Veru(US:VERU)2024-08-08 14:45PART I. FINANCIAL INFORMATION This section presents Veru Inc.'s unaudited condensed consolidated financial statements and management's analysis for the periods ended June 30, 2024 Financial Statements Presents Veru Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and notes, with restated prior-period figures due to R&D accounting errors Unaudited Condensed Consolidated Balance Sheets Presents Veru Inc.'s financial position, detailing assets, liabilities, and equity as of June 30, 2024, and September 30, 2023 Condensed Consolidated Balance Sheet Data (as of June 30, 2024 vs. September 30, 2023) | Metric | June 30, 2024 ($) | September 30, 2023 (Restated) ($) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $29,150,879 | $9,625,494 | | Total current assets | $38,476,141 | $22,933,222 | | Total assets | $64,631,654 | $50,023,091 | | Liabilities & Equity | | | | Total current liabilities | $10,620,035 | $17,810,732 | | Total liabilities | $27,011,198 | $30,344,930 | | Total stockholders' equity | $37,620,456 | $19,678,161 | Unaudited Condensed Consolidated Statements of Operations Details Veru Inc.'s revenues, expenses, and net loss for the three and nine months ended June 30, 2024, with comparative restated figures Condensed Consolidated Statements of Operations | Metric | Three Months Ended June 30, 2024 ($) | Three Months Ended June 30, 2023 (Restated) ($) | Nine Months Ended June 30, 2024 ($) | Nine Months Ended June 30, 2023 (Restated) ($) | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $3,953,870 | $3,341,185 | $10,229,897 | $12,434,946 | | Gross profit | $1,338,015 | $1,230,618 | $3,166,766 | $6,024,748 | | Research and development | $4,879,024 | $8,787,636 | $9,515,865 | $47,259,464 | | Selling, general and administrative | $7,507,609 | $10,902,916 | $23,389,380 | $41,283,275 | | Operating loss | $(10,938,618) | $(13,736,311) | $(28,710,107) | $(85,606,082) | | Net loss | $(10,968,874) | $(12,522,646) | $(29,270,803) | $(85,020,577) | | Net loss per share (basic and diluted) | $(0.07) | $(0.14) | $(0.22) | $(1.02) | Unaudited Condensed Consolidated Statements of Cash Flows Summarizes Veru Inc.'s cash inflows and outflows from operating, investing, and financing activities for the nine months ended June 30, 2024 Condensed Consolidated Statements of Cash Flows (Nine Months Ended June 30) | Metric | 2024 ($) | 2023 (Restated) ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(17,316,239) | $(78,521,354) | | Net cash provided by investing activities | $14,714 | $5,547,174 | | Net cash provided by financing activities | $36,826,910 | $8,996,641 | | Net increase (decrease) in cash | $19,525,385 | $(63,977,539) | | Cash and cash equivalents at end of period | $29,150,879 | $16,213,136 | Notes to Unaudited Condensed Consolidated Financial Statements Details accounting policies, restatement specifics, liquidity, fair value measurements, revenue, debt, equity, and contingent liabilities from shareholder litigation - Veru Inc. is a late clinical stage biopharmaceutical firm focused on metabolic diseases, oncology, and ARDS, with the FC2 Female Condom as its primary commercial product24 - Financial statements for the three and nine months ended June 30, 2023, were restated due to errors in estimating research and development expenses from third-party service providers262728 - Current cash and FC2 sales are expected to fund operations for 12 months, but the company's ability to raise capital is impaired due to ineligibility to file Form S-3 until at least March 1, 202535 - A December 2023 public offering of 52.7 million shares at $0.72 per share raised net proceeds of approximately $35.2 million69 - Several shareholder lawsuits allege securities law violations related to public statements about sabizabulin for COVID-19, with potential losses currently unestimable929398 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strategic pipeline, FC2 business, and financial results for Q2 and 9M 2024, noting revenue mix shifts, reduced R&D/SG&A, and improved liquidity Overview Provides an overview of Veru Inc.'s late clinical stage biopharmaceutical focus, key drug candidates, and commercial operations - Veru Inc. is a late clinical stage biopharmaceutical company with key drug candidates enobosarm (obesity, breast cancer) and sabizabulin (viral-induced ARDS)110 - Primary clinical focus is enobosarm for obesity in a Phase 2b QUALITY trial, with topline results expected by Q4 2024111117 - Development of enobosarm for breast cancer and sabizabulin for ARDS is contingent on external funding and not currently advancing120127 - Commercial operations center on the FC2 Female Condom, sold in the U.S. prescription channel and global public health sector128130 Results of Operations Analyzes Veru Inc.'s financial performance, including revenues, gross profit, and operating expenses, for the three and nine months ended June 30, 2024 Financial Performance Comparison (Three Months Ended June 30) | Metric | 2024 ($M) | 2023 (Restated) ($M) | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $4.0M | $3.3M | +18% | Increase in global public health sector sales, partially offset by a decrease in U.S. prescription channel sales | | Gross Profit | $1.3M | $1.2M | +8% | Increase in sales volume | | Gross Margin | 34% | 37% | -3 p.p. | Sales mix shifted to lower-margin global public health sector products | | R&D Expenses | $4.9M | $8.8M | -44% | Strategic refocus away from prior programs, including winding down sabizabulin for COVID-19 activities | | SG&A Expenses | $7.5M | $10.9M | -31% | Decreased share-based compensation, and elimination of ENTADFI selling costs and sabizabulin pre-launch costs from prior year | Financial Performance Comparison (Nine Months Ended June 30) | Metric | 2024 ($M) | 2023 (Restated) ($M) | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $10.2M | $12.4M | -18% | Decrease in U.S. prescription channel sales, primarily due to the loss of The Pill Club as a customer | | Gross Profit | $3.2M | $6.0M | -47% | Lower sales and unfavorable sales mix | | Gross Margin | 31% | 48% | -17 p.p. | Shift away from higher-margin U.S. prescription channel sales | | R&D Expenses | $9.5M | $47.3M | -80% | Strategic refocus and pause in drug programs; prior year included significant costs for sabizabulin for COVID-19 | | SG&A Expenses | $23.4M | $41.3M | -43% | Elimination of sabizabulin pre-launch commercialization costs and ENTADFI selling costs from prior year | Liquidity and Sources of Capital Examines Veru Inc.'s cash position, working capital, and cash flow activities, highlighting changes in liquidity and capital sources - Cash and cash equivalents increased to $29.2 million at June 30, 2024, from $9.6 million at September 30, 2023, primarily due to a public stock offering158 - Working capital improved to $27.9 million from $5.1 million, driven by increased cash and decreased accounts payable158 - Net cash used in operating activities for the nine months ended June 30, 2024, was $17.3 million, a significant improvement from $78.5 million in the prior-year period163164 - Net cash provided by financing activities was $36.8 million, primarily from $35.2 million net proceeds of the December 2023 public offering and $1.7 million from Lincoln Park Capital165 Quantitative and Qualitative Disclosures About Market Risk Reports no material changes to the company's market risk exposures since the Annual Report on Form 10-K for the fiscal year ended September 30, 2023 - No material changes to market risk exposures have occurred since the September 30, 2023, annual report183 Controls and Procedures Management concluded disclosure controls and procedures were ineffective due to two material weaknesses in internal control over financial reporting, with remediation underway - CEO and CFO concluded that disclosure controls and procedures were not effective as of June 30, 2024185 - Two material weaknesses identified: inadequate controls for technical accounting guidance on nonrecurring transactions and insufficient management review over R&D expense estimation187188 - Remediation activities are underway, enhancing review procedures for complex transactions and improving third-party R&D expense estimation processes190191 PART II. OTHER INFORMATION This section provides additional information, including legal proceedings, new risk factors, and a list of exhibits filed with the report Legal Proceedings Details material pending legal proceedings, including class action and shareholder derivative lawsuits alleging securities law violations related to sabizabulin - The company is subject to material pending legal proceedings, detailed in Note 12 of the financial statements195 - Legal proceedings include a putative class action complaint and several shareholder derivative actions against the company and its officers/directors9293959697 Risk Factors Highlights new material risks, including Form S-3 ineligibility until March 2025, impairing capital raising, and uncertainty of BWV payments for ENTADFI assets - Veru Inc. is ineligible to file new Form S-3 registration statements until at least March 1, 2025, due to untimely SEC filings, potentially impairing capital raising197199 - Form S-3 ineligibility will prevent sales under the Lincoln Park Purchase Agreement and potentially the Jefferies Sales Agreement until March 1, 2025199 - Significant uncertainty exists regarding collecting $10 million in promissory notes and up to $80 million in milestone payments from BWV for ENTADFI assets201202203 Exhibits Lists all exhibits filed with the Quarterly Report on Form 10-Q, including material agreements, corporate governance documents, and CEO/CFO certifications - The report includes a list of exhibits, such as corporate governance documents, material agreements, and required CEO/CFO certifications205210