10-K: Veru Inc. 2025 10-K: Clinical Progress Amidst Financial Challenges

Veru Inc. reports significant clinical advancements for enobosarm and sabizabulin, alongside substantial net losses and a going concern warning, necessitating further capital.

Summary

• Veru Inc. is a late clinical stage biopharmaceutical company focusing on cardiometabolic and inflammatory diseases, with key drug candidates enobosarm and sabizabulin.
• The company sold its FDA-approved commercial product, the FC2 Female Condom business, on December 30, 2024, for $18.0 million in cash, resulting in net proceeds of $16.5 million and a loss on sale of $4.1 million.
• A net loss of $22.7 million was reported for fiscal year 2025, an improvement from $37.8 million in fiscal year 2024.
• Cash, cash equivalents, and restricted cash decreased to $15.8 million at September 30, 2025, from $24.9 million at September 30, 2024.
• The independent registered public accounting firm included an explanatory paragraph regarding substantial doubt about the company's ability to continue as a going concern.
• A 1-for-10 reverse stock split was effected on August 8, 2025, to regain Nasdaq compliance.
• An underwritten public offering was completed on October 31, 2025, raising approximately $23.4 million in net proceeds.

Sentiment

Score: 3

Explanation: While the clinical trial results for enobosarm are promising and sabizabulin shows potential, the company's severe financial distress, including substantial net losses, negative operating cash flow, a going concern warning from auditors, and the explicit need for significant additional capital, overshadows the clinical progress. The ongoing litigation and unlikely collection of significant receivables further contribute to a highly negative financial outlook.

Positives

• Enobosarm Phase 2b QUALITY clinical trial met its primary endpoint, showing a statistically significant and clinically meaningful benefit in preserving total lean body mass (100% relative reduction in lean mass loss, p<0.001) in patients receiving enobosarm 3mg + semaglutide versus placebo + semaglutide at 16 weeks.
• Enobosarm + semaglutide treatment resulted in dose-dependent greater loss of fat mass, with the 6mg dose having a 42% greater relative loss of fat mass (p=0.017) and the 3mg dose having a 12% greater fat loss compared to placebo + semaglutide.
• Enobosarm treatment preserved lean mass, leading to a 59.8% relative reduction (p=0.0006) in patients experiencing a clinically significant stair climb physical function decline with enobosarm 3mg + semaglutide.
• The enobosarm + semaglutide combination demonstrated a positive safety profile in the Phase 2b QUALITY study, with no increases in gastrointestinal side effects, drug-induced liver injury, obstructive sleep apnea, prostate specific antigen in men, or masculinization in women.
• Positive results from the Phase 2b QUALITY Maintenance Extension study showed 3mg enobosarm monotherapy significantly reduced body weight regained by 46% after discontinuing semaglutide.
• A novel, patentable, modified release oral enobosarm formulation is under development, with expected patent expiry in 2046, and has completed initial Phase 1 bioavailability clinical trial in July 2025.
• FDA feedback indicates incremental weight loss with enobosarm added to GLP-1 RA is an acceptable primary endpoint for approval, and enobosarm 3mg is an acceptable dosage for future clinical development.
• FDA encouraged expanding the enobosarm development program to include a younger population with obesity.
• Sabizabulin is being explored for atherosclerotic cardiovascular disease, leveraging its broad anti-inflammatory activity and existing safety database of 266 patients, with potential for a better safety profile than colchicine.
• FDA agreed there is an unmet medical need for sabizabulin in atherosclerotic disease during a pre-IND meeting on December 26, 2024.
• The company recorded a gain on sale of ENTADFI assets of $10.8 million in fiscal 2025.
• A gain on extinguishment of debt of $8.6 million was recognized in fiscal 2025 related to the termination of the Residual Royalty Agreement.
• Remediation of previously identified material weaknesses in internal control over financial reporting was successfully completed during the quarter ended September 30, 2024.

Negatives

• Incurred a net loss of $22.7 million in fiscal 2025 and $37.8 million in fiscal 2024, indicating continued unprofitability.
• Operating activities used $30.0 million in cash in fiscal 2025 and $21.7 million in fiscal 2024, reflecting negative cash flow from operations.
• Cash, cash equivalents, and restricted cash decreased by $9.1 million from September 30, 2024, to September 30, 2025.
• Working capital decreased to $11.1 million at September 30, 2025, from $23.4 million at September 30, 2024.
• Stockholders' equity decreased to $18.3 million at September 30, 2025, from $32.3 million at September 30, 2024.
• The independent registered public accounting firm issued a going concern warning, stating that current cash is insufficient to fund operations for the next twelve months.
• The company will need to raise additional capital to fund operations and development programs, which may not be available on favorable terms or at all, potentially leading to significant dilution.
• A loss of $4.1 million was incurred on the sale of the FC2 business.
• It is unlikely that the company will collect any of the $3.9 million in accounts receivable from The Pill Club due to its Chapter 11 bankruptcy filing.
• The company is subject to significant payment obligations totaling $3.9 million to a supplier to resolve a commercial dispute, with $2.6 million due by September 30, 2026.
• The company is a defendant in multiple shareholder class action and derivative lawsuits, which could result in substantial legal fees, fines, penalties, or damages, and divert management's attention.
• The company is subject to outstanding litigation filed by the purchaser of the FC2 Business (Clear Future, Inc.), alleging breach of representations and warranties and fraud, which could result in substantial legal fees or damages.
• The company's common stock was subject to delisting from Nasdaq due to a closing bid price below $1.00 for 30 consecutive trading days in 2024 and 2025, necessitating a reverse stock split.
• The company does not anticipate paying any cash dividends on its common stock in the foreseeable future.

Risks

• The company currently has no commercial revenue and may never generate revenue or become profitable.
• Limited experience in obtaining regulatory approval for a drug could hinder future product commercialization.
• Potential delays in the timing of and results from clinical trials and studies, including patient recruitment, suspension, or termination, could impact drug development.
• The FDA may ultimately disagree that trials support approval, despite prior feedback, leading to delays or failure to obtain marketing authorization.
• Clinical trial results may not be replicated in clinical practice or may not otherwise support further development.
• Business operations could be negatively impacted by disruptions at the FDA or other government agencies, such as government shutdowns.
• Inability to obtain sufficient financing on acceptable terms when needed to fund product development and operations raises substantial doubt about the company's ability to continue as a going concern.
• Failure to maintain compliance with the continued listing requirements of the Nasdaq Stock Market LLC (Nasdaq) could lead to delisting.
• Significant external funding through government grants or pharmaceutical partnerships is needed to advance sabizabulin development, and such funding may not be available.
• Product demand and market acceptance of products in development, if approved, are uncertain.
• Inability to obtain insurance reimbursement from private or government payors could limit commercial success.
• Risks related to intellectual property, including the uncertainty of obtaining and enforcing protections, the possibility of infringing third-party intellectual property, and licensing risks.
• Competition from existing and new competitors with substantially greater resources could negatively affect sales and profit margins.
• Extensive and costly governmental regulation, including healthcare reform measures, could impact the ability to sell products profitably.
• Risks inherent in doing business on an international level, including currency risks, tariffs, and political risks.
• Risk of disruption of production at facilities of third-party manufacturers due to various factors.
• Inability to attract and retain highly skilled and qualified personnel could hinder growth.
• Costs and other effects of litigation, governmental investigations, and settlements could adversely impact financial results.
• Risk of identifying material weaknesses or other deficiencies in internal control over financial reporting in the future.
• Cybersecurity risks and data security or privacy incidents could lead to significant liability and reputational harm.
• Inability to identify, successfully negotiate, and complete suitable acquisitions, out-licensing, in-licensing, or other strategic initiatives.
• Difficulties in integrating strategic acquisitions could adversely affect profitability and financial condition.
• Potential claims or investigations relating to The Pill Club's business practices with respect to sales of FC2.
• Uncertainty and adverse changes in general economic conditions, such as inflation or recessionary pressures, may negatively affect the business.
• Uncertainties in the interpretation and application of tax rules could materially affect deferred tax assets, tax obligations, and effective tax rate.
• The ability to use net operating loss carryforwards and certain other tax attributes may be limited.
• Outstanding litigation filed by the purchaser of the FC2 Business could result in substantial legal fees or damages.
• Ownership in common stock is highly concentrated, potentially limiting the ability of other shareholders to influence corporate matters.
• The trading price of common stock has been volatile and may continue to be, leading to substantial losses for investors.
• Sales of a significant number of shares of common stock, or the expectation of such sales, may depress the market price.
• The company may not receive any meaningful amount of, or potentially any, additional funds upon the exercise of outstanding warrants, especially pre-funded warrants.

Future Outlook

The company plans to prioritize funding for the Phase 2b PLATEAU clinical trial for enobosarm, which is expected to begin in the first quarter of calendar 2026. This trial will evaluate enobosarm 3mg on total body weight, physical function, and safety in approximately 200 obese patients (BMI ≥ 35, age ≥ 65) initiating GLP-1 RA treatment, with a primary endpoint of percent change from baseline in total body weight at 72 weeks. The company also intends to seek external funding through government grants or pharmaceutical partnerships to advance sabizabulin for atherosclerotic cardiovascular disease, starting with a small Phase 2 dose-finding proof-of-concept study. A novel modified release oral enobosarm formulation is on track for Phase 3 clinical studies and commercialization, with an expected patent expiry in 2046.

Management Comments

• We believe there is an urgent unmet need for a drug that can both augment the fat loss and preserve muscle and physical function patients with obesity receiving GLP-1 RA for weight reduction.
• We believe this urgent unmet medical need could be addressed by enobosarm, a SARM, that may effectively increase weight loss, while preventing or reducing the loss of muscle mass and function and increasing the fat loss experienced by patients receiving a GLP-1 RA for the treatment of obesity.
• We believe sabizabulin may be evaluated in a small, planned Phase 2 dose finding proof of concept study to assess whether sabizabulin reduces blood levels of high sensitivity C-reactive protein, a measurement of inflammation, in patients with stable coronary artery disease.
• We currently plan to prioritize the use of our internal cash and the net proceeds of any future financings for the development of enobosarm, with a primary near-term focus on funding the Veru planned Phase 2b PLATEAU clinical trial.
• We believe there is compelling scientific evidence and rationale to evaluate sabizabulin as a treatment for the inflammation associated with atherosclerotic cardiovascular disease.
• The Company's decision to explore this major cardiometabolic indication was based on the significant unmet medical need to treat inflammation in atherosclerotic cardiovascular disease, the large global market opportunity, current clinical and safety sabizabulin database of 266 patients, high probability of success of the drug's mechanism of action which is similar to colchicine, and strong intellectual property position.

Industry Context

The company operates in the highly competitive biopharmaceutical industry, characterized by extensive research and rapid technological progress. Its enobosarm program targets the growing obesity market, specifically addressing the challenge of lean mass loss associated with popular GLP-1 RA drugs like semaglutide (Wegovy) and tirzepatide (Zepbound). This positions enobosarm as a potential 'next-generation' adjunct therapy to improve the quality of weight loss. The sabizabulin program aims to enter the cardiovascular disease market, focusing on inflammation in atherosclerosis, a significant unmet medical need. The recent FDA approval of colchicine for ASCVD provides a regulatory pathway and validates the anti-inflammatory approach, but colchicine's safety concerns create an opportunity for sabizabulin with its potentially better safety profile. The market for muscle preservation drugs for obesity treatment is projected to reach $30 billion annually.

Comparison to Industry Standards

• **Enobosarm vs. GLP-1 RAs**: Current GLP-1 RAs (e.g., semaglutide/Wegovy, tirzepatide/Zepbound) cause significant weight loss, but 20-50% of this loss is lean (muscle) mass. Enobosarm aims to improve upon this by preserving muscle and increasing fat loss, offering a 'tissue-selective quality weight reduction.'
• **Enobosarm vs. Eli Lilly's SURMOUNT-1**: Eli Lilly's SURMOUNT-1 study showed about 88% of obese patients on tirzepatide reached a weight loss plateau by 72 weeks, with 62.6% still overweight or obese. Enobosarm is designed to 'reset the weight loss plateau' and lead to incremental weight reduction beyond GLP-1 RA monotherapy.
• **Sabizabulin vs. Colchicine**: Colchicine, an older drug, has shown significant cardiovascular risk reduction (31% in stable CAD, 23% post-MI) in trials like COLCOT, LoDoCo, and LoDoCo-2, leading to FDA approval in June 2023 for ASCVD. However, colchicine has well-known serious safety concerns (drug-drug interactions, narrow therapeutic index, GI side effects, rare fatal dyscrasias). Sabizabulin, with a similar mechanism but different chemical structure, aims to offer a better safety profile by potentially eliminating CYP3A4 and P-glycoprotein drug-drug interactions, making it a potentially safer secondary therapy in combination with statins.

Corporate Governance

Legal Proceedings

• **Ewing v. Veru Inc., et al. (Securities Class Action)**: Filed December 5, 2022, amended September 15, 2023. Alleges public statements about sabizabulin for COVID-19 between March 1, 2021, and March 2, 2023, violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5, seeking monetary damages.
• **Maglia v. Steiner et al. (Derivative Action)**: Filed July 7, 2023. Asserts claims for breach of fiduciary duty, waste of corporate assets, and unjust enrichment related to issues in the Ewing Lawsuit, seeking corporate governance improvements, monetary damages, injunctive relief, and restitution.
• **Franchi v. Steiner et al. (Derivative Action)**: Filed September 1, 2023, consolidated with Renbarger Lawsuit on November 8, 2023. Asserts claims for breach of fiduciary duty and unjust enrichment related to issues in the Ewing Lawsuit, seeking corporate governance improvements, monetary damages, restitution.
• **Renbarger v. Steiner et al. (Derivative Action)**: Filed September 28, 2023, consolidated with Franchi Lawsuit on November 8, 2023. Asserts claims for breach of fiduciary duty, aiding and abetting, gross mismanagement, waste of corporate assets, and unjust enrichment related to issues in the Ewing Lawsuit, seeking corporate governance improvements, monetary damages.
• **Alshourbagy v. Steiner et al. (Derivative Action)**: Filed October 9, 2023. Asserts claims for breach of fiduciary duty and contribution related to issues in the Ewing Lawsuit, seeking corporate governance improvements, monetary damages, injunctive relief, and restitution.
• **Ovadias v. Steiner et al. (Derivative Action)**: Filed September 30, 2024. Asserts claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and contribution related to issues in the Ewing Lawsuit, seeking corporate governance improvements, monetary damages, and restitution.
• **Clear Future, Inc. v. Veru Inc. (FC2 Business Sale Lawsuit)**: Filed August 5, 2025, amended October 2, 2025. Alleges breach of representations and warranties and fraud related to a customer relationship in the FC2 Business Sale, and responsibility for a pre-closing tax liability of approximately $137,000. Potential exposure limited to $54,000 except in case of fraud.
• **Commercial Dispute with Supplier**: Resolved on February 29, 2024, with an agreement to pay $8.3 million. Remaining liability of $3.9 million as of September 30, 2025 (before a subsequent $1.6 million payment).

Related Party Transactions

• Employment agreements with Mitchell S. Steiner, M.D. (Chairman, President, CEO), Harry Fisch, M.D. (Vice Chairman, Chief Corporate Officer), and Michele Greco (CFO, CAO).
• Executive officers and directors collectively beneficially owned approximately 14.2% of the outstanding shares of common stock as of December 12, 2025, including 6.3% by Mitchell Steiner, M.D., and 5.7% by Harry Fisch, M.D.

Stakeholder Impact

• **Shareholders**: Face significant dilution risk from future capital raises, potential losses from ongoing litigation, and volatility in stock price. The going concern warning indicates a high risk to investment. The reverse stock split was intended to maintain Nasdaq listing, but future delisting remains a risk. No cash dividends are anticipated.
• **Employees**: The company has 20 full-time employees in the U.S. and offers compensation and benefits, including equity awards. The need for additional capital and potential curtailment of programs could impact employment stability.
• **Customers (future)**: Potential for new treatments for obesity and cardiovascular disease, offering improved outcomes (e.g., better quality weight loss with enobosarm, potentially safer anti-inflammatory for ASCVD with sabizabulin).
• **Suppliers/Creditors**: The company has significant payment obligations to a supplier and faces a going concern risk, which could impact its ability to meet future obligations.
• **Regulatory Authorities**: The company is actively engaging with the FDA on clinical trial designs and regulatory pathways for its drug candidates.

Next Steps

• Advance enobosarm into a Phase 2b PLATEAU clinical trial, expected to begin in the first quarter of calendar 2026.
• Evaluate sabizabulin in a small Phase 2 dose-finding proof-of-concept study to assess reduction in high sensitivity C-reactive protein in patients with stable CAD.
• Seek external funding (government grants, pharmaceutical partnerships) to advance sabizabulin development.
• Continue development of a novel modified release oral enobosarm formulation for Phase 3 clinical studies and commercialization.
• File Proxy Statement for the 2026 Annual Meeting of Shareholders on or before January 28, 2026.
• Address ongoing legal proceedings and potential financial liabilities.

Key Dates

Recommendation

The company faces severe financial challenges, including substantial and ongoing net losses, negative cash flow from operations, and an explicit 'going concern' warning from its auditors. While clinical data for enobosarm is promising and sabizabulin shows potential, the significant need for additional capital, coupled with the high risk of dilution, ongoing shareholder and commercial litigation, and the unlikelihood of collecting substantial receivables, creates an extremely precarious financial position. The recent public offering and reverse stock split are temporary measures to address liquidity and listing compliance, but do not fundamentally resolve the underlying financial instability. Investors face a high degree of risk, including potential loss of capital, making a 'sell' recommendation prudent for risk-averse investors.

Keywords

Biopharmaceutical, Drug development, Enobosarm, Sabizabulin, Obesity treatment, GLP-1 RA, Muscle preservation, Atherosclerosis, Cardiovascular disease, Clinical trials, FDA approval, Going concern, Capital raise, Reverse stock split, Intellectual property, Cybersecurity, Litigation, SEC filing, 10-K