Why investors need to take note as Veru Inc transforms into a prostate cancer firm

According to the American Cancer Society, prostate cancer is the second most common form of cancer among men in the US, affecting almost one in nine people. This naturally brings us to why we should take more seriously a company that projects itself as the “Prostate cancer company.”

Miami-based Veru Inc (NASDAQ: VERU) has four products in the pipeline to take on the prostate cancer therapy market, which is projected to grow at a CAGR of 6.1% between 2019 and 2024, as per data from a recent study. In an interview with AlphaStreet, Veru CEO Dr. Mitchell Steiner gave more reasons as to why the biopharmaceutical company commands investor interest.     

Female condoms to drive R&D

Veru is the only FDA-approved supplier of female condoms in the US. Abroad, the company sells its FC2 female condoms in over 140 countries, where it claims to have a market share of about 90%. 

Besides FC2, Veru sells PREBOOST wipes that help improve ejaculation control. Both these products contribute to the topline, which is then utilized for Research & Development to achieve the firm’s ultimate goal of becoming a prostate cancer company. 

In 2019, both these products made meaningful contributions to the topline. Revenue more than doubled during this period to $31.8 million, while losses were cut down by more than half. The improvement in bottom-line came despite a 26% jump in R&D expenses, which the company attributes to the increased expenses associated with later phase clinical trials. 

Dr. Steiner said, “We have been able to match the revenues and cash flows from the commercial business for the development of prostate cancer products. So we don’t have to go to the markets for funding. This allows us the flexibility of continuing our programs, even in a down-market like the one we are in right now.”     

A promising pipeline

Zuclomiphene citrate, which is aimed at treating hot flashes caused by prostate cancer hormone therapy, is the most advanced product in Veru’s pipeline. Phase 2 trials have been completed, but the initiation of Phase 3 is being slightly delayed due to the COVID-19 situation. 

However, the CEO is pretty confident about the progress. “We have already started the preparations and protocols – so from that standpoint, we are on track. And we have guided that we will start the study by December. We are on track to do that,” he said.

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

Zuclomiphene, which is a weak estrogen, has reportedly shown a significant reduction in hot flashes in Phase 2 among men undergoing castration therapy. Meanwhile, the therapy is not showing the usual side effects associated with the imbalance of estrogen including enlargement of breasts, blood clots, and stroke, and according to Dr. Steiner, this is what makes Zuclomiphene exciting.  

Another promising candidate is the orally administered VERU-111, aimed at treating prostate cancer patients who have failed to respond positively to androgen deprivation therapy. Phase 2 trials have been initiated and the company hopes to start Phase 3 trials next year. 

The executive also sees the opportunity of expanding VERU-111 for the treatment of tumors such as breast cancer, pancreatic cancer, cervical cancer, lung cancer, etc. The efficacy would be tested once Phase 2 for prostate cancer would be completed, he told AlphaStreet.

Veru-100 and TADFIN are two other candidates that are in the early development stages. 

Road to profitability 

Dr. Steiner said the company has a clear plan of becoming a profitable firm. “If you look at our commercial business, it is profitable. As it grows, because margins are great, we will continue to have revenues to fund the prostate cancer products, ” he said.

He also expressed hopes that the three prostate cancer drugs would reach the market between 2022 and 2024, which would raise the profitability bar. 

Regarding the impact of COVID-19 on its financials, the CEO said the management is still assessing it. “Production has not been affected by coronavirus and there’s supplies on hand. At this point, in the short term, it looks ok,” he said.