectious diseases as well as drug development, regulatory matters, marketing and sales, and business development which we believe facilitates effective management of our preclinical studies and clinical trials of drug candidates, potential launch planning, effective collaboration activity and product commercialization.
In reported third-party clinical trials evaluating currently approved GLP-1 RA in obese patients, trial participants exhibited significant weight loss composed of reductions in both fat and lean (muscle and bone) mass. Of the total weight loss reported in certain of these third-party clinical trials, 20-50% of the total weight loss reported by patients was attributable to muscle loss.
In reported third-party clinical trials evaluating currently approved GLP-1 RA in obese patients, trial participants exhibited significant weight loss composed of reductions in both fat and lean (muscle and bone) mass. Of the total weight loss reported in certain of these third-party clinical trials, 20-50% of the total weight loss was attributable to lean mass (muscle) loss.
In third-party clinical trials evaluating currently approved GLP-1 RA in obese patients, trial participants exhibited significant weight loss composed of reductions in both fat and lean (muscle and bone) mass. Of the total weight loss reported in certain of these third-party clinical trials, 20-50% of the total weight loss reported by patients was attributable to muscle loss.
In reported third-party clinical trials evaluating currently approved GLP-1 RA in obese patients, trial participants exhibited significant weight loss composed of reductions in both fat and lean (muscle and bone) mass. Of the total weight loss reported in certain of these third-party clinical trials, 20-50% of the total weight loss was attributable to lean mass (muscle) loss.
These third-party clinical trials include two Phase 2 clinical trials in healthy older or sarcopenic subjects (168 subjects) and one Phase 2b clinical trial and two Phase 3 clinical trials in subjects with muscle wasting because of cancer (800 subjects), generating muscle mass and safety data from a total of 968 patients.
These third-party clinical trials include two Phase 2 clinical trials in healthy older or sarcopenic subjects (168 subjects) and one Phase 2b clinical trial and two Phase 3 clinical trials in subjects with muscle wasting because of cancer (800 subjects), generating lean mass and safety data from a total of 968 patients.
We must comply with t he Medical Device Reporting (MDR) regulation, which requires that we provide information to the FDA whenever evidence reasonably suggests that one of our FC2 devices may have caused or contributed to a death or serious injury, or where a malfunction has occurred that would be likely to cause or contribute to a death or serious injury if the malfunction were to recur.
We must comply with the Medical Device Reporting (MDR) regulation, which requires that we provide information to the FDA whenever evidence reasonably suggests that one of our FC2 devices may have caused or contributed to a death or serious injury, or where a malfunction has occurred that would be likely to cause or contribute to a death or serious injury if the malfunction were to recur.
The Company’s operations in Malaysia are audited and certified against ISO 14001, the environmental management standard that was developed by the International Organization for Standardization (ISO) to help organizations manage the environmental impacts of their processes, products, and services. 27 Table of Contents Raw Materials The principal raw material used to produce FC2 is a nitrile polymer.
The Company’s operations in Malaysia are audited and certified against ISO 14001, the environmental management standard that was developed by the International Organization for Standardization (ISO) to help organizations manage the environmental impacts of their processes, products, and services. 22 Table of Contents Raw Materials The principal raw material used to produce FC2 is a nitrile polymer.
We therefore believe there is an urgent unmet need for a drug that can both augment the fat loss and prevent the muscle loss in sarcopenic obese or overweight elderly patients receiving GLP-1 RA who are at-risk for developing muscle atrophy and muscle weakness leading to frailty.
We therefore believe there is an urgent unmet need for a drug that can both augment the fat loss and prevent the lean mass loss in sarcopenic obese or overweight elderly patients receiving GLP-1 RA who are at-risk for developing muscle atrophy and muscle weakness leading to frailty.
Item 1. Business Overview 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.
Item 1. Business Overview 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 consists of two late-stage new chemical entities, enobosarm and sabizabulin.
As a result, FC2 is now available through multiple access channels including: 95% of major retail pharmacies, community-based organizations, by prescription, universities, direct purchase and 340B qualified health care clinics, and directly to the public health sector without distributors.
As a result, FC2 is now available through multiple access channels including: 95% of major retail pharmacies, community-based organizations, by prescription, universities, direct purchase and 340B qualified health care clinics, and directly to the public health sector.
See “Forward Looking Statements.” Company History Veru is a Wisconsin corporation that is the successor to The Wisconsin Pharmacal Company, Inc. (Wisconsin Pharmacal), a company which manufactured and marketed disparate specialty chemical and branded consumer products. Wisconsin Pharmacal was originally incorporated in 1971.
See “Forward Looking Statements.” Company History Veru is a Wisconsin corporation that is the successor to The Wisconsin Pharmacal Company, Inc. (“Wisconsin Pharmacal”), a company which manufactured and marketed disparate specialty chemical and branded consumer products. Wisconsin Pharmacal was originally incorporated in 1971.
Following the FDA’s declination decision on the Company’s EUA application for sabizabulin as a treatment for COVID-19, the Company does not expect to apply for an EUA for any of its drug candidates currently under development. Outside the U.S., the emergency use of medical products is subject to regulatory processes and requirements that differ from those in the U.S.
Following the FDA’s declination decision on the Company’s EUA application for sabizabulin as a treatment for COVID-19, the Company does not expect to apply for an EUA for any of its drug candidates currently under development. 16 Table of Contents Outside the U.S., the emergency use of medical products is subject to regulatory processes and requirements that differ from those in the U.S.
Using a 40% AR staining cutoff, CBR at 24 weeks for ≥40% AR was 52% and 13 Table of Contents In summary, treatment with enobosarm, a novel oral selective androgen receptor modulator, resulted in clinically significant objective tumor responses, improvement in quality of life, and favorable safety profile in a heavily pretreated population of women with AR+ER-HER2- metastatic breast cancer.
Using a 40% AR staining cutoff, CBR at 24 weeks for ≥40% AR was 52% and In summary, treatment with enobosarm, a novel oral selective androgen receptor modulator, resulted in clinically significant objective tumor responses, improvement in quality of life, and favorable safety profile in a heavily pretreated population of women with AR+ER-HER2- metastatic breast cancer.
Sarcopenic obese patients are patients who have 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 for the treatment of obesity.
Sarcopenic obese patients are patients who have 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.
We remain focused on growing FC2 sales and revenues in future quarters from our dedicated telemedicine solution while leveraging opportunities that help couples better understand how FC2 can help them take control of their sexual and reproductive health. FC2 is currently reimbursable by prescription under the Affordable Care Act (ACA).
We remain focused on growing FC2 sales and revenues in future quarters from our dedicated telemedicine solution while leveraging opportunities that help couples better understand how FC2 can help them take control of their sexual and reproductive health. 12 Table of Contents FC2 is currently reimbursable by prescription under the Affordable Care Act (ACA).
No drugs are currently approved by the FDA for the indication of chronic weight management with preservation of muscle and bone, either alone or in combination with GLP-1 receptor agonists.
No drugs are currently approved by the FDA for the indication of chronic weight management with preservation of lean mass (muscle) and bone, either alone or in combination with GLP-1 receptor agonists.
If other female condoms enter the U.S. market, we may face increased competition in the U.S., which may put downward pressure on pricing for FC2 and adversely affect sales of FC2 in the U.S. 28 Table of Contents The pharmaceutical industry is highly competitive and is characterized by extensive research efforts and rapid technological progress.
If other female condoms enter the U.S. market, we may face increased competition in the U.S., which may put downward pressure on pricing for FC2 and adversely affect sales of FC2 in the U.S. The pharmaceutical industry is highly competitive and is characterized by extensive research efforts and rapid technological progress.
While the market conditions are favorable for continued growth, the brand has seen decreasing sales due to lower volume from digital telemedicine customers because of consolidation in the industry.
While we believe market conditions are favorable for continued growth, the brand has seen decreasing sales due to lower volume from digital telemedicine customers because of consolidation in the industry.
In addition, we seek to operate and grow our sexual health program to help fund our clinical development efforts. We will need substantial capital to support our drug development and any related commercialization efforts for our drug candidates. The key elements of our strategy are: Develop enobosarm for metabolic diseases.
In addition, we seek to operate and grow our sexual health program to help fund our clinical development efforts. We will need substantial capital to support our drug development and any related commercialization efforts for our drug candidates. The key elements of our strategy are: ● Develop enobosarm for obesity.
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.
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 lean mass (muscle) loss in sarcopenic obese or overweight older patients receiving a GLP-1 RA who are at-risk for developing muscle atrophy and muscle weakness.
Enobosarm for the treatment of AR+ ER+ HER2- metastatic breast cancer. In the two Phase 2 clinical studies conducted in women with AR+ ER+ HER2- metastatic breast cancer, enobosarm demonstrated significant antitumor efficacy in heavily pretreated cohorts and was well tolerated with a favorable safety profile.
In the two Phase 2 clinical studies conducted in women with AR+ ER+ HER2- metastatic breast cancer, enobosarm demonstrated significant antitumor efficacy in heavily pretreated cohorts and was well tolerated with a favorable safety profile.
FDA approval of any NDA submitted by us will be at a time the FDA chooses. Also, if regulatory approval of a product is granted, such approval may entail limitations on the indicated uses for which such product may be marketed.
FDA approval of any NDA submitted by us will be at a time the FDA chooses. 17 Table of Contents Also, if regulatory approval of a product is granted, such approval may entail limitations on the indicated uses for which such product may be marketed.
Enobosarm is being developed to optimize weight loss by preferentially increasing fat loss and preventing loss of muscle and physical function in at risk patients taking GLP-1 receptor agonist drugs for chronic weight management.
Enobosarm is being developed to optimize weight loss by preferentially increasing fat loss and preventing loss of lean mass and physical function in at risk patients taking GLP-1 receptor agonist drugs for chronic weight management.
For example, in the Phase 2 clinical trial evaluating enobosarm in 120 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 = We believe the clinical data we own that was generated from third-party clinical trials of enobosarm in both elderly patients and in patients with initial and ongoing muscle wasting caused by a starvation state (cancer induced muscle wasting), 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.
For example, in the Phase 2 clinical trial evaluating enobosarm in 120 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 = We believe the clinical data we own that was generated from third-party clinical trials of enobosarm in both elderly patients and in patients with initial and ongoing muscle wasting caused by loss of appetite, provide strong clinical rationale for the co-administration of enobosarm and a GLP-1 RA in at-risk sarcopenic obese or overweight elderly patients has the potential to ameliorate the muscle loss caused by currently approved GLP-1 RA therapies and also allow for greater preferential loss of fat mass.
In addition, the FDA may require Phase 4 post - marketing studies to monitor the effect of approved products and may limit further marketing of the product based on the results of these post - marketing studies. 21 Table of Contents Post - Approval Requirements for Pharmaceutical Products.
In addition, the FDA may require Phase 4 post-marketing studies to monitor the effect of approved products and may limit further marketing of the product based on the results of these post-marketing studies. Post-Approval Requirements for Pharmaceutical Products.
In certain of these trials, enobosarm demonstrated a dose-dependent improvement in body composition with increases in muscle mass and reductions in fat mass.
In certain of these trials, enobosarm demonstrated a dose-dependent improvement in body composition with increases in lean mass and reductions in fat mass.
Enobosarm, a selective androgen receptor modulator (“SARM”), is being developed for two indications: (i) enobosarm 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 and (ii) subject to the availability of sufficient funding, enobosarm for 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 2nd line setting.
Enobosarm, an oral selective androgen receptor modulator (“SARM”), is being developed for two indications: (i) as a treatment to augment fat loss and to prevent lean mass (muscle) loss in sarcopenic obese or overweight older 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, as a treatment of androgen receptor positive (AR+), estrogen receptor positive (ER+) and human epidermal growth factor receptor 2 negative (HER2-) metastatic breast cancer in the 2nd line setting.
The Company cannot determine the likelihood of receiving any Milestone Payments at this time. 17 Table of Contents On September 29, 2023, the Company entered into an amendment to the BWV Asset Purchase Agreement.
The Company cannot determine the likelihood of receiving any Milestone Payments at this time. 13 Table of Contents On September 29, 2023, the Company entered into an amendment to the Asset Purchase Agreement.
In the global public sector, FC2 has been cleared by the World Health Organization (WHO) for purchase by U.N. agencies because it is a multipurpose prevention technology by preventing unintended pregnancy and the transmission of STIs, while protecting against HIV/AIDs.
In the global public sector, FC2 has been cleared by the World Health Organization (WHO) for purchase by U.N. agencies because it is a multipurpose prevention technology by preventing unintended pregnancy and the transmission of STIs, including HIV/AIDS.
The amendment amends the BWV Asset Purchase Agreement by providing that the note receivable for the $4.0 million installment of the purchase price due September 30, 2023, was deemed paid and fully satisfied upon (1) the payment to the Company of the sum of $1.0 million in immediately available funds on September 29, 2023, and (2) the issuance to the Company by October 3, 2023 of 3,000 shares of Series A Convertible Preferred Stock of BWV (“BWV Series A Preferred Stock”).
The amendment amends the Asset Purchase Agreement by providing that the Promissory Note for the $4.0 million installment of the purchase price due September 30, 2023, was deemed paid and fully satisfied upon (1) the payment to the Company of the sum of $1.0 million in immediately available funds on September 29, 2023, and (2) the issuance to the Company by October 3, 2023 of 3,000 shares of Series A Convertible Preferred Stock of ONCO (“ONCO Preferred Stock”).
The Company did not incur environmental expenses in fiscal 2023 or 2022, nor does it anticipate environmental expenses in the foreseeable future.
The Company did not incur environmental expenses in fiscal 2024 or 2023, nor does it anticipate environmental expenses in the foreseeable future.
Enobosarm has extensive nonclinical and clinical experience having been evaluated in 25 separate clinical studies in approximately 1,450 subjects dosed, including three Phase 2 clinical trials in advanced breast cancer involving more than 191 patients.
Enobosarm has extensive nonclinical and clinical experience having been evaluated in 27 separate clinical studies in approximately 1,581 subjects dosed, including three Phase 2 clinical trials in advanced breast cancer involving more than 191 patients.
The process required by the FDA before pharmaceutical product candidates may be marketed in the United States generally involves the following: nonclinical laboratory and animal tests, including some that must be conducted in accordance with Good Laboratory Practices ; submission of an IND, which must become effective before clinical trials may begin; adequate and well - controlled human clinical trials to establish the safety and efficacy of the proposed drug candidate for its intended use; pre-approval inspection of manufacturing facilities and selected clinical investigators for their compliance with current Good Manufacturing Practices (cGMP) and current Good Clinical Practices (cGCP); and FDA approval of an NDA to permit commercial marketing for particular indications for use.
The process required by the FDA before pharmaceutical product candidates may be marketed in the United States generally involves the following: ● nonclinical laboratory and animal tests, including some that must be conducted in accordance with Good Laboratory Practices; ● submission of an IND, which must become effective before clinical trials may begin; ● adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug candidate for its intended use; ● pre-approval inspection of manufacturing facilities and selected clinical investigators for their compliance with current Good Manufacturing Practices (cGMP) and current Good Clinical Practices (cGCP); and ● FDA approval of an NDA to permit commercial marketing for particular indications for use. 15 Table of Contents The testing and approval process requires substantial time, effort, and financial resources.
The Company determined that it was not probable, at the time of the transaction and at September 30, 2023, that substantially all of the consideration promised under the BWV Asset Purchase Agreement would be collected. Therefore, the Company recognizes the difference between the nonrefundable consideration received and the carrying amount of the assets as a gain.
The Company determined that it was not probable, at the time of the transaction and at September 30, 2024, that substantially all of the consideration promised under the Asset Purchase Agreement would be collected. Therefore, the Company recognized the difference between the nonrefundable consideration received and the carrying amount of the assets as a gain.
Information on the Company's website is not part of this report. 29 Table of Contents
Information on the Company's website is not part of this report. 24 Table of Contents
In addition, we intend to capitalize on the strong reputations of the members of our management and board of directors with academic institutions, hospitals, physicians, pharmacists, and distributors to expand our customer base and to introduce potential new products. ‎ 9 Table of Contents Our Products and Product Candidates The following table summarizes the Company’s current product and development portfolio: DEVELOPMENT PRODUCT INDICATION PHASE Metabolic Disease Candidate Enobosarm – selective androgen receptor modulator 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 Planned Phase 2b Oncology Drug Candidate – Breast Enobosarm – selective androgen receptor modulator with or without abemaciclib CDK 4/6 inhibitor AR+ ER+ HER2- metastatic breast cancer (2 nd line metastatic setting) Phase 3 stage 1b ENABLAR-2 active but not currently recruiting Viral-related ARDS Sabizabulin – oral microtubule disruptor, broad host targeted antiviral and anti-inflammatory agent Hospitalized patients with mild to severe viral-induced ARDS Planned Phase 3 Sexual Health Program Commercial Product FC2 Female Condom ® (internal condom) Unintended pregnancy and prevents STIs Marketed Our Clinical Trials Program and Our Drug Candidates Obesity and Overweight Program - Enobosarm Scientific Overview.
In addition, we intend to capitalize on the strong reputations of the members of our management and board of directors with academic institutions, hospitals, physicians, pharmacists, and distributors to expand our customer base and to introduce potential new products. ‎ Our Products and Product Candidates The following table summarizes the Company’s current product and development portfolio: PRODUCT INDICATION DEVELOPMENT PHASE Cardiometabolic Obesity Program Enobosarm – selective androgen receptor modulator A treatment to augment fat loss and to prevent lean mass loss in sarcopenic obese or overweight older patients receiving a GLP-1 RA who are at-risk for developing muscle atrophy and muscle weakness Ongoing Phase 2b QUALITY clinical study Oncology Drug Candidate - Breast Enobosarm – selective androgen receptor modulator with or without abemaciclib CDK 4/6 inhibitor AR+ ER+ HER2- metastatic breast cancer (2nd line metastatic setting) Planned Phase 3 ENABLAR-2 Viral-related ARDS Sabizabulin – oral microtubule disruptor, broad host targeted antiviral and anti-inflammatory agent Hospitalized patients with mild to severe viral-induced ARDS Planned Phase 3 Sexual Health Program Commercial Product FC2 Female Condom® (internal condom) Unintended pregnancy and prevents STIs Marketed 8 Table of Contents Our Clinical Trials Program and Our Drug Candidates in Metabolic Diseases, Oncology, and ARDS: Obesity and Overweight Program - Enobosarm Scientific Overview.
We completed the Stage 1a portion of our Phase 3 clinical trial in October 2023. We will not, however, begin the Stage 1b portion or otherwise advance our trial Phase 3 clinical trial until sufficient funding is available. 8 Table of Contents Develop sabizabulin for viral-induced ARDS subject to accessing government or pharmaceutical partnership funding.
We completed the Stage 1a portion of our Phase 3 clinical trial in October 2023. We will not, however, begin our Phase 3 clinical trial until sufficient funding is available. ● Develop sabizabulin for viral-induced ARDS subject to accessing government or pharmaceutical partnership funding.
The muscle wasting observed with GLP-1 RA drugs places elderly overweight or obese patients with sarcopenic obesity at risk as they already have low muscle mass and may develop muscle weakness, functional limitations, mobility disability, and falls.
The lean mass reduction observed with GLP-1 RA drugs places older overweight or obese patients with sarcopenic obesity at risk as they already have low muscle mass reserve and may develop muscle weakness, functional limitations, mobility disability, and falls.
In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office (the “USPTO”) in examining and granting a patent or may be shortened if a patent is terminally disclaimed over an earlier filed patent.
In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the USPTO in examining and granting a patent or may be shortened if a patent is terminally disclaimed over an earlier filed patent.
On April 19, 2023, the Company entered into an Asset Purchase Agreement (the “BWV Asset Purchase Agreement”) with Blue Water Biotech Inc. formerly known as Blue Water Vaccines Inc. (“BWV”) to sell substantially all of the assets related to ENTADFI. The transaction closed on April 19, 2023.
On April 19, 2023, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Onconetix, Inc. formerly known as Blue Water Vaccines Inc. (“ONCO”) to sell substantially all of the assets related to ENTADFI. The transaction closed on April 19, 2023.
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 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, 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.
In September 2023, we received positive feedback from the FDA on the design of a Phase 3 clinical trial to evaluate sabizabulin in viral-induced ARDS. 7 Table of Contents 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 Phase 2b clinical trial to evaluate the safety and efficacy of enobosarm initially as a treatment to augment fat loss and to prevent lean mass 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.
According to the CDC, data suggests that STIs in U.S. continued to increase in 2021 – an all-time high for the 6th straight year increasing from 2.4 million to 2.5 million. FC2 is the only FDA approved for market female use product that protects against unintended pregnancies, the transmission of STIs and HIV/AIDs.
According to the CDC, data suggests that STIs in U.S. continued to increase through 2021 – an all-time high for the 6th straight year increasing to 2.5 million. In 2022, rates remained level overall. FC2 is the only FDA approved for market female use product that protects against unintended pregnancies and the transmission of STIs, including HIV/AIDS.
On July 31, 2017, we changed our corporate name from “The Female Health Company” to “Veru Inc.” reflecting our focus on developing and commercializing biopharmaceutical products. 7 Table of Contents Our Strategy Our strategy focuses primarily on the clinical development and commercialization of novel medicines for metabolic diseases, metastatic breast cancer, and viral-induced ARDS.
On July 31, 2017, we changed our corporate name from “The Female Health Company” to “Veru Inc.” reflecting our focus on developing and commercializing biopharmaceutical products. 6 Table of Contents Our Strategy Our strategy focuses primarily on the clinical development and commercialization of novel medicines for the treatment of metabolic diseases, oncology, and ARDS.
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.
In September 2023, we received positive feedback from the FDA on the design of a Phase 3 clinical trial to evaluate sabizabulin in viral-induced ARDS. 11 Table of Contents 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 clinical development program to evaluate the safety and efficacy of enobosarm as a treatment to augment fat loss and to prevent lean mass 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.
We hold an exclusive worldwide license to 16 issued U.S. patents, six pending U.S. patent applications, 74 patents and patent applications in countries outside the U.S., and one pending PCT application, including issued molecule and polymorph composition of matter and method of use patents in the U.S, EU and Japan, relating to our enobosarm drug candidate and related compounds, and their use in breast cancer.
Veru holds an exclusive worldwide license to 16 issued U.S. patents, six pending U.S. patent applications, 59 patents and patent applications in countries outside the U.S., and one pending PCT application, including issued molecule and polymorph composition of matter and method of use patents in the U.S, EU and Japan, relating to our enobosarm drug candidate and related compounds.
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.
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.
Intellectual Property We will be able to protect our technology from unauthorized use by third parties only to the extent it is covered by valid and enforceable patents or is effectively maintained as trade secrets. Patents and other proprietary rights are an essential element of our business. 24 Table of Contents Enobosarm and Related Compounds License.
Intellectual Property; Regulatory Exclusivity We will be able to protect our technology from unauthorized use by third parties only to the extent it is covered by valid and enforceable patents or is effectively maintained as trade secrets or to the extent our technology has regulatory exclusivity. Patents and other proprietary rights are an essential element of our business.
Enobosarm is an oral, novel SARM that has demonstrated tissue-selective, dose-dependent improvement in body composition with increases in muscle mass and decreases in fat mass, improves insulin resistance, has no masculinizing effects in women and has neutral prostate effects in men in third-party clinical trials.
Enobosarm is an oral, novel SARM that has demonstrated tissue-selective, dose-dependent improvement in body composition with increases in lean mass and decreases in fat mass, improvement in muscle strength and physical function, improves insulin resistance, has no clinically-relevant masculinizing effects in women and has neutral prostate effects in men in previous clinical trials.
The supplier has stated that it will assist in providing continuity of supply while we transfer to the standardized grade of nitrile and has confirmed that it will utilize another production facility that it controls to produce the current specialty grade.
The supplier has stated that it will assist in providing continuity of supply while we transfer to the alternative grade of nitrile and is currently utilizing another production facility that it controls to produce the current specialty grade.
Our oncology drug pipeline is focused on the clinical development of enobosarm 9mg, an oral selective androgen receptor modulator, for the treatment of AR+ ER+ HER2- metastatic breast cancer.
Our oncology drug pipeline is focused on the clinical development of enobosarm 9mg for the treatment of AR+ ER+ HER2- metastatic breast cancer.
Appropriate plant trials and testing have been conducted to show the new facility is capable of supplying our current nitrile grade. Manufacturing We manufacture and warehouse FC2 within a leased facility with approximately 45,800 square feet of space in Selangor D.E., Malaysia. P roduction capacity at this facility is approximately 100 million units of FC2 annually.
Appropriate plant trials and testing have been conducted to show the new facility is capable of supplying our current nitrile grade and we are now testing the new material. Manufacturing We manufacture and warehouse FC2 within a leased facility with approximately 45,800 square feet of space in Selangor D.E., Malaysia.
We intend to move to an alternative grade of nitrile, which will require us to incur costs to formulate and test the alternative grade and seek FDA approval of the alternative grade.
We are in the process of testing an alternative grade of nitrile, which will require us to incur costs to formulate and test the alternative grade and seek FDA approval of the alternative grade.
We believe there is an urgent unmet medical need which could be addressed by a SARM, such as enobosarm, that may effectively prevent the loss of muscle mass experienced by older patients receiving a GLP-1 RA for the treatment of obesity.
We believe this urgent unmet medical need could be addressed by enobosarm, a SARM, that may effectively prevent the loss of muscle mass and increase the fat loss experienced by older patients receiving a GLP-1 RA for the treatment of obesity.
The results of Phase 4 studies can confirm the effectiveness of a drug candidate and can provide important safety information. 19 Table of Contents Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug candidate, as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.
Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug candidate, as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.
In third-party clinical trials evaluating currently approved GLP-1 RA in obese patients, trial participants exhibited significant weight loss composed of reductions in both fat and lean (muscle and bone) mass, with 20-50% of the total weight loss reported by patients attributable to muscle loss.
In the United States, 37% of adult men and 40.4% of adult women have obesity (CDC 2022). In third-party clinical trials evaluating currently approved GLP-1 RA in obese patients, trial participants exhibited significant weight loss composed of reductions in both fat and lean (muscle) mass, with 20-50% of the total weight loss reported by patients attributable to lean mass loss.
To create and maintain a successful work environment, we offer an annual base salary and a comprehensive package of additional benefits that support the physical and mental health and wellness of all of our employees and their families.
We believe that our compensation and benefit programs are appropriately designed to attract and retain qualified talent. To create and maintain a successful work environment, we offer an annual base salary and a comprehensive package of additional benefits that support the physical and mental health and wellness of all of our employees and their families.
The confidentiality agreements are designed to protect our proprietary information and, in the case of agreements or clauses requiring invention assignment, to grant us ownership of intellectual property that is developed through a relationship with a third party. 26 Table of Contents Significant Customers The Company's two largest customers in fiscal 2023 accounted for 47% of the Company’s net revenues, including The Pill Club, which represented 24% of the Company’s net revenues.
The confidentiality agreements are designed to protect our proprietary information and, in the case of agreements or clauses requiring invention assignment, to grant us ownership of intellectual property that is developed through a relationship with a third party. Significant Customers The Company's four largest customers in fiscal 2024 accounted for 60% of the Company’s net revenues.
Sabizabulin and Related Compounds License. We hold an exclusive worldwide license to twelve issued U.S. patents, three pending U.S. patent applications and 84 patents and patent applications in countries outside the United States, including issued patents in the EU and Japan, relating to our sabizabulin drug candidates and related compounds, and oncology methods of use.
Veru holds an exclusive worldwide license to 13 issued U.S. patents, one pending U.S. patent application and 14 patents and patent applications in countries outside the United States, including issued patents in the EU and Japan, relating to our sabizabulin drug candidates and related compounds, and methods of use.
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.
If enobosarm+abemaciclib combination therapy 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 Phase 3 clinical trial. Granting accelerated approval for investigational products is within the discretion of the FDA.
Submission of an IND may not result in FDA authorization to commence a clinical trial. A separate submission to the existing IND must be made for each successive clinical trial conducted during product development.
In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Submission of an IND may not result in FDA authorization to commence a clinical trial. A separate submission to the existing IND must be made for each successive clinical trial conducted during product development.
Depending on the circumstances, failure to comply with these laws can result in penalties, including criminal, civil, and/or administrative criminal penalties, damages, fines, disgorgement, exclusion of products from reimbursement under government programs, “qui tam” actions brought by individual whistleblowers in the name of the government, refusal to allow us to enter into supply contracts, including government contracts, reputational harm, diminished profits, and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our business. 23 Table of Contents The U.S. and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals designed to change the healthcare system in ways that could affect our ability to sell our products profitably.
Depending on the circumstances, failure to comply with these laws can result in penalties, including criminal, civil, and/or administrative criminal penalties, damages, fines, disgorgement, exclusion of products from reimbursement under government programs, “qui tam” actions brought by individual whistleblowers in the name of the government, refusal to allow us to enter into supply contracts, including government contracts, reputational harm, diminished profits, and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our business.
In the US, up to 41.5% of older adults (> 60 years of age) have obesity (CDC) and up to 34.4% of these patients also have sarcopenia, or low muscle reserve. 12 Table of Contents Oncology Program – Breast Cancer: Enobosarm Scientific Overview.
In the U.S., up to 41.5% of older adults (> 60 years of age) have obesity (CDC) and up to 34.4% of these patients also have sarcopenia, or low muscle reserve. The overall prevalence of obesity with low lean muscle mass in the U.S. is almost 30 million adults. Oncology Program – Breast Cancer: Enobosarm Scientific Overview.
The FDA may then approve the new drug candidate for all or some of the labeled indications for which the referenced product has been approved, as well as for any new indication sought by the Section 505(b)(2) applicant.
The FDA may then approve the new drug candidate for all or some of the labeled indications for which the referenced product has been approved, as well as for any new indication sought by the Section 505(b)(2) applicant. None of the Company’s drug candidates currently under development are expected to follow the Section 505(b)(2) approval pathway. Orange Book Listing.
Veru intends to conduct a Phase 2b multicenter, double-blind, placebo-controlled, randomized, and dose-finding obesity or overweight clinical study to evaluate enobosarm 3mg, enobosarm 6mg, or placebo in approximately 75 patients who qualify and will be receiving a GLP-1 RA for weight loss and are at risk for significant muscle loss. Develop enobosarm for advanced breast cancer.
Veru is conducting a Phase 2b multicenter, double-blind, placebo-controlled, randomized, and dose-finding QUALITY clinical study to evaluate enobosarm 3mg, enobosarm 6mg, or placebo in approximately 168 randomized older patients who are overweight or obese and are also receiving a GLP-1 RA for weight loss. ● Develop enobosarm for advanced breast cancer.
In these mice, treatment with enobosarm in combination with a CDK 4/6 inhibitor suppressed the growth of human metastatic breast cancer greater than the CDK 4/6 inhibitor alone. Further, enobosarm treatment alone was also effective in suppressing the growth of CDK 4/6 inhibitor and estrogen blocking agent resistant human metastatic breast cancer tumors in mice.
In these mice, treatment with enobosarm in combination with a CDK 4/6 inhibitor suppressed the growth of human metastatic breast cancer greater than the CDK 4/6 inhibitor alone.
In addition, because of the extensive time required for clinical development and regulatory review of a product candidate we may develop, it is possible that any related patent may remain in force for a short period following commercialization, thereby reducing any advantage of any such patent.
In addition, because of the extensive time required for clinical development and regulatory review of a product candidate we may develop, it is possible that any related patent may remain in force for a short period following commercialization, thereby reducing any advantage of any such patent. 21 Table of Contents In addition to patents, we rely upon unpatented trade secrets and know-how and continuing innovation to develop and maintain our competitive position.
The purchase price for the transaction was $20.0 million, consisting of $6.0 million paid at closing, $4.0 million payable by September 30, 2023, $5.0 million payable 12 months after closing, and $5.0 million payable by September 30, 2024, plus up to $80.0 million based on BWV’s net revenues from ENTADFI after closing (the “Milestone Payments”).
The purchase price for the transaction was $20.0 million, consisting of $6.0 million paid at closing, $4.0 million payable pursuant to a Promissory Note due on September 30, 2023, $5.0 million payable pursuant to a Promissory Note due on April 19, 2024 (the “April 2024 Promissory Note”), and $5.0 million payable pursuant to a Promissory Note due on September 30, 2024 (the “September 2024 Promissory Note” and, together with the April 2024 Promissory Note, the “ONCO Promissory Notes”), plus up to $80.0 million based on ONCO’s net revenues from ENTADFI after closing (the “Milestone Payments”).
The term of a patent that covers a drug or biological product may also be eligible for patent term extension when FDA approval is granted, provided statutory and regulatory requirements are met.
In addition, the term of a patent that covers a drug or biological product may also be eligible for a PTE of up to five years after FDA drug approval is granted and as determined by the FDA, and further provided certain statutory and regulatory requirements are met.
This license contains provisions requiring milestone and royalty payments to the licensor (University of Tennessee Research Foundation). If we fail to comply with these obligations or other obligations to the licensor, the licensor might have the right to terminate the license, in which event we would not be able to commercialize our drug candidate.
If we fail to comply with these obligations or other obligations to the licensor, the licensor might have the right to terminate the license, in which event we would not be able to commercialize our enobosarm drug candidate. Owned Patents .
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.
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. Market. Enobosarm represents the first new class of targeted endocrine therapy in advanced breast cancer as it does not target estrogen.
None of the Company’s drug candidates currently under development are expected to follow the Section 505(b)(2) approval pathway. 20 Table of Contents Orange Book Listing. In seeking approval for a drug through an NDA, including a 505(b)(2) NDA, applicants are required to list with the FDA certain patents whose claims cover the applicant’s product.
In seeking approval for a drug through an NDA, including a 505(b)(2) NDA, applicants are required to list with the FDA certain patents whose claims cover the applicant’s product.
If we fail to comply with these obligations or other obligations to the licensor, the licensor might have the right to terminate the license, in which event we would not be able to commercialize these drug candidates. Any patents issuing from these patents and patent applications would expire in April 2042. 25 Table of Contents FC2 Patents.
If we fail to comply with these obligations or other obligations to the licensor, the licensor might have the right to terminate the license, in which event we would not be able to commercialize our sabizabulin drug candidates. Owned Patents.
As FC2 is nonhormonal, it is a viable alternative for many U.S. women who have reported dissatisfaction with the side effects of hormonal birth control or are seeking the layering (i.e.
As FC2 is nonhormonal, it is a viable alternative for many U.S. women who have reported dissatisfaction with the side effects of hormonal birth control or are seeking the layering (i.e. STI prevention) benefits FC2 offers since it can be used with many other forms of contraception. We have built the infrastructure to allow for broad access across the U.S.
Among policy makers and payers in the U.S. and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. In the U.S., the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives. Anti-Corruption Laws.
Among policy makers and payers in the U.S. and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access.
FC2 Female Condom for dual protection against unintended pregnancy and transmission of sexually transmitted infections and HIV/AIDs Product . FC2 is the only FDA-approved single use internal condom for the prevention of pregnancy, sexually transmitted infections (STIs), and HIV/AIDs.
Sexual Health Program The Company's sexual health program consists of FC2, the only FDA-approved, female-controlled, hormone-free and latex-free female condom indicated for the prevention of pregnancy and sexually transmitted infections, including HIV/AIDS. Product . FC2 is the only FDA-approved single use internal condom for the prevention of pregnancy, sexually transmitted infections (STIs), including HIV/AIDS.
The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30 - day time period, raises safety concerns or questions about the conduct of the clinical trial by imposing a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.
Prior to commencing the first clinical trial with a drug candidate, we must submit an IND to the FDA. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the conduct of the clinical trial by imposing a clinical hold.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf available, financing terms may lead to significant dilution of our stockholders’ equity. The amount of additional financing that we will need to support our development and commercialization activities is uncertain. We may not receive any additional payments from BWV in connection with the sale of our ENTADFI assets and may not receive any value for the shares of BWV Series A Preferred Stock we hold. ‎ 30 Table of Contents Risks Related to Our Business Our FC2 business may be affected by contracting risks with government and other international health agencies. The FDA issued a final order reclassifying female condoms as Class II medical devices, which may result in increased competition for FC2 in the U.S. market. We may experience competition, especially for enobosarm as a treatment for metabolic diseases, if approved, and FC2. Our net revenues from sales of FC2 may not return to past levels. We may not be able to successfully implement our strategy to grow sales of FC2 in the U.S. market through our own portal. An inability to identify or complete future acquisitions could adversely affect our future growth. We may experience difficulties in integrating strategic acquisitions. We may be subject to claims or investigations relating to The Pill Club’s business practices with respect to sales of FC2. It is unlikely that we will collect any amount of our accounts receivable with The Pill Club. We are subject to potential liability relating to a dispute with a supplier. Since we sell FC2 in foreign markets, we are subject to international business risks that could adversely affect our operating results. Increases in the cost of raw materials, labor, and other costs used to manufacture FC2 could increase our cost of sales and reduce our gross margins. Currency exchange rate fluctuations could increase our expenses. We rely on a single facility to manufacture FC2, which subjects us to the risk of supply disruptions. We may incur costs or experience supply interruptions relating to our need to transition the supply of the nitrile polymer for FC2. Uncertainty and adverse changes in the general economic conditions may negatively affect our business. Material adverse or unforeseen legal judgments, fines, penalties, or settlements could have an adverse impact on our profits and cash flows. We have been named a defendant in stockholder class actions.
Biggest changeRisks Related to Our Business ● Our FC2 business may be affected by contracting risks with government and other international health agencies. ● The FDA issued a final order reclassifying female condoms as Class II medical devices, which may result in increased competition for FC2 in the U.S. market. ● We may experience competition, especially for enobosarm as a treatment for metabolic diseases, if approved, and FC2. ● Our net revenues from sales of FC2 may not return to past levels. ● We may not be able to successfully implement our strategy to grow sales of FC2 in the U.S. market through our own telehealth portal. ● An inability to identify or complete future acquisitions could adversely affect our future growth. ● We may experience difficulties in integrating strategic acquisitions. ● We may be subject to claims or investigations relating to The Pill Club’s business practices with respect to sales of FC2. ● It is unlikely that we will collect any amount of our accounts receivable with The Pill Club. ● We are subject to significant payment obligations pursuant to the resolution of a dispute with a supplier. ● Since we sell FC2 in foreign markets, we are subject to international business risks that could adversely affect our operating results. ● Increases in the cost of raw materials, labor, and other costs used to manufacture FC2 could increase our cost of sales and reduce our gross margins. ● Currency exchange rate fluctuations could increase our expenses. ● We rely on a single facility to manufacture FC2, and single source suppliers for certain raw materials, which subjects us to the risk of supply disruptions. ● We may incur costs or experience supply interruptions relating to our need to transition the supply of the nitrile polymer for FC2. ● Uncertainty and adverse changes in the general economic conditions may negatively affect our business. ● Material adverse or unforeseen legal judgments, fines, penalties, or settlements could have an adverse impact on our profits and cash flows. ● We have been named a defendant in stockholder class actions.
These, and potential similar or related lawsuits or investigations, could result in substantial legal fees, fines, penalties or damages and may divert management’s time and attention from our business. Our business and operations would suffer if we sustain cyber-attacks or other privacy or data security incidents that result in security breaches. Any failure to comply with the FCPA and similar anti-bribery laws in non-U.S. jurisdiction could materially adversely affect our business and result in civil and/or criminal sanctions. We will need to increase the size and complexity of our organization in the future, and we may experience difficulties in executing our growth strategy and managing any growth. Uncertainties in the interpretation and application of tax rules in the various jurisdictions in which we operate could materially affect our deferred tax assets, tax obligations and effective tax rate. Our effective tax rate may be negatively impacted if we are unable to realize deferred tax assets or by future changes to tax laws in jurisdictions in which we operate. Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. ‎ 31 Table of Contents Risks Relating to Our Intellectual Property We may be unable to protect the proprietary nature of the intellectual property covering our products. Our or our licensors’ patents may expire or be invalidated, found to be unenforceable, narrowed or otherwise limited or our or our licensors’ patent applications may not result in issued patents or may result in patents with narrow, overbroad, or unenforceable claims. We may not have sufficient intellectual property protection for enobosarm as a treatment to augment fat loss and to prevent muscle loss in sarcopenic obese or overweight elderly patients receiving GLP-1 RA who are at-risk for developing muscle atrophy and muscle weakness. We are dependent in part on some license relationships. We may face claims that our intellectual property infringes on the intellectual property rights of third parties.
These, and potential similar or related lawsuits or investigations, could result in substantial legal fees, fines, penalties or damages and may divert management’s time and attention from our business. ● Our business and operations would suffer if we sustain cyber-attacks or other privacy or data security incidents that result in security breaches. ● Any failure to comply with the FCPA and similar anti-bribery laws in non-U.S. jurisdiction could materially adversely affect our business and result in civil and/or criminal sanctions. ● We will need to increase the size and complexity of our organization in the future, and we may experience difficulties in executing our growth strategy and managing any growth. ● Uncertainties in the interpretation and application of tax rules in the various jurisdictions in which we operate could materially affect our deferred tax assets, tax obligations and effective tax rate. ● Our effective tax rate may be negatively impacted if we are unable to realize deferred tax assets or by future changes to tax laws in jurisdictions in which we operate. ● Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. 26 Table of Contents Risks Relating to Our Intellectual Property ● We may be unable to protect the proprietary nature of the intellectual property covering our products. ● Our or our licensors’ patents may expire or be invalidated, found to be unenforceable, narrowed or otherwise limited or our or our licensors’ patent applications may not result in issued patents or may result in patents with narrow, overbroad, or unenforceable claims. ● We may not have sufficient intellectual property protection for enobosarm as a treatment to augment fat loss and to prevent muscle loss in sarcopenic obese or overweight elderly patients receiving GLP-1 RA who are at-risk for developing muscle atrophy and muscle weakness. ● We are dependent in part on some license relationships. ● We may face claims that our intellectual property infringes on the intellectual property rights of third parties.
Clinical trials can be delayed for a variety of reasons, including the following: delays in obtaining regulatory approval to commence a trial; imposition of a clinical hold following an inspection of our clinical trial operations or trial sites by the FDA or other regulatory authorities; imposition of a clinical hold because of safety or efficacy concerns by the FDA, a DSMB or IDMC, a clinical trial site's IRB or us; delays in reaching agreement on acceptable terms with prospective contract research organizations (CROs) and clinical trial sites; delays in obtaining required IRB approval at each site; delays in identifying, recruiting and training suitable clinical investigators; delays in recruiting suitable patients to participate in a trial; delays in having patients complete participation in a trial or return for post-treatment follow-up; clinical sites dropping out of a trial to the detriment of enrollment; time required to add new sites; delays in obtaining sufficient supplies of clinical trial materials, including suitable active pharmaceutical ingredients; delays resulting from negative or equivocal findings of DSMB or IDMC for a trial; or delays resulting from shutdowns or quarantines or staffing shortages relating to a pandemic or other reasons. 33 Table of Contents Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, a pandemic, competing clinical trials, and clinicians' and patients' perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating.
Clinical trials can be delayed for a variety of reasons, including the following: ● delays in obtaining regulatory approval to commence a trial; ● imposition of a clinical hold following an inspection of our clinical trial operations or trial sites by the FDA or other regulatory authorities; ● imposition of a clinical hold because of safety or efficacy concerns by the FDA, a DSMB or IDMC, a clinical trial site’s IRB or us; ● delays in reaching agreement on acceptable terms with prospective contract research organizations (CROs) and clinical trial sites; ● delays in obtaining required IRB approval at each site; ● delays in identifying, recruiting and training suitable clinical investigators; ● delays in recruiting suitable patients to participate in a trial; ● delays in having patients complete participation in a trial or return for post-treatment follow-up; ● clinical sites dropping out of a trial to the detriment of enrollment; ● time required to add new sites; ● delays in obtaining sufficient supplies of clinical trial materials, including suitable active pharmaceutical ingredients; ● delays resulting from negative or equivocal findings of DSMB or IDMC for a trial; or ● delays resulting from shutdowns or quarantines or staffing shortages relating to a pandemic or other reasons. 28 Table of Contents Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, a pandemic, competing clinical trials, and clinicians' and patients' perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating.
Our international operations subject us to risks, including: economic and political instability; currency fluctuations; global pandemics, as governments reallocate their health or development budgets to other health areas; changes in international regulatory requirements, import duties, or export restrictions, including limitations on the repatriation of earnings; disruptions and price increases in the global transportation network, such as work stoppages, strikes or shutdowns of ports of entry or such other transportation sources, or delays or difficulties in products clearing customs; difficulties in staffing and managing foreign operations; greater difficulty in collecting accounts receivable and longer collection periods; the uncertainty of protection for intellectual property in some countries; 47 Table of Contents multiple, conflicting and changing laws and regulations such as privacy regulations, including GDPR, tax laws, export and import restrictions, employment laws, immigration laws, labor laws, regulatory requirements and other governmental approvals, permits and licenses; complications in complying with trade and foreign tax laws and greater risk of a failure of foreign employees, distributors or other agents to comply with both U.S. and foreign laws, including antitrust regulations, the FCPA and other anti-bribery or corruption laws, and trade regulations ; price controls and other restrictions on foreign currency; and difficulties in our ability to enforce legal rights and remedies.
Our international operations subject us to risks, including: ● economic and political instability; ● currency fluctuations; ● global pandemics, as governments reallocate their health or development budgets to other health areas; ● changes in international regulatory requirements, import duties, or export restrictions, including limitations on the repatriation of earnings; ● disruptions and price increases in the global transportation network, such as work stoppages, strikes or shutdowns of ports of entry or such other transportation sources, or delays or difficulties in products clearing customs; ● difficulties in staffing and managing foreign operations; 41 Table of Contents ● greater difficulty in collecting accounts receivable and longer collection periods; ● the uncertainty of protection for intellectual property in some countries; ● multiple, conflicting and changing laws and regulations such as privacy regulations, including GDPR, tax laws, export and import restrictions, employment laws, immigration laws, labor laws, regulatory requirements and other governmental approvals, permits and licenses; ● complications in complying with trade and foreign tax laws and greater risk of a failure of foreign employees, distributors or other agents to comply with both U.S. and foreign laws, including antitrust regulations, the FCPA and other anti-bribery or corruption laws, and trade regulations; ● price controls and other restrictions on foreign currency; and ● difficulties in our ability to enforce legal rights and remedies.
These risks include the possibility of the following: the patent applications that we have filed may fail to result in issued patents in the United States or in foreign countries; patents issued or licensed to us or our partners may be challenged or discovered to have been issued on the basis of insufficient, incomplete or incorrect information, and thus held to be invalid or unenforceable; the scope of any patent protection may be too narrow to exclude competitors from developing or designing around these patents; we or our licensor was not the first to make the invention covered by an issued patent or pending patent application; we or our licensor was not the first inventor to file a patent application for the technology in the United States or was not the first to file a patent application directed to the technology abroad; we may fail to comply with procedural, documentary, fee payment and other similar provisions during the patent application process, which can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights; future drug candidates or our proprietary technologies may not be patentable or legal decisions may limit patent-eligible subject matter; others may claim rights or ownership with regard to patents and other proprietary rights that we hold or license; delays in development, testing, clinical trials and regulatory review may reduce the period of time during which we could market our drug candidates under patent protection; we may fail to timely apply for patents on our technologies or products; and inability to control patent prosecution, maintenance, or enforcement of any in-licensed intellectual property.
These risks include the possibility of the following: ● the patent applications that we have filed may fail to result in issued patents in the United States or in foreign countries; ● patents issued or licensed to us or our partners may be challenged or discovered to have been issued on the basis of insufficient, incomplete or incorrect information, and thus held to be invalid or unenforceable; ● the scope of any patent protection may be too narrow to exclude competitors from developing or designing around these patents; ● we or our licensor was not the first to make the invention covered by an issued patent or pending patent application; ● we or our licensor was not the first inventor to file a patent application for the technology in the United States or was not the first to file a patent application directed to the technology abroad; ● we may fail to comply with procedural, documentary, fee payment and other similar provisions during the patent application process, which can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights; 46 Table of Contents ● future drug candidates or our proprietary technologies may not be patentable or legal decisions may limit patent-eligible subject matter; ● others may claim rights or ownership with regard to patents and other proprietary rights that we hold or license; ● delays in development, testing, clinical trials and regulatory review may reduce the period of time during which we could market our drug candidates under patent protection; ● we may fail to timely apply for patents on our technologies or products; and ● inability to control patent prosecution, maintenance, or enforcement of any in-licensed intellectual property.
Misconduct by employees could include intentional failures to comply with FDA regulations, marketing and promotional laws, rules, and policies, to provide accurate information to the FDA, to comply with federal and state health care fraud and abuse laws and regulations, to comply with anti-corruption laws, including the FCPA, to report financial information or data accurately or to disclose unauthorized activities to us.
Misconduct by employees could include failures to comply with FDA regulations, marketing and promotional laws, rules, and policies, to provide accurate information to the FDA, to comply with federal and state health care fraud and abuse laws and regulations, to comply with anti-corruption laws, including the FCPA, to report financial information or data accurately or to disclose unauthorized activities to us.
Our future capital requirements will depend upon a number of factors, including: the size, complexity, results and timing of our development programs and clinical trials; our ability to successfully commercialize our drug candidates, if approved; our ability to obtain sufficient supply of the compounds necessary for our drug candidates at a reasonable cost; the time and cost involved in obtaining regulatory approvals; the time and cost involved in developing any required companion diagnostics for any of our product candidates, including enobosarm; the terms and timing of any potential future collaborations, licensing or other arrangements we may establish; cash requirements of any future acquisitions, in-licenses or the development of other drug candidates; our receipt of funds from other potential sources, including cash flow from licenses and sales, and payments on outstanding receivables; the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims; the costs involved in manufacturing and commercializing our drug candidates; the amount of sales or other revenues from drug candidates that we may commercialize, if any, including the selling prices for such drug candidates and the availability of adequate third-party coverage and reimbursement; regulatory changes; changes to federal, state or local health care or prescription drug programs; 43 Table of Contents market and economic conditions; and competing technological and market developments.
Our future capital requirements will depend upon a number of factors, including: ● the size, complexity, results and timing of our development programs and clinical trials; ● our ability to successfully commercialize our drug candidates, if approved; ● our ability to obtain sufficient supply of the compounds necessary for our drug candidates at a reasonable cost; ● the time and cost involved in obtaining regulatory approvals; ● the time and cost involved in developing any required companion diagnostics for any of our product candidates, including enobosarm; ● the terms and timing of any potential future collaborations, licensing or other arrangements we may establish; ● cash requirements of any future acquisitions, in-licenses or the development of other drug candidates; ● our receipt of funds from other potential sources, including cash flow from licenses and sales, and payments on outstanding receivables; ● the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims; ● the costs involved in manufacturing and commercializing our drug candidates; ● the amount of sales or other revenues from drug candidates that we may commercialize, if any, including the selling prices for such drug candidates and the availability of adequate third-party coverage and reimbursement; ● regulatory changes; ● changes to federal, state or local health care or prescription drug programs; ● market and economic conditions; and ● competing technological and market developments.
Sales of FC2 fluctuate based upon demand from our commercial partners and the public health sector and the nature of government procurement processes . Historically, our net revenues and profitability have varied from quarter–to-quarter due to such buying patterns.
Sales of FC2 fluctuate based upon demand from our commercial partners and the public health sector and the nature of government procurement processes. Historically, our net revenues have varied from quarter–to-quarter due to such buying patterns.
Risks Related to Our Financial Position and Need for Capital We have incurred net losses in recent fiscal years and expect to continue to incur losses for the foreseeable future. Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements included in this Annual Report on Form 10-K for the fiscal year ended September 30, 2023. We will need to raise additional capital to fund our operations in the future.
Risks Related to Our Financial Position and Need for Capital ● We have incurred net losses in recent fiscal years and expect to continue to incur losses for the foreseeable future. ● Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements included in this Annual Report on Form 10-K for the fiscal year ended September 30, 2024. ● We will need to raise additional capital to fund our operations in the future.
Even the successful defense of legal proceedings may cause us to incur substantial legal costs, may divert management's attention and resources away from our business, may prevent us or our partners from achieving or maintaining market acceptance of the affected product and may substantially increase the costs of commercializing our future products and impair the ability to generate revenues from the commercialization of these products either by us or by our strategic alliance partners. 49 Table of Contents We currently maintain limited general commercial liability insurance coverage.
Even the successful defense of legal proceedings may cause us to incur substantial legal costs, may divert management’s attention and resources away from our business, may prevent us or our partners from achieving or maintaining market acceptance of the affected product and may substantially increase the costs of commercializing our future products and impair the ability to generate revenues from the commercialization of these products either by us or by our strategic alliance partners. 43 Table of Contents We currently maintain limited general commercial liability insurance coverage.
The trading price of our common stock could decline or fluctuate in response to a variety of factors, including: our failure to meet market expectations for our performance; the timing of announcements by us or our competitors concerning significant product developments, acquisitions, or financial performance; adverse results or delays in our clinical trials for our drug candidates; changes in laws or regulations applicable to our business; 60 Table of Contents competition from new products that may emerge; actual or anticipated fluctuations in our financial condition or operating results; substantial sales of our common stock; issuance of new or updated research reports from securities analysts; announcement or expectation of additional debt or equity financing efforts; additions or departures of key personnel; general stock market conditions; attacks by short sellers or substantial short interest in our common stock; or other economic or external factors.
The trading price of our common stock could decline or fluctuate in response to a variety of factors, including: ● our failure to meet market expectations for our performance; ● the timing of announcements by us or our competitors concerning significant product developments, acquisitions, or financial performance; ● adverse results or delays in our clinical trials for our drug candidates; ● changes in laws or regulations applicable to our business; ● competition from new products that may emerge; ● actual or anticipated fluctuations in our financial condition or operating results; ● substantial sales of our common stock; ● issuance of new or updated research reports from securities analysts; ● announcement or expectation of additional debt or equity financing efforts; ● additions or departures of key personnel; ● general stock market conditions; ● attacks by short sellers or substantial short interest in our common stock; or ● other economic or external factors.
If the confidentiality of this intellectual property is breached, it could adversely impact our business. 54 Table of Contents We may not have sufficient intellectual property protection for enobosarm as a treatment to augment fat loss and to prevent muscle loss in sarcopenic obese or overweight elderly patients receiving GLP-1 RA who are at-risk for developing muscle atrophy and muscle weakness.
If the confidentiality of this intellectual property is breached, it could adversely impact our business. 47 Table of Contents We may not have sufficient intellectual property protection for enobosarm as a treatment to augment fat loss and to prevent muscle loss in sarcopenic obese or overweight elderly patients receiving GLP-1 RA who are at-risk for developing muscle atrophy and muscle weakness.
The report from our independent registered public accounting firm for the year ended September 30, 2023, includes an explanatory paragraph stating that our losses from operations and required additional funding to finance our operations raise substantial doubt about our ability to continue as a going concern for a period of one year after the date the financial statements are issued.
The report from our independent registered public accounting firm for the year ended September 30, 2024, includes an explanatory paragraph stating that our losses from operations and required additional funding to finance our operations raise substantial doubt about our ability to continue as a going concern for a period of one year after the date the financial statements are issued.
There can be no assurance that the current operating plan will be achieved in the time frame anticipated by us, or that our cash resources will fund our operating plan for the period anticipated by the Company or that additional funding will be available on terms acceptable to us, or at all. 42 Table of Contents We will need to raise additional capital to fund our operations in the future.
There can be no assurance that the current operating plan will be achieved in the time frame anticipated by us, or that our cash resources will fund our operating plan for the period anticipated by the Company or that additional funding will be available on terms acceptable to us, or at all. 36 Table of Contents We will need to raise additional capital to fund our operations in the future.
Item 1A. Risk Factors Our business is subject to a number of risks of which you should be aware before making an investment decision. The following summary highlights some of the risks y ou should consider with respect to our business and prospects. This summary is not complete and the risks summarized below are not the only risks we face.
Item 1A. Risk Factors Our business is subject to a number of risks of which you should be aware before making an investment decision. The following summary highlights some of the risks you should consider with respect to our business and prospects. This summary is not complete and the risks summarized below are not the only risks we face.
We are a “smaller reporting company,” as defined in the Securities Exchange Act of 1934, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “smaller reporting companies,” including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
We are a “smaller reporting company,” as defined in the Exchange Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “smaller reporting companies,” including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
These third-party logistics companies may experience disruptions to the transportation channels used to distribute our products, including disruptions caused by pandemics, increased airport and shipping port congestion, a lack of transportation capacity, increased fuel expenses, and a shortage of manpower or capital or due to other business interruptions.
These third-party logistics companies may experience disruptions to the transportation channels used to distribute our products, including disruptions caused by pandemics, increased airport and shipping port congestion, a lack of transportation capacity, increased fuel expenses and storage costs, and a shortage of manpower or capital or due to other business interruptions.
The amended complaint alleges that certain public statements about sabizabulin as a treatment for COVID-19 between March 1, 2021 and March 2, 2023 violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and seeks monetary damages.
The amended complaint alleges that certain public statements about sabizabulin as a treatment for COVID-19 between March 1, 2021 and March 2, 2023 violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, and seeks monetary damages.
Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements included in this Annual Report on Form 10-K for the fiscal year ended September 30, 2023.
Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements included in this Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
We currently plan to prioritize the use of our internal cash and the net proceeds of any future financings to the development of enobosarm, with a primary near-term focus on funding a Phase 2b clinical trial designed 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 sabizabulin as a treatment for viral-induced ARDS.
We currently plan to prioritize the use of our internal cash and the net proceeds of any future financings to the development of enobosarm, with a primary near-term focus on funding a Phase 2b clinical trial to evaluate the safety and efficacy of enobosarm initially as a treatment to augment fat loss and to prevent lean mass 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 sabizabulin as a treatment for viral-induced ARDS.
In such cases, the trading price of our common stock could decline. 32 Table of Contents Risks Related to the Regulation and Commercialization of Our Products and Drug Candidates We have limited experience in obtaining regulatory approval or emergency use authorization for a drug.
In such cases, the trading price of our common stock could decline. 27 Table of Contents Risks Related to the Regulation and Commercialization of Our Products and Drug Candidates We have limited experience in obtaining regulatory approval or emergency use authorization for a drug.
Appropriate plant trials and testing have been conducted to show the new facility is capable of supplying our current nitrile grade. 48 Table of Contents Uncertainty and adverse changes in the general economic conditions may negatively affect our business.
Appropriate plant trials and testing have been conducted to show the new facility is capable of supplying our current nitrile grade. 42 Table of Contents Uncertainty and adverse changes in the general economic conditions may negatively affect our business.
We have only obtained regulatory approval for one drug, ENTADFI (tadalafil and finasteride) capsules, for oral use, which we sold to BWV in April 2023. We have never obtained an EUA in the U.S. or in any other jurisdiction.
We have only obtained regulatory approval for one drug, ENTADFI (tadalafil and finasteride) capsules, for oral use, which we sold to ONCO in April 2023. We have never obtained an EUA in the U.S. or in any other jurisdiction.
Section 382 of the Code imposes an annual limitation on the amount of post-ownership change taxable income a corporation may offset with pre-ownership change net operating loss carryforwards and certain recognized built-in losses. 52 Table of Contents Risks Relating to Our Intellectual Property We may be unable to protect the proprietary nature of the intellectual property covering our products.
Section 382 of the Code imposes an annual limitation on the amount of post-ownership change taxable income a corporation may offset with pre-ownership change net operating loss carryforwards and certain recognized built-in losses. Risks Relating to Our Intellectual Property We may be unable to protect the proprietary nature of the intellectual property covering our products.
We do not expect any imminent such modifications or repeal under the Biden Administration, but we can offer no assurance that the political situation regarding the ACA will not change in ways in the future that could have a material adverse effect on our ability to commercialize FC2 as a prescription product in the U.S.
We do not expect any imminent such modifications or repeal, but we can offer no assurance that the political situation regarding the ACA will not change in ways in the future that could have a material adverse effect on our ability to commercialize FC2 as a prescription product in the U.S.
In April 2023, we sold our ENTADFI assets to BWV and on September 29, 2023, we entered into an amendment to the BWV Asset Purchase Agreement which provided that the promissory note for the $4 million installment of the purchase price due September 30, 2023 was deemed paid and fully satisfied upon (1) the payment to us of the sum of $1.0 million in immediately available funds on September 29, 2023, and (2) the issuance to us by October 3, 2023 of 3,000 shares of BWV Series A Preferred Stock.
In April 2023, we sold our ENTADFI assets to ONCO and on September 29, 2023, we entered into an amendment to the Asset Purchase Agreement which provided that the promissory note for the $4 million installment of the purchase price due September 30, 2023 was deemed paid and fully satisfied upon (1) the payment to us of the sum of $1.0 million in immediately available funds on September 29, 2023, and (2) the issuance to us by October 3, 2023 of 3,000 shares of ONCO Preferred Stock.
Further, third parties, such as hosted solution providers, that provide services to us, could also be a source of security risk in the event of a failure of their own security systems and infrastructure. 50 Table of Contents The costs to eliminate or address the foregoing security threats and vulnerabilities before or after a cyber-incident could be significant.
Further, third parties, such as hosted solution providers, that provide services to us, could also be a source of security risk in the event of a failure of their own security systems and infrastructure. The costs to eliminate or address the foregoing security threats and vulnerabilities before or after a cyber-incident could be significant.
Such foreign regulation may be equally or more demanding than corresponding U.S. regulation. 38 Table of Contents The ACA mandates coverage of FC2 by U.S. health insurance plans. The ACA is periodically subject to legal challenges and a continuing political effort to limit its scope or even potentially repeal it.
Such foreign regulation may be equally or more demanding than corresponding U.S. regulation. The ACA mandates coverage of FC2 by U.S. health insurance plans. The ACA is periodically subject to legal challenges and a continuing political effort to limit its scope or even potentially repeal it.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions. 40 Table of Contents Coverage and reimbursement may not be available for our products.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions. Coverage and reimbursement may not be available for our products.
We have acquired by license intellectual property and technology relating to our s abizabulin and enobosarm drug candidates and might enter into additional licenses in the future. Licenses to which we are a party contain, and we expect that any future licenses will contain, provisions requiring up-front, milestone and royalty payments to licensors.
We have acquired by license intellectual property and technology relating to our sabizabulin and enobosarm drug candidates and might enter into additional licenses in the future. Licenses to which we are a party contain, and we expect that any future licenses will contain, provisions requiring up-front, milestone and royalty payments to licensors.
We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. As a result, capital appreciation, if any, of our common stock will be our shareholders’ sole source of gain for the foreseeable future. Item 1B. Unresolved Staff Comments Not Applicable
We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. As a result, capital appreciation, if any, of our common stock will be our shareholders’ sole source of gain for the foreseeable future. 54 Table of Contents Item 1B. Unresolved Staff Comments Not Applicable
If we are not able to remediate this material weakness, or we identify additional deficiencies in the future or otherwise fail to maintain an effective system of internal controls, including disclosure controls and procedures, this could result in material misstatements of our financial statements or cause us to fail to meet our reporting obligations. We are a “smaller reporting company” and will be able to avail ourselves of reduced disclosure requirements applicable to smaller reporting companies, which could make our common stock less attractive to investors. There are provisions in our charter documents, Wisconsin law and our residual royalty agreement that might prevent or delay a change in control of our company. The trading price of our common stock has been volatile, and investors in our common stock may experience substantial losses. A substantial number of shares may be sold in the market, which may depress the market price for our common stock. Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be our shareholders’ sole source of gain.
Although we have remediated these material weaknesses, we may identify additional material weaknesses or other deficiencies in the future or otherwise fail to maintain an effective system of internal controls, including disclosure controls and procedures, and this could result in material misstatements of our financial statements or cause us to fail to meet our reporting obligations. ● We are a “smaller reporting company” and will be able to avail ourselves of reduced disclosure requirements applicable to smaller reporting companies, which could make our common stock less attractive to investors. ● There are provisions in our charter documents, Wisconsin law and our residual royalty agreement that might prevent or delay a change in control of our company. ● The trading price of our common stock has been volatile, and investors in our common stock may experience substantial losses. ● A substantial number of shares may be sold in the market, which may depress the market price for our common stock. ● Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be our shareholders’ sole source of gain.
While we cannot predict whether such legislative or regulatory proposals will be adopted, the adoption of such proposals could have a material adverse effect on our likelihood of launching a product and on the profitability of any marketed product. 41 Table of Contents Third parties may obtain FDA regulatory exclusivity to our detriment.
While we cannot predict whether such legislative or regulatory proposals will be adopted, the adoption of such proposals could have a material adverse effect on our likelihood of launching a product and on the profitability of any marketed product. Third parties may obtain FDA regulatory exclusivity to our detriment.
Such claims may lead to material costs for us, or an inability to protect or use valuable intellectual property rights, which could adversely affect our business, financial condition, results of operations and prospects. 56 Table of Contents We may need to file lawsuits or take other actions to protect or enforce our intellectual property rights.
Such claims may lead to material costs for us, or an inability to protect or use valuable intellectual property rights, which could adversely affect our business, financial condition, results of operations and prospects. We may need to file lawsuits or take other actions to protect or enforce our intellectual property rights.
As a result of the restatement, we have incurred, and may continue to incur, unanticipated costs for accounting and legal fees in connection with, or related to, such restatement.
As a result of the restatements, we have incurred, and may continue to incur, unanticipated costs for accounting and legal fees in connection with, or related to, such restatements.
If we are unsuccessful in attracting new capital, we may not be able to continue operations or may be forced to sell assets to do so. Alternatively, capital may not be available to us on favorable terms, or if at all. If available, financing terms may lead to significant dilution of our stockholders’ equity.
If we are unsuccessful in attracting new capital, we may not be able to continue operations or may be forced to sell assets to do so. Alternatively, capital may not be available to us on favorable terms, or if at all. If available, financing terms may lead to significant dilution of our stockholders ’ equity.
If third parties are successful in their claims, we might have to pay substantial damages or take other actions that are adverse to our business. There is a substantial amount of litigation involving intellectual property in the pharmaceutical industry.
If third parties are successful in their claims, we might have to pay substantial damages or take other actions that are adverse to our business. 48 Table of Contents There is a substantial amount of litigation involving intellectual property in the pharmaceutical industry.
Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations, liquidity and financial condition. We are a “smaller reporting company” and will be able to avail ourselves of reduced disclosure requirements applicable to smaller reporting companies, which could make our common stock less attractive to investors.
Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations, liquidity and financial condition. We are a “ smaller reporting company ” and will be able to avail ourselves of reduced disclosure requirements applicable to smaller reporting companies, which could make our common stock less attractive to investors.
Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be our shareholders’ sole source of gain. We have not declared or paid cash dividends on our common stock since May 2014.
Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be our shareholders ’ sole source of gain. We have not declared or paid cash dividends on our common stock since May 2014.
Budget issues, spending cuts, and global health spending priorities affecting government health agencies may also adversely affect demand for FC2 and our net revenues. 44 Table of Contents The FDA issued a final order reclassifying female condoms as Class II medical devices, which may result in increased competition for FC2 in the U.S. market.
Budget issues, spending cuts, and global health spending priorities affecting government health agencies may also adversely affect demand for FC2 and our net revenues. The FDA issued a final order reclassifying female condoms as Class II medical devices, which may result in increased competition for FC2 in the U.S. market.
Any state or federal regulatory review of us, regardless of the outcome, would be costly and time-consuming. We could experience misconduct by our employees. We will be exposed to the risk of employee fraud or other misconduct.
Any state or federal regulatory review of us, regardless of the outcome, would be costly and time-consuming. 34 Table of Contents We could experience misconduct by our employees. We will be exposed to the risk of employee fraud or other misconduct.
We may encounter challenges or delays in entering into or maintaining these relationships, and any such delays or challenges may have a material adverse impact on our business, financial condition, results of operations and prospects. We expect to rely on third party manufacturers for our drug candidates and we rely on third party manufacturers for our marketed products.
We may encounter challenges or delays in entering into or maintaining these relationships, and any such delays or challenges may have a material adverse impact on our business, financial condition, results of operations and prospects. We rely on third party manufacturers for our drug candidates.
The integration of acquired companies and their operations into our operations involves a number of risks, including: the acquired business may experience losses that could adversely affect our profitability; unanticipated costs relating to the integration of acquired businesses may increase our expenses; possible failure to accomplish the strategic objectives for an acquisition; the loss of key personnel of the acquired business; difficulties in achieving planned cost-savings and synergies may increase our expenses or decrease our net revenues; diversion of management’s attention could impair their ability to effectively manage our business operations; the acquired business may require significant expenditures for product development or regulatory approvals; the acquired business may lack adequate internal controls or have other issues with its financial systems; there may be regulatory compliance or other issues relating to the business practices of an acquired business; we may record goodwill and nonamortizable intangible assets that are subject to impairment testing on a regular basis and potential impairment charges and we may also incur amortization expenses related to intangible assets; and unanticipated management or operational problems or liabilities may adversely affect our profitability and financial condition. 46 Table of Contents Additionally, we may borrow funds or issue equity to finance strategic acquisitions.
The integration of acquired companies and their operations into our operations involves a number of risks, including: ● the acquired business may experience losses or we may assume liabilities from the acquired company that could adversely affect our profitability; ● unanticipated costs relating to the integration of acquired businesses may increase our expenses; ● possible failure to accomplish the strategic objectives for an acquisition; ● the loss of key personnel of the acquired business; ● difficulties in achieving planned cost-savings and synergies may increase our expenses or decrease our net revenues; ● diversion of management’s attention could impair their ability to effectively manage our business operations; ● the acquired business may require significant expenditures for product development or regulatory approvals; 40 Table of Contents ● the acquired business may lack adequate internal controls or have other issues with its financial systems; ● there may be regulatory compliance or other issues relating to the business practices of an acquired business; ● we may record goodwill and nonamortizable intangible assets that are subject to impairment testing on a regular basis and potential impairment charges and we may also incur amortization expenses related to intangible assets; and ● unanticipated management or operational problems or liabilities may adversely affect our profitability and financial condition.
You may be unable to sell your stock at or above your purchase price. A substantial number of shares may be sold in the market, which may depress the market price for our common stock.
You may be unable to sell your stock at or above your purchase price. 53 Table of Contents A substantial number of shares may be sold in the market, which may depress the market price for our common stock.
If we are slow or unable to adapt to any such changes, our business, prospects and ability to achieve or sustain profitability would be adversely affected. 37 Table of Contents We may fail or elect not to commercialize our drug candidates or our approved or authorized products.
If we are slow or unable to adapt to any such changes, our business, prospects and ability to achieve or sustain profitability would be adversely affected. We may fail or elect not to commercialize our drug candidates or our approved or authorized products.
There is uncertainty as to whether and when we will receive any future installment payments of purchase price or sales milestone payments under the BWV Asset Purchase Agreement, and there is a risk of a future default by BWV in performing its payment obligations, and we do not have a security interest in any of BWV’s assets and accordingly would be an unsecured creditor in the event that BWV defaulted.
There is uncertainty as to whether and when we will receive any future installment payments of purchase price under the ONCO Promissory Notes or sales milestone payments under the Asset Purchase Agreement, and there is a risk of a future default by ONCO in performing its payment obligations, and we do not have a security interest in any of ONCO's assets and accordingly would be an unsecured creditor in the event that ONCO defaulted.
A s threats related to cyber-attacks develop and grow, we may also find it necessary to make additional investments to protect our data and infrastructure, which may impact our profitability.
As threats related to cyber-attacks develop and grow, we may also find it necessary to make additional investments to protect our data and infrastructure, which may impact our profitability.
The material weakness in internal control over financial reporting described above, any new deficiencies identified in the future or any deficiencies in our disclosure controls and procedures, if not timely remediated, could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements.
Although the material weaknesses in internal control over financial reporting described above have been remediated, any new material weaknesses or other deficiencies identified in the future or any deficiencies in our disclosure controls and procedures, if not timely remediated, could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements.
As part of our business strategy, we may enter into collaboration arrangements with strategic partners to develop and commercialize our drug candidates or to develop companion diagnostics for our drug candidates. For our collaboration efforts to be successful, we must identify partners whose competencies complement our competencies.
We may be subject to risks relating to collaboration with third parties. As part of our business strategy, we may enter into collaboration arrangements with strategic partners to develop and commercialize our drug candidates or to develop companion diagnostics for our drug candidates. For our collaboration efforts to be successful, we must identify partners whose competencies complement our competencies.
The FDA also requires the reporting of certain adverse events and product malfunctions and may require the reporting of recalls or other correction or removals of devices in commercial distribution. Issues identified through such inspections and reports may result in FDA enforcement action. Moreover, issues identified through such inspections and reports may require significant resources to resolve.
The FDA also requires the reporting of certain adverse events and product malfunctions and may require the reporting of recalls or other correction or removals of devices in commercial distribution. Issues identified through such inspections and reports may result in FDA enforcement action.
Risks Related to Our Financial Position and Need for Capital We have incurred net losses in recent fiscal years and expect to continue to incur losses for the foreseeable future. We incurred a net loss of $93.1 million during the year ended September 30, 2023.
Risks Related to Our Financial Position and Need for Capital We have incurred net losses in recent fiscal years and expect to continue to incur losses for the foreseeable future. We incurred a net loss of $37.8 million during the year ended September 30, 2024.
In addition, third-party manufacturers may have a limited number of facilities in which our drug candidates or products can be produced, and any interruption of the operation of those facilities due to events such as equipment malfunction or failure or damage to the facility by natural disasters could result in the cancellation of shipments, loss of product in the manufacturing process or a shortfall in available drug candidates or products. 36 Table of Contents In addition, regulatory requirements could pose barriers to the manufacture of our drug candidates or marketed products.
In addition, third-party manufacturers may have a limited number of facilities in which our drug candidates or products can be produced, and any interruption of the operation of those facilities due to events such as equipment malfunction or failure or damage to the facility by natural disasters could result in the cancellation of shipments, loss of product in the manufacturing process or a shortfall in available drug candidates or products.
Therefore, we intend to and do rely on CROs to conduct research and development activities for our drug candidates and for the execution of our clinical studies.
We rely on CROs to conduct our research and development activities. We do not have the resources to independently conduct research and development activities. Therefore, we intend to and do rely on CROs to conduct research and development activities for our drug candidates and for the execution of our clinical studies.
Under the BWV Asset Purchase Agreement, BWV is obligated to pay an additional $10 million in installments in our fiscal year 2024 pursuant to unsecured promissory notes, plus up to an additional $80 million in milestone payments based on BWV’s net sales from ENTADFI business after closing.
Under the Asset Purchase Agreement, ONCO was obligated to pay an additional $10 million in installments in our fiscal year 2024 pursuant to the ONCO Promissory Notes, plus up to an additional $80 million in milestone payments based on ONCO’s net sales from ENTADFI business after closing.
In particular, sales to our largest telehealth customer, The Pill Club, have been eliminated due to The Pill Club’s recent Chapter 11 bankruptcy filing and the termination of our contract with The Pill Club.
In particular, sales to our largest telehealth customer, The Pill Club, have been eliminated due to The Pill Club’s Chapter 11 bankruptcy filing on April 18, 2023 and the termination of our contract with The Pill Club.
If we identify any new deficiencies in the future or are not able to successfully remediate the material weakness we have identified and related deficiencies in our disclosure controls and procedures, the accuracy and timing of our financial reporting may be adversely affected, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, we could be subject to sanctions or investigations by the SEC, or other regulatory authorities, and we may not be able to source external financing for our capital needs on acceptable terms or at all.
If we identify any new deficiencies in the future, the accuracy and timing of our financial reporting may be adversely affected, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, we could be subject to sanctions or investigations by the SEC, or other regulatory authorities, and we may not be able to source external financing for our capital needs on acceptable terms or at all.
Any of these actions could have a material adverse effect on our business. Any of our products that are tested or marketed abroad are also subject to extensive regulation by foreign governments, whether or not we have obtained FDA approval for a given product and its uses.
Any of these actions could have a material adverse effect on our business. Any of our products that are tested or marketed abroad are also subject to extensive regulation by foreign governments, whether or not we have obtained FDA approval for a given product and its uses. Such foreign regulation may be equally or more burdensome than U.S. regulation.
We identified a material weakness in internal control over financial reporting, and determined that they resulted in our internal control over financial reporting and disclosure controls and procedures not being effective, as of September 30, 2023.
We previously had identified two material weaknesses in our internal control over financial reporting, and determined that they resulted in our internal control over financial reporting and disclosure controls and procedures not being effective, as of September 30, 2023 .
We have also registered the offer and sale of all shares of common stock that we may issue under our equity compensation plans, including upon the exercise of stock options, shares of common stock we may issue under our current common stock purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”), including 3,025,000 shares of common stock that we have issued under our current common stock purchase agreement with Lincoln Park through the date of this report, and shares of common stock we may issue under our Open Market Sales Agreement℠ with Jefferies LLC.
We have also registered the offer and sale of all shares of common stock that we may issue under our equity compensation plans, including upon the exercise of stock options, shares of common stock we may issue under our current common stock purchase agreement with Lincoln Park, including 3,025,000 shares of common stock that we have issued under our current common stock purchase agreement with Lincoln Park through the date of this report.
Subject to receiving clearance of our IND, we plan to conduct a Phase 2b multicenter, double-blind, placebo-controlled, randomized, dose-finding clinical trial designed 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, with the first data from the trial expected in the second half of 2024.
We are currently conducting a Phase 2b multicenter, double-blind, placebo-controlled, randomized, dose-finding clinical trial designed 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, with the first data from the trial expected in the second quarter of calendar 2025.
Our claims agai n st The Pill Club for these receivables have been filed with The Pill Club bankruptcy estate and we will continue to pursue payment for as much of the rec e ivables as possible but based on the amount of the claims of other unsecured creditors and the limited assets remaining in The Pill Club bankruptcy es t ate it is unlikely that we will recover any of these receivables.
Our claims against The Pill Club for these receivables have been filed with The Pill Club bankruptcy estate and we will continue to pursue payment for as much of the receivables as possible but based on the amount of the claims of other unsecured creditors and the limited assets remaining in The Pill Club bankruptcy estate it is unlikely that we will recover any of these receivables.
A summary of the material risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, those relating to: Risks Related to the Regulation and Commercialization of Our Products and Drug Candidates We have limited experience in obtaining regulatory approval or emergency use authorization for a drug. We could experience delays in our planned clinical trials. Our clinical trials may be suspended or discontinued. We could experience delays or unanticipated costs in connection with our planned Phase 2b clinical trial 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 if the FDA does not accept our trial design. We may be subject to risks relating to collaboration with third parties. We intend to rely on CROs to conduct our research and development activities. We expect to rely on third party manufacturers for our drug candidates and we rely on third party manufacturers for our marketed products. Disruptions to or significantly increased costs associated with transportation and other distribution channels for our products may adversely affect our margins and profitability. Changes in law could have a negative impact on the approval of our drug candidates. We may fail or elect not to commercialize our drug candidates or our approved or authorized products. Our development and commercialization of sabizabulin as a treatment for ARDS will depend on our ability to secure significant funding through government grants, pharmaceutical company partnerships or similar external sources. We are subject to extensive and costly governmental regulation, including healthcare reform measures that may negatively impact sales of FC2. We could experience misconduct by our employees. Coverage and reimbursement may not be available for our products. We may not be able to gain and retain market acceptance for our drug candidates. Our drug products may be subject to governmental pricing controls. Third parties may obtain FDA regulatory exclusivity to our detriment.
A summary of the material risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, those relating to: Risks Related to the Regulation and Commercialization of Our Products and Drug Candidates ● We have limited experience in obtaining regulatory approval or emergency use authorization for a drug. ● We could experience delays in our planned clinical trials. ● Our clinical trials may be suspended or discontinued. ● We could experience delays or unanticipated costs in connection with our planned clinical development program of enobosarm as a treatment to augment fat loss and to prevent lean mass (muscle) loss in sarcopenic obese or overweight patients receiving a GLP-1 RA. ● Interim, preliminary and topline data from our preclinical studies and clinical trials that we announce or publish from time to time may change as more data become available and are subject to audit and verification procedures that could result in material changes in the final data. ● We may be subject to risks relating to collaboration with third parties. ● We rely on CROs to conduct our research and development activities. ● We rely on third party manufacturers for our drug candidates. ● Disruptions to or significantly increased costs associated with transportation and other distribution channels for our products may adversely affect our margins and profitability. ● Changes in law could have a negative impact on the approval of our drug candidates. ● We may fail or elect not to commercialize our drug candidates or our approved or authorized products. ● Our development and commercialization of sabizabulin as a treatment for ARDS will depend on our ability to secure significant funding through government grants, pharmaceutical company partnerships or similar external sources. ● We are subject to extensive and costly governmental regulation, including healthcare reform measures that may negatively impact sales of FC2. ● We could experience misconduct by our employees. ● Coverage and reimbursement may not be available for our products. ● We may not be able to gain and retain market acceptance for our drug candidates. ● Our drug products may be subject to governmental pricing controls. ● Third parties may obtain FDA regulatory exclusivity to our detriment.
An inability to identify or complete future acquisitions could limit our future growth. Similarly, any use of our equity or a convertible debt security in any acquisition would be dilutive to our stockholders and may affect the market price of our shares. We may experience difficulties in integrating strategic acquisitions.
Similarly, any use of our equity or a convertible debt security in any acquisition would be dilutive to our stockholders and may affect the market price of our shares. We may experience difficulties in integrating strategic acquisitions.
We regularly review our deferred tax assets for recoverability and establish a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized.
Significant judgment is required in determining our provision for income taxes. We regularly review our deferred tax assets for recoverability and establish a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized.
If Nasdaq delists our shares of common stock or warrants from trading on its exchange for failure to meet Nasdaq’s listing standards, we and our stockholders could face significant material adverse consequences including: a limited availability of market quotations for our shares; reduced liquidity for our shares; a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our shares; a limited amount of news and analyst coverage; and a decreased ability to issue additional securities or obtain additional financing in the future.
If we do not qualify for the second compliance period or fail to regain compliance during the second 180-day period, then Nasdaq will notify us of its determination to delist our common stock. 50 Table of Contents If Nasdaq delists our shares of common stock from trading on its exchange for failure to meet Nasdaq’s listing standards, we and our stockholders could face significant material adverse consequences including: ● a limited availability of market quotations for our shares; ● reduced liquidity for our shares; ● a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our shares; ● a limited amount of news and analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future.
The cost and regulatory complexity required for launching this platform, including costs with collaborators who are helping us develop the platform, who will help us in our efforts to market the platform and FC2 and who will provide telehealth physician consultations, may outweigh any increased sales resulting from this effort.
The cost and regulatory complexity required to operate and continue to refine this platform, including costs for collaborators who are helping us refine the platform and who will help us in our efforts to market the telehealth platform and FC2, may outweigh any increased sales resulting from this effort.
Difficulties encountered by this facility, such as fire, accident, natural disaster, labor disruptions, or an outbreak of a contagious disease, could halt or disrupt production at the facility, delay the completion of orders, or cause the cancellation of orders. Any of these risks could increase our expenses or reduce our net revenues.
Difficulties encountered by this facility or these suppliers, such as fire, accident, natural disaster, labor disruptions, or an outbreak of a contagious disease, could halt or disrupt production at our facility or the facilities of our suppliers, delay the completion of orders, or cause the cancellation of orders.
The interests of such stockholders may not always coincide with your interests or the interests of other stockholders and they may act in a manner that advances their best interests and not necessarily those of other stockholders.
The interests of such stockholders may not always coincide with your interests or the interests of other stockholders and they may act in a manner that advances their best interests and not necessarily those of other stockholders. We have received a notice of delisting from Nasdaq.
Risks Related to Ownership of Our Common Stock Ownership in our common stock is highly concentrated and your ability to influence corporate matters may be limited as a result. Our common stock may be subject to delisting from the Nasdaq Capital Market if our common stock has a closing bid price of less than $1.00 per share. We incurred charges to earnings in fiscal 2020 and in fiscal 2023 resulting from the APP Acquisition, and additional charges to earnings resulting from the APP Acquisition in the future may cause our operating results to suffer. The restatement of our prior quarterly financial statements may affect stockholder and investor confidence in us or harm our reputation, and may subject us to additional risks and uncertainties, including increased costs and the increased possibility of legal proceedings and regulatory inquiries, sanctions or investigations. We identified a material weakness in internal control over financial reporting, and determined that they resulted in our internal control over financial reporting and disclosure controls and procedures not being effective, as of September 30, 2023.
Risks Related to Ownership of Our Common Stock ● Ownership in our common stock is highly concentrated and your ability to influence corporate matters may be limited as a result. ● We have received a notice of delisting from Nasdaq. ● We incurred charges to earnings in fiscal 2020 and in fiscal 2023 resulting from the APP Acquisition, and additional charges to earnings resulting from the APP Acquisition in the future may cause our operating results to suffer. ● The restatements of our prior financial statements may affect stockholder and investor confidence in us or harm our reputation, and may subject us to additional risks and uncertainties, including increased costs and the increased possibility of legal proceedings and regulatory inquiries, sanctions or investigations. ● We previously had identified two material weaknesses in our internal control over financial reporting, and determined that they resulted in our internal control over financial reporting and disclosure controls and procedures not being effective, as of September 30, 2023.
W e have a concentration of accounts receivable at The Pill Club, with $3.9 million of accounts receivable as of June 30, 2023. On April 18, 2023, The Pill Club filed for Chapter 1 1 bankruptcy and its assets were sold in June 2023 to satisfy a secured credito r .
We have a concentration of accounts receivable at The Pill Club, with $3.9 million of accounts receivable as of September 30, 2024. On April 18, 2023, The Pill Club filed for Chapter 11 bankruptcy and its assets were sold in June 2023 to satisfy a secured creditor.
We may incur costs or experience supply interruptions relating to our need to transition the supply of the nitrile polymer for FC2. We have relied on a sole supplier for the principal raw material for FC2.
Any of these risks could increase our expenses or reduce our net revenues. We may incur costs or experience supply interruptions relating to our need to transition the supply of the nitrile polymer for FC2. We have relied on a sole supplier for the principal raw material for FC2.
Our need to manage our operations, growth and various projects effectively requires that we: improve our operational, financial, management and regulatory compliance controls and reporting systems and procedures; attract and retain sufficient numbers of talented employees; manage our commercialization activities for our drug candidates effectively and in a cost-effective manner; manage our relationship with our partners related to the commercialization of our drug candidates; manage our clinical trials effectively; manage our internal manufacturing operations effectively and in a cost-effective manner while increasing production capabilities for our current drug candidates to commercial levels; and manage our development efforts effectively while carrying out our contractual obligations to partners and other third parties. 51 Table of Contents In addition, historically, we have utilized and continue to utilize the services of part-time outside consultants to perform a number of tasks for us, including tasks related to preclinical and clinical testing.
Our need to manage our operations, growth and various projects effectively requires that we: ● improve our operational, financial, management and regulatory compliance controls and reporting systems and procedures; ● attract and retain sufficient numbers of talented employees; ● manage our commercialization activities for our drug candidates effectively and in a cost-effective manner; ● manage our relationship with our partners related to the commercialization of our drug candidates; ● manage our clinical trials effectively; ● manage our internal manufacturing operations effectively and in a cost-effective manner while increasing production capabilities for our current drug candidates to commercial levels; and ● manage our development efforts effectively while carrying out our contractual obligations to partners and other third parties.
If any supplier for our drug candidates or marketed products experiences any significant difficulties in its manufacturing processes, does not comply with the terms of the agreement between us or does not devote sufficient time, energy and care to providing our manufacturing needs, we could experience significant interruptions in the supply of our drug candidates or marketed products, which could impair our ability to supply our drug candidates at the levels required for our clinical trials or commercialization and prevent or delay their successful development and commercialization.
If any supplier for our drug candidates experiences any significant difficulties in its manufacturing processes, does not comply with the terms of the agreement between us or does not devote sufficient time, energy and care to providing our manufacturing needs, we could experience significant interruptions in the supply of our drug candidates, which could impair our ability to supply our drug candidates at the levels required for our clinical trials or commercialization and prevent or delay their successful development and commercialization. 31 Table of Contents Disruptions to or significantly increased costs associated with transportation and other distribution channels for our products may adversely affect our margins and profitability.
Similar risks apply to Emergency Use Authorization applications in the U.S. and other jurisdictions.
Similar risks apply to EUA applications in the U.S. and other jurisdictions.
We may take advantage of these reporting exemptions until we are no longer a “smaller reporting company.” We will remain a “smaller reporting company” until (a) the aggregate market value of our outstanding common stock held by non-affiliates as of the last business day of our most recently completed second fiscal quarter is $250 million or more and we reported annual net revenues as of our most recently completed fiscal year is $100 million or more, or (b) the aggregate market value of our outstanding common stock held by non-affiliates as of the last business day of our most recently completed second fiscal quarter is $700 million or more, regardless of annual revenue.
We may take advantage of these reporting exemptions until we are no longer a “smaller reporting company.” We will remain a “smaller reporting company” until (a) the aggregate market value of our outstanding common stock held by non-affiliates as of the last business day of our most recently completed second fiscal quarter is $250 million or more and we reported annual net revenues as of our most recently completed fiscal year is $100 million or more, or (b) the aggregate market value of our outstanding common stock held by non-affiliates as of the last business day of our most recently completed second fiscal quarter is $700 million or more, regardless of annual revenue. 52 Table of Contents There are provisions in our charter documents, Wisconsin law and our residual royalty agreement that might prevent or delay a change in control of our company.
In addition, even if our drug candidates achieve market acceptance, we may not be able to maintain that market acceptance over time if: new products or technologies are introduced that are more favorably received than our products, are more cost effective or render our products obsolete; unforeseen complications arise with respect to use of our products; or sufficient third-party insurance coverage or reimbursement does not remain available.
In addition, our efforts to educate the medical community and third-party payors on the benefits of our products may require significant resources and may never be successful. 35 Table of Contents In addition, even if our drug candidates achieve market acceptance, we may not be able to maintain that market acceptance over time if: ● new products or technologies are introduced that are more favorably received than our products, are more cost effective or render our products obsolete; ● unforeseen complications arise with respect to use of our products; or ● sufficient third-party insurance coverage or reimbursement does not remain available.
If we are required to pay all or substantially all of the amount claimed by our supplier with immediate effect, we may need to raise additional capital, curtail one or more product development or commercialization programs, scale back or eliminate the development of business opportunities, or significantly reduce expenses, sell assets, seek a merger or joint venture partner, file for protection from creditors or liquidate all of our assets.
If we lack sufficient cash to pay amounts due to this supplier when due, we may need to raise additional capital, curtail one or more product development or commercialization programs, scale back or eliminate the development of business opportunities, or significantly reduce expenses, sell assets, seek a merger or joint venture partner, file for protection from creditors or liquidate all of our assets.
If we are not able to remediate this material weakness, or we identify additional deficiencies in the future or otherwise fail to maintain an effective system of internal controls, including disclosure controls and procedures, this could result in material misstatements of our financial statements or cause us to fail to meet our reporting obligations.
Although we have remediated these material weaknesses, we may identify additional material weaknesses or other deficiencies in the future or otherwise fail to maintain an effective system of internal controls, including disclosure controls and procedures, and this could result in material misstatements of our financial statements or cause us to fail to meet our reporting obligations.
Our growth strategy may also entail expanding our use of consultants to implement these and other tasks going forward. Because we rely on consultants for certain functions of our business, we will need to be able to effectively manage these consultants to ensure that they successfully carry out their contractual obligations and meet expected deadlines.
Because we rely on consultants for certain functions of our business, we will need to be able to effectively manage these consultants to ensure that they successfully carry out their contractual obligations and meet expected deadlines.
As of December 5, 2023, our executive officers and directors collectively beneficially owned approximately 21.7% of the outstanding shares of our common stock, including approximately 10.0% beneficially owned by Mitchell Steiner, M.D., our Chairman, President and Chief Executive Officer, and 9.4% beneficially owned by Harry Fisch, M.D., our Vice Chairman and Chief Corporate Officer.
As of December 12, 2024, our executive officers and directors collectively beneficially owned approximately 14.9% of the outstanding shares of our common stock, including approximately 6.6% beneficially owned by Mitchell Steiner, M.D., our Chairman, President and Chief Executive Officer, and 6.2% beneficially owned by Harry Fisch, M.D., our Vice Chairman and Chief Corporate Officer.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe lease has a five-year term that expires in August 2025. 61 Table of Contents The Company manufactures and warehouses FC2 within a leased facility with approximately 45,800 square feet of space in Selangor D.E., Malaysia. P roduction capacity at this facility is approximately 100 million units of FC2 annually.
Biggest changeThe Company leases approximately 6,400 square feet of office space located in London, England. The lease has a five-year term that expires in August 2025. The Company manufactures and warehouses FC2 within a leased facility with approximately 45,800 square feet of space in Selangor D.E., Malaysia. Production capacity at this facility is approximately 100 million units of FC2 annually.
Removed
The Company leases approximately 6,600 square feet of office space located in Chicago, Illinois. The Company executed the lease for this office space in May 2016, for a seven-year term commencing on November 1, 2016 and ending on October 31, 2023.
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In June 2017, the Company entered into a sublease for this office space commencing on September 1, 2017 and ending on October 31, 2023. The Company continues to be responsible for performance under this lease until it expires on October 31, 2023. The Company leases approximately 6,400 square feet of office space located in London, England.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. For a description of our material pending legal proceedings, see Litigation in Note 13, Contingent Liabilities , to the financial statements included in this report and incorporated herein by reference. Item 4. Mine Safety Disclosures Not Applicable 62 Table of Contents PART II
Biggest changeItem 3. Legal Proceedings. For a description of our material pending legal proceedings, see Litigation in Note 13, Contingent Liabilities , to the financial statements included in this report and incorporated herein by reference. Item 4. Mine Safety Disclosures Not Applicable PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 62 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 63 Item 6. R eserved 63 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 64 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 78 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 56 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 56 Item 6. Reserved 56 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 57 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 69 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Shares of our common stock trade on the Nasdaq Capital Market under the symbol “VERU”. The number of record holders of our common stock on December 5, 2023 was approximately 153.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Shares of our common stock trade on the Nasdaq Capital Market under the symbol “VERU”. The number of record holders of our common stock on December 12, 2024 was approximately 148.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFor example, in the Phase 2 clinical trial evaluating enobosarm in 120 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 = We believe the clinical data we own that was generated from third-party clinical trials of enobosarm in both elderly patients and in patients with initial and ongoing muscle wasting caused by a starvation state (cancer induced muscle wasting), 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.
Biggest changeWe believe the clinical data we own that was generated from third-party clinical trials of enobosarm in both elderly patients and in patients with initial and ongoing muscle wasting caused by loss of appetite, 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. 57 Table of Contents We submitted an Investigational New Drug Application (IND) for enobosarm for a Phase 2b clinical study in January 2024.
We therefore believe there is an urgent unmet need for a drug that can ameliorate the muscle wasting effects of currently approved GLP-1 RA therapies and also allow for preferential loss of fat mass in at-risk sarcopenic obese or overweight elderly patients.
We therefore believe there is an urgent unmet need for a drug that can ameliorate the muscle wasting effects of currently approved GLP-1 RA therapies and also allow for preferential loss of fat mass in at-risk sarcopenic obese and overweight elderly patients.
These third-party clinical trials include two Phase 2 clinical trials in healthy older or sarcopenic subjects (168 subjects) and one Phase 2b clinical trial and two Phase 3 clinical trials in subjects with muscle wasting because of cancer (800 subjects), generating muscle mass and safety data from a total of 968 patients.
These third-party clinical trials include two Phase 2 clinical trials in healthy older or sarcopenic subjects (168 subjects) and one Phase 2b clinical trial and two Phase 3 clinical trials in subjects with muscle wasting because of cancer (800 subjects), generating lean mass and safety data from a total of 968 patients.
While there has been consolidation in the telehealth industry, we continue to believe that telehealth will be an important commercial strategy in the U.S. for access to birth control products, including FC2, given both healthcare industry dynamics and our product’s profile.
While there has been recent consolidation in the telehealth industry, we continue to believe that telehealth will be an important commercial strategy in the U.S. for access to birth control products, including FC2, given both healthcare industry dynamics and our product’s profile.
Investing activities Net cash from investing activities was $6.3 million in fiscal 2023, attributed to $7.0 million received from the sale of the Company’s ENTADFI ® assets, partially offset by $0.7 million in capital expenditures for manufacturing equipment and leasehold improvements.
Net cash provided by investing activities was $6.3 million in fiscal 2023, attributed to $7.0 million received from the sale of the Company’s ENTADFI® assets, partially offset by $0.7 million in capital expenditures for manufacturing equipment and leasehold improvements.
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.
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.
Certain elements of our operating plan to alleviate the conditions that raise substantial doubt, including but not limited to our ability to secure equity financing or other financing alternatives, are outside of our control and cannot be included in management’s evaluation under the requirement of ASC 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.
Certain elements of our operating plan to alleviate the conditions that raise substantial doubt, including but not limited to our ability to secure equity financing or other financing alternatives, are outside of our control and cannot be included in management’s evaluation under the requirements of ASC 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.
Veru Biopharma UK Limited has a full valuation allowance of $0.3 million. Although management uses the best information available, it is reasonably possible that the estimates used by the Company will be materially different from the actual results. These differences could have a material effect on the Company's future results of operations and financial condition.
Veru Biopharma UK Limited has a full valuation allowance of $0.4 million. Although management uses the best information available, it is reasonably possible that the estimates used by the Company will be materially different from the actual results. These differences could have a material effect on the Company's future results of operations and financial condition.
The Company's revenues are primarily derived from sales of FC2 in the U.S. prescription channel and global public health sector. These sales are recognized upon shipment or delivery of the product to the customers depending on contract terms.
Consolidated Operations Revenues . The Company's revenues are primarily derived from sales of FC2 in the U.S. prescription channel and global public health sector. These sales are recognized upon shipment or delivery of the product to the customers depending on contract terms.
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 which purchase and distribute FC2 for use in HIV/AIDS prevention and family planning programs.
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.
The Company’s significant accounting policies are disclosed in Note 1 to the financial statements included in this report. 75 Table of Contents The Company’s most critical accounting estimates include: valuation of tax assets and liabilities, measurement of fair value, and valuation of goodwill and intangible assets.
The Company’s significant accounting policies are disclosed in Note 1 to the financial statements included in this report. 66 Table of Contents The Company’s most critical accounting estimates include: valuation of tax assets and liabilities, measurement of fair value, and valuation of goodwill and intangible assets.
As of August 2023, we had completed the target enrollment of three patients in the Stage 1a portion of the Phase 3 clinical trial to assess the safety and pharmacokinetics of the combination of abemaciclib and enobosarm.
As of August 2023, we had completed the target enrollment of three patients in the Stage 1a portion of the Phase 3 ENABLAR-2 clinical trial to assess the safety and pharmacokinetics of the combination of abemaciclib and enobosarm.
We assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. 76 Table of Contents Fair Value Measurements As of September 30, 2023, the Company’s financial liabilities measured at fair value on a recurring basis, which consisted of embedded derivatives, represents the fair value of the change of control provisions in the Residual Royalty Agreement.
We assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. 67 Table of Contents Fair Value Measurements As of September 30, 2024, the Company’s financial liabilities measured at fair value on a recurring basis, which consisted of embedded derivatives, represents the fair value of the change of control provisions in the Residual Royalty Agreement.
In certain of these trials, enobosarm demonstrated a dose-dependent improvement in body composition with increases in muscle mass and reductions in fat mass.
In certain of these trials, enobosarm demonstrated a dose-dependent improvement in body composition with increases in lean mass and reductions in fat mass.
Sabizabulin, a microtubule disrupto r , 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 .
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.
These assumptions require significant judgment regarding the forecasts of the future taxable income in each tax jurisdiction and are consistent with the forecasts used to manage the Company’s business. It should be noted that the Company realized significant losses through 2005 on a consolidated basis.
These assumptions require significant judgment regarding the forecasts of the future taxable income in each tax jurisdiction and are consistent with the forecasts used to manage the Company’s business. It should be noted that the Company realized significant losses through 2005 on a consolidated basis. From fiscal 2006 through fiscal 2015, the Company generated taxable income on a consolidated basis.
There was a change in the sales mix with the U.S. prescription channel representing 36% of total FC2 net revenues in the current year compared to 77% in the prior year and the global public health sector representing 64% of total FC2 net revenues in the current year compared to 23% in the prior year.
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 compared to 36% in the prior year and the global public health sector representing 86% of total FC2 net revenues in the current year compared to 64% in the prior year.
Management has projected future pretax losses in the U.S. driven by the investment in research and development and based on their analysis concluded that an additional valuation allowance of $19.9 million should be recorded against the U.S. deferred tax assets related to federal and state net operating loss carryforwards as of September 30, 2023.
Management has projected future pretax losses in the U.S. driven by the investment in research and development and based on their analysis concluded that an additional valuation allowance of $7.3 million should be recorded against the U.S. deferred tax assets related to federal and state net operating loss carryforwards as of September 30, 2024.
Accordingly, we have concluded that substantial doubt exists about our ability to continue as a going concern for a period of at least twelve months subsequent to the issuance date of the financial statements included in this report. Operating activities Our operating activities used cash of $88.0 million in fiscal 2023.
Accordingly, we have concluded that substantial doubt exists about our ability to continue as a going concern for a period of at least twelve months subsequent to the issuance date of the financial statements included in this report. Operating activities Our operating activities used cash of $21.7 million in fiscal 2024.
On an ongoing basis, the Company evaluates its estimates and assumptions. The Company bases its estimates on historical experience to the extent practicable and on various other assumptions that it believes are reasonable under the circumstances and at the time they are made.
The Company bases its estimates on historical experience to the extent practicable and on various other assumptions that it believes are reasonable under the circumstances and at the time they are made.
The Company made total payments under the Residual Royalty Agreement of $0.6 million and $2.6 million during the year ended September 30, 2023 and 2022, respectively . The Company currently estimates the aggregate amount of quarterly revenue-based payments payable during the 12-month period subsequent to September 30, 2023 will be approximately $0.9 million under the Residual Royalty Agreement.
The Company made total payments under the Residual Royalty Agreement of $0.7 million and $0.6 million during the year ended September 30, 2024 and 2023, respectively. The Company currently estimates the aggregate amount of quarterly revenue-based payments payable during the 12-month period subsequent to September 30, 2024 will be approximately $1.0 million under the Residual Royalty Agreement.
In March 2023, the Company recorded an impairment charge of $3.9 million related to IPR&D assets recorded for sabizabulin for prostate cancer and zuclomiphene, as a result of the Company’s strategic decision to refocus its drug development efforts on those drug candidates that it believes have the best opportunity to lead to long-term success and shareholder value creation.
In fiscal 2023, the Company recorded an impairment charge of $3.9 million related to in-process research and development (“IPR&D”) assets recorded for sabizabulin for prostate cancer and zuclomiphene, as a result of the Company’s strategic decision to refocus its drug development efforts on those drug candidates that it believes have the best opportunity to lead to long-term success and shareholder value creation.
Enobosarm has extensive nonclinical and clinical experience having been evaluated in 25 separate clinical studies in approximately 1,450 subjects dosed, including three Phase 2 clinical trials in advanced breast cancer involving more than 191 patients.
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.
The U.S. continues to have a full valuation allowance on its deferred tax assets; therefore, activity in the U.S. does not have a material effect on income tax expense. Liquidity and Sources of Capital Liquidity Our cash and cash equivalents on hand at September 30, 2023 was $9.6 million, compared to $80.2 million at September 30, 2022.
The U.S. continues to have a full valuation allowance on its deferred tax assets; therefore, activity in the U.S. does not have a material effect on income tax expense. 63 Table of Contents Liquidity and Sources of Capital Liquidity Our cash and cash equivalents on hand at September 30, 2024 was $24.9 million, compared to $9.6 million at September 30, 2023.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview W e are a late clinical stage biopharmaceutical company focused on developing novel medicines for the treatment of metabolic diseases, oncolog y , and ARDS. Our drug development program includes two late-stage new chemical entities, enobosarm and sabizabulin.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview 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.
The increase in cash from changes in operating assets and liabilities included an increase in accounts payable of $18.6 million, an increase in accrued expenses and other current liabilities of $8.7 million, and a decrease in accounts receivable of $4.5 million, partially offset by an increase in inventory of $3.1 million and an increase in prepaid expenses and other assets of $2.4 million.
The decrease in cash from changes in operating assets and liabilities included a decrease in accrued expenses and other current liabilities of $11.7 million, a decrease in accounts payable of $9.1 million, and an increase in accounts receivable of $4.2 million, partially offset by a decrease in prepaid expenses and other assets of $9.8 million.
The gain associated with the change in fair value of the embedded derivatives related to Residual Royalty Agreement was $3.0 million in fiscal 2023 compared to $3.6 million in fiscal 2022 . The liabilities associated with embedded derivatives represent the fair value of the change of control provision in the Residual Royalty Agreement.
The loss associated with the change in fair value of the embedded derivatives related to Residual Royalty Agreement was $0.2 million in fiscal 2024 compared to a gain of $3.0 million in fiscal 2023. The liabilities associated with embedded derivatives represent the fair value of the change of control provision in the Residual Royalty Agreement.
Cash used in operating activities included net loss of $93.1 million, adjustments to reconcile net loss to net cash used in operating activities totaling an increase of $20.3 million and changes in operating assets and liabilities totaling a decrease of $15.2 million.
Our operating activities used cash of $88.0 million in fiscal 2023. Cash used in operating activities included net loss of $93.2 million, adjustments to reconcile net loss to net cash used in operating activities totaling an increase of $20.3 million and changes in operating assets and liabilities totaling a decrease of $15.2 million.
In September 2023, we received positive feedback from the FDA on the design of a Phase 3 clinical trial to evaluate sabizabulin in viral-induced ARDS.
In September 2023, we received agreement from the FDA on the design of a Phase 3 clinical trial to evaluate sabizabulin in broadly any viral-induced ARDS.
On February 7, 2023, the California Attorney General announced a settlement with The Pill Club over a number of alleged improper actions by The Pill Club, including alleged overbilling for FC2.
We had no oversight of The Pill Club’s operations. On February 7, 2023, the California Attorney General announced a settlement with The Pill Club over a number of alleged improper actions by The Pill Club, including alleged overbilling for FC2.
During the year ended September 30, 2023, we sold 1,225,000 shares of common stock to Lincoln Park under the Lincoln Park Purchase Agreement, resulting in proceeds to the Company of $1.4 million.
During the year ended September 30, 2024, we sold 1,800,000 shares of common stock to Lincoln Park under the Lincoln Park Purchase Agreement, resulting in proceeds to the Company of $1.7 million.
The fair value of the embedded derivatives at September 30, 2023 was $1.3 million compared to $4.3 million at September 30, 2022. The Company recognized non-operating income of $3.0 million to adjust the fair value of these instruments.
The fair value of the embedded derivatives at September 30, 2024 was $1.6 million compared to $1.3 million at September 30, 2023. The Company recognized non-operating expense of $0.3 million to adjust the fair value of these instruments.
Private Investment in Public Equity On April 12, 2023, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Frost Gamma Investments Trust (“FGI”), pursuant to which, on the date thereof, the Company issued and sold 5,000,000 shares of the Company’s common stock to FGI at a price of $1.00 per share, for a total investment of $5,000,000, through a private investment in public equity financing.
On June 26, 2023, the term of the Aspire Purchase Agreement expired and no additional shares of common stock will be sold under the agreement. 65 Table of Contents Private Investment in Public Equity On April 12, 2023, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Frost Gamma Investments Trust (“FGI”), pursuant to which, on the date thereof, the Company issued and sold 5,000,000 shares of the Company’s common stock to FGI at a price of $1.00 per share, for a total investment of $5,000,000, through a private investment in public equity financing.
The Company had net revenues from the U.S. prescription channel of $5.8 million and $30.2 million in fiscal 2023 and fiscal 2022, respectively and net revenues from the global public health sector of $10.5 million and $9.1 million in fiscal 2023 and fiscal 2022, respectively.
The Company had net revenues from the U.S. prescription channel of $2.4 million and $5.8 million in fiscal 2024 and fiscal 2023, respectively and net revenues from the global public health sector of $14.5 million and $10.5 million in fiscal 2024 and fiscal 2023, respectively.
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”).
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”). 58 Table of Contents We began patient enrollment in April 2022.
The Purchase Shares and Commitment Shares under the Lincoln Park Purchase Agreement have been registered pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-270606), and a related prospectus supplement that was filed with the SEC on May 3, 2023.
The Purchase Shares up to $50.0 million and Commitment Shares under the Lincoln Park Purchase Agreement have been registered pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-270606), and a related prospectus supplement that was filed with the SEC on May 3, 2023, as further supplemented on December 13, 2023 to reflect the Lincoln Park Amendment.
In February 2022, the Company received a tender award to supply 57% of a tender covering up to 120 million female condoms over three years in the Republic of South Africa (the “2022 South Africa Tender”). The Company began shipping units under the 2022 South Africa Tender in the second quarter of fiscal 2023.
In February 2022, the Company received a tender award to supply 57% of a tender covering up to 120 million female condoms over three years in the Republic of South Africa (the “2022 South Africa Tender”).
The amendment amends the BWV Asset Purchase Agreement by providing that the note receivable for the $4.0 million installment of the purchase price due September 30, 2023, was deemed paid and fully satisfied upon (1) the payment to the Company of the sum of $1.0 million in immediately available funds on September 29, 2023, and (2) the issuance to the Company by October 3, 2023 of 3,000 shares of BWV Series A Preferred Stock.
On September 29, 2023, the Company entered into an Amendment to the Asset Purchase Agreement providing that the promissory note for the $4.0 million installment of the purchase price due September 30, 2023 would be deemed paid and fully satisfied upon (1) the payment to the Company of the sum of $1.0 million in immediately available funds on September 29, 2023 and (2) the issuance to the Company by October 3, 2023 of 3,000 shares of Series A Convertible Preferred Stock of ONCO (the “ONCO Preferred Stock”).
Net revenues decreased 59% year over year. Most of the Company’s net revenues 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 telemedicine providers.
Net revenues increased 4% year over year. Substantially all of the Company’s net revenues 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.
Without such external funding, we do not plan to advance the development of sabizabulin as a treatment for viral-induced ARDS and will not commence our Phase 3 clinical trial to evaluate sabizabulin in 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.
The Company filed a registration statement under the Securities Act to register the resale of the shares of common stock issued to FGI, which was declared effective on May 24, 2023. 74 Table of Contents Lincoln Park Capital Fund, LLC Purchase Agreement On May 2, 2023, the Company entered into a common stock purchase agreement (the “Lincoln Park Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”) which provides that, upon the terms and subject to the conditions and limitations set forth therein, the Company has the right, but not the obligation, to sell to Lincoln Park up to $100.0 million of shares (the “Purchase Shares”) of the Company’s common stock over the 36-month term of the Lincoln Park Purchase Agreement.
Lincoln Park Capital Fund, LLC Purchase Agreement On May 2, 2023, the Company entered into a common stock purchase agreement (as amended, the “Lincoln Park Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”) which provides that, upon the terms and subject to the conditions and limitations set forth therein, the Company has the right, but not the obligation, to sell to Lincoln Park up to $100.0 million of shares (the “Purchase Shares”) of the Company’s common stock over the 36-month term of the Lincoln Park Purchase Agreement.
The shares of common stock issued to FGI pursuant to the Stock Purchase Agreement were not registered under the Securities Act.
The shares of common stock issued to FGI pursuant to the Stock Purchase Agreement were not registered under the Securities Act and may be resold pursuant to Rule 144 under the Securities Act.
Enobosarm is an oral, novel SARM that has demonstrated tissue-selective, dose-dependent improvement in body composition with increases in muscle mass and decreases in fat mass, improves insulin resistance, has no masculinizing effects in women, and has neutral prostate effects in men in third-party clinical trials.
Enobosarm is an oral, novel SARM that has demonstrated tissue-selective, dose-dependent improvement in body composition with increases in lean mass and decreases in fat mass, improvement in muscle strength and physical function, has no clinically-relevant masculinizing effects in women and has neutral prostate effects in men in previous clinical trials.
Sexual Health Program Our sexual health program consists of FC2, the only FDA-approved, female controlled, hormone free female condom indicated for the dual protection against unplanned pregnancy and sexually transmitted infections, including HIV/AIDS.
Sexual Health Program Our sexual health program consists of FC2, the only FDA-approved, female controlled, hormone-free and latex-free female condom indicated for the dual protection against unplanned pregnancy and sexually transmitted infections, including HIV/AIDS. We sell FC2 in the U.S. in both the prescription channel and in the public health sector and globally we sell FC2 in the public sector.
The Company recorded a provision for credit losses of $3.9 million in fiscal 2023 for the total amount of receivables due from The Pill Club due to their Chapter 11 bankruptcy (see Note 5 to the financial statements included in this report for additional information). There was no provision for credit losses recorded in fiscal 2022.
The Company recorded a provision for credit losses of $3.9 million in fiscal 2023 for the total amount of receivables due from The Pill Club due to their Chapter 11 bankruptcy. There was no provision for credit losses recorded in fiscal 2024.
Financing activities Net cash provided by financing activities in fiscal 2023 was $11.1 million and primarily consisted of proceeds from the sale of shares under common stock purchase agreements of $4.8 million, proceeds from the sale of shares in a private investment in public equity of $5.0 million, and proceeds from the sale of shares pursuant to the Jefferies Sales Agreement of $1.0 million .
Financing activities Net cash provided by financing activities in fiscal 2024 was $36.8 million and primarily consisted of proceeds from the sale of shares in a public offering, net of commissions and costs, of $35.2 million and proceeds from sale of shares under the common stock purchase agreement with Lincoln Park (see discussion below) of $1.7 million. 64 Table of Contents Net cash provided by financing activities in fiscal 2023 was $11.1 million and primarily consisted of proceeds from the sale of shares under common stock purchase agreements of $4.8 million, proceeds from the sale of shares in a private investment in public equity of $5.0 million, and proceeds from the sale of shares pursuant to the Jefferies Sales Agreement of $1.0 million.
We have recently seen increases in the cost of the nitrile polymer used to produce FC2, as well as transportation costs, and may also experience increases in other material costs due to the impact of inflation. Moreover, the Company's decision to adopt an internal telehealth solution means that the expenses associated with acquiring new FC2 users are expected to increase.
We have seen increases in the cost of the nitrile polymer used to produce FC2, as well as transportation costs, and may also experience increases in other material costs due to the impact of inflation. Also, the Company's decision to launch a telehealth portal may result in increases in expenses associated with acquiring new FC2 users.
Sarcopenic obese patients are patients who have 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 for the treatment of obesity.
Up to 34.4% of people over the age of 60 with obesity in the United States have sarcopenic obesity. Sarcopenic obese patients are patients who have obesity and 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.
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 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. 59 Table of Contents 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.
The Pill Club was solely responsible for its interactions with health care providers and patients (including, without limitation, the conduct of the telehealth physician-patient interactions), pricing of the FC2 products that it distributed, and legal and regulatory compliance. We had no oversight of The Pill Club’s operations.
The Pill Club took title to FC2 and then acted as a distributor of FC2. The Pill Club was solely responsible for its interactions with health care providers and patients (including, without limitation, the conduct of the telehealth physician-patient interactions), pricing of the FC2 products that it distributed, and legal and regulatory compliance.
During the 36-month term of the Aspire Purchase Agreement, we sold 4,424,450 shares of common stock to Aspire Capital resulting in proceeds to the Company of $8.4 million. On June 26, 2023, the term of the Aspire Purchase Agreement expired and no additional shares of common stock will be sold under the agreement.
During the 36-month term of the Aspire Purchase Agreement, we sold 4,424,450 shares of common stock to Aspire Capital resulting in proceeds to the Company of $8.4 million.
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.
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 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.
Net cash provided by financing activities in fiscal 2022 was $1.1 million and primarily consisted of proceeds from stock option exercises of $1.1 million . 73 Table of Contents Sources of Capital SWK Credit Agreement and Residual Royalty Agreement On March 5, 2018, the Company entered into a Credit Agreement (as amended, the “Credit Agreement”) with the financial institutions party thereto from time to time (the “Lenders”) and SWK Funding LLC, as agent for the Lenders (the “Agent”), for a synthetic royalty financing transaction.
Sources of Capital SWK Credit Agreement and Residual Royalty Agreement On March 5, 2018, the Company entered into a Credit Agreement (as amended, the “Credit Agreement”) with the financial institutions party thereto from time to time (the “Lenders”) and SWK Funding LLC, as agent for the Lenders (the “Agent”), for a synthetic royalty financing transaction.
Critical Accounting Estimates The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States. The Company is required to adopt various accounting policies and to make estimates and assumptions in preparing its financial statements that affect the reported amounts of assets, liabilities, net revenues and expenses.
The Company is required to adopt various accounting policies and to make estimates and assumptions in preparing its financial statements that affect the reported amounts of assets, liabilities, net revenues and expenses. On an ongoing basis, the Company evaluates its estimates and assumptions.
While the California Attorney General’s allegations included The Pill Club’s practices with respect to sales of FC2 by The Pill Club, we were not involved in such business practices and no claims against Veru have been made by the California Attorney General. 69 Table of Contents We also had a concentration of accounts receivable with The Pill Club, which totaled $3.9 million as of September 30, 2023.
While the California Attorney General’s allegations included The Pill Club’s practices with respect to sales of FC2 by The Pill Club, we were not involved in such business practices and no claims against Veru have been made by the California Attorney General.
In March 2023, the Company announced its strategic decision to refocus its drug development efforts on those drug candidates that it believes have the best opportunity to lead to long-term success and shareholder value creation. As part of this strategic decision, the Company has indefinitely ceased development of sabizabulin for prostate cancer and zuclomiphene.
The charge was primarily a result of the Company’s strategic decision to refocus its drug development efforts on those drug candidates that it believes to have the best opportunity to lead to long-term success and shareholder value creation, which led the Company to indefinitely cease development of sabizabulin for prostate cancer and zuclomiphene.
Interest expense, which is related to the accretion of the liability for the Residual Royalty Agreement, was $2.4 million in fiscal 2023, which is a decrease from $4.4 million in fiscal 2022 . The decrease relates to a decrease in actual and projected FC2 sales.
See Note 15 to the financial statements included in this report for additional information. Interest expense, which is related to the accretion of the liability for the Residual Royalty Agreement, was $0.6 million in fiscal 2024, which is a decrease from $2.4 million in fiscal 2023. The decrease relates to a decrease in projected FC2 sales.
The decrease in the fair value of the embedded derivates is due primarily to a decrease in projected FC2 net revenues in future periods. Goodwill and Intangible Assets The Company has $6.9 million recorded as goodwill at September 30, 2023 and 2022 and $6,000 and $4.0 million recorded as intangible assets at September 30, 2023 and 2022, respectively.
The increase in the fair value of the embedded derivates is due primarily to an increase in the probability of a change in control of FC2. Goodwill and Intangible Assets The Company has $6.9 million recorded as goodwill at September 30, 2024 and 2023.
The purchase price for the transaction was $20.0 million, consisting of $6.0 million paid at closing, $4.0 million payable by September 30, 2023, $5.0 million payable 12 months after closing, and $5.0 million payable by September 30, 2024, plus up to $80.0 million based on BWV’s net revenues from ENTADFI after closing.
The purchase price for the transaction was $20.0 million, consisting of $6.0 million paid at closing, $4.0 million payable pursuant to a promissory note due on September 30, 2023, $5.0 million payable pursuant to a Promissory Note due on April 19, 2024 (the “April 2024 Promissory Note”), and $5.0 million payable pursuant to a Promissory Note due on September 30, 2024 (the “September 2024 Promissory Note” and, together with the April 2024 Promissory Note, the “ONCO Promissory Notes”), plus up to $80.0 million based on ONCO’s net revenues from ENTADFI after closing (the “Milestone Payments”).
The Pill Club had historically been our largest telehealth customer for FC2, accounting for 24% of our net revenues (including 67% of our U.S. prescription channel revenue) in fiscal 2023 and 44% of our net revenues (including 58% of our U.S. prescription channel revenue) in fiscal 2022.
The Pill Club had historically been our largest telehealth customer for FC2, accounting for 24% of our net revenues (including 67% of our U.S. prescription channel revenue) in fiscal 2023. We sold FC2 to The Pill Club at a wholesale price pursuant to purchase orders received from The Pill Club from time to time.
Our operating activities used cash of $47.5 million in fiscal 2022. Cash used in operating activities included net loss of $83.8 million, adjustments to reconcile net loss to net cash used in operating activities totaling an increase of $10.4 million and changes in operating assets and liabilities of $25.9 million.
Cash used in operating activities included net loss of $37.8 million, adjustments to reconcile net loss to net cash used in operating activities totaling an increase of $15.9 million and changes in operating assets and liabilities, which net to an immaterial amount.
Forming a conclusion that a valuation allowance is not needed is difficult when there is significant negative evidence such as cumulative losses in recent years.
However, the Company had a cumulative pretax loss in the U.S. for fiscal 2024 and the three preceding fiscal years. Forming a conclusion that a valuation allowance is not needed is difficult when there is significant negative evidence such as cumulative losses in recent years.
In the second half of fiscal 2023, research and development expense has decreased 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. 71 Table of Contents Selling, general and administrative expenses increased to $48.1 million in fiscal 2023 from $43.2 million in fiscal 2022.
Research and development expenses decreased to $12.8 million in fiscal 2024 from $51.2 million in fiscal 2023. The decrease is due to the Company's updated strategy to refocus development efforts on those drug candidates that it believes have the best opportunity to lead to long-term success and shareholder value creation.
We will need substantial capital to support our drug development and any related commercialization efforts for our drug candidates.
The Company is not profitable and has had negative cash flow from operations. We will need substantial capital to support our drug development and any related commercialization efforts for our drug candidates.
There were no reported drug-to-drug interactions between abemaciclib and enobosarm or new safety findings in the three patients as of the data cutoff date.
There were no reported drug-to-drug interactions between abemaciclib and enobosarm or new safety findings in the three patients as of the data cutoff date. Further, the early preliminary clinical results showed two partial responses and one stable disease in the first three patients based on local assessments.
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.
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.
Additional capital may not be available at such times and in such amounts as needed by us to fund our activities on a timely basis. 72 Table of Contents These uncertainties raise substantial doubt regarding our ability to continue as a going concern for a period of twelve months subsequent to the issuance date of the financial statements included in this report.
These uncertainties raise substantial doubt regarding our ability to continue as a going concern for a period of twelve months subsequent to the issuance date of the financial statements included in this report.
To obtain the capital necessary to fund our operations, we expect to finance our cash needs through public or private equity offerings, debt financing transactions and/or other capital sources.
To obtain the capital necessary to fund our operations, we expect to finance our cash needs through public or private equity offerings, debt financing transactions and/or other capital sources. Additional capital may not be available at such times and in such amounts as needed by us to fund our activities on a timely basis.
Enobosarm has been evaluated in five separate third-party clinical trials in which muscle mass measurement was a primary or co-primary endpoint.
Advanced cancer can cause a loss of appetite where there is significant loss of both lean mass and fat mass. Enobosarm has been evaluated in five separate third-party clinical trials in which lean mass measurement was a primary or co-primary endpoint.
Additionally, the Company incurred commercialization costs of $13.4 million in the current year compared to $9.3 million in the prior year related to preparation for the potential launch of sabizabulin for COVID-19 prior to the FDA’s declination decision on the Company’s EUA application.
The decrease is due primarily to commercialization costs of $13.4 million in the prior year related to preparation for the potential launch of sabizabulin for COVID-19 prior to the FDA’s declination decision on the Company’s EUA application and selling costs of $1.2 million in the prior year related to ENTADFI, which was sold in April 2023.
Enobosarm, a s elective androgen receptor modulator (“SARM”), is being developed for two indications: (i) enobosarm 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 atro p hy and muscle weakness and (ii) subject to the availability of sufficient funding, enobosarm for 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.
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 2nd 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.
The Company evaluates the carrying value of its goodwill and indefinite-lived intangible assets, which consisted of in-process research and development (IPR&D), on an annual basis in the fourth quarter of each fiscal year or more frequently when indicators of impairment exist.
The Company evaluates the carrying value of its goodwill on an annual basis in the fourth quarter of each fiscal year or more frequently when indicators of impairment exist. An impairment of goodwill could occur if the carrying amount of a reporting unit exceeded the fair value of that reporting unit.
Net cash from investing activities was $4.3 million in fiscal 2022, attributed to $5.0 million received on notes receivable from the sale of the Company’s PREBOOST ® business, partially offset by $0.7 million in capital expenditures for manufacturing and office equipment.
Investing activities Net cash provided by investing activities was $0.1 million in fiscal 2024, attributed to $0.3 million received from the sale of the Company’s ENTADFI® assets, partially offset by $0.2 million in capital expenditures for property and equipment, primarily at our Malaysia location.
We expect to continue this trend of investing significant resources in research and development due to advancement of our drug candidates. ‎ 70 Table of Contents Results of Operations YEAR ENDED SEPTEMBER 30, 2023 COMPARED TO YEAR ENDED SEPTEMBER 30 , 2022 The Company generated net revenues of $16.3 million and net loss of $93.1 million, or $(1.10) per basic and diluted common share, in fiscal 2023, compared to net revenues of $39.4 million and net loss of $83.8 million, or $(1.05) per basic and diluted common share, in fiscal 2022 .
Results of Operations YEAR ENDED September 30, 2024 COMPARED TO YEAR ENDED September 30, 2023 The Company generated net revenues of $16.9 million and net loss of $37.8 million, or $(0.28) per basic and diluted common share, in fiscal 2024, compared to net revenues of $16.3 million and net loss of $93.2 million, or $(1.10) per basic and diluted common share, in fiscal 2023.
Subject to receiving clearance of our IND, we plan to conduct a 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 sarcopenic obese or overweight elderly patients receiving a GLP-1 RA who are at-risk for developing muscle atrophy and muscle weakness, with the first data from the trial expected in the second half of 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 sarcopenic obese or overweight older (>60 years of age) patients receiving semaglutide (Wegovy®).
Our claims against The Pill Club for these receivables, and an additional claim of $1.4 million for contractual damages, have been filed with The Pill Club bankruptcy estate. It is uncertain at this time what assets will be available to satisfy unsecured creditors such as Veru.
The Pill Club filed for Chapter 11 bankruptcy on April 18, 2023 and its assets have been sold to satisfy a secured creditor. Our claims against The Pill Club for these receivables, and an additional claim of $1.4 million for contractual damages, have been filed with The Pill Club bankruptcy estate.
Consequently, there may be an unfavorable effect on the Company's selling expenses and income from operations if it cannot pass through these cost escalations to its customers. Conducting research and development is central to our oncology, obesity and overweight, and infectious disease programs.
As a result, there may be an unfavorable impact on the Company's selling expenses and income from operations if it cannot pass through these increases to its customers. Conducting research and development is central to our drug development programs. The Company has several products under development and management routinely evaluates each product in its portfolio of products.
In third-party clinical trials evaluating currently approved GLP-1 RA in obese patients, trial participants exhibited significant weight loss composed of reductions in both fat and lean (muscle and bone) mass. Of the total weight loss reported in certain of these third-party clinical trials, 20-50% of the total weight loss reported by patients was attributable to muscle loss.
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. Obesity Program In reported third-party clinical trials evaluating currently approved GLP-1 RA in obese patients, trial participants exhibited significant weight loss composed of reductions in both fat and lean (muscle and bone) mass.
We sell FC2 in both the U.S. commercial sector and in the public health sector both in the U.S. and globally. 67 Table of Contents In the U.S. commercial sector, FC2 is available by prescription through multiple telehealth and internet pharmacy channels as well as retail pharmacies.
In the U.S. prescription channel, FC2 is available through multiple telehealth and telepharmacy channels as well as retail pharmacies.
The decrease in the fair value of the embedded derivates is due to a decrease in projected FC2 net revenues in future periods. See Note 3 and Note 9 to the financial statements included in this report for additional information. Income tax expense in fiscal 2023 was $0.5 million, compared to income tax expense of $0.2 million in fiscal 2022.
The increase in the fair value of the embedded derivates is due to an increase in the probability of a change in control and a decrease in discount rates. See Note 3 and Note 9 to the financial statements included in this report for additional information.

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