Veru Inc.  (NASDAQ: VERU) Q1 2020 Earnings Call Transcript

Veru Inc.  (NASDAQ: VERU) Q1 2020 Earnings Conference Call
Final Transcript

CORPORATE PARTICIPANTS:

Sam Fisch — Director of Investor Relations

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

Michele Greco — Chief Financial Officer and Chief Administrative Officer

ANALYSTS:

Brandon Folkes — Cantor Fitzgerald — Analyst

Leland Gershell — Oppenheimer — Analyst

Kumar Raja — Brookline Capital Markets — Analyst

Peter McMullin — Consultant — Analyst

PRESENTATION:

Operator

Good morning, ladies and gentlemen, and welcome to Veru Inc.’s Investors Conference Call. [Operator Instructions] After this morning’s discussion, there will be an opportunity to ask questions. [Operator Instructions]

I’d now like to turn the conference over to Mr. Sam Fisch, Veru Inc.’s Director of Investor Relations. Please go ahead.

Sam Fisch — Director of Investor Relations

Good morning. The statements made on this conference call that are not historical in nature are forward-looking statements. Such forward-looking statements reflect the Company’s current assessment of the risks and uncertainties related to our businesses. Our actual results and future developments could differ materially from the results or developments in such forward-looking statements. Factors that may cause actual results or developments to differ materially include such things as the risks related to the development of the Company’s product portfolio, risks related to the ability of the Company to obtain sufficient financing on acceptable terms when needed to fund development and Company operations, risks related to competition, government contracting risks and other risks detailed in the Company’s press releases, shareholder communications and Securities and Exchange Commission filings. For additional information regarding such risks, the Company urges you to review its 10-Q and 10-K SEC filings.

I’d now like to turn the conference over to Dr. Mitchell Steiner, Veru Inc.’s Chairman, CEO and President.

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

Thank you, Sam, and good morning. With me on this morning’s call are Michele Greco, the CFO and CAO; Phil Greenberg, Executive Vice President, Legal; and Sam Fisch, Director of Investor Relations. Thank you for joining our call. Veru is an oncology and urology biopharmaceutical company with a focus on developing novel medicines for the management of prostate cancer.

Today, we will update you on the clinical development of our drug pipeline and the commercialization of our products, as well as provide financial highlights for the first quarter fiscal year 2020. It is estimated by the American Cancer Society, that in 2020, there will be about 191,930 men with newly diagnosed prostate cancer, which is a 10% increase from 2019. There will be an estimated 33,330 deaths from prostate cancer in 2020, a 13% increase from 2018. After falling for two decades, this is the second year in a row that we’ve seen an increase in deaths from prostate cancer, suggesting that men with advanced prostate cancer are progressing through current treatments and new effective treatments are urgently needed.

We are delivering on our strategy to be the prostate cancer company. We’re responding to this call-to-action and are dedicated to the development and commercialization of products to address unmet medical needs for the management of prostate cancer. The markets for prostate cancer management are well established as multibillion-dollar markets, and given our core expertise and the number and type of drugs in our pipeline, we are uniquely positioned to understand, develop and commercialize medicines for these unmet medical needs of prostate cancer patients.

Here is a brief update on the advancement of the prostate cancer drug pipeline. We have made significant progress with our open-label Phase 1b/2 clinical trial for VERU-111, a novel proprietary first-in-class oral selective antitubulin agent for metastatic castration-resistant prostate cancer patients who have also become resistant to the novel androgen-blocking agents, enzalutamide or abiraterone, but prior to IV chemotherapy, also referred to as the prechemotherapy stage.

These are the patients whose prostate cancer is progressing, that is spreading after exhausting the benefits of currently available injectable and oral prostate cancer drugs, but before they’re offered IV cabazitaxel, taxane chemotherapy. Unfortunately, there is a large number of these affected men. According to the published scientific report, about 12% to 25% of men who have metastatic castration-resistant prostate cancer and who have been started on a novel androgen-blocking agent will not respond at all to this therapy. And about 75% of men will initially respond to the treatment with an androgen-blocking agent, but their tumor will start progressing in about nine months to 15 months. So essentially, by one year, the majority of these men will have tumor progression and will be ready for the next therapy like VERU-111 to control their advancing prostate cancer.

This prechemotherapy space in men who have failed ADT and a novel androgen-blocking agent is currently the fastest-growing unmet medical need segment in advanced prostate cancer. According to Accuvia, oral drugs, abiraterone, enzalutamide, for advanced prostate cancer had over $6 billion in 2018 global annual sales. Men who have failed these novel blocking agents are the patients that VERU-111 is currently targeting, which we estimate represents a $4.5 billion annual global market. There are currently no FDA-approved oral or IV drugs for the indication of men with advanced prostate cancer who have failed both ADT and one of the novel androgen-blocking agents.

In the Phase 1b clinical trial, we have treated 39 men to date who have metastatic castration and androgen-blocking agent resistant prostate cancer and have shown evidence of cancer progression by rising PSA levels and the spread of prostate cancer by CT and/or bone scans. By the study design, which is called a 3+3 design, the maximum tolerated dose or some safety side effect that indicates that the higher doses may not be tolerated is determined by treating three patients at a time, with an oral daily dose of VERU-111 for seven days, followed by two weeks off drug, which treatment schedule represents one cycle.

For patients that tolerate treatment, we increase the schedule to two weeks on drug and one week off, and then three weeks continuously on drug until there is evidence of prostate cancer progression. This will allow us to assess the durability of the anticancer response. The escalating doses of VERU-111, tested to date are 4.5 milligrams, 9 milligrams, 18 milligrams, 27 milligrams, 36 milligrams, 45 milligrams, 54 milligrams, 63 milligrams, 72 milligrams and 81 milligrams a day.

As for safety, VERU-111 appears to be generally well tolerated. There are no reports of neutropenia up to and including 72 milligrams, which is the dose-limiting toxicity typically seen for IV taxanes. There have been no reported complaints of neurotoxicity or hypersensitivity reactions, which are also common side effects that occur with the IV taxanes. There have been a few isolated mild liver enzyme changes that, in some instances, resolved while still on drug. There have been reported side effects consistent with VERU-111s and other antitubulins’ cytotoxic effects such as mild-to-moderate diarrhea, nausea and vomiting, which appear to be dose-dependent.

Further, we know that through oral dosing, VERU-111 is being absorbed into the blood stream from the stomach as levels of VERU-111 are measurable in the blood, which means VERU-111 has good bioavailability. VERU-111 concentrations are higher with increasing oral drug doses. In fact, we have achieved VERU-111 blood concentrations in humans that match the efficacy concentrations we’ve measured in the pre-clinical animal models with prostate cancer tumors shrunk.

Although, this is a safety study, we do see preliminary evidence of antitumor activity, as we have mentioned in our prior earnings call. As historically reported from the literature, men with metastatic castration-resistant and androgen-blocking agent-resistant prostate cancer have a median of 3.7 months before their CT and/or bone scan evidence of new cancer progression. This is called imaging-based progression-free survival.

In our Phase 1b, we have 20 men in the study that had the potential to be treated for 4.5 months. Even without having determined an optimal dose or a dose schedule yet, there are four men who are still ongoing in the trial with no tumor progression at 12 months, 10.4 months, 10.4 months and 7.6 months. All of these men have experienced PSA reductions from peak or base values. Another six men have progressed to 4.2 months. The patient still in the trial at 12 months has had a PSA reduction of 63% from peak and has had two of its cancerous lymph node shrink, as measured by an initial follow-up CT scan and confirmed by another follow-up CT scan three months later.

We also have another patient who at the time of enrollment had progressing prostate cancer bone metastases, now showing improvements of these bone metastases based on a bone scan following treatment with VERU-111. There was also evidence that these anticancer effects in the study have a dose and schedule response, meaning, higher doses and three-week treatment cycles have more activity.

Based on these results demonstrated from these preliminary clinical data, VERU-111 is a promising anticancer compound with a good safety margin and without the typical side effects seen with IV taxanes. Accordingly, VERU-111 appears to be a good candidate for an oral anticancer therapy in men with metastatic castration and novel androgen blocking agent-resistant prostate cancer in the prechemotherapy space. An advantage of VERU-111 is that, it can be also potentially prescribed by the urologist who is the usual physician managing this type of patients. Once the Phase 1b is completed, we will present the full clinical data set at an upcoming major scientific meeting.

We are approaching a significant and an important clinical milestone in the development of VERU-111. We’re finishing up the last cohort of the Phase 1b portion of the Phase 1b/2 clinical study, and we’ll continue to collect long-term clinical data from this portion of the clinical trial. We will soon initiate the Phase 2 portion of the clinical trial, enrolling approximately 26 men with metastatic castration and novel androgen blocking agent-resistant prostate cancer, using the dose and schedule selected from the Phase 1b.

Moreover, given the current efficacy and safety profile of VERU-111, we plan to expand the clinical program of VERU-111 in 2020 into Phase 2 studies for two to three additional tumor types or indications where anti-cancer activity was shown in the preclinical animal models. We will update you further when we have more information on these studies, showing antitumor activity in other tumor types will increase the overall value of VERU-111 program.

Next, I will update you on VERU-100, our proprietary peptide drug candidate for the treatment of hormone-sensitive advanced prostate cancer, an established multibillion-dollar global market. The target product profile of VERU-100 is commercially and scientifically compelling as having a number of anticipated advantages over currently available androgen-deprivation therapies. VERU-100 is a long-acting gonadotropin-releasing hormone, GnRH antagonist, designed to be administered as a small volume subcutaneous three-month depot injection without a loading dose.

As a GnRH antagonist, it is intended to immediately suppress testosterone with no testosterone surge upon initial or repeated administration and no testosterone micro increases, which may adversely affect patient outcomes. This is a problem which potentially occurs with the approved LHRH agonist drugs like Lupron, Zoladex and Eligard. Currently, there are no GnRH antagonist commercially available for the treatment beyond one month, making VERU-100, if approved, the only commercially available GnRH antagonist three-month depot, an attractive choice for androgen-deprivation therapy.

We’ve received agreement from FDA that the development program for VERU-100 may follow an expedited pathway. Based on this FDA input, the Company plans to commence a single open-label multi-center dose-finding Phase 2 clinical trial in approximately 60 men, followed by a single open-label multi-center Phase 3 clinical trial in only approximately 100 men. Veru is in the process of scaling up GMP manufacturing drug products to prepare for the clinical trials of VERU-100. The Company intends to submit an Investigational New Drug Application in early 2020, so we can commence the open-label Phase 2 clinical study by early summer.

As it is an open-label Phase 2 study, we will be able to periodically update you on our progress towards reaching the primary endpoint, which is the reduction of testosterone to castrate levels in real time during 2020. The planned development pathway for VERU-100, agreed upon by FDA, represents a lower cost investment opportunity for a major product that could address the shortfalls of the current $2.6 billion global ADT market.

Our next product candidate in a clinical trial is zuclomiphene, a novel proprietary oral nonsteroidal estrogen receptor agonist being evaluated to treat hot flashes, the most common side effect in men on androgen-deprivation therapy for advanced prostate cancer, and a major reason why men want to stop androgen-deprivation therapy. We’ve enrolled 93 men in a multi-center, double-blind, placebo dose-finding Phase 2 clinical trial, evaluating two doses, 10 milligrams and 50 milligrams of zuclomiphene versus placebo. We reported positive topline interim results a few weeks ago.

We determined that the 10-milligram dose was the no-effect dose, and the 50-milligram dose of zuclomiphene demonstrated estrogenic activity and a reduction in the frequency of hot flashes from baseline at Day 42. We also reported on the safety from the current blinded aggregate clinical database from our placebo-controlled trial. And based on this study’s interim findings, zuclomiphene appears to be well tolerated. We have not received any reports of gynecomastia, painful breast or venous thromboembolic events, which are common side effects seen in men treated with high doses of estrogen.

After having an end of Phase 2 meeting with FDA for the zuclomiphene program and obtaining agreement on the trial design that will be acceptable for approval, our plan is to initiate a pivotal Phase 3 clinical study. We will provide detailed design and timing of this study after we have the FDA meeting. The expectation is that the Phase 3 design will be very similar to the Phase 2 study, and that will be a 12-week treatment study.

Veru has determined that the peak US revenue potential for zuclomiphene citrate is between $580 million to $630 million. This projection assumes a 25% to 33% of all ADT patients who experience hot flashes, take zuclomiphene, with an annual patient cost between $4,000 and $5,000. This estimate is determined based on research estimates from Accuvia, Medical Marketing Economics and DelveInsight. This independently confirms that zuclomiphene for the indication of treatment of hot flashes in men on androgen-deprivation therapy for advanced prostate cancer is a major market opportunity. Currently, there are no FDA-approved drugs for this indication. We are very excited about our progress with zuclomiphene for this unmet indication.

Veru’s ability to advance the clinical development of our proprietary prostate cancer drugs that address unmet medical needs in large markets is being substantially supported by investments from two commercial sources of revenue, the FC2 female internal condom as well as PREBOOST/Roman Swipes, which is a 4% benzocaine wipes for premature ejaculation. As you can see from the earnings release, in Q1 fiscal year 2020, we continue to have significant growth in revenue and gross profits from these commercial products.

Although, Ms. Greco will cover the detailed financial results highlights in a few moments, I would like to take a few — I would like to make a few comments. We continue to have robust growth in fiscal year 2020 and expect further increases of FC2 sales in both the public sector and prescription sales in the U.S. for the rest of the year as we have signed new agreements to supply FC2 by prescription through telemedicine companies. The strong growth in the U.S. FC2 prescription business remains noteworthy, as it allows us to be less reliant on the intermittent ordering patterns, typically seen in our traditional FC2 public sector business.

We had $6.1 million in revenue from the prescription business for Q1 fiscal year 2020 compared to $2.4 million for fiscal — for Q1 fiscal year 2019, an increase of 148%. In fact, to give you a sense of our growth trajectory, for all of fiscal year 2019, we achieved 159,000 FC2 prescriptions, and for just Q1 of fiscal year 2020, we had 81,000 FC2 prescriptions.

For a premature ejaculation product marketed as Roman Swipes, the Company entered into a multi-year U.S. distribution agreement with Roman Health Ventures, a premier and fast-growing men’s health and telemedicine company that discreetly sells men’s health products via the Internet website called www.getroman.com. We have begun to see these revenues grow too.

Focusing now on the Veru’s commercial segment, which is FC2 PREBOOST/Roman Swipes and drug commercialization costs, we had net revenue increases in Q1 fiscal year 2020 to $10.6 million compared to $6.4 million in Q1 fiscal year 2019, which is up 66%. Gross profits for Q1 fiscal year 2020 were $7.3 million compared to $4.6 million in fiscal year 2019, which was up 57%. Our income from operations from this segment of the business was $5.8 million for Q1 fiscal year 2020, up from $3.4 million in Q1 fiscal year 2019, an increase of 73%.

As you can see, our base commercial business is doing very well and as a stand-alone business would be quite valuable, experiencing significant growing revenue. With continued revenue growth and profit and positive cash flow from this base commercial business, we have been able to substantially fund the development of our prostate cancer clinical programs and our urology specialty pharmaceuticals for the past year. We intend to continue this revenue growth trajectory, with not only the current growth of revenues from FC2 and PREBOOST, but also from the revenues that we expect to generate from the commercialization of the Company’s proprietary tadalafil/finasteride combination capsule for the treatment of the symptoms of BPH called TADFIN. We expect this to be the Company’s first pharmaceutical urology asset to move into commercialization.

We are collecting 12-month stability data on TADFIN manufacturing batches and expect to submit the NDA by the end of 2020. In the U.S., we’re exploring commercially launching TADFIN through telemedicine channels. As you have seen, we’ve had great success with our products using this sales channel. We are also in discussions with potential commercial partners outside the U.S. and having TADFIN revenues from U.S. sales, and potential partnerships with upfront payments and royalties from outside the U.S. should add substantial near-term revenues with gross — with high gross margins to the existing and growing revenues from FC2 and PREBOOST/Roman Swipe products.

I will now turn the call over to Michele Greco, CFO and CAO, to discuss the financial highlights. Michele?

Michele Greco — Chief Financial Officer and Chief Administrative Officer

Thank you, Dr. Steiner. As Dr. Steiner indicated, we started off the year with a great first quarter. FC2 unit sales totaled $10.1 million, up 36% over the prior year first quarter of $7.4 million. FC2 net revenues for the quarter totaled $10.4 million, an increase of 65% from the prior year quarter of $6.3 million. In the U.S., FC2 prescription channel net revenues were $6.1 million, an increase of 148% over the prior year quarter of $2.4 million. Net revenue for the public sector business also increased to $4.4 million from $3.9 million in the prior year quarter. Net revenues for PREBOOST/Roman Swipes were $153,000 compared to $47,000 in the prior year quarter.

Gross profit increased $2.7 million to $7.3 million for a gross margin of 69%, compared with $4.6 million for a gross margin of 73% in the prior year quarter. The reduction in the gross margin is due to an increase in labor, transportation and equipment maintenance costs. FC2 net revenue per unit was $1.04 compared to $0.86 in the prior year quarter. The increase in U.S. prescription volumes resulted in the increase in our net revenue per unit and the increase in our gross profit. This increase in revenue provided the Company with cash to continue funding its research and development projects.

Research and development costs were $5.3 million compared to $2.4 million in the prior year quarter, an increase of $2.9 million. Operating expenses increased $3.4 million to $9.1 million from the prior year quarter of $5.7 million. The increase in operating expenses is primarily due to the increase in research and development expenses for our multiple advancing drug product candidates. The operating loss for the quarter was $1.8 million compared to $1 million in the prior year quarter. During the quarter, non-operating expenses increased approximately $553,000 compared to the prior period, primarily due to the changes in the fair value of derivative liabilities.

For the quarter, we had a tax benefit of $77,000 compared to a tax expense of $92,000 in the prior year quarter, which was primarily due to the changes in the valuation allowance recorded against U.S. net operating losses. After income taxes, the bottom line result for the quarter was a net loss of $3.3 million or $0.05 per share compared to a net loss of $2.1 million or $0.03 per share in the prior year quarter. The increase in the net loss of $1.2 million is primarily due to the increase in the research and development costs. The Company has net operating loss carryforwards for U.S. federal tax purposes of $42.7 million with $14.4 million expiring in years 2022 through 2038, and $28.3 million, which can be carried forward indefinitely. And our U.K. subsidiary has net operating loss carryforwards of $61.7 million, which do not expire.

Now turning to our balance sheet. As of December 31st, 2019, our cash balance was $4.2 million and our accounts receivable were $6 million compared to a cash balance of $6.3 million and accounts receivable of $5 million at September 30th, 2019. During the quarter ended December 31st, 2019, we used cash of $2.5 million for operating activities compared with using cash of $1.5 million in the prior period. Overall, we’re delighted to see the continued increases in sales in the U.S. FC2 prescription market, the increasing global public sector sales as well as the increasing sales of PREBOOST/Roman Swipes through Roman Health Ventures. These revenue sources will continue to be a source of funds to invest in our promising pharmaceutical clinical programs as we continue to transform our Company into the prostate cancer company.

Now I’d like to turn the call back to Dr. Steiner.

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

Thank you, Michele. We have enjoyed yet another strong financial quarter, which has allowed us to significantly advance our clinical programs. In fact, we’ve now had nine strong quarters of growth in our FC2 U.S. prescription business.

Looking forward to the rest of fiscal year 2020, we expect our revenues to continue to be strong and growing towards a record year. With the improving performance of commercial products and the strengthening of the balance sheet, we believe that we’ll be able to substantially invest in the continued development of our prostate cancer and other cancer drug product candidates as well as to submit NDAs, and if approved, commercially launch TADFIN, which would provide even more revenue to the already growing revenues from FC2 and PREBOOST/Roman Swipes.

We anticipate a steady flow of important positive news for Veru over the next few months to one year. For VERU-111, our oral selective antitubulin, we will report open-label efficacy and safety clinical results with the Phase 1b and the Phase 2 clinical trials for VERU-111 for the prechemo metastatic castration and novel androgen-blocking agent-resistant prostate cancer. We will initiate new open-label Phase 2 clinical studies in other indications and tumor types.

For VERU-100, our novel peptide GnRH antagonist three-month depot formulation, we will complete GMP manufacturing of the clinical supply of VERU-100, submit the IND and complete the Phase 2 clinical trial.

For Veru — excuse me, for zuclomiphene, our oral estrogen receptor agonist, we will have an end of Phase 2 meeting with FDA and initiate a pivotal Phase 3 clinical trial evaluating zuclomiphene for the treatment of hot flashes in men with advanced prostate cancer on androgen-deprivation therapy. We will submit the NDA for TADFIN. We have secured partnerships with some of our drug products, and we will continue to demonstrate robust growing revenues for our commercial products, FC2 and PREBOOST/Roman Swipes.

We’re committed to driving shareholder value by becoming the prostate cancer company. We’re also committed to providing substantial benefits to prostate cancer patients by developing and commercializing products to address unmet medical needs in the management of their disease.

With that, I’ll now open the call to questions. Operator?

QUESTIONS AND ANSWERS:

Operator

Ladies and gentlemen, at this time, we’ll begin the question-and-answer session. [Operator Instructions] Our first question today comes from Brandon Folkes of Cantor Fitzgerald. Please go ahead.

Brandon Folkes — Cantor Fitzgerald — Analyst

Hi, thanks for taking my question and congratulations on all the progress during the quarter. Firstly, is there any additional color perhaps on the baseline characteristics of the four men on VERU-111 that you call out that have responded very well? And then secondly, can you just talk — I know it’s jumping a bit ahead, but about the competitive environment you would expect for VERU-111 when it comes to market within prostate cancer? Thank you.

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

Thank you. All right. So the first question, can I give you some more color on the baseline characteristics of the four men that have shown good, I guess, imaging, progression-free survival, meaning that they have not progressed, and you’re clearly well beyond what you would have expected for the patients of this type. I can’t provide color on the individual patients, but I will give you some color about the patients in general that have entered the study in that in prostate cancer, the most common place that prostate cancer spreads is the lymph nodes and to bone. And when it spreads to visceral disease, like the liver and that kind of stuff, they — that’s called visceral disease.

So in this study, almost all the patients are either bone metastasis, nodes or both. And that’s why I commented on a node in one patient, for example, shrinking and with confirmed with the follow-up CT scan and the bone scan that improved. And so, that kind of gives you a flavor of the typical patient that a urologist sees. Now when the patient starts getting visceral disease, meaning it goes into the liver, and the adrenal glands and that kind of stuff, and those patients are further along in their disease and most likely will be followed by the medical oncologist.

As it relates to the question about the competitive market, right now, this is the fastest segment, it’s growing — and it’s growing and the best way to kind of lay out the competitive market is to think about kind of the treatment modalities that are coming in. At this point, just to be very, very clear, there are no drugs approved for patients that fail ADT and fail one of these androgen-blocking agents. And I will also say that almost every patient is starting to get treated with these agents even as early as nonmetastatic disease, which means when they get their first metastatic lesion, whether it’s a bone or a lymph node, they’re going to have gone through ADT, and they would have gone through one of these androgen-blocking agents. And in fact, first-line therapy is wide open for treating these patients because all these drugs have moved so early.

And the other important point is, once you use one of these androgen-blocking agents, whether it’s abiraterone, enzalutamide, apalutamide, darolutamide, bicalutamide, you can’t use them again because you’re not going to get much benefit from squeezing testosterone down even lower. So you need a drug or an approach as a new mechanism. So those kinds of drugs really leave only at this point that improve the metastatic castrate-resistant prostate cancer are going to be docetaxel and cabazitaxel, which are taxanes. And as we know, that means the patient has to leave oral therapy and go to a medical oncologist. And that’s a bad day in the office because that’s basically passing the patient off and saying that we’ve exhausted everything we can do in the urologist office. So that’s a bad day.

We’re trying to make — VERU-111, I think, has got a tremendous competitive advantage because we’re a cytotoxic therapy, without some of the side effects of the cytotoxic therapy. So for example, taxanes, or cytotoxic therapies, they work, but you have dose-limiting neutropenia, febrile neutropenia, sepsis, neurotoxicity, meaning that you can’t feel your fingers and toes, and other side effects. Hypersensitivity, you have to get an IV. You have to sit on an IV chair. You have to be premedicated with prednisone. You have to — you get the picture. So if you had an oral drug, which we can now say, based on the Phase 1b, that we’re not seeing the neurotoxicity or the neutropenia and those kinds of side effects, and that can be given at a home, then it opens up a whole world for the urologists to step in.

So in my opinion, the others will have to come in and chip away at that basic therapy. And that will be, for example, the PARP inhibitors that I think will be very effective in patients who have germline/somatic mutations with BRCA2, for example, but that patient population is less than 5%. I think what we’re going to see in prostate cancer, just like we’ve seen in lung cancer, and in breast cancer and other cancers that over time, we’re going to have sub-populations of this heterogeneous class called prostate cancer that we’re going to be able to pick away with effective drugs. So for example, as I mentioned, the PARP inhibitors will come in, and you’ll take that 5% of patients and treat them, but what you do for the other 95%. And so, that’s where we step in.

As it relates to immunotherapy, immunotherapy really has not made big headway into this patient population. And — I’m looking forward to seeing it in the future. What will happen in the meantime, we want to be part of the bread and butter, right? Bread and butter; ADT, first; ADT plus an androgen-blocking agent, second; VERU-111, third; and that’s it. And then everything else picks away at that big group. So I think the competitive landscape for VERU-111, because of the drug and now because we know about the side effect profile, I think it places us very, very nicely as being the next go-to drug before all these other ones will be used.

Make one last comment about the nuclear radioisotope treatments that are in development and — as Xofigo and those kinds of drugs. Typically, those are given much later, when patients have widespread metastatic disease in the bones or etc. or they had to be PSMA positive. So that has to — that remains to be seen, and I still think that’s going to be done later because it’s not the urologists, it’s not the medical oncologists, it’s a nuclear medicine doctor that prescribes that one. And so, that adds a different complexity. So hopefully, Brandon, that answers your question.

Brandon Folkes — Cantor Fitzgerald — Analyst

It does. Thank you very much. Can I maybe just sneak in one more, just housekeeping? How should we think about operating spend [Phonetic] for the rest of the year going forward?

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

You broke up, say that one more time.

Brandon Folkes — Cantor Fitzgerald — Analyst

How should we think about operating expenditure for the rest of the year going forward? Thank you.

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

So the way I would look at it is, and I’ll have Michele comment as well, the way that we have the Phase 3 in the budget, the Phase 2s in the budget, the VERU-100, the way we’re planning our budget for the year, it looks like our revenue and gross profits and the cash coming off the business will meet our needs. And so, we feel pretty good about that. And as we guided last year, we did not do a raise. This year, we’re feeling pretty good. Next year possibly. But I think right now, it is a balance between making the money match versus accelerating programs that have promising good news. And so, that’s the fine line that we walk. So right now, we’re fine. But then, I hope we keep accelerating because that gets us to the patient sooner rather than later. Okay?

Brandon Folkes — Cantor Fitzgerald — Analyst

Thank you very much.

Operator

The next question today comes from Leland Gershell of Oppenheimer. Please go ahead.

Leland Gershell — Oppenheimer — Analyst

Hey, good morning, Mitch. Thanks for taking my questions. Just a question on VERU-111 — or two questions. If you could remind us the two to three indications that you’re looking at in addition to your current focus? And also, when might we see the first presentation of data, perhaps at a medical meeting this year? And then just a quick follow-up. Thanks.

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

Yeah. So for the two to three indications, you’ve heard me mention on the previous call that we were looking at pancreatic cancer and breast cancer and post-taxane prostate cancer. And so where we are right now is those are all still on the table. And what we’re trying to do right now is, say, look, let’s just focus on getting the prostate one done, and this will answer your second question as well, and I’ll come back to the other indications.

The idea is, for us, for the other indications, if you look in the literature, either at VERU-111, you’ll see that we’ve had activity in pancreas, we have activity in ovarian, cervical, breast, triple-negative breast, of course, prostate in different flavors, taxane and non-taxane cell lines. It doesn’t matter. We work in taxane, cell lines has become resistant taxanes. So we have a lot of flexibility. So what we want to do first is get going. We’ve got — to answer your second question, when we’re going to present the information at a scientific meeting, it’s maturing very, very nicely, the Phase 1b.

And we’re finishing up the last cohort, which means that we can quickly initiate the Phase 2 because it’s all part of the same plan. In other words, the IRBs and everything approved the Phase 1b/2. So going to the Phase 2, just literally requires getting your sites, which we already have and starting the study. So that’s why I said in the call that we’ve reached an important milestone. We’re closing one chapter, but we’re opening another.

The other important thing to understand is, even though we’re closing the first chapter, those patients that are on our drug, and they’re responding to the drug, we’re not taking them off the drug. They’re going to stay on the drug. So, we’re going to get some information about the durability of the response and more information about long-term safety. So even in the future, when we announce the full data set, so you can see what we’re seeing in a scientific meeting, we can update it until every patient has progressed.

So what we’re thinking right now is that if that’s the case, then we’re wrapping this thing up this quarter. And as you know, for the scientific meetings, you don’t just say — I mean, even the late breaker means you need eight weeks before you can submit and then it gets presented. So once we wrap — pull this thing together, I will guide, which of the important scientific meetings we’re going to get into. ASCO, I mean, the deadline has already passed. GU ASCO is this weekend, but we’ll find a major scientific meeting that we can present the full data set.

And again, for the other indications, we are going after Phase 2s and other indications. We just want to make sure that we have the best chance for success. And so as I said, the short list will be pancreatic cancer, triple-negative breast cancer, lung cancer, because that’s the other one which has shown activity and potentially ovarian or cervical cancer. So it’ll be from that list. And I’ll come back and let you know as we get a little closer to starting that. And of course, it will be done here in the first half of 2020. But again, all we have to do is do an amendment to the protocol that we have now and start that study. So there’s not much from a regulatory or a clinical supply standpoint to get this thing up and running. It literally is just get the prostate one going and then switch to the other two Phase 2s.

Leland Gershell — Oppenheimer — Analyst

Okay, great. And then with the Phase 3 in zuclomiphene set to start after your end of Phase 2 with FDA, if could you remind us the size — the sample size you’d expect based on powering assumptions from the data you have? And then when might we see the Phase 3 data from that program? Thanks.

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

Yeah. So the way we’re thinking about it now is, after the end of the Phase 2 meeting, we’ll be able to lay out the exact assumptions, effect size and the size of the study, but we’re thinking we’re looking at about 120 patients per arm. So the study will be about a 240-patient study, something like that, 240 to 260. And as you know, it’s a 12-week treatment period, so that’s going to be pretty consistent. And so, I think that gives you sort of sense of the trial. We believe it will take us six months to nine months to enroll that study, if not a little bit longer, which — and then you have to have 12 weeks that goes by. We’ll be able to talk about the efficacy part, and then the patients will then enroll into the safety — longer-term safety piece of it. So if we meet with the FDA and then start the study sort of by summer, then we’re looking at data coming in approximately a year and some change.

Leland Gershell — Oppenheimer — Analyst

Well, great progress. Thanks very much.

Operator

[Operator Instructions] Our next question comes from Kumar Raja of Brookline Capital Markets. Please go ahead.

Kumar Raja — Brookline Capital Markets — Analyst

Thanks for taking my questions. So Mitch, on VERU-111, I just wanted to get a sense with regard to as you are dose escalating, what kind of correlations are you seeing in terms of the efficacy versus the side effect profile? And also how these can be leveraged in sense of the follow-on trials with other indications?

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

To make sure I understand the second question, the second question is based on what we’ve learned from the Phase 1b, how is that relevant to the other tumor types. Is that what you’re asking?

Kumar Raja — Brookline Capital Markets — Analyst

Yeah, that, and also like how you can leverage the — yeah, I think — yeah, that’s what I’m asking.

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

Yeah. Got you. Okay. So let me answer the second question first. And the answer is that in our animal models, it turns out that the concentrations that we saw for almost every tumor type, whether it’s pancreatic, lung cancer, triple-negative breast, it was always in the same human-equivalent dose and it was dose-dependent, which means if you were low, you’ve got less of a tumor response in the animals. If your concentration in blood was higher, you get a better response. You definitely had a dose response. And our doses that we’re treating, 54 and beyond, are in that range.

And so we’ve reached, as I said in the call — the prepared comments in the call that we’ve reached the concentration there. So if we stay in that concentration range, it will get a broad spectrum of different tumor types, if the animal model translates into the human model. As it relates to what we’re seeing, we are seeing interestingly, that we’re changing two levers, one is dose, so we went from 4.5 milligrams up to 81 milligrams, and the other thing, we’re changing is schedule. Patients get treated one week on, two weeks off, two weeks on, one week off, three weeks continuous. And so, we have two levers that we’re pulling. What I can tell you is that using PSA as a biomarker, there’s no question that the higher the dose and the more it’s given. So continuous is better than two weeks on and one week off and two weeks on and continuous are better than taking one week on, two weeks off. So we’re seeing dose and schedule changes consistent with a dose response with the product — with VERU-111.

As it relates to the side effects, there appears to be a window in which we’re in the concentration required to see anticancer effects that we’ve seen in the preclinical model. Now we’re seeing in the human model, where the side effect profile looks pretty good. So well tolerated. And as you go to the highest, highest doses, that’s when we start seeing what you expect for a cytotoxic agent on the GI tract. Because as you know, the GI tract is where the cells divide pretty rapidly. And so, that’s when we’re starting to see the nausea, vomiting and the diarrhea. They are all manageable. But at the highest doses, you see more of it. So even that side effect is dose-dependent. As it relates to, as I said, that we’re not seeing neurotoxicity, so I can’t comment on that. As it relates to effects on neutrophils, I’m telling you, unless we keep pushing this drug, I mean, the effects on neutrophils appear to be mild. So it’s already a different side effect profile than a taxane.

Kumar Raja — Brookline Capital Markets — Analyst

Okay. Thank you. And one more question with regard to the female condom. It looks like the business in the U.S. is doing well. What I’m trying to get here is like, obviously, we are seeing decent growth. But in terms of the potential, where do we stand there? Like in terms of continued growth, how long do we expect to see there? And in terms of the potential, where do we stand? Like what are your expectations in terms of the long-term growth?

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

Great question. And I think — I don’t want to be — this one just sounds a little corny, but it’s a blue ocean out there, right? And this is what we’ve been able to do is tap into a very interesting way to sell — interesting sales channel for FC2. So by using a sales channel called telemedicine, it’s allowed our Company not to spend any money on marketing and selling. I mean that’s an important point. So we have this kind of revenue coming in without a salesperson and without a marketing budget, and you said, well, Mitch, how can that be?

Well, it turns out that these telemedicine groups are using their resources to market products and market people to come to their website and then in their website is when they interact with the physician through whatever mechanism that website does that. And then some of these websites also play a role in filling the prescription, sending the product to the patient, and following up the patient over time, just like traditional CVS or Walgreens would do if we came in with a prescription in a brick-and-mortar place.

For some reason, and I think it has to do with the fact that women’s health is such an important issue, particularly contraception, there are so many of these telemedicine sites that are opening up — literally once a week, we hear about a new one. You’ve heard of Feraheme, it’s in the Pill Club, and others like that, and you’ve heard about Get Roman for men. So — Ferahemes for men. So these websites are growing rapidly. And we’re just literally taking — literally taking advantage of this in the sense that, that’s the patients that are accessing our product, and those numbers are just staggering in terms of what an Internet-based sales team can do versus a brick-and-mortar marketing and selling team where a single salesperson will be lucky if he sees 400 scripts to the 1,000 scripts a month.

With telemedicine, it’s not unusual because some of these telemedicine groups, they have 30,000 to 40,000 prescriptions a month, not our product but women’s health products in general. So it’s — I don’t know what the ceiling is going to be on this one. All I can tell you is we’ve had nine quarters of significant growth that has allowed us to meet our cash needs to run our clinical — excuse me, invest in our clinical programs. And this is going to be a record year for us. And I hope the year after that will be a record year as well. But with this kind of trajectory, I mean, I don’t know. I will tell you that where 1% female condom business in the U.S. is about less than 0.1% of the male condom business.

And so, we have a lot of room to go, as women use these products and enjoy these products and begin to take in to all of their sexual health, there’s a blue ocean. So I think that’s all I can say at this point. And I feel very bullish that we’re going to continue to see growth. And this has been one of the reasons we’d held on to this asset.

Kumar Raja — Brookline Capital Markets — Analyst

Okay. Great. Thank you so much.

Operator

The next question today comes from Peter McMullen, a consultant. Please go ahead.

Peter McMullin — Consultant — Analyst

Can you hear me, Mitch?

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

I hear you, Peter. How are you doing?

Peter McMullin — Consultant — Analyst

[Indecipherable] Thank you. Mine is more of a marketing question. I believe you’re going to ASCO over the next few days. What are you doing there? How much of the odd ends to our Veru? What’s the opportunity to kind of expand your fan club?

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

Great question. So as you know, we’ve taken the approach that it’s better to show than to tell. And so, we now have information that’s coming out of our cancer programs, where we can show. And so that’s allowing us now to — and this has been a record year to begin to get a new fan club or base. And as you know, Dr. Harry Fisch and myself, both urologists and particularly in our history with the urology community, and particularly, in prostate cancer, we have a big footprint. And so, we’re beginning to engage with these thought leaders to get them on board. That’s how come I know, for example, that they’re very excited about VERU-111 because urologists want to maintain these patients. Just by way of how this is going now, when I was a resident, if somebody was diagnosed with advanced prostate cancer, they had 18 months to live. In some cases, today, it’s 20 years or more.

And so, these advanced — and because of all these new drugs, these advanced prostate clinics opening up across the country that are manned mostly by urologists. They have their own pharmacies. And this is what they do. They manage these patients effectively so that we can get as much time and quality as we can. And so, now there’s a new renewed interest in new drugs because before we had nothing. And now with these clinics that opened around ADT, that opened around novel androgen-blocking agents, and now that patients are starting to fail these agents, what’s the next thing? What else can we do to keep these patients? And so, this is where we’re coming in. So this new meeting coming up, GU ASCO, I’m going to hop on the plane after this call to go to GU ASCO.

We are presenting two abstracts at GU ASCO, one of them, and this is in the press release, our earnings release, one is on GnRH antagonists showing the proof of concept, where we basically able to, with a single injection, castrate mice — rats for over nine — six to nine months. It’s a very effective product. And so everybody can see the data. And then we’re also presenting a very interesting Prostate Cancer Research Institute survey that we sponsored in about 218 patients that have hot flashes, and it really answers a lot of questions like, how many of those patients really have hot flashes? Whether the hot flashes, they just go away or they stay? And what is the preferred way to get the treatment for the ADT? And that kind of questions. So it was a lot of marketing information there as well.

But it’s being presented in the scientific forum. So those abstracts have been selected. I will personally be standing by those abstracts and those posters at the meeting to interact. So this will be a very big weekend for us as we begin, almost a kickoff. And as we move from a Phase 1b to a Phase 2 with VERU-111, that’s also going to allow us to have data to show people and to talk about it. And the Phase 2, I really do believe that Phase 2 is going to enroll pretty quickly, which means that — and I didn’t mention this on my call, but we’re looking for a significant data this year. And so, that will be on top of the Phase 1b data. So stay tuned. We’ve reached a point in our Company that we’ve gone from, I tell you, I’m going to do this, so now I can show them what we have. And so it should be a very interesting year.

Peter McMullin — Consultant — Analyst

What are the dates covered? And when do you actually present? Does it go through the weekend? Or is it Thursday, Friday and people go home with…

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

Yeah. I think it’s going to be like Thursday, Friday exactly, that’s what it is. And one each day. And if you look on the GU ASCO or the genitourinary oncology ASCO meetings, it will have — I think, it will actually get into the schedule and see. And do we have a press release coming? Yeah. So we have a press release, somebody in the room was telling me that we will put a press release out. We’ll tell you the dates, the times, and we’ll give you a summary of each abstract and it’s already out. It’s on the website. Can we put — are we’re going to do a press release or not?

Michele Greco — Chief Financial Officer and Chief Administrative Officer

It already went out.

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

Went out? Okay, thanks. So good. It’s already gone up. So you go to our website, evidently, it’s already out.

Peter McMullin — Consultant — Analyst

Well, good luck on that and take your trumpet.

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

Thank you. Appreciate it.

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.

Mitchell S. Steiner — Chairman, President and Chief Executive Officer

Thank you, operator. I appreciate you joining us on today’s call, and I look forward to updating all of you on our progress at our next investors call. Thank you.

Operator

The digital replay of the conference will be available beginning approximately noon Eastern Time today, February 12th, by dialing 1(877) 344-7529 in the U.S. and 1(412) 317-0088 internationally. You will be prompted to enter the replay access code, which will be 10138979. Please record your name and company when joining. [Operator Closing Remarks]

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