VERU - Veru: Great Potential Despite FDA Rejection Of Sabizabulin EUA

2023-03-08 13:47:06 ET

Summary

• Emergency Use Authorization of Veru Inc.'s Sabizabulin for Covid-19 was rejected by the FDA for United States use for now, barring a new study being done for further review at a later time point.
• Potential remains to still obtain Emergency Use Authorization of Sabizabulin for Covid-19 in other territories outside of the United States.
• Final results from the phase 3 ARTEST trial, using enobosarm as a monotherapy for the treatment of patients with 3rd-line AR+ ER+ HER2- metastatic breast cancer, are expected mid-2023.
• Final results from the phase 3 ENABLAR-2 study, using enobosarm + Verzenio for the treatment of patients with 2nd-line AR+ ER+ HER2- metastatic breast cancer, are expected in 1st half of 2024.
• Veru Inc. had $46.9 million in cash as of December 31, 2022; enough cash to fund its operations for at least the next 12 months.

Veru Inc. (VERU) is a great speculative biotech play to look into, despite a rejection by the FDA of the Emergency Use Authorization ((EUA)) of Sabizabulin for the treatment of patients with moderate to severe Covid-19. That's because it is possible that it could still eventually obtain an EUA for this indication, barring it completes another study necessary to do so.

However, I want to put focus towards another indication in the pipeline that it has, which involves the targeting of patients with 3rd-line breast cancer. That is, the drug enobosarm is being explored for the treatment of patients with 3rd-line AR+ ER+ HER2- metastatic breast cancer in a phase 3 study known as ARTEST. The reason why I want to highlight this study and why it could possibly help give Veru a boost in value is because results from this phase 3 ARTEST study are expected to be released in mid-2023. The company still has the potential to obtain EUAs for other territories outside of the United States as well. It is very low on cash and as such it will likely need to raise additional funds to move many of these programs along.

Enobosarm For The Treatment Of Patients With 3rd-line Breast cancer

The next update to go over involves the use of enobosarm for the treatment of patients with 3rd-line breast cancer. This drug is being explored in the phase 3 ARTEST trial for the treatment of AR+ ER+ HER2- metastatic breast cancer patients. One major aspect to consider for this program is that it is specifically looking at targeting 3rd-line AR+ ER+ HER2- metastatic breast cancer patients. Not only that, but for the phase 3 ARTEST trial , patients are only being given enobosarm alone as a monotherapy. It is important to note that this late-stage ARTEST study is only recruiting patients who have greater than 40% AR staining, which might improve the odds of success. In addition, these patients must have progressed while on a nonsteroidal AI such as fulvestrant and a CDK4/6 inhibitor.

It is said that about 210 patients will be recruited into this study and then will be randomized to receive either 9 mg of enobosarm or a control (control could end up being Everolimus (Afinitor), Exemestane, or estrogen receptor modulator such as tamoxifen). The primary endpoint is going to be radiographic progression-free survival (rPFS) over a 120 day period between enobosarm compared to the control treatment group.

It's hard to say for sure if this phase 3 ARTEST trial will end up being successful, but there were some positive findings from a phase 2 trial. Especially, when looking at ER+ HER2- breast cancer patients with AR staining of at least 40%. It was shown that patients who took enobosarm achieved a clinical benefit rate of 52% at 24 weeks . The AR staining is important, because it is a biomarker of patients who are likely to respond to this drug. Otherwise, the advanced breast cancer patients with less than 40% AR only achieved a clinical benefit rate of 14%.

As far as a catalyst goes, I believe that clinical data from this phase 3 ARTEST study will be released this year in 2023. That's because the estimated completion date for this trial is going to be in April of 2023. That means, results from this late-stage study, using enobosarm for the treatment of patients with AR+ ER+ HER2- breast cancer should be released by mid-2023.

Financials

According to the 10-Q SEC Filing , Veru Inc. had cash and cash equivalents of about $46.9 million as of December 31, 2022. To be very blunt, one negative aspect about this company is that it is very low on cash. Thus, it will have to enact some type of cash-raising activities during 2023 so that it can keep its operations going.

Such possible cash raising activities could be debt financing, common stock offering, convertible debt or to use a Form S-3 filing. It could also choose to sell shares of common stock under a stock purchase agreement that was done with Aspire Capital Fund, LLC.

The obvious reason that it will need to raise more funds is because of the cash and cash equivalents of $46.9 million on hand it has. However, it is also because of the estimate it gave in its 10-Q SEC filing. It stated that it believes it would have enough cash to fund its operations for at least the next 12 months. I believe that once an opportunity arises to raise additional cash, it won't hesitate to do so. Where it may enact a cash raise is possibly after it announces EUA given for Sabizabulin for Covid-19 in another territory outside of the United States.

Risks To Business

There are several risks that traders/investors should be aware of before investing in this biotech. The first major risk to consider would be with respect to the release of results from the phase 3 ARTEST study, which is using enobosarm as a monotherapy for the treatment of AR+ ER+ HER2- metastatic breast cancer. Final results from this late-stage study are expected to be released in mid-2023 and there is no guarantee that the primary endpoint will be met.

A second risk to consider for Veru Inc. would be with respect to the Emergency Use Authorization update given by the FDA. Which is that in order for the biotech to obtain an EUA for the United States, it would have to complete another study in order to do so. Even if Veru completes such a study requested by this agency, there is no guarantee that Sabizabulin will be approved for the treatment of patients with moderate to severe Covid-19 for the United States.

A third risk to consider would be with respect to review of the other ongoing EUAs of Sabizabulin for several territories outside of the United States. While it's possible it could still obtain EUAs of Sabizabulin for Covid-19 in these other territories, there is no certainty that it will do so.

The final risk to consider is with respect to the cash on hand it has, which is very low. It is my expectation that Veru is looking for an opportunity to raise additional cash to keep its pipeline going. This means that any positive news development to be released in the coming months will likely be followed with an immediate cash raising activity.

Conclusion

The final conclusion is that Veru Inc. is a great speculative biotech play to look into. That's because it has the release of final results coming from the phase 3 ARTEST trial, which is using enobosarm for the treatment of patients with 3rd-line AR+ ER+ HER2- metastatic breast cancer. Results from this late-stage study are expected to be released by mid-2023.

While EUA of Sabizabulin for Covid-19 was not given by the FDA for the United States, there is still an opportunity to do so with a new study. Not only that, but an EUA can still be obtained of Sabizabulin for another territory outside of the United States. I believe that the upcoming release of the phase 3 ARTEST trial for enobosarm could boost shareholder value in a few ways.

The first way would be establishing proof of concept for another study. That's because Veru is also exploring the use of enobosarm plus Verzenio for the treatment of patients with 2nd-line AR+ ER+ HER2- metastatic breast cancer in the ongoing phase 3 ENABLAR-2 study. Results from this late-stage study are expected to be released around the 1st half of 2024.

The second way would be, that with the primary endpoint being met in the phase 3 ARTEST study, I would expect the Veru Inc. stock price to trade higher. With the possibility of still obtaining an EUA of Sabizabulin for Covid-19 in other territories outside of the United States, plus a few catalysts expected within the next few years, these are the reasons why I believe Veru Inc. is a great speculative biotech play to look into.

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