Veru Sells FC2 Condom Business, Focuses on Biopharma Pipeline

Veru Inc. (NASDAQ: VERU) has announced the sale of its FC2 Female Condom business to clients managed by Riva Ridge Capital Management LP and other co-investors for $18 million. The sale, which is expected to close in the first quarter of 2025, will allow Veru to focus its resources on its biopharmaceutical pipeline and clinical trials. The company anticipates releasing topline results from its enobosarm Phase 2b QUALITY clinical trial in January 2025.

The sale of the FC2 business will result in a significant reduction in Veru's workforce, from 210 employees to 22. After deducting the change of control premium to SWK Funding LLC under the company's Residual Royalty Agreement, along with customary transaction fees, Veru expects net proceeds of about $12.5 million. Upon payment of the change of control premium, the Royalty Agreement will terminate, and its liabilities, totaling $9.9 million as of September 30, 2024, will be eliminated.

Mitchell Steiner, Chairman, President, and Chief Executive Officer of Veru Inc., stated, "The monetization of the FC2 business allows Veru to be a pure biopharmaceutical company focusing its additional nondilutive resources on the execution and development of its promising late-stage clinical drug pipeline." He also expressed excitement about the company's strategic evolution to the treatment of cardiometabolic diseases, with a fully enrolled Phase 2b QUALITY clinical trial evaluating enobosarm to preserve muscle and augment fat loss for a higher quality weight loss in patients receiving WEGOVY, a GLP-1 receptor agonist.

Veru's drug development program includes two late-stage novel small molecules, enobosarm and sabizabulin. Enobosarm, a selective androgen receptor modulator, is being developed in two different programs: obesity-enobosarm in combination with GLP-1 RA to augment fat loss, prevent muscle loss, and maintain physical function for higher quality weight loss, and breast cancer-enobosarm plus abemaciclib for the second line treatment of androgen receptor positive, estrogen receptor positive and others. Sabizabulin, a microtubule disruptor, is being developed for the treatment of hospitalized patients with viral-induced ARDS. However, Veru does not intend to develop sabizabulin further to treat viral-induced ARDS until it obtains funding from government grants, partnerships, or external third-party sources.



Veru's cash and equivalents stood at $29.2 million as of June 30, 2024. The company's shares jumped 29% to $0.8201 at the last check Tuesday, following the announcement of the FC2 business sale.

The sale of the FC2 business represents a significant reduction in company operations, which may raise concerns about workforce stability and morale. However, the elimination of $9.9 million in liabilities associated with the Royalty Agreement significantly improves Veru's financial health. The company's move to focus solely on biopharmaceuticals raises questions about its ability to successfully execute this transition and whether its drug development pipeline will yield successful results or adequate funding in the future.

In conclusion, Veru Inc. has sold its FC2 Female Condom business for $18 million, allowing the company to focus on its biopharmaceutical pipeline and clinical trials. The sale will result in a significant reduction in the company's workforce and a substantial improvement in its financial health. Veru anticipates releasing topline results from its enobosarm Phase 2b QUALITY clinical trial in January 2025, which could have a significant impact on the company's future revenue and growth potential.