Veru(US:VERU)2020-05-13 16:14Financial Performance - The Company has incurred quarterly operating losses since Q4 of fiscal 2016 and anticipates continued cash consumption and substantial net losses as it develops drug candidates[38]. - The comprehensive loss for the three and six months ended March 31, 2020, is equivalent to the reported net loss[32]. - Total net revenues for the three months ended March 31, 2020, were $9,943,104, a 42.5% increase from $6,976,115 in the same period of 2019[51]. - For the six months ended March 31, 2020, total net revenues reached $20,521,120, compared to $13,347,924 for the same period in 2019, reflecting a 54.1% growth[51]. - Revenue from the U.S. prescription channel for the three months ended March 31, 2020, was $6,952,627, a 168.5% increase from $2,594,271 in the same period of 2019[51]. - FC2 net revenues increased by 39% year over year to $9.9 million for the three months ended March 31, 2020, compared to $7.0 million for the same period in 2019[153]. - FC2 net revenues represented 96% of total net revenues for the three months ended March 31, 2020, with a 30% decrease in total unit sales and a 98% increase in average sales price per unit[154]. - The Company anticipates potential revenue challenges due to pricing pressure from large global agencies and donor governments in the developed world[157]. Cash Position and Financing - The Company believes its current cash position and expected sales from commercial products are adequate to fund operations for the next 12 months[39]. - Cash on hand at March 31, 2020, was $2.6 million, down from $6.3 million at September 30, 2019, with working capital decreasing to $0.6 million[172]. - The Company intends to pursue equity or debt financing opportunistically, which may include selling common stock under its common stock purchase agreement[39]. - The Company plans to pursue various financing alternatives, including equity financing and debt financing, to support operations for the next 12 months[174]. - The Company received net proceeds of approximately $9.9 million from a $10.0 million term loan under the Credit Agreement established on March 5, 2018[70]. - The Company was approved for a $0.5 million loan under the U.S. Small Business Administration's Paycheck Protection Program, with the potential for full forgiveness if funds are used for payroll costs, rent, and utilities[187]. Operational Challenges and COVID-19 Impact - The Company is closely monitoring the impact of the COVID-19 pandemic on its operations, with no material adverse effects reported in Q1 2020[120]. - The COVID-19 pandemic has caused significant disruptions, including the temporary closure of the manufacturing facility in Malaysia[136]. - Significant uncertainty remains regarding the impact of COVID-19 on operations and clinical trials, with potential delays in recruitment and trial initiation[137]. - The Company has not terminated any employees in the U.S. due to the COVID-19 pandemic, intending to use the PPP Loan proceeds for salaries and other expenses[187]. Research and Development - The Phase 1b portion of the VERU-111 trial enrolled 39 men, with 75% showing decreases in PSA levels after treatment[123]. - The maximum tolerated dose (MTD) of VERU-111 was determined to be 72 mg, with 3 out of 11 men experiencing reversible Grade 3 diarrhea[123]. - The Company plans to advance zuclomiphene citrate to a Phase 3 clinical trial in late 2020 after successful Phase 2 results[124]. - VERU-100 is a long-acting GnRH antagonist designed for advanced prostate cancer treatment, anticipated to enter Phase 2 study in Q3 2020[125]. - The Phase 2 clinical trial for VERU-111, targeting COVID-19, will involve 40 hospitalized patients and evaluate daily oral doses for 21 days[126]. - The Company is actively seeking grant funding to expedite the clinical development of VERU-111 for COVID-19[126]. Assets and Liabilities - As of March 31, 2020, the Company's financial liabilities measured at fair value included embedded derivatives classified within Level 3 of the fair value hierarchy, with an ending balance of $3,550,000[45]. - The change in fair value of derivative liabilities for the six months ended March 31, 2020, was a decrease of $75,000 compared to an increase of $403,000 for the same period in 2019[45]. - The Company had approximately $508,000 in contract liabilities as of March 31, 2020, up from $249,000 at September 30, 2019[51]. - Accounts receivable, net, increased to $5,802,016 as of March 31, 2020, from $5,021,057 at September 30, 2019[55]. - Inventory, net, rose to $6,016,323 as of March 31, 2020, compared to $3,647,406 at September 30, 2019[63]. - The Company reported total intangible assets of $20,900,000 as of March 31, 2020, with no change from September 30, 2019[67]. - Goodwill remained unchanged at $6.9 million as of March 31, 2020, consistent with the balance at September 30, 2019[69]. - The Company has a net deferred tax asset of $8.34 million as of March 31, 2020[116]. Shareholder and Stock Information - The Company sold a total of 4,417,010 shares of common stock to Aspire Capital, generating proceeds of $9.1 million as of March 31, 2020[90]. - During the six months ended March 31, 2020, the Company sold 300,000 shares of common stock to Aspire Capital, resulting in proceeds of $1.2 million[89]. - As of March 31, 2020, the Company had 5,876,321 shares available for issuance under the 2018 Equity Incentive Plan, which allows for a total of 11.0 million shares[93]. - The total intrinsic value of options exercised during the six months ended March 31, 2020, was approximately $1.1 million, significantly higher than $48,000 for the same period in 2019[98]. - Share-based compensation expenses for the three months ended March 31, 2020, totaled $681,680, compared to $496,209 for the same period in 2019, reflecting a 37.2% increase[92]. - The Company recorded share-based compensation expenses in research and development of $184,627 for the three months ended March 31, 2020, compared to $81,005 for the same period in 2019, marking a 128.5% increase[92].