Upgrade to SI Premium - Free Trial

Form 10-Q VERU INC. For: Jun 30

August 11, 2022 3:39 PM
falseQ320220000863894YesYes12040-12-312022-12-31P10Y2041-12-312038-12-31P5Y2025-09-012022-09-012025-09-012023-09-010000863894us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-04-012022-06-300000863894veru:CurrentAccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2021-10-012022-06-300000863894veru:AccountsReceivableAndLongTermTradeReceivablesMemberus-gaap:CustomerConcentrationRiskMember2021-10-012022-06-300000863894us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-10-012022-06-300000863894us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-04-012021-06-300000863894veru:TotalAccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2020-10-012021-09-300000863894veru:CurrentAccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2020-10-012021-09-300000863894veru:SwkCreditAgreementMember2018-03-052018-03-050000863894veru:AspireCapitalPurchaseAgreement2020Member2021-10-012022-06-300000863894srt:MinimumMemberveru:EstimatedChangeOfControlDatesMember2021-10-012022-06-300000863894srt:MaximumMemberveru:EstimatedChangeOfControlDatesMember2021-10-012022-06-300000863894srt:MinimumMemberveru:EstimatedChangeOfControlDatesMember2020-10-012021-09-300000863894srt:MaximumMemberveru:EstimatedChangeOfControlDatesMember2020-10-012021-09-300000863894veru:PremiumFinanceAgreementMember2020-11-012020-11-010000863894veru:ResidualRoyaltyAgreementMember2021-10-012022-06-300000863894veru:ResidualRoyaltyAgreementMember2018-03-052018-03-050000863894country:BR2021-10-012022-06-300000863894veru:CommonStockPurchaseWarrantsMember2016-10-312016-10-3100008638942022-03-012022-03-010000863894us-gaap:DomesticCountryMemberveru:TwentyFortyToTwentyFortyTwoMember2021-09-300000863894us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300000863894us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310000863894us-gaap:AdditionalPaidInCapitalMember2021-10-012021-12-310000863894us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300000863894us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000863894us-gaap:AdditionalPaidInCapitalMember2020-10-012020-12-310000863894us-gaap:CommonStockMember2022-04-012022-06-300000863894us-gaap:CommonStockMember2022-01-012022-03-310000863894us-gaap:CommonStockMember2021-10-012021-12-310000863894us-gaap:CommonStockMember2021-04-012021-06-300000863894us-gaap:CommonStockMember2021-01-012021-03-310000863894veru:AspireCapitalPurchaseAgreement2020Member2020-06-262020-06-260000863894veru:CommonStockPurchaseWarrantsMember2020-10-012021-06-300000863894us-gaap:CommonStockMember2020-10-012020-12-310000863894us-gaap:TreasuryStockMember2022-06-300000863894us-gaap:RetainedEarningsMember2022-06-300000863894us-gaap:AdditionalPaidInCapitalMember2022-06-300000863894us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300000863894us-gaap:TreasuryStockMember2022-03-310000863894us-gaap:RetainedEarningsMember2022-03-310000863894us-gaap:AdditionalPaidInCapitalMember2022-03-310000863894us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-3100008638942022-03-310000863894us-gaap:TreasuryStockMember2021-12-310000863894us-gaap:RetainedEarningsMember2021-12-310000863894us-gaap:AdditionalPaidInCapitalMember2021-12-310000863894us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-3100008638942021-12-310000863894us-gaap:TreasuryStockMember2021-09-300000863894us-gaap:RetainedEarningsMember2021-09-300000863894us-gaap:AdditionalPaidInCapitalMember2021-09-300000863894us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300000863894us-gaap:TreasuryStockMember2021-06-300000863894us-gaap:RetainedEarningsMember2021-06-300000863894us-gaap:AdditionalPaidInCapitalMember2021-06-300000863894us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300000863894us-gaap:TreasuryStockMember2021-03-310000863894us-gaap:RetainedEarningsMember2021-03-310000863894us-gaap:AdditionalPaidInCapitalMember2021-03-310000863894us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-3100008638942021-03-310000863894us-gaap:TreasuryStockMember2020-12-310000863894us-gaap:RetainedEarningsMember2020-12-310000863894us-gaap:AdditionalPaidInCapitalMember2020-12-310000863894us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-3100008638942020-12-310000863894us-gaap:TreasuryStockMember2020-09-300000863894us-gaap:RetainedEarningsMember2020-09-300000863894us-gaap:AdditionalPaidInCapitalMember2020-09-300000863894us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300000863894us-gaap:CommonStockMember2022-06-300000863894us-gaap:CommonStockMember2022-03-310000863894us-gaap:CommonStockMember2021-12-310000863894us-gaap:CommonStockMember2021-09-300000863894us-gaap:CommonStockMember2021-06-300000863894us-gaap:CommonStockMember2021-03-310000863894us-gaap:CommonStockMember2020-12-310000863894us-gaap:CommonStockMember2020-09-3000008638942021-02-220000863894us-gaap:StockAppreciationRightsSARSMember2022-06-300000863894us-gaap:StockAppreciationRightsSARSMember2016-10-310000863894veru:EmployeeMemberus-gaap:StockAppreciationRightsSARSMemberveru:AppMergerMember2021-10-012022-06-300000863894srt:DirectorMemberus-gaap:StockAppreciationRightsSARSMemberveru:AppMergerMember2016-10-312016-10-310000863894us-gaap:EmployeeStockOptionMember2021-09-300000863894veru:TwoThousandAndSeventeenEquityIncentivePlanMember2022-06-300000863894veru:TwoThousandEightStockIncentivePlanMember2022-06-300000863894veru:TwentyEighteenEquityIncentivePlanMember2022-06-300000863894veru:InducementPlan2022Member2022-06-300000863894veru:TwoThousandAndSeventeenEquityIncentivePlanMember2017-07-310000863894us-gaap:EmployeeStockOptionMember2022-04-012022-06-300000863894us-gaap:EmployeeStockOptionMember2021-04-012021-06-300000863894us-gaap:EmployeeStockOptionMember2020-10-012021-06-300000863894srt:MaximumMemberus-gaap:EmployeeStockOptionMember2021-10-012022-06-300000863894us-gaap:StockAppreciationRightsSARSMember2016-10-312016-10-310000863894us-gaap:StockAppreciationRightsSARSMemberveru:AppMergerMember2016-10-312016-10-310000863894veru:Fc2SegmentMemberveru:U.s.PrescriptionChannelSegmentMember2022-04-012022-06-300000863894veru:Fc2SegmentMemberveru:PublicSectorSegmentMember2022-04-012022-06-300000863894veru:OtherCountriesMember2022-04-012022-06-300000863894veru:Fc2SegmentMember2022-04-012022-06-300000863894country:US2022-04-012022-06-300000863894veru:Fc2SegmentMemberveru:U.s.PrescriptionChannelSegmentMember2021-10-012022-06-300000863894veru:Fc2SegmentMemberveru:PublicSectorSegmentMember2021-10-012022-06-300000863894veru:OtherCountriesMember2021-10-012022-06-300000863894veru:Fc2SegmentMember2021-10-012022-06-300000863894country:US2021-10-012022-06-300000863894veru:Fc2SegmentMemberveru:U.s.PrescriptionChannelSegmentMember2021-04-012021-06-300000863894veru:Fc2SegmentMemberveru:PublicSectorSegmentMember2021-04-012021-06-300000863894veru:OtherCountriesMember2021-04-012021-06-300000863894veru:Fc2SegmentMember2021-04-012021-06-300000863894country:US2021-04-012021-06-300000863894veru:Fc2SegmentMemberveru:U.s.PrescriptionChannelSegmentMember2020-10-012021-06-300000863894veru:Fc2SegmentMemberveru:PublicSectorSegmentMember2020-10-012021-06-300000863894veru:PreboostSegmentMember2020-10-012021-06-300000863894veru:OtherCountriesMember2020-10-012021-06-300000863894veru:Fc2SegmentMember2020-10-012021-06-300000863894country:US2020-10-012021-06-300000863894veru:ResidualRoyaltyAgreementMember2018-03-052021-08-310000863894srt:MinimumMemberveru:EquipmentFurnitureAndFixturesMember2021-10-012022-06-300000863894srt:MinimumMemberus-gaap:MachineryAndEquipmentMember2021-10-012022-06-300000863894srt:MinimumMemberus-gaap:LeaseholdImprovementsMember2021-10-012022-06-300000863894srt:MaximumMemberveru:EquipmentFurnitureAndFixturesMember2021-10-012022-06-300000863894srt:MaximumMemberus-gaap:MachineryAndEquipmentMember2021-10-012022-06-300000863894srt:MaximumMemberus-gaap:LeaseholdImprovementsMember2021-10-012022-06-300000863894veru:EquipmentFurnitureAndFixturesMember2022-06-300000863894us-gaap:MachineryAndEquipmentMember2022-06-300000863894us-gaap:LeaseholdImprovementsMember2022-06-300000863894veru:EquipmentFurnitureAndFixturesMember2021-09-300000863894us-gaap:MachineryAndEquipmentMember2021-09-300000863894us-gaap:LeaseholdImprovementsMember2021-09-3000008638942021-02-222021-02-220000863894veru:AspireCapitalPurchaseAgreement2020Member2020-06-012020-06-300000863894veru:PreboostMember2021-10-012022-06-300000863894veru:PreferredClassSeries4Member2022-06-300000863894veru:PreferredClassASeries3Member2022-06-300000863894veru:PreferredClassASeries2Member2022-06-300000863894veru:PreferredClassASeries1Member2022-06-300000863894veru:PreferredClassASeries3Member2021-09-300000863894veru:PreferredClassASeries2Member2021-09-300000863894veru:PreferredClassASeries1Member2021-09-300000863894us-gaap:PreferredClassBMember2022-06-300000863894us-gaap:PreferredClassAMember2022-06-300000863894us-gaap:PreferredClassBMember2021-09-300000863894us-gaap:PreferredClassAMember2021-09-300000863894veru:AspireCapitalPurchaseAgreement2020Member2021-09-300000863894srt:MinimumMember2021-10-012022-06-300000863894srt:MaximumMember2021-10-012022-06-300000863894us-gaap:StateAndLocalJurisdictionMemberveru:TwentyTwentyTwoToTwentyFortyMember2021-09-300000863894us-gaap:StateAndLocalJurisdictionMemberveru:IndefiniteMember2021-09-300000863894us-gaap:ForeignCountryMemberveru:IndefiniteMember2021-09-300000863894us-gaap:DomesticCountryMemberveru:TwentyTwentyTwoToTwentyFortyMember2021-09-300000863894us-gaap:DomesticCountryMemberveru:IndefiniteMember2021-09-300000863894us-gaap:StateAndLocalJurisdictionMember2021-09-300000863894us-gaap:DomesticCountryMember2021-09-3000008638942022-01-012022-06-300000863894us-gaap:RetainedEarningsMember2022-04-012022-06-300000863894us-gaap:RetainedEarningsMember2022-01-012022-03-3100008638942022-01-012022-03-310000863894us-gaap:RetainedEarningsMember2021-10-012021-12-3100008638942021-10-012021-12-310000863894us-gaap:RetainedEarningsMember2021-04-012021-06-300000863894us-gaap:RetainedEarningsMember2021-01-012021-03-3100008638942021-01-012021-03-310000863894us-gaap:RetainedEarningsMember2020-10-012020-12-3100008638942020-10-012020-12-310000863894veru:PremiumFinanceAgreementMember2022-06-300000863894veru:PremiumFinanceAgreementMember2021-09-300000863894veru:EntadfiMember2022-06-300000863894veru:Fc2Member2022-06-300000863894veru:Fc2Member2021-09-300000863894us-gaap:OtherIntangibleAssetsMember2022-06-300000863894us-gaap:OtherIntangibleAssetsMember2021-09-300000863894us-gaap:StockOptionMember2020-10-012021-06-300000863894us-gaap:StockAppreciationRightsSARSMember2020-10-012021-06-300000863894veru:PreboostMember2020-10-012021-06-300000863894veru:CovenantsNotToCompeteMember2022-06-300000863894veru:CovenantsNotToCompeteMember2021-09-300000863894us-gaap:EmployeeStockOptionMember2022-06-300000863894us-gaap:EmployeeStockOptionMember2021-10-012022-06-300000863894srt:MinimumMemberveru:MeasurementInputProbabilityOfChangeOfControlMember2022-06-300000863894srt:MinimumMemberus-gaap:MeasurementInputDiscountRateMember2022-06-300000863894srt:MaximumMemberveru:MeasurementInputProbabilityOfChangeOfControlMember2022-06-300000863894srt:MaximumMemberus-gaap:MeasurementInputDiscountRateMember2022-06-300000863894srt:MinimumMemberveru:MeasurementInputProbabilityOfChangeOfControlMember2021-09-300000863894srt:MinimumMemberus-gaap:MeasurementInputDiscountRateMember2021-09-300000863894srt:MaximumMemberveru:MeasurementInputProbabilityOfChangeOfControlMember2021-09-300000863894srt:MaximumMemberus-gaap:MeasurementInputDiscountRateMember2021-09-300000863894veru:PreboostMember2020-12-082020-12-080000863894veru:PreboostMember2020-12-080000863894veru:EquipmentFurnitureAndLeaseholdImprovementsMember2022-06-300000863894veru:EquipmentFurnitureAndLeaseholdImprovementsMember2021-09-300000863894country:US2022-06-300000863894country:US2021-09-300000863894country:MY2022-06-300000863894country:GB2022-06-300000863894country:MY2021-09-300000863894country:GB2021-09-300000863894veru:SwkCreditAgreementMember2022-06-300000863894veru:AspireCapitalPurchaseAgreement2020Member2020-06-260000863894veru:SwkCreditAgreementMember2021-10-012022-06-300000863894veru:PremiumFinanceAgreementMember2020-11-010000863894veru:SwkCreditAgreementMember2018-03-050000863894veru:ResidualRoyaltyAgreementMember2022-06-300000863894veru:ResidualRoyaltyAgreementMember2021-09-300000863894veru:TwoCustomersMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-04-012022-06-300000863894veru:TwoCustomersMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-10-012022-06-300000863894veru:ThreeCustomersMemberveru:AccountsReceivableAndLongTermTradeReceivablesMemberus-gaap:CustomerConcentrationRiskMember2021-10-012022-06-300000863894veru:ThreeCustomersMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-04-012021-06-300000863894veru:ThreeCustomersMemberveru:TotalAccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2020-10-012021-09-300000863894veru:TwoCustomersMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-10-012021-06-300000863894veru:AspireCapitalPurchaseAgreement2020Member2022-06-300000863894veru:CommonStockPurchaseWarrantsMember2022-06-300000863894veru:CommonStockPurchaseWarrantsMember2021-06-300000863894veru:CommonStockPurchaseWarrantsMember2016-10-3100008638942021-06-3000008638942020-09-3000008638942022-03-010000863894srt:DirectorMemberveru:TwentyEighteenEquityIncentivePlanMember2022-04-012022-06-300000863894us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-04-012022-06-300000863894us-gaap:ResearchAndDevelopmentExpenseMember2022-04-012022-06-300000863894us-gaap:CostOfSalesMember2022-04-012022-06-300000863894srt:DirectorMemberveru:TwentyEighteenEquityIncentivePlanMember2021-10-012022-06-300000863894us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-10-012022-06-300000863894us-gaap:ResearchAndDevelopmentExpenseMember2021-10-012022-06-300000863894us-gaap:CostOfSalesMember2021-10-012022-06-300000863894us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-04-012021-06-300000863894us-gaap:ResearchAndDevelopmentExpenseMember2021-04-012021-06-300000863894us-gaap:CostOfSalesMember2021-04-012021-06-300000863894us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-10-012021-06-300000863894us-gaap:ResearchAndDevelopmentExpenseMember2020-10-012021-06-300000863894us-gaap:CostOfSalesMember2020-10-012021-06-3000008638942022-04-012022-06-3000008638942021-04-012021-06-3000008638942020-10-012021-06-300000863894country:BR2022-06-3000008638942022-06-3000008638942021-09-3000008638942022-08-0800008638942021-10-012022-06-30xbrli:sharesutr:Dveru:customeriso4217:USDnum:sqftveru:segmentveru:itemxbrli:pureiso4217:USDxbrli:sharesutr:sqftiso4217:USDxbrli:shares

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 1-13602

Veru Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Wisconsin

 

39-1144397

(State of Incorporation)

 

(I.R.S. Employer Identification No.)

 

 

2916 N. Miami Avenue, Suite 1000, Miami, FL

 

33127

(Address of Principal Executive Offices)

 

(Zip Code)

305-509-6897

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

VERU

Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x     No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  x     No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer x

Smaller reporting companyx

Emerging growth company¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as determined by Rule 12b-2 of the Exchange Act).    Yes  ¨     No  x

As of August 8, 2022, the registrant had 80,146,735 shares of $0.01 par value common stock outstanding.


VERU INC.

INDEX

PAGE

Forward Looking Statements

3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

5

Unaudited Condensed Consolidated Balance Sheets

5

Unaudited Condensed Consolidated Statements of Operations

6

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

7

Unaudited Condensed Consolidated Statements of Cash Flows

9

Notes to Unaudited Condensed Consolidated Financial Statements

10

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

26

Item 3. Quantitative and Qualitative Disclosures About Market Risk

37

Item 4. Controls and Procedures

38

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

39

Item 1A. Risk Factors

40

Item 6. Exhibits

44

 

2


FORWARD LOOKING STATEMENTS

Certain statements included in this quarterly report on Form 10-Q which are not statements of historical fact are intended to be, and are hereby identified as, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the anticipated or potential impact of COVID-19 and the global response thereto on our financial condition or business, our development and commercialization plans relating to our product candidates and products, future financial and operating results, plans, objectives, expectations and intentions, costs and expenses, royalty payments, outcome of contingencies, financial condition, results of operations, liquidity, cost savings, future ordering patterns of our customers, objectives of management, business strategies, clinical trial timing, plans and results, the achievement of clinical and commercial milestones, the advancement of our technologies and our products and drug candidates, and other statements that are not historical facts. Forward-looking statements can be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intend,” “may,” “opportunity,” “plan,” “predict,” “potential,” “estimate,” “should,” “will,” “would” or the negative of these terms or other words of similar meaning. These statements are based upon the Company’s current plans and strategies and reflect the Company's current assessment of the risks and uncertainties related to its business and are made as of the date of this report. These statements are inherently subject to known and unknown risks and uncertainties. You should read these statements carefully because they discuss our future expectations or state other “forward-looking” information. There may be events in the future that we are not able to accurately predict or control and our actual results may differ materially from the expectations we describe in our forward-looking statements. Factors that could cause actual results to differ materially from those currently anticipated include the following:

potential delays in the timing of and results from clinical trials and studies, including potential delays in the recruitment of patients and their ability to effectively participate in such trials and studies due to COVID-19 or other reasons, and the risk that such results will not support marketing approval and commercialization in the United States or in any foreign country;

potential delays in the timing of any submission to the U.S. Food and Drug Administration (the “FDA”) and potential delays in, or failure to obtain, regulatory approval of products under development or authorization of the Company’s emergency use authorization application for sabizabulin for certain COVID-19 patients, including the risk of a delay or failure in reaching agreement with the FDA on the design of a clinical trial or in obtaining authorization to commence a clinical trial or commercialize a product candidate in the U.S.;

potential delays in the timing of FDA approval of the release of manufactured lots of approved products;

clinical results or early data from clinical trials may not be replicated or continue to occur in additional trials or may not otherwise support further development in the specified product candidate or at all;

risks related to our ability to obtain sufficient financing on acceptable terms when needed to fund product development and our operations, including our ability to secure timely grant or other funding to develop, manufacture or distribute sabizabulin as a potential COVID-19 treatment;

risks related to the development of our product portfolio, including clinical trials, regulatory approvals and time and cost to bring any of our product candidates to market, and risks related to efforts of our collaborators such as in the development of a companion diagnostic for enobosarm;

risks related to the impact of the COVID-19 pandemic on our business, the nature and extent of which is highly uncertain and unpredictable;

our pursuit of a COVID-19 treatment candidate is still in development and we may be unable to develop a drug that successfully treats the virus in a timely manner, if at all;

risks related to our commitment of financial resources and personnel to the development of a COVID-19 treatment which may cause delays in or otherwise negatively impact our other development programs, despite uncertainties about the longevity and extent of COVID-19 as a global health concern and the possibility that as vaccines and other treatments become widely distributed the need for new COVID-19 treatment candidates may be reduced or eliminated;

risks related to our ability to scale up and manufacture sabizabulin in sufficient quantities as a COVID-19 treatment if we receive an emergency use authorization;

government entities may take actions that directly or indirectly have the effect of limiting opportunities for sabizabulin as a COVID-19 treatment, including favoring other treatment alternatives or imposing price controls on COVID-19 treatments;

product demand and market acceptance of our commercial product and our products in development, if approved;

3


 

some of our products are in development and we may fail to successfully commercialize such products;

risks related to any potential new telehealth platform developed or used by us in commercializing our current product or potential future products, including potential regulatory uncertainty around such platforms;

risks related to intellectual property, including the uncertainty of obtaining intellectual property protections and in enforcing them, the possibility of infringing a third party’s intellectual property, and licensing risks;

competition from existing and new competitors including the potential for reduced sales, pressure on pricing and increased spending on marketing;

risks related to compliance and regulatory matters, including costs and delays resulting from extensive government regulation and reimbursement and coverage under healthcare insurance and regulation as well as potential healthcare reform measures;

the risk that we will be affected by regulatory and legal developments, including a reclassification of products or repeal or modification of part or all of the Patient Protection and Affordable Care Act (the “ACA”);

risks inherent in doing business on an international level, including currency risks, regulatory requirements, political risks, export restrictions and other trade barriers;

the disruption of production at our manufacturing facilities or facilities of third parties on which we rely and/or of our ability to supply product due to raw material shortages, labor shortages, physical damage to our or third parties’ facilities, COVID-19 (including the impact of COVID-19 on suppliers of key raw materials), product testing, transportation delays or regulatory or other governmental actions, and the duration and impact of any such disruptions;

our reliance on major customers and risks related to delays in payment of accounts receivable by major customers;

risks from rising costs of raw materials and our ability to pass along increased costs to our customers;

risks related to our growth strategy;

our continued ability to attract and retain highly skilled and qualified personnel;

the costs and other effects of litigation, governmental investigations, legal and administrative cases and proceedings, settlements and investigations;

government contracting risks, including the appropriations process and funding priorities, potential bureaucratic delays in awarding contracts, process errors, politics or other pressures, and the risk that government tenders and contracts may be subject to cancellation, delay, restructuring or substantial delayed payments;

a governmental tender award indicates acceptance of the bidder’s price rather than an order or guarantee of the purchase of any minimum number of units, and as a result government ministries or other public health sector customers may order and purchase fewer units than the full maximum tender amount;

our ability to identify, successfully negotiate and complete suitable acquisitions, out-licensing transactions, in-licensing transactions or other strategic initiatives and to realize any potential benefits of such transactions or initiatives; and

our ability to successfully integrate acquired businesses, technologies or products.

All forward-looking statements in this report should be considered in the context of the risks and other factors described above, in Part II, Item 1A, “Risk Factors” below in this report, and in Part I, Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this report or to update them to reflect events or circumstances occurring after the date of this report except as required by applicable law.

4


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VERU INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

June 30,

September 30,

2022

2021

Assets

Current assets:

Cash and cash equivalents

$

100,550,610

$

122,359,535 

Accounts receivable, net

8,302,745

8,794,224 

Notes receivable

5,000,000 

Inventory, net

7,722,551

5,574,253 

Prepaid research and development costs

9,611,066

9,174,586 

Prepaid expenses and other current assets

2,173,722

850,889 

Total current assets

128,360,694

151,753,487 

Plant and equipment, net

1,081,710

592,603 

Operating lease right-of-use assets

4,970,311

969,839 

Deferred income taxes

13,005,533

13,024,550 

Intangible assets, net

3,995,238

4,048,810 

Goodwill

6,878,932 

6,878,932 

Other assets

2,284,890

878,502 

Total assets

$

160,577,308

$

178,146,723 

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

6,936,312

$

3,409,771 

Accrued research and development costs

10,721,360

2,020,445 

Accrued compensation

4,016,771

4,986,058 

Accrued expenses and other current liabilities

2,133,286

1,615,922 

Residual royalty agreement liability, short-term portion

3,050,135

3,237,211 

Operating lease liability, short-term portion

951,574

497,903 

Total current liabilities

27,809,438

15,767,310 

Residual royalty agreement liability, long-term portion

11,557,190

9,397,136 

Operating lease liability, long-term portion

4,264,458

609,921 

Deferred income taxes

63,426

63,426 

Other liabilities

15,000

14,986 

Total liabilities

43,709,512

25,852,779 

Commitments and contingencies (Note 12)

 

 

Stockholders' equity:

Preferred stock; no shares issued and outstanding at June 30, 2022 and September 30, 2021

Common stock, par value $0.01 per share; 154,000,000 shares authorized, 82,311,689 and 82,153,452 shares issued and 80,127,985 and 79,969,748 shares outstanding at June 30, 2022 and September 30, 2021, respectively

823,117

821,535 

Additional paid-in-capital

248,984,393

241,658,711 

Accumulated other comprehensive loss

(581,519)

(581,519)

Accumulated deficit

(124,551,590)

(81,798,178)

Treasury stock, 2,183,704 shares, at cost

(7,806,605)

(7,806,605)

Total stockholders' equity

116,867,796

152,293,944 

Total liabilities and stockholders' equity

$

160,577,308

$

178,146,723 

See notes to unaudited condensed consolidated financial statements.

 

5


VERU INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Nine Months Ended

June 30,

June 30,

2022

2021

2022

2021

Net revenues

$

9,602,195

$

17,655,592

$

36,765,721

$

45,613,068

 

Cost of sales

2,533,572

3,782,480

6,679,738

9,995,023

 

Gross profit

7,068,623

13,873,112

30,085,983

35,618,045

 

Operating expenses:

Research and development

18,133,412

11,188,246

43,755,677

24,438,813

Selling, general and administrative

10,758,986

5,556,730

24,881,330

14,745,507

Total operating expenses

28,892,398

16,744,976

68,637,007

39,184,320

Gain on sale of PREBOOST® business

18,410,158

 

Operating (loss) income

(21,823,775)

(2,871,864)

(38,551,024)

14,843,883

 

Non-operating expenses:

Interest expense

(1,185,093)

(1,287,525)

(3,556,477)

(3,728,259)

Change in fair value of derivative liabilities

881,000

(1,372,000)

(557,000)

(2,029,000)

Other income (expense), net

69,895

(34,540)

135,897

(170,841)

Total non-operating expenses

(234,198)

(2,694,065)

(3,977,580)

(5,928,100)

 

(Loss) income before income taxes

(22,057,973)

(5,565,929)

(42,528,604)

8,915,783

 

Income tax expense (benefit)

137,603

(2,873,063)

224,808

(2,773,071)

Net (loss) income

$

(22,195,576)

$

(2,692,866)

$

(42,753,412)

$

11,688,854

 

Net (loss) income per basic common share outstanding

$

(0.28)

$

(0.03)

$

(0.53)

$

0.16

 

Basic weighted average common shares outstanding

80,088,431

79,729,370

80,054,594

75,054,871

Net (loss) income per diluted common share outstanding

$

(0.28)

$

(0.03)

$

(0.53)

$

0.14

 

Diluted weighted average common shares outstanding

80,088,431

79,729,370

80,054,594

82,807,156

 

See notes to unaudited condensed consolidated financial statements.

 

6


VERU INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

 

Accumulated

 

Additional

Other

Treasury

 

Common Stock

Paid-in

Comprehensive

Accumulated

Stock,

 

Shares

Amount

Capital

Loss

Deficit

at Cost

Total

 

Balance at September 30, 2021

82,153,452

$

821,535

$

241,658,711

$

(581,519)

$

(81,798,178)

$

(7,806,605)

$

152,293,944

Share-based compensation

1,880,428

1,880,428

Issuance of shares pursuant to share-based awards

79,334

793

209,076

209,869

Net loss

(6,380,006)

(6,380,006)

Balance at December 31, 2021

82,232,786

822,328

243,748,215

(581,519)

(88,178,184)

(7,806,605)

148,004,235

Share-based compensation

2,124,941

2,124,941

Issuance of shares pursuant to share-based awards

17,267

173

46,924

47,097

Net loss

(14,177,830)

(14,177,830)

Balance at March 31, 2022

82,250,053

822,501

245,920,080

(581,519)

(102,356,014)

(7,806,605)

135,998,443

Share-based compensation

2,910,976

2,910,976

Issuance of shares pursuant to share-based awards

61,636

616

153,337

153,953

Net loss

(22,195,576)

(22,195,576)

Balance at June 30, 2022

82,311,689

$

823,117

$

248,984,393

$

(581,519)

$

(124,551,590)

$

(7,806,605)

$

116,867,796

See notes to unaudited condensed consolidated financial statements.


7


VERU INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)

 

Accumulated

 

Additional

Other

Treasury

 

Common Stock

Paid-in

Comprehensive

Accumulated

Stock,

 

Shares

Amount

Capital

Loss

Deficit

at Cost

Total

 

Balance at September 30, 2020

72,047,385

$

720,474

$

126,971,518

$

(581,519)

$

(89,192,552)

$

(7,806,605)

$

30,111,316

Share-based compensation

785,297

785,297

Issuance of shares pursuant to share-based awards

468,611

4,686

619,133

623,819

Issuance of shares pursuant to common stock purchase warrants

1,574,611

15,746

(15,746)

Net income

17,227,701

17,227,701

Balance at December 31, 2020

74,090,607

740,906

128,360,202

(581,519)

(71,964,851)

(7,806,605)

48,748,133

Share-based compensation

1,002,281

1,002,281

Issuance of shares pursuant to share-based awards

357,297

3,573

645,702

649,275

Shares issued in connection with public offering of common stock, net of fees and costs

7,419,354

74,194

107,868,104

107,942,298

Net loss

(2,845,981)

(2,845,981)

Balance at March 31, 2021

81,867,258

818,673

237,876,289

(581,519)

(74,810,832)

(7,806,605)

155,496,006

Share-based compensation