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VI

VERU INC. (VERU)·Q3 2024 Earnings Summary

Executive Summary

  • VERU reached full enrollment (>150 patients) in its Phase 2b QUALITY study of enobosarm + semaglutide and set timelines: last patient out in December 2024; topline lean body mass data in January 2025; extension topline in Q2 2025 .
  • Q3 2024 revenue was $3.95M, up 18% YoY; gross profit was $1.34M; net loss narrowed to $11.0M ($0.07 EPS). Mix shift toward Global Public Sector lifted revenue but reduced margin vs prior-year quarter; operating loss improved YoY .
  • Management highlighted sufficient cash ($29.2M) to complete the Phase 2b trial and extension, reducing near-term financing risk for trial execution .
  • Strategic focus: enobosarm for “high-quality weight loss” (muscle preservation + enhanced fat loss) amid GLP-1-associated muscle loss concerns; management framed Phase 3 path and partnership optionality post-topline .
  • Catalysts: January 2025 topline data (lean mass, fat mass), potential FDA dialogue and partnership discussions, and FC2 demand initiatives. No numeric revenue guidance provided; estimate comparisons were unavailable via S&P Global at time of analysis (S&P Global access limit).

What Went Well and What Went Wrong

What Went Well

  • Full enrollment exceeded target (>150 patients) with 14 U.S. sites; timelines clarified for topline and extension readouts .
  • YoY improvements: revenue +$0.61M to $3.95M and operating loss improved to $(10.94)M; R&D and SG&A reduced materially YoY as the company refocused spend .
  • CEO reinforced clinical and safety rationale: enobosarm’s prior muscle studies, large safety database (27 trials, 1,581 subjects), and complementary mechanism to GLP‑1 RAs for body composition .
    Quote: “We are very pleased to have expeditiously reached our targeted full enrollment… Having reached this important milestone, we now anticipate topline data in January 2025.” — Dr. Mitchell Steiner .

What Went Wrong

  • Gross margin compressed vs prior-year quarter due to mix shift away from higher-margin U.S. prescription channel; CFO cited lower U.S. Rx revenues and inventory reserve impacts over YTD .
  • Sequential revenue down vs Q2 ($4.14M to $3.95M) as U.S. prescription sales remained weak ($0.55M), reflecting lingering telehealth consolidation and a bankrupt customer from prior periods .
  • Non-operating income declined YoY (to $0.13M) due to derivative liability fair value changes tied to FC2 synthetic royalty financing .

Financial Results

Revenue and Gross Profit (USD Millions)

MetricQ1 2024Q2 2024Q3 2024
Net Revenues ($M)$2.10 $4.14 $3.95
Gross Profit ($M)$1.20 $0.68 $1.34

EPS and Losses

MetricQ1 2024Q2 2024Q3 2024
Operating Loss ($M)N/A (not disclosed)$(9.89) $(10.94)
Net Loss ($M)N/A (not disclosed)$(10.03) $(10.97)
Diluted EPS ($)N/A (not disclosed)$(0.07) $(0.07)

Margins (calculated)

MetricQ1 2024Q2 2024Q3 2024
Gross Margin %57.1% (1.20/2.10) 16.4% (0.68/4.14) 33.8% (1.34/3.95)

Segment Breakdown (Q3 2024)

SegmentQ3 2024Q3 2023
U.S. Prescription ($M)$0.55 $0.86
Global Public Sector ($M)$3.40 $2.50

KPIs and Balance Sheet

KPIQ1 2024Q2 2024Q3 2024
Phase 2b EnrollmentInitiation planned Apr-2024 Actively enrolling; ~90 target then upsized Full enrollment >150; 14 sites
Cash & Equivalents ($M)$40.6 $34.74 $29.15
Working Capital ($M)N/AN/A$27.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Phase 2b topline (lean body mass primary)Jan 2025“End of calendar 2024” January 2025 Lowered (timing slipped)
Phase 2b extension toplineQ2 2025Q2 2025 (unchanged expectation) Q2 2025 Maintained
Phase 2b patient countTrial design~90 patients >150 patients Raised (upsized)
Funding sufficiency for trialsFY2024Not explicitly stated“Sufficient financial resources” to complete Phase 2b + extension New disclosure (positive)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Enobosarm program statusIND cleared; Phase 2b to start Apr-2024 . Actively enrolling; SAB formed; presenting at endocrine/GLP‑1 summits Full enrollment >150; 14 sites; topline Jan-2025; extension Q2-2025 Progressing to data; timelines clarified
GLP‑1 muscle loss risk & body compositionFramed unmet need for muscle preservation in GLP‑1 users Extensive mechanism/safety discussion; complementary fat loss; stair-climb functional endpoint Deepened scientific narrative
Regulatory path / Phase 3Emphasis on obesity focus, defer oncology pending funding FDA path: all-comers obesity population; primary weight loss with functional endpoints; subgroup ≥60 yrs Increasing clarity on registrational approach
PartnershipsNot explicitWill pursue FDA dialogue and partner discussions post-topline; engagement with majors Positioning for BD post-data
FC2 commercial mixTelehealth platform build; global tenders; prior customer bankruptcy Q3 mix: Rx $0.55M, GPS $3.4M; margin impact explained Public sector up; U.S. Rx soft
Funding runwayCash $40.6M (Q1); $34.7M (Q2) Cash $29.2M; sufficient for trials Adequate near-term for study completion

Management Commentary

  • “There is a substantial unmet medical need for a drug that can effectively preserve muscle mass while enhancing fat loss in patients using GLP-1 drugs for weight management.” — Dr. Steiner .
  • “Gross profit… decreased due to change in the sales mix with the U.S. prescription business… comprising a smaller percentage of total net revenues.” — Michele Greco .
  • “We believe we have sufficient financial resources on hand… to complete and provide results on both the Phase IIb quality clinical trial and the Phase IIb extension clinical trial.” — Dr. Steiner .
  • “The FDA… is looking forward to… develop the drug in all patients that have obesity or overweight… clinical meaningfulness beyond weight loss includes physical function.” — Dr. Steiner .

Q&A Highlights

  • Timing and BD: Topline in January 2025 will drive FDA discussions and partnership outreach; extension data not required for next regulatory steps .
  • Safety at higher dose: Prior safety data supports doses above 6 mg; no drug-induced liver injury observed across 27 studies; alcohol intake monitored; fatty liver risk mitigated by triglyceride reduction .
  • Interim updates: No further updates expected before topline; safety showing no surprises thus far .
  • Endpoints clarification: Home-IR removed from Phase 2b; functional endpoint is stair-climb power, FDA-accepted; body composition endpoints include lean mass and fat mass .
  • Phase 3 design: All-comers primary weight loss with functional endpoints; subgroup ≥60 powered for functional benefit; ~68-week duration to align with GLP‑1 titration and sustained effects .

Estimates Context

  • Attempts to retrieve Wall Street consensus (S&P Global) for quarterly EPS and revenue failed due to access limits at the time of analysis; therefore, comparisons to consensus are unavailable. Values would have been retrieved from S&P Global if accessible.
  • Expect analyst models to focus on topline timelines, Phase 3 path clarity, funding sufficiency, and FC2 mix impacts; revisions likely tethered to January 2025 data rather than near-term revenue.

Key Takeaways for Investors

  • Near-term catalyst: January 2025 topline (lean mass and fat mass) with clear regulatory and BD pathways immediately after; potential stock-moving event tied to effect sizes and dose selection .
  • Strategic focus and spend discipline improved P&L YoY; however, mix shift pressures margin—monitor U.S. Rx recovery and global tenders to stabilize gross margin .
  • Safety narrative is strong and differentiated (non-overlapping mechanism, GI tolerability vs GLP-1), an important de-risking factor ahead of Phase 3 .
  • Funding appears sufficient to reach both topline readouts without incremental dilution risk from trial execution; watch for BD activity and non-dilutive grants .
  • Regulatory framing favors totality of benefit (weight loss + function), increasing odds of a workable Phase 3 design in all-comers and a targeted functional subgroup .
  • Execution confidence: Full enrollment in ~3 months across 14 sites underscores operational capability and trial momentum .
  • Trading implications: Position around data readout; upside if body composition and function show clear separation vs placebo + GLP‑1; downside if effect sizes are modest or safety signals emerge.

Citations:

  • Q3 press release and financial schedules .
  • Q3 earnings call transcript (prepared remarks and Q&A) .
  • Aug 8, 2024 enrollment press release .
  • Q2 2024 press release and schedules .
  • Q1 2024 press release highlights .