Veru Inc. Q2 FY2026 Earnings Call - Enobosarm Phase IIb Plateau Study Targets GLP-1 Weight Loss Plateau & Muscle Loss

Operator: Good morning, ladies and gentlemen, and welcome to Veru Inc.’s Investors Conference Call. I would now like to turn the conference over to Mr. Samuel Fisch, Veru Inc.’s Executive Director, Investor Relations and Corporate Communications. Please go ahead.

Samuel Fisch, Executive Director of Investor Relations and Corporate Communications, Veru Inc.: Good morning. The statements made on this conference call may be forward-looking statements. Forward-looking statements may include, but are not necessarily limited to, statements of the company’s plans, objectives, expectations, or intentions regarding its business, operations, regulatory interactions, finances, and development and product portfolio. Such forward-looking statements are subject to known and unknown risks and uncertainties, and our actual results may differ significantly from those projected, suggested, or included in any forward-looking statements. Risks that may cause actual results or developments to differ materially are contained in our Form 10-Q and Form 10-K SEC filings, as well as in our press releases from time to time. I would now like to turn the conference call over to Dr. Mitchell Steiner, Veru Inc.’s Chairman, CEO, and President.

Dr. Mitchell Steiner, Chairman, Chief Executive Officer, and President, Veru Inc.: Good morning. With me on this morning’s call are Dr. K. Gary Barnette, the Chief Scientific Officer; Michele Greco, the Chief Financial Officer and Chief Administrative Officer; Philip Greenberg, General Counsel; and Samuel Fisch, the Executive Director of Investor Relations and Corporate Communications. Thank you for joining our second quarter fiscal year 2026 earnings call. Veru is a late clinical stage biopharmaceutical company focused on developing innovative medicines for the treatment of cardiometabolic and inflammatory disease. Our drug development program consists of two novel small molecules, enobosarm and sabizabulin.

The first one, enobosarm, is an oral selective androgen receptor modulator, SARM, and it’s being developed as a next generation drug that when combined with a GLP-1 receptor agonist, makes weight reduction more tissue selective for fat loss and preservation of lean mass and physical function, which is intended to lead to greater weight loss compared to a GLP-1 receptor agonist treatment alone, with a focus on older patients with obesity. Our second asset, sabizabulin, is a microtubule disruptor, and it’s being developed as a broad anti-inflammatory agent to reduce vascular plaque inflammation to slow the progression or promote the regression of atherosclerotic cardiovascular disease. This morning, we’ll focus on an update of the clinical development progress of enobosarm in our obesity program. We’ll also provide financial highlights for fiscal 2026 second quarter ended March 31st, 2026.

GLP-1 receptor agonists have been shown to produce significant weight loss in patients who are overweight or have obesity. Unfortunately, this weight loss is tissue non-selective with the significant indiscriminate loss of both lean mass and fat mass. Of the total weight loss, up to 50% is attributable to lean mass. Although GLP-1 receptor agonist treatments have resulted in substantial weight loss for many patients, the strategy for the next generation of obesity drugs should be a combination therapy with a GLP-1 receptor agonist to cause patients to only lose fat while preserving lean mass and physical function and bone mineral density for the highest quality weight reduction. Now, Veru has focused the clinical development of enobosarm for weight loss on older patients who have obesity.

More specifically, the focus has been on older patients who have sarcopenic obesity, which means they have both obesity and low muscle mass and are potentially at the greatest risk for reaching a critically low muscle mass, which may lead to physical function decline when taking the currently approved GLP-1 receptor agonist. According to the European Working Group on Sarcopenia in Older People 2, sarcopenia is defined by reduced muscle strength and function as the primary diagnostic criterion, confirmed by low muscle quantity and quality, while the impaired physical performance reflects disease severity. As you can see, the working group emphasis is on physical strength and function, thus muscle loss alone does not define sarcopenia. As a consequence, we have chosen to also objectively evaluate and measure physical function by a stair climb test in the Phase II QUALITY clinical study.

Now, Veru has completed the Phase 2b QUALITY clinical trial with a multicenter, double-blind, placebo-controlled, randomized dose finding clinical trial designed to evaluate safety and efficacy of enobosarm 3 milligrams, enobosarm 6 milligrams or placebo as a treatment to augment fat loss and prevent muscle loss. The efficacy dose finding active weight loss portion of the phase IIb clinical trial was completed at 16 weeks. Participants continued into a phase IIb maintenance extension study where all patients discontinued semaglutide treatment but continued receiving either placebo. As I mentioned, Veru focused on the impact of weight loss on physical function, not just lean mass in older patients with obesity in the Phase 2b QUALITY clinical study. Physical function was measured by the stair climb test, which is a common activity of daily living.

Decline to physical function as measured by the stair climb test may predict in older patients a higher risk for mobility disabilities, gait difficulties, falls and bone fractures, hospitalizations, and mortality. It has been reported that stair climb power declines by 1.38% annually with aging. Now, it should be noted that the Phase IIb QUALITY clinical study is the first human study to demonstrate that the weight reduction in older patients who have obesity receiving a GLP-1 receptor agonist puts them at a higher risk for accelerated loss of lean mass with physical function decline. A pre loss as it represents loss of stair climb power that would naturally occur with aging over a 7-8-year period in older patients.

In a phase IIb QUALITY study, the loss of lean mass mattered as 44.3% of patients on placebo plus semaglutide group had at least a 10% decline in stair climb power physical function at 16 weeks. What happened to the study group that received enobosarm in combination with a GLP-1 receptor agonist? In the phase IIb QUALITY clinical study, enobosarm treatment preserved lean mass, which translated into a reduction in the proportion of patients that had a clinically significant stair climb physical function decline when compared to patients receiving a GLP-1 receptor alone.

More specifically, the enobosarm 3 mg plus semaglutide group had a statistically significant and clinically meaningful 59.8% relative reduction in proportion of patients that lost at least 10% stair climb power compared to the placebo plus semaglutide group, and that P value is 0.0006. In the enobosarm 6 mg group, plus semaglutide, there was a 44.1% relative reduction in the proportion of patients with at least a 10% decline in stair climb study. We believe there’s an urgent unmet need for a drug that prevents the loss of muscle and physical function, as well as augments the loss of fat for greater weight loss in at-risk older patients with sarcopenic obesity receiving a GLP-1 receptor agonist for weight reduction.

The next important question is can you potentially have greater weight loss by adding enobosarm to a GLP-1 receptor agonist treatment? First of all, as the Phase IIb QUALITY clinical studies demonstrated, patients receiving enobosarm had greater fat loss. Plus, if you’re able to preserve muscle and physical function with enobosarm while taking a GLP-1 receptor agonist, we would expect that more calories will be burned, which is expected to result in greater weight loss compared to a GLP-1 receptor agonist alone, especially in a longer study. Let’s turn to the current progress of our Phase IIb plateau clinical study. A common clinical and therapeutic challenge with GLP-1 receptor agonist treatments is that 88% of patients after 1 year on a GLP-1 receptor agonist hit a weight loss plateau where they stop losing additional weight.

Based on the SURMOUNT-1 study conducted by Eli Lilly and Company, 62.6% of these patients unfortunately still had clinical obesity at the time they reached this weight loss plateau of 1 year. One explanation might be that the loss of muscle caused by non-selective tissue weight loss may reach a point that now stimulates the appetite in patients receiving a GLP-1 receptor agonist, so they consume more calories, which in turn may cause patients to stop losing weight and hit that weight loss plateau. enobosarm has been shown in clinical studies to directly burn fat and to preserve muscle to increase physical function and burn more calories. By preserving muscle, appetite stays suppressed while more calories are burned, which can help to break through the weight loss plateau, leading to incremental weight reduction.

Now let’s turn to the design of the Phase IIb QUALITY clinical study, which is a double-blind, placebo-controlled study to evaluate the effect of enobosarm 3 milligrams on total body weight, fat mass, lean mass, and physical function, bone mineral density, and safety in approximately 200 older patients aged greater than or equal to 65 who have obesity, BMI greater than or equal to 35, and are initiating semaglutide Wegovy GLP-1 receptor agonist treatment for weight reduction. The primary efficacy endpoint of the study is percent change from baseline in total body weight at 68 weeks. An interim analysis will be conducted at 36 weeks to assess the percent change from baseline in lean body mass and total fat mass as measured by DEXA scan.

The key secondary endpoints for the overall study are total fat, total lean mass, physical function, again measured by stair climb test, mobility disability assessment, bone mineral density, and patient-reported outcome questionnaires for physical function, HbA1c, and insulin resistance. The objective of the phase IIb plateau clinical trial is to focus on the effects of longer-term GLP-1 receptor agonist treatment in older patients who have obesity. The phase IIb plateau clinical study will also assess the ability of enobosarm to break through the weight loss plateau observed in patients receiving a GLP-1 receptor agonist treatment. To achieve clinically meaningful incremental weight reduction, as well as to preserve muscle mass and physical function by 68 weeks. The interim analysis of the clinical study will occur when all patients have been treated for 36 weeks.

Now, semaglutide was selected as a GLP-1 receptor agonist for the phase IIb plateau study to build on Veru’s previous clinical experience using enobosarm in combination with semaglutide in the positive phase II QUALITY clinical study. Further, the clinical data from the phase IIb plateau clinical study using injectable semaglutide may support the use of oral semaglutide and oral enobosarm fixed dose combination in future phase III clinical studies. Contrast, there are no approved oral formulations for tirzepatide. On the March 9, 2026, we announced the enrollment of the first patients in the phase IIb plateau clinical study. I’m very pleased with the current enrollment rate, and we’re on track for results of the 36 interim analysis, which is expected in Q1 calendar year 2027. Now Veru is targeting the at-risk older patients with sarcopenic obesity.

How large is that market? How about the total market for obesity? The Wall Street Journal reported last week that there are more than 1 billion people in the world with obesity. The World Health Organization estimates that there are 2.5 billion adults globally who are either overweight or obese, with the rate of adult obesity more than doubling since 1990. Right now, there are only two companies, Lilly and Novo Nordisk, that together are treating less than 2% of them. How about the total market for sarcopenic obesity? The overall prevalence of obesity and low muscle mass is almost 30 million adults in the U.S. How about the total market of patients who are 65 years and older with obesity?

The prevalence of obesity in patients who are 65 years and older is 41.5% among the 47.4 million patients enrolled in Medicare Part D plans. That’s about 20 million potential patients. As you can see, taken together, the market opportunity for enobosarm in combination with GLP-1 receptor agonist in older patients with sarcopenic obesity is very large. I will now turn the call over to Michele Greco, CFO, CAO, to discuss the financial highlights. Michele.

Michele Greco, Chief Financial Officer and Chief Administrative Officer, Veru Inc.: Thank you, Dr. Steiner. Let’s review the results for the 3 months ended March 31st, 2026. Research and development costs decreased to $3.1 million from $3.9 million in the prior quarter. The decrease is primarily due to wind down of the Phase IIb QUALITY clinical study for enobosarm as a treatment to augment fat loss and prevent muscle loss, which was completed during fiscal 2025. Personnel costs also decreased primarily due to the reduced share-based compensation expense. Selling, general, and administrative expenses were $4.1 million compared to $5.2 million in the prior quarter. The decrease is primarily due to a decrease in the share-based compensation expense.

We recognized a gain on the sale of Antahi assets of $974,000 in the prior year’s quarter, which is based on non-refundable consideration received related to promissory notes previously due to Veru. As the promissory notes are now settled, no additional gain is expected in future periods. During the prior fiscal year, the company entered into a settlement agreement with OnKinetics, which included payment of Series D preferred stock and warrants. During the current period, the increase in fair value of the equity securities received was $3.9 million as a result of the realized gain from the conversion of the preferred stock and then sale of the underlying common stock and change in the fair value of the remaining preferred stock and warrants.

Favorable anti-dilution provisions triggered by the OnKinetics reverse stock split during the period contributed to the increase in the fair value. The bottom line result for continuing operations was a net loss of $3.1 million, or $0.13 per diluted common share, compared to a net loss of $7.9 million, or $0.54 per diluted common share in the prior year’s quarter. During the quarter, the company recognized an additional gain on sale of the FC2 business of $351,000 for the net proceeds received from Clear Future in the settlement of a dispute related to a pre-closing tax receivable and liability. All direct revenues, costs, and expenses related to the FC2 Female Condom business are classified within loss from discontinued operations net of tax in the statement of operations.

Net loss was $2.7 million or $0.12 per diluted common share, compared to a net loss of $7.9 million or $0.54 per diluted common share in the prior quarter. Turning to the results for the 6 months ended March 31st, 2026. Research and development costs decreased to $4.5 million from $9.6 million in the prior period. The decrease is primarily due to a wind down of the Phase IIb QUALITY clinical study for enobosarm as a treatment to augment fat loss and prevent muscle loss, which was completed during fiscal 2025. Personnel costs also decreased primarily due to the reduced share-based compensation expense. Selling general administrative expenses were $8.2 million compared to $10.4 million in the prior period.

The decrease is primarily due to a decrease in the share-based compensation expense. We recognized a gain on the sale of the ENTADFI assets of $1.7 million in the prior period. In conjunction with the sale of the FC2 Female Condom business during the prior fiscal year, we recorded a gain on extinguishment of debt of $8.6 million related to the termination of the SWK Holdings residual royalty agreement. During the current period, the company recorded a gain of $3.8 million from the increase in the fair value of equity securities compared to a loss from the decrease in fair value of equity securities of $0.3 million in the prior period.

The increase in fair value of the equity securities during the current year period is the result of a realized gain from the conversion of the OnKinetics preferred stock and sale of the underlying common stock and change in fair value of the remaining preferred stock and warrants. Favorable anti-dilution provisions triggered by the OnKinetics reverse stock split during the period contributed to the increase in fair value. The bottom line results for continuing operations was a net loss of $8.4 million or $0.39 per diluted common share, compared to a net loss of $9.6 million or $0.66 per diluted common share in the prior period.

The net loss was $8.1 million or $0.38 per diluted common share, compared to a net loss of $16.8 million or $1.15 per diluted common share in the prior period. Looking at the balance sheet. As of March 31, 2026, our cash equivalents, and restricted cash balance was $27.6 million compared to $15.8 million as of September 30, 2025. On both March 31, 2026 and September 30, 2025, there was $0.1 million of restricted cash related to the sale of the FC2 Female Condom business. Our net working capital was $28 million on March 31, 2026, compared to $11.1 million on September 30, 2025.

On October 31, 2025, Veru completed an underwritten public offering of 1.4 million shares of our common stock, pre-funded warrants to purchase up to 7 million shares of our common stock, accompanying Series A warrants to purchase up to 8.4 million shares of our common stock, and accompanying Series B warrants to purchase up to 8.4 million shares of our common stock at a public offering price of $3 per share of common stock and the accompanying Series A and Series B warrants. Net proceeds to the company from this offering were approximately $23.4 million after deducting underwriting discounts and commissions and costs paid by the company. The company is not profitable and has had negative cash flows from operations.

Based on the company’s current operating plan, our cash as of the issuance date of these financial statements is expected to be sufficient for the company to fund operations beyond the interim analysis in the phase IIb clinical study that would be performed to assess percent change from baseline in lean body mass and fat mass as measured by DEXA scans. During the 6 months ended March 31st, 2026, we used cash of $15.1 million for operating activities, compared with $19.1 million used for operating activities in the prior period. We generated cash from investing activities of $3.5 million for the 6 months ended March 31st, 2026, compared to $18.4 million in the prior period.

The cash generated during the current period represents proceeds from the sale of the OnKinetics equity securities of $3.2 million and $0.3 million for the settlement of a dispute related to pre-closing tax matters related to the sale of the FC2 business. The cash generated in the prior period relates to proceeds from the sale of the FC2 Female Condom business of $16.3 million, proceeds of $1.7 million from the sale of Antahi assets, and proceeds of $393,000 from the sale of equity securities. Net proceeds provided by financing activities for the six months ended March 31, 2026 was $23.4 million, which were the proceeds from the sale of common stock and warrants in an underwritten public offering, net of commissions and costs.

We used cash and financing activities for the 6 months ended March 31st, 2025 of $4.2 million related to the change of control payment to SWK pursuant to the residual royalty agreement, which terminated in conjunction with the sale of the FC2 Female Condom business. I’d now like to turn the call back to Dr. Steiner. Dr. Steiner?

Dr. Mitchell Steiner, Chairman, Chief Executive Officer, and President, Veru Inc.: Thank you, Michele.

Question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys to ensure the best sound quality. To withdraw your question, please press star then two. Please limit yourself to one question and one follow-up. If you have further questions, you may re-enter the question queue. Once again, that’s star then one to rejoin the question queue. We will pause momentarily to assemble our roster. The first question today comes from Leland Gershell with Oppenheimer. Please go ahead.

Leland Gershell, Analyst, Oppenheimer: Hey, good morning. A couple of questions from us. Assuming success in the Plateau study, would you expect to need two phase IIIs, or could you perhaps get by with one pivotal and perhaps use Plateau as supportive? Also wanted to ask in further studies with enobosarm

Given the development of evolving agents for obesity, you know, some orals are coming through. Others want to know if the design would capture those agents as well. Would the ultimate label be agnostic to the primary weight loss agent? Would you need to study the specific weight loss agents to have those reflected in the indication label for an enobosarm? Thank you.

Dr. Mitchell Steiner, Chairman, Chief Executive Officer, and President, Veru Inc.: Thank you, Leland Gershell. The first question is basically, if we’re successful, you know, what is the next step? Do you go to a phase III? Let’s be very clear what that means. As you know, the FDA has come back and told us that incremental weight loss of greater than 5% for the efficacy portion of the study is sort of the anchor. Okay. If you have greater than 5%, that stands on its own. If you wanna add the function benefits and the bone benefits, then you have to show those separately. You at least you’re moving forward with incremental weight loss.

If your incremental weight loss is less than 5%, then you have two ways to move forward. One is physical function as a primary endpoint. The reason the phase IIb is so important is because we’re doing a lot of work on physical function to make sure that we have a very clear understanding of the phase III endpoint for physical function as a claim. Furthermore, if we’re collecting bone mineral density information, as you know, the FDA has recently reported back in December of 2025 that BMD alone can be a surrogate endpoint in place of fractures. That could be very interesting, as we know GLP-1s can cause bone loss. 5%, then that’ll be the primary endpoint with function and BMD as secondary endpoints.

If incremental weight loss is less than 5%, you have 2 ways forward. 1 is a functional endpoint, and BMD or BMD alone. That’s why this trial is so critical. It’s a perfect trial because it’s measuring all these things and body composition that can inform us on what the phase III programs would look like. If you notice, all the competitors are still in phase II, working out dose, working out safety, working out, you know, which direction they’re gonna take. This is not just for enobosarm. Myostatin inhibitors, if you wanna have incremental weight loss and function and BMD, you have to measure those all separately, and they have to be separate claims.

You have to make sure you have the data to do that. We’re the only company that really is focused on function with a very objective measurement. That’s why this trial will be interesting. As you know, we’ve de-risked a lot of it with the Phase II QUALITY study that we’ve done. The problem with the QUALITY study is 16 weeks, and you need more than that time to see weight loss, incremental weight loss. So we’re doing the definitive study to answer that question. To answer your second question, yes.

The field is Which, just to refresh everybody’s memory, second question is, you know, if we do move forward, and we’ve got all these co-companies coming out with weight loss agents, orals and non-orals, you know, is the claim gonna be an enobosarm with any GLP-1 receptor agonist, or the studies have to be specific to the GLP-1 receptor agonist in the form or the formulation of that agonist? The answer is, my understanding is that certainly initially it’s gonna be based on the specific GLP-1 receptor agonist. That’s why it’s important for us to focus on, you know, semaglutide or initially.

I think since each of these GLP-1 receptor agonists have different effects on weight loss, that you’re probably going to have to do, whether it’s us or anybody else, you’re probably going to have to combine it with the specific weight loss agent initially, and then we’ll see what happens to the field later. It may get to a point that, you know, GLP-1 alone or GLP-1 GIP alone. Initially it’s my opinion it’s going to be specific to the GLP-1 receptor agonist. K. Gary Barnette is on the call. He’s our Chief Scientific Officer. What do you think about that question, Gary?

Dr. K. Gary Barnette, Chief Scientific Officer, Veru Inc.: Yeah, it’s a great question. I think that, at some point I can envision Remember, the consequence that we’re treating with enobosarm, is weight loss. Weight loss occurs with all of the GLPs and all of the incretins, and all of them will have a similar issue with the loss of lean mass and the plateau that we’re addressing in the plateau study. I think that I can see a world where we include multiple different incretins as in our phase III. Mitch is exactly correct. You know, the FDA’s longtime mantra is you get in your label what you study in your phase III.

Right now, our plan is to really focus on one or two incretins in the phase III program.

Leland Gershell, Analyst, Oppenheimer: Okay. Thank you.

Operator: Ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to Dr. Mitchell Steiner for any closing remarks. Thank you, operator. I appreciate everyone who joined us on today’s call. I look forward to updating all of you on our progress on our next investor’s call. Have a great day. The digital replay of the conference call will be available beginning approximately 12:00 P.M. Eastern Time today, May 13th, by dialing 18556699658 in the U.S. and 14123170088 internationally. You will be prompted to enter the replay access code, which will be 8826955. Please record your name and company when joining. The conference call has now concluded. Thank you for attending today’s discussion.