Good morning, ladies and gentlemen, and welcome to Veru Inc.'s Investor Conference Call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After this morning's discussion, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference call over to Mr. Samuel Fisch, Veru Inc.'s Executive Director of Investor Relations and Corporate Communications. Please go ahead.
Good morning. The statements made on this conference call may be forward-looking statements. Forward-looking statements may include, but are not necessarily limited to, statements of the company's plans, objectives, expectations, or intentions regarding its business, operations, regulatory interactions, finances, and development and product portfolio. Such forward-looking statements are subject to known and unknown risks and uncertainties, and our actual results may differ significantly from those projected, suggested, or included in any forward-looking statements. Risks that may cause actual results or developments to differ materially are contained in our 10-Q and 10-K SEC filings, as well as in our press releases from time to time. I would now like to turn the conference call over to Dr. Mitchell Steiner, Veru Inc.'s Chairman, CEO, and President.
Good morning. With me in this morning's call are Dr. Gary Barnett, the CSO, Michele Greco, the CFO and CAO, Michael Purvis, the EVP of General Counsel and Corporate Strategy, and Sam Fisch, the Executive Director of Investor Relations and Corporate Communications. Thank you for joining our call. Veru is a biopharmaceutical company focused on developing novel medicines for COVID-19 and other viral and ARDS related diseases and for oncology. The company has a commercial sexual health program called Urev, which includes two FDA-approved products ENTADFI, a new treatment for benign prostatic hyperplasia, and FC2 Female Condom (Internal Condom) , for the dual protection against unplanned pregnancy and the transmission of sexually transmitted infections. The revenue from the sexual health program is being used partially to fund the clinical development of our late stage therapeutic candidates, which aim to address multibillion-dollar premium market opportunities.
This morning, we will provide an update on our COVID-19 sabizabulin clinical program, the clinical development of our oncology drug pipeline, and the commercialization of our products in the Urev program. We will also provide financial highlights for our fiscal fourth quarter and our fiscal year 2022 year-end. First, I will update you on the status of sabizabulin, an investigational drug candidate for the treatment of hospitalized adult COVID-19 patients at high risk for ARDS. We reported positive results from the phase III COVID-19 clinical trial, which was a double-blind, multicenter, multinational, randomized two to one placebo-controlled study evaluating daily oral 9 milligram dose of sabizabulin for up to 21 days versus placebo in 204 hospitalized moderate severe COVID-19 patients who were at high risk for ARDS and death.
Both the placebo and sabizabulin treatment groups were allowed to receive standard of care treatment, which could include dexamethasone, remdesivir, anti-IL-6 receptor antibodies and/or JAK inhibitors. The primary efficacy endpoint of our phase III trial was the proportion of patients who die on study up to day 60. Key secondary endpoints measured included the proportion of patients alive without respiratory failure, days in the ICU, days on mechanical ventilation, days in the hospital, and viral load. On April 8, 2022, the Independent Data Monitoring Committee conducted a planned interim efficacy analysis in the first 150 patients randomized in the phase III COVID-19 study. After reviewing the unblinded clinical data, the Independent Data Safety Monitoring Committee unanimously recommended that the phase III study be halted early due to clear clinical efficacy benefit. The Independent Data Monitoring Committee also remarked that no safety concerns were identified.
In this interim analysis, sabizabulin treatment demonstrated a statistically significant 24.9 percentage point absolute reduction and a 55.2% relative reduction in all-cause mortality by day 60. That was the primary efficacy endpoint of the study, and that p-value was 0.0042. The efficacy was further supported by the consistency of the mortality benefit across subgroup analyses of the primary endpoint. Clinically meaningful reductions in deaths with sabizabulin treatment compared to placebo was observed regardless of the standard care treatment received, baseline WHO Ordinal Score, sex, age, baseline comorbidities, BMI, or geographic location.
In the full final data set of 204 randomized patients, the all-cause mortality benefit was similar to the positive clinical results observed in the interim efficacy analysis population, with sabizabulin treatment resulting in a 51.6% relative reduction in deaths compared to placebo treatment. That p-value is 0.0046. Data from the key secondary efficacy endpoints demonstrated that sabizabulin treatment resulted in a significant reduction in days in the ICU, days on mechanical ventilation, days in the hospital compared to placebo. Sabizabulin also had an acceptable safety profile. Significantly fewer adverse and serious adverse events were reported for sabizabulin compared to placebo. There were also fewer treatment discontinuations due to adverse events in the sabizabulin group compared to placebo.
The phase 3 reported safety profiles suggest that sabizabulin treatment may have resulted in fewer COVID-19 related morbidities, especially respiratory failure, pneumothorax, acute kidney injury, cardiac arrest, septic shock, and hypotension. We're proud that the phase III clinical trial interim efficacy and full study safety results were published in The New England Journal of Medicine Evidence in July, which recognizes both the importance of a trial focused on COVID-19 treatment during the ongoing pandemic and the potential clinical benefit of sabizabulin in hospitalized mild to severe COVID-19 patients. We plan to submit a manuscript of the overall 204 randomized subjects to a prestigious peer-reviewed medical journal soon. We are extremely pleased that the clinical results in the phase III trial of sabizabulin in COVID-19 patients was highlighted in two medical conference presentations this fall, including a late-breaker oral presentation at ID Week.
Next, I will share with you our U.S. and ex-U.S. regulatory situation and progress regarding sabizabulin in COVID-19. On May 10th, 2022, we had a pre-Emergency Use Authorization meeting with FDA. In this meeting, the FDA agreed that no additional efficacy studies would be required to support an Emergency Use Authorization or EUA or an NDA. FDA also agreed that no additional safety data would be required to support an EUA, but that a collection of safety data under the EUA would satisfy the safety requirements for an NDA. Based on that FDA feedback from that meeting, on June 6th, 2022, we submitted a request for an EU application to FDA. On November 9th, 2022, the U.S. FDA's Pulmonary-Allergy Drugs Advisory Committee met with the company to review its request for EUA of sabizabulin.
Although the Advisory Committee had a vote of eight to five that the known or potential benefits of sabizabulin when used for the treatment of adult patients hospitalized with COVID-19 at high risk of ARDS do not outweigh the known or potential risks of sabizabulin, there was additional discussion by the Advisory Committee around the possible clinical trial design aspects for a potential confirmatory phase III clinical trial as a post EUA authorization requirement. FDA will consider the input of the Advisory Committee as part of their review. The FDA makes the final decision on the emergency use authorization application. We're in contact with the FDA as they continue to review our request for the EUA.
As it relates to our ex-U.S. regulatory updates, on July 27th, 2022, we announced that the European Medicines Agency, which is also known as EMA's Emergency Task Force, had informed the company that it has initiated a review of sabizabulin for the treatment of hospitalized COVID-19 patients at high risk for acute respiratory distress syndrome. The review will assess the 31 EU member states who may consider allowing the use of the medicine before a formal marketing authorization is granted. This review of sabizabulin is the first to be triggered under Article 18 of the new EU regulation that expanded the role of the EMA during public health emergencies in 2022. We have been in active communication with the Emergency Task Force as they complete their review of sabizabulin.
Once the Emergency Task Force completes their review, they will submit their formal recommendation to the EMA's Committee for Medicinal Products for Human Use, also known as CHMP. The CHMP reviews the recommendation and renders an opinion whether sabizabulin qualifies for emergency use in Europe. On December 2nd, 2022, we had discussions with the Health Emergency Preparedness and Response Authority, also known as HERA, H-E-R-A, which is part of the European Commission. HERA is responsible for joint procurement framework contracts, which offers 36 participating countries the possibility to jointly procure medical drugs and countermeasures as an alternative or as a complement to procurement at the national level. The joint procurement framework contracts have been previously signed with Gilead, Hoffmann-La Roche, GSK, and most recently on November 23rd with Pfizer.
With respect to the United Kingdom, on July 25, 2022, we announced that the UK's Medicines and Healthcare products Regulatory Agency, again, also known as MHRA, considers that the currently available safety and efficacy data will support an expedited review of the marketing authorization application for the company's sabizabulin treatment in hospitalized COVID-19 patients at high risk for acute respiratory distress syndrome when the application is submitted. In August 2022, Australia's Therapeutic Goods Administration, the TGA, granted the company an expedited provisional registration regulatory pathway for sabizabulin treatment in hospitalized COVID-19 patients at high risk for ARDS. On November 28th, 2022, Veru submitted a regulatory package to the Access Consortium national groups, which includes UK, Australia, and Switzerland.
The Access Consortium is a coalition of these regulatory authorities with therapeutic products that work together to promote greater regulatory collaboration and alignment of regulatory requirements. On November 28th, we submitted a regulatory data package for sabizabulin to Health Canada. To recap, we have submitted regulatory data packages and requests for emergency use authorizations on an international level to the European Union, the UK, Australia, Switzerland, and Canada, as well as South Korea. We are also in various stages of discussions with regulatory agencies in other countries to obtain regulatory emergency or expedited authorizations to sabizabulin in the near term, including Israel, Singapore, Egypt and South Africa.
Turning now to sabizabulin's commercialization preparation update. In anticipation of the need for potential commercial sabizabulin drug product, we have scaled up manufacturing processes and have commercial drug supply on hand to address anticipated drug needs following a potential FDA authorization in the U.S. As well as potential authorizations and approvals in other ex-U.S. countries and territories. As an update for the commercialization of sabizabulin in the U.S., Joel Batten, our Executive Vice President and General Manager of Veru's U.S. Infectious Disease Franchise, was hired in May of 2022. Mr. Batten has assembled an experienced leadership team to commercialize sabizabulin in the U.S. This dedicated team consists of 16 employees and 52 contractors that are focused on commercial launch, market access, and medical affairs. We have also executed contracts with wholesalers for specialized hospital distribution services for sabizabulin.
We are ready for the launch of sabizabulin to hospitals across the U.S. if we are granted emergency use authorization. We also have established Veru International to commercialize sabizabulin to the rest of the world. Jason Davies joined us in August of 2022 as the Executive Vice President, General Manager of Europe, the Middle East and Africa, Latin America, Canada, UK, and Asian Pacific for Veru's Infectious Disease Franchise for Veru International. Most recently, Mr. Davies held positions as the EMEA Head of Launch Excellence in pharmaceutical portfolio at Janssen, which is Johnson & Johnson company, where he's responsible for creating and leading a new organization to enhance launch strategy and execution across all of Janssen's EMEA's pharmaceutical portfolio.
Over the course of his career, Mr. Davies spent approximately 20 years in several commercial positions of increasing responsibility spread across the Janssen business units, including pharmaceutical business unit P&L responsibility, sales, marketing, market access, integration, and strategy, with a focus on pharmaceuticals for virology and infectious disease. Veru, Mr. Davies is responsible for developing and leading all aspects of international launch strategy, including government purchase agreements as well as the go-to-market commercial partner and distribution strategy for sabizabulin COVID-19 if authorized, as well as planned future indications for other viral ARDS related diseases. If we receive an emergency use authorization from the U.S., EU, or in another large market, we plan to initiate in a post-emergency use authorization setting any potential additional clinical studies that regulatory agencies request to evaluate sabizabulin for the treatment of hospitalized moderate to severe COVID-19 adult patients at high risk for ARDS and death.
We're also excited to expand the investigation of sabizabulin into other infectious disease indications based on the candidate's novel mechanism of action. As we have preclinical data in VIVO scientific data that demonstrates that sabizabulin has activity against H1N1 variant of Influenza A, also known as swine flu. We plan to conduct a phase III clinical study to evaluate sabizabulin in hospitalized adult patients with Influenza A who are at high risk for ARDS. Influenza A virus causes up to 52,000 deaths and 710,000 hospitalizations each year in the U.S. alone. We also plan to conduct a phase III clinical study of sabizabulin for the treatment of hospitalized adult patients with viral ARDS, kind of an all comers, which would include respiratory syncytial virus, which alone causes 14,000 deaths and 177 hospitalizations each year in the U.S.
As outlined above, sabizabulin as a novel antiviral and anti-inflammatory agent, is positioned to potentially become a valuable treatment option for multiple infectious diseases that can lead to ARDS, a life-threatening lung condition that has a high mortality rate. I will now briefly discuss the progress of our oncology drug portfolio focused on advanced breast and prostate cancers. In advanced breast cancer, we're actively enrolling two phase III clinical trials. The first is the ARTEST registrational clinical study in approximately 210 patients to evaluate enobosarm monotherapy for third-line treatment of AR- positive, ER -positive, HER2-negative metastatic breast cancer.
Second one is the ENABLAR-2 registration clinical study in approximately 186 patients to evaluate the efficacy and safety of enobosarm and abemaciclib combination therapy versus an alternative estrogen-blocking agent in subjects with AR- positive, ER- positive, HER2 -negative metastatic breast cancer who have failed first-line therapy with palbociclib, which is a CDK4/6 inhibitor, plus an estrogen-blocking agent and who have sufficient AR expression in their breast cancer tissue. We have a clinical trial collaboration and supply agreement with Lilly for the ENABLAR-2 phase III clinical study. Under terms of the non-exclusive clinical trial collaboration supply agreement, Veru is responsible for conducting the clinical trial, while Lilly is supplying abemaciclib for the study. Veru maintains full, exclusive, and global rights to enobosarm. In the advanced prostate cancer, we're actively enrolling a phase III and a phase II clinical trial.
We're actively enrolling an open label, randomized two to one multicenter phase III VERACITY clinical study evaluating sabizabulin 32 milligrams versus an alternative androgen receptor-targeted agent for the treatment of chemotherapy-naive men with metastatic castration-resistant prostate cancer who've had tumor progression after previously receiving at least one androgen receptor-targeted agent. The primary endpoint is radiographic progression-free survival. Enrollment for the phase III VERACITY clinical study is on track and ongoing. Our second clinical study in prostate cancer is evaluating VERU-100, a GnRH antagonist three-month depot formulation in a phase II dose-finding clinical study for the treatment of hormone-sensitive advanced prostate cancer. Although the study is ongoing, the promising preclinical data demonstrate that VERU-100 has the ability to both induce and maintain castration for three months. Veru has a commercial sexual health division called Urev, which includes two FDA products, FC2 and ENTADFI.
We have built the infrastructure to allow for broad market access to FC2 across the U.S. As a result, FC2 is now available through multiple sales channels. We have partnered with fast-growing and highly reputable telemedicine platform companies to bring our FC2 product to patients in the most cost-effective and highly convenient manner. While the telemedicine sector has underperformed across the board this past year, we're anticipating improvement in revenues after a couple of down quarters. Our strategy to drive FC2 sales is as follows. One, we will seek additional telemedicine and internet pharmacy service partnerships. Two, we have created and launched our own dedicated direct-to-patient telemedicine and internet pharmacy services platform. We're pleased with its growing source of revenue to date and are committed to expanding its customer base and reach. The website can be reached at fc2condoms.com.
We also expect to see continued increase in our U.S. public sector sales through our new agreements with the New York State Department of Health and with new distribution partnerships with Global Protection as well as Afaxys. We also have ENTADFI, an FDA-approved new treatment for benign prostatic hyperplasia, and currently prescribed benign prostatic hyperplasia medicines may lead to the most common side effect of sexual adverse events. ENTADFI has demonstrated its faster and more effective treatment option for benign prostatic hyperplasia than finasteride alone, and it does not cause the side effect of impotence. We launched this product during the fourth fiscal quarter with a focus on payer agreements as well as executing distribution, wholesaler, and Medicare contracts. I will now turn the call over to Michele Greco, CFO, CAO, to discuss the financial highlights. Michele?
Thank you, Dr. Steiner. As Dr. Steiner indicated, once again, we have a lot of ongoing activity at Veru. Let's review the results for the fiscal year ended September 30th, 2022. Overall, net revenues for fiscal year 2022 were $39.4 million compared to $61.3 million in the prior year. The U.S. prescription business net revenues decreased to $30.2 million from $46.5 million in the prior year. The reduction is due to some business challenges experienced by our telemedicine customers during the year, which resulted in a slowdown in orders. Net revenue for the global public health sector business was $9.1 million compared to $13.9 million in the prior year.
The decrease in sales in the global public sector during the year is due primarily to 9.7 million units sold to Brazil and 4.9 million more units sold to South Africa in the prior year for tenders which have ended and therefore did not repeat in the current year. Overall, gross profit was $30.6 million, or 78% of net revenues, compared to $47.9 million, or 78% of net revenues in the prior year. The reduction in gross profit is driven primarily by the reduction in sales in our U.S. FC2 prescription business. Operating expenses increased to $113.8 million compared to the prior year of $53.4 million.
The increase of $60.4 million is primarily due to research and development costs, which increased $37.9 million - $70.6 million from $32.7 million in the prior year, and the increase in selling general and administrative expenses of $22.5 million from $20.7 million in the prior year to $43.2 million in the current year. The increase in research and development costs is due to the increased number of clinical trials. This year, we had four phase III clinical trials and two phase II clinical trials ongoing, while in the prior year we had three phase III clinical trials and three phase II clinical trials ongoing.
The increase in selling general and administrative expenses is primarily due to the increase in headcount related to the preparations for the commercial launch of ENTADFI and potentially sabizabulin for COVID-19, as well as the launch of the company's own direct-to-patient telemedicine and pharmacy services portal for FC2, resulting in increased compensation, increased stock compensation, and increased sales and marketing expenses. Operating loss for the year was $83.2 million compared to operating income in the prior year of $13 million. The change of $96.2 million is primarily due to gain on sale of PREBOOST of $18.4 million in the prior year period. The increase in research and development costs and selling general and administrative expenses during the current year, and the reduction in net revenues and gross profit during the year.
Non-operating expenses were $316,000 compared to $8.7 million in the prior year, which primarily consisted of interest expense and change in the fair value of the derivative liabilities related to the synthetic royalty financing. For the year, we recorded a tax expense of $236,000 compared to a tax benefit of $3.1 million in the prior year. The tax benefit recorded in the prior year is primarily due to the increased value of the UK net operating losses due to an increase in the UK tax rates from 19%- 25%.
The company has net operating loss carryforwards for U.S. federal tax purposes of $112.5 million, with $29.7 million expiring in years through 2042 and $82.8 million, which can be carried forward indefinitely. The company has UK net operating loss carryforwards of GBP 63.1 million, which do not expire. The bottom line results for the fiscal year 2022 were the net loss of $83.8 million, or $1.05 per diluted common share, compared to net income in the prior year, which included a gain on sale of PREBOOST of $7.4 million, or $0.09 per diluted common share. Turning to the balance sheet.
As of September 30th, 2022, our cash balance was $80.2 million and our accounts receivable balance was $3.6 million. Our net working capital was $63.3 million on September 30th, 2022, compared to $136 million on September 30th, 2021. As a reminder, during fiscal year 2021, we sold PREBOOST for $15 million in cash and $5 million in notes receivable and completed an underwritten public offering resulting in net proceeds of $108 million. During the fiscal year ended September 30th, 2022, we used cash of $47.5 million for operating activities.
The expected future revenues from sabizabulin for COVID-19 if authorized, the continued revenue from sales of FC2 in the U.S. prescription channel and the global public sector, and future revenue from ENTADFI added to our healthy balance sheet should continue to be the primary sources of funds we use for commercial activities and to invest in our promising pharmaceutical clinical development programs as we continue to focus on developing novel medicines for COVID-19 and other viral and ARDS related diseases and for the management of breast and prostate cancers. Now I'd like to turn the call back to Dr. Steiner.
Thank you, Michele. COVID-19 cases continue to persist worldwide. Hospitalizations and death rates are rising as we head into the winter season. The emergence of COVID-19 variants BQ.1 and BQ.1.1 have contributed to this new surge. These mutated strains have the ability to evade immunity, meaning that these variants can affect anyone, including vaccinated individuals. In fact, for the first time, more vaccinated people than unvaccinated people are dying from COVID-19. This waning immunity is partly because of the new variants, but also from booster vaccine fatigue. Unfortunately, 1,080,000 Americans have died from COVID-19 to date.
A series of recent articles, including one by Ariana Cha and Dan Diamond, published in The Washington Post, entitled COVID-19 Becomes a Plague of the Elderly, Reviving the Debate Over Acceptable Loss, points out, quote, "Nearly nine of 10 deaths are now in people 65 or older, the highest rate since the pandemic began." End quote. With the current standard of care treatment, approximately 300 people are still dying each day. This is unacceptable. We need to do better. We must reduce the risk of death from COVID-19, including in this vulnerable population of individuals over the age of 65. An effective and safe oral therapeutic to treat hospitalized moderate to severe COVID-19 patients who are at high risk for ARDS that prevents death is still desperately needed.
We strongly believe that sabizabulin, an oral therapy with dual antiviral and anti-inflammatory properties, can serve as this new treatment modality that addresses and overcomes the threat of death that hospitalized moderate to severe COVID-19 patients continue to face. While multiple regulatory agencies across the world review sabizabulin as a potential option for emergency use settings, we are eagerly and proactively preparing multiple work streams in the background. For instance, manufacturing drugs, drug supply and scale-up activities are in place. Our U.S. and international commercial infrastructure is ready to provide access to sabizabulin to hospitalized patients at high risk for ARDS and death if authorized. We continue to live in a world facing a public health emergency as we enter the fourth year of the COVID-19 pandemic.
In summary, we continue to advance our core late clinical stage breast cancer and prostate cancer programs with three actively enrolling phase III clinical studies. Our legacy sexual health business comprises of two FDA-approved products, continues to generate revenue, and if authorized, we expect to have substantial near-term revenue from sabizabulin 9 milligrams for hospitalized COVID-19 patients in high risk for ARDS. With that, I'll now open the call to questions. Operator?
Thank you. Ladies and gentlemen, at this time, we'll begin the Q&A session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys to ensure the best sound quality. To withdraw your question, please press star then two. Please limit yourself to one question and one follow-up. If you have further questions, you may re-enter the question queue. Once again, that is star then one to rejoin the question queue. We'll pause momentarily to assemble our roster. Our first question comes from Brandon Folkes from Cantor Fitzgerald. Please go ahead.
Hi. Thanks for taking my questions and congratulations on all the progress. I guess no surprise where I'm gonna start, I'll ask my, I guess, two questions up front 'cause they kind of roll into each other. Maybe just firstly, can you talk about how much interaction you've had with the FDA post the A dCom and give me a put into context the nature of those interactions?
And then secondly, given the proposal to run a potential confirmatory phase III trial, not saying that's going to happen, but just how quickly could you get such a trial up and running provided it's within the range of maybe what you're expecting the trial to look like, maybe what was proposed? And on that nature, any risk or how should we think about sort of the one topic of maybe getting U.S. patients and U.S. standard of care? Is there a rush to get it done this winter? Thank you very much.
As I said in my prepared comments that we're in contact with the FDA. We are in contact with the FDA on an ongoing basis. I, you know, this is not radio silence by any means. What I can tell you is that we have been actively in communication with the FDA. That's an important point because as you know, with PDUFA dates, if you don't hear from the FDA, you worry. We don't have a PDUFA date, but we're hearing from the FDA. That's number one.
What I can tell you, as I said in my prepared remarks, they are continuing to review the EUA post AdCom. As it relates to the question, I believe the question around the phase III clinical trials, I guess your assumption is if we have to do the phase III, not under an EUA, a post EUA, you mean just doing or with an EU, or it doesn't matter?
Doesn't matter. I'm just trying to, you know, think about-
Yeah.
Um-
Yeah.
You know, if they do ask for additional U.S. exposures, I think, you know.
Yeah
... some of the committee members raised, you know, how quickly can you get that up and running? You know, does it need to be this winter versus maybe going to the southern hemisphere or having to?
Oh, yeah.
till next year?
Yeah. Yeah. Well, first of all, if you look at the pattern, we had our surge during the summer, just like Australia. It doesn't seem so far that we, you know, that COVID is really necessarily following the surge concept of other viruses where they tend to happen based on, you know, coming together during the winter months. It appears that you're still gonna have it even in the summer months when people are going in for air conditioning, I guess, or crowds. With that said, you know, the strategy this time is to be is to have more clinical sites than just U.S., South America and Bulgaria.
I wouldn't say there's a rush except the fact that the people dying and standard of care, one of the things that works in our favor is that, you know, literally thousands of companies have done clinical trials trying to find a drug for COVID-19 and have failed. Now we're down to a handful of drugs that have emergency use authorization or full authorization that have a modest, at best, mortality benefit. Remdesivir has no mortality benefit as the only antiviral in this setting. The anti-inflammatory agents at best with baricitinib, you're getting about 5.7% absolute benefit in mortality. There is an unmet need, as the FDA said during the AdCom, for a new agent.
I think because we have the data that we have, you know, phase III study, published study, full study to be published, that we have a real opportunity with less noise and competition for patients, more clinical sites and with good scientific data showing the mortality benefit, that this trial should enroll much more quickly. Our goal is to enroll it as quickly as we can. The truth of the matter is it still takes about three to six months to get most of your clinical sites up and running. The endpoint will be 60 days. We still have to have, you know, two months of follow-up after a patient is on the study. We're even, contemplating adding in as a follow-up, not as a primary endpoint, long COVID.
As you know, long COVID is becoming the next major issue that people are dealing with COVID. We're gonna have a lot of fun with this additional trial in order to answer some of the questions we could not have answered during the ongoing pandemic because we just didn't know those were questions to ask. so I think you can look for us to be pretty aggressive in getting that study done. As it relates to the question of... Well, your second question has to do with standard care and rush to get it done. I kinda answered that.
Standard care now, the best we're doing is still dealing with 300, 250 deaths a day on average, and now the hospitalizations are going back up, and the lag behind hospitalizations with deaths again. I think we're also dealing with immunity waning. People are just not getting the booster no matter how much people are asking for boosters. Then we're seeing, quite frankly, that these antibody drugs, particularly the one from Lilly, that was the only hope that immunocompromised patients had, is gone. They're, you know, so they're at risk. I think we're seeing is this evolving situation is pointing to standard care is just not adequate. The rush is that you've got a loved one that's dying, and what do you wanna do about that?
I think that, as physicians, you know, to have this additional tool, will be very important.
Thanks, Mitch. I appreciate all the time. Definitely makes sense.
Thank you.
Congrats on the progress.
Thank you.
Our next question comes from Leland Gershell from Oppenheimer. Please go ahead.
Mitch, thank you for the update and for taking our questions. Just to get into specifics, to the extent you're able to with respect to the ongoing FDA discussions, can you say that you are continuing to discuss the design of what may be a confirmatory trial that would be performed under the EUA? Is that a part of the ongoing discussion content?
What I can tell you, which is public, is that the FDA stated in their background package that the design that they laid out was agreed upon by the sponsor. It's there. The that's not the top discussion point because that's been agreed upon. I think I can't say much more than that, except right now, you know, in the black box of the FDA, you know, they're checking their boxes that, you know, they need to check.
Can you comment if there are any particular boxes that are left to check that you're working to check?
I can't say much more.
Okay. Then with respect to the other countries, has there been any change in tenor in their interest since the Advisory Committee? Whether there has or not, or whether you can comment or not, are you aware of any-
Mm-hmm.
-dependence on what the EUA decision outcome will have in terms of, you know, what those ex-U.S. decisions may be versus independent, you know, what could be independent emergency authorizations in other places, you know, irrespective or prior to an FDA decision?
Yeah. Let me see if I can give you some color on that. The question is basically, you know, have you noticed any changes in the interactions that we're having with other governments that are reviewing our application based on the Advisory Committee? The answer is no. In fact, there. What we see is in intense discussions with other regulatory agencies outside the U.S. You know, to put this in perspective and using remdesivir as an analog, especially the last six months that was reported by Gilead, almost 52%-53% of their revenue, they reported, I think, revenue of $1.9 billion for the first half of the year, was coming from outside the U.S., and a big bulk of that was coming from Europe.
The point I'm trying to make is that when you're looking at a COVID-19 drug, the split of 65% in the US and 35% outside the U.S. doesn't make sense. It's very different. When you look at that, the major markets then turn out to be Europe and all the countries that follow Europe. If Europe gives you an emergency use authorization similar, then 80% of the countries outside of Europe will use that authorization as part of their review or in lieu of their review. Okay? 'Cause and it makes sense. If you get U.S., you get Europe, you get both, and those are the major markets, you're good to go and have significant revenue.
I will tell you that there has not been at all any change in the interactions that we've had with, as I mentioned in the, in the prepared comments, with multiple agencies. The multiple agencies remain engaged and active in their review. So no, the answer is no. The answer is, it appears to be quite independent. As I mentioned, the FDA is still reviewing the application, so I'm not quite sure what to make out of the outcome.
Okay. Just one question on the, on the other development programs. Just with ARTEST and VERACITY, I believe you'd indicated around the time that those trials were getting going, that we could see enrollment starting to complete kind of in this timeframe. Just wanted to ask about enrollment progress with those and, if you do, if you do see, those either or both trials perhaps completing enrollment by year-end or what that timeframe is looking like.
Yeah. The timeframe still looks like data in you know, end of next year kinda timeframe. They're event driven, and so enrollment's still consistent with that. That's all I can say at this point.
Okay, great. Thanks for taking the questions.
Thank you.
Our next question comes from Chris Howerton from Jefferies. Please go ahead.
Hey, good morning. Thanks for taking the questions. I guess, two for me. One would be, with respect to the FC2 and ENTADFI part of your business, you know, what measures are you gonna take in your own internal hub to kind of combat some of the challenges that your partner had for the telemedicine and, you know, I guess, to give you confidence that that will be a sustainable business? I guess I'm just curious if you can give us some more color around liquidity and your cash runway. You know, in a scenario where sabizabulin is launched, what would be your cash needs to launch such a drug? In a scenario where maybe there's a longer delay, how do you see your current cash reserves being deployed against your plan? Thank you.
Okay, thank you for your questions. The first one on FC2 and that part of the business, I'm gonna answer, and then I'm gonna have Michele answer the question on liquidity. As it relates to FC2, you know, we've had two down quarters and from telemedicine market. We have two customers that in the telemedicine space that make up a significant portion of that revenue. They had, you know, a down year, we get to have a down year. If you look across telemedicine, you already know, you can see that they're still going through some pains right now. With that said, I'm happy to report the way we're handling that to maximize our revenue is threefold.
One is to make sure, and to make sure we do everything in our power to help our partners. I will tell you that the indications at this point is that whatever that hiccup was these last two quarters is turning around, so they're figuring it out as well. Our expectation is to see, you know, an increase in revenue, increase in orders, and whatever that new normal is, they're back, they're back. They've gone from, you know, struggling to headwinds to looks like they sort of figured it out. Again, time will tell, but it feels good that at least our main customers will get back, which means we'll start to see, you know, significant revenue come back.
What we didn't sit on our hands, we went ahead and realized that what would be better than depending on customers to buy product from us would be to have a telemedicine hub of our own. That really has played out very, very nicely because it puts us in control of our destiny. What we've done, what that means is you have to put all the components together. You have to have the doctors, you have to have the website, we have the product, and you have to have the ability to fill the prescription, and you have to have the ability to deal with insurance and all that. All that's in place.
What we're finding is there is a direct correlation between marketing spend and people, you know, buying the product and wanting the prescriptions. I'm happy to report that that looks incredibly viable and will really supplement the revenue going forward. It took us about a year to put it together, but it's, you know, it's been pressure tested and now we're gonna expand that. We're again seeing an opportunity for revenue from that standpoint. In ENTADFI, early days, because most of it has been trying to get insurance, Medicare wholesaler contracts in place, because of the FDA wanting a certain release criteria we didn't agree upon until later in the year.
We really didn't have, but a fiscal year, a fourth quarter fiscal year 2022 as an opportunity to launch, a little behind there, but we'll try to do our best to make up. The Urev is with $39 million in revenue this past year, that's real money that our investors don't have to come up with that we can use to help invest and move our pipeline. With that, I'll turn it over to Michele to talk about liquidity in the event that we launch sabizabulin.
Sure. In the event we launch sabizabulin, you know, I'd like to point out that our drug spend was around $70 million this year, and slightly over half of that was related to COVID. Our COVID trial included in that was over 60% of those costs were related to building up the material to get our drug ready so that when we're ready to launch we have the drug ready. You can see as I noted, you know, we built a team, we have those expenses that ran through this past year in our fourth quarter. We built the team in the U.S. We put all the vendor contracts in place. We have the people up and going. We have our strategy ready to deliver.
From a liquidity standpoint, we've already invested in this drug and we're ready to go. We're not gonna be needing to get additional liquidity other than what we generate from our business. As Mitch indicated, you know, there's a lot of things that we're doing on the Urev side to get things up and going there and working on increasing some of those revenues. In the event that we don't launch the COVID drug, you know, as the company, as we've demonstrated over the years, we're very good at managing our cash and managing and prioritizing all of our drugs under development. Those are the levers that we have to work on is, you know, how quick we push different drugs through the trial, and how much we can slow them down.
You know, for us, from a liquidity standpoint, we're looking good. You know, between our balance sheet and, you know, what we can get from Urev and how we can manage our business, you know, liquidity isn't a concern for us whether we launch the drug or if the drug isn't launched this year.
Okay.
Thank you.
That's wonderful. Thanks so much.
Thank you.
Again, if you have a question, please press star then one. Our next question comes from Yi Chen from H.C. Wainwright. Please go ahead.
Thank you for taking my questions. When do you expect the FDA to issue its final decision on the EU application? Do you think it could occur before the end of 2022?
I will tell you that, and you can appreciate this, that I've given up on guessing when the FDA is gonna make a decision, okay? I just. FDA does what the FDA does. I, you know, I just scratch my head because we're dealing with a, you know, with an agent that has an incredible mortality benefit. So I can't answer that question at all or give you any sense at all because, you know, my guidance initially was that, you know, we expect this sooner. So it's not, you know, There's a great need out there, and even the FDA said so. This, I just can't give any more color than that.
We just have to let the FDA work through their process. This is also true for the other regulatory agencies, but what I can tell you is that they're all doing it, and they're all sincerely, you know, doing their work.
Okay. For the fiscal fourth quarter, there appears to be a sharp decline in terms of revenue from FC2. Could you comment on the current trend of the U.S. prescription for FC2? How much revenue contribution you expect to get from the launch of ENTADFI going forward? Also, could you also comment on whether the operating expenses will be on the same level as observed in the fiscal fourth quarter going forward? Thank you.
If you don't mind me asking Michele to answer those three questions. T he first question being the FC2 decline, second, being related to the contribution, and the third related to operating expenses. Well, the contribution's been ENTADFI, and the third one is operating expenses. My color to the first question is we're already seeing the turnaround. You know, we believe that the fourth quarter is gonna hopefully, you know, represent the bottom. Now with all these other levers of increasing revenue in place, plus seeing actual life coming back to telemedicine, it, you know, it feels like we're, you know, we're gonna see more revenue. I'll let Michele answer. Michele?
Sure. You know, as Dr. Steiner indicated, yes, you know, we're working with our customers. We've added some customers this year, and we're projecting that we're gonna be seeing a turnaround here. You know, the turnaround isn't instant, but the turnaround is coming for the FC2 business, both in the U.S., in the prescription channel. In the global public sector in the U.S., we did add a new distributor this year that's really helping drive those increased sales. In the global public sector, you know, in the global public sector, it's a matter of timing related to these tenders. Don't always follow a strict cadence and agencies on when that happens.
Right now, the South Africa tender is, we're starting to see sales that are coming back under their newest tender. ENTADFI is going to slowly increase this year. Again, a lot of that is getting some of the back office infrastructure in place, and then it's to allocate some money and marketing dollars to spend to push that launch. Right now, as I indicated in discussing liquidity, you know, we're managing our cash spend, and we're looking at the trade-offs and what we're doing with our cash spend. That's going to be a trade-off we're going to look at as to how much we're going to put behind marketing spend for ENTADFI versus what we're going to be doing with that cash to spend for a launch for COVID.
As far as the level of operating expenses, as Mitch indicated, we brought on Joel Batten, and he brought on his team, all primarily in our fourth quarter of 2022. The increase in our SG&A expense in the fourth quarter is driven by building out that team. We've started now to build out an international team, but that's just starting. You know, our operating expenses, if we go ahead with a launch, are gonna be closer to those expenses that you look at in the fourth quarter of this past fiscal year, and to continue there, and then to build as we build out a commercial team ex-U.S.
Okay. Thank you.
Ladies and gentlemen, this concludes our Q&A session. I'd like to turn the conference call back over to Dr. Mitchell Steiner for any closing remarks.
I appreciate everyone who joined us on today's call, and I look forward to updating you all on our progress at our next investor call. Thank you.
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