Veru(VERU) - 2025 Q1 - Quarterly Report

Financial Performance - The company reported net revenues from discontinued operations of $4,484,591 for the three months ended December 31, 2024, compared to$2,140,726 for the same period in 2023, representing an increase of approximately 109%[39]. - The cost of sales for the discontinued operations was $2,900,514 for the three months ended December 31, 2024, compared to$990,274 in 2023, resulting in a gross profit of $1,584,077, up from$1,150,452[39]. - The company reported a net loss from discontinued operations of $7,135,444 for the three months ended December 31, 2024, compared to a net loss of$608,598 in the same period of 2023[39]. - The company incurred a loss on the sale of the FC2 business amounting to $4,204,435, which contributed to an operating loss of$3,722,345 for the three months ended December 31, 2024[39]. - Total operating expenses for the discontinued operations were $1,101,987 in Q4 2024, a decrease from$1,641,283 in Q4 2023, indicating a reduction of approximately 33%[39]. Cash Flow and Financing - Cash, cash equivalents, and restricted cash on hand at December 31, 2024, was $26.6 million, an increase from$24.9 million at September 30, 2024, with working capital at $22.0 million[151]. - Operating activities used cash of$11.3 million in the three months ended December 31, 2024, including a net loss of $8.9 million and adjustments totaling an increase of$1.1 million[154]. - The company has substantial doubt regarding its ability to continue as a going concern for at least twelve months following the issuance date of the financial statements due to negative cash flow from operations[32]. - The company plans to finance its operations through public or private equity offerings, debt financing transactions, and/or other capital sources to address its cash needs[31]. - The Company completed a public offering of 52,708,332 shares at a price of $0.72 per share, resulting in net proceeds of approximately$35.2 million[166]. Asset Sales and Liabilities - The purchase price for the FC2 Business Sale was $18.0 million in cash, with expected net proceeds of$16.4 million after adjustments and costs[34]. - The company completed the sale of its FC2 female condom business for a purchase price of $18.0 million, with expected net proceeds of$16.4 million after costs and adjustments[136]. - The company entered into an agreement to resolve a commercial dispute with a supplier, agreeing to pay $8.3 million, with$2.3 million payable upon execution and the remainder in installments[93]. - The company recognized a gain on extinguishment of debt of $8.6 million related to the change of control payment of$4.2 million made on December 30, 2024[56]. - The company had a total residual royalty agreement liability of $9,876,629 as of December 31, 2024, which included an embedded derivative liability[58]. Research and Development - Research and development expenses increased significantly to$5.7 million for the three months ended December 31, 2024, compared to $1.7 million in the same period in 2023, primarily due to the Phase 2b QUALITY clinical trial[145]. - The Phase 2b QUALITY clinical trial for enobosarm received FDA clearance and enrolled 168 subjects, focusing on preserving muscle and reducing fat in older patients[113]. - The proposed Phase 3 clinical trial will focus on older patients (>60 years) with obesity or overweight, assessing the effect of enobosarm on physical function and body composition[120]. - The company is developing enobosarm and sabizabulin for cardiometabolic and inflammatory diseases, with enobosarm targeting muscle loss in sarcopenic obese patients[107][108]. - The anticipated expenditure for the ASCVD program, including chronic toxicology animal studies, is approximately$2 million through the first half of calendar 2026[133]. Clinical Trials and Regulatory Challenges - The company may experience delays in planned clinical trials, which could be interrupted, delayed, suspended, or terminated once commenced[194]. - Regulatory approval has not been obtained for any of the company's drug candidates to date, which may impact future commercialization efforts[196]. - The company plans to conduct a Phase 2 clinical study of sabizabulin with approximately 120 patients randomized into three treatment groups, focusing on a primary endpoint of percent change in low attenuation non-calcified plaque volume in coronary arteries[133]. - The company relies on contract research organizations (CROs) and third-party manufacturers for its research and development activities and drug candidates[181]. - Any delays or issues with CROs could significantly impact the company's ability to obtain regulatory approval and commercialize drug candidates[205]. Market and Competitive Landscape - Physicians' acceptance of drug candidates is critical for revenue generation, and factors such as safety, efficacy, and competition will influence this acceptance[219]. - Market acceptance and sales of drug candidates depend on coverage and reimbursement policies, which may be influenced by health care reform measures[218]. - Governmental pricing controls in foreign markets and potential U.S. proposals could adversely affect product launch likelihood and profitability[220]. - The company may face claims or investigations relating to business practices, which could result in substantial legal fees and divert management's attention[185]. - The company has identified two material weaknesses in its internal control over financial reporting, which were remediated, but there is a risk of identifying additional weaknesses in the future[190].