Veru Shares Tumble Despite Enobosarm's Lean Muscle Preservation Breakthrough

Veru Inc. (NASDAQ: VERU) shares plummeted on Monday, January 27, despite announcing positive topline results from its Phase 2b QUALITY clinical study. The study evaluated the efficacy of enobosarm, a selective androgen receptor modulator (SARM), in preserving lean muscle mass and improving body composition in older patients with obesity or overweight receiving Novo Nordisk's WEGOVY (semaglutide). The stock price fell 48.5% to $0.62 last check Monday, following the release of the study results.

The Phase 2b QUALITY study met its primary endpoint, demonstrating a statistically significant benefit in preserving total lean body mass in patients receiving enobosarm + semaglutide versus placebo + semaglutide at 16 weeks. Patients on enobosarm lost 71% less lean mass and 27% more fat mass on average than those receiving WEGOVY alone, indicating improved body composition. Enobosarm also reduced the proportion of patients that lost clinically significant physical function compared to those receiving semaglutide alone.

Despite these positive results, investors had a mixed reaction to the news. The stock initially rose before falling 35% in premarket trading Monday compared with a Friday closing price of $1.21. The mixed reaction can be attributed to several factors, including uncertainty about the safety data, potential implications of lean mass loss with GLP-1 RA therapy, and the FDA's response to the planned Phase 3 study.

The safety data from the trial remains blinded, and the unblinded safety set will not be available until April 2025. This uncertainty may cause some investors to be cautious about the stock's performance until more comprehensive safety data is revealed. Additionally, the potential implications of lean mass loss associated with GLP-1 RA therapy, as highlighted in the release, pose a concerning indication that could affect patient safety and perceptions of existing therapies, leading to skepticism towards Veru's product.

Moreover, the FDA's response to the planned Phase 3 study adds a layer of risk regarding regulatory approval and future marketability of enobosarm as a body composition drug. Veru plans to discuss the design of the Phase 3 clinical program with the FDA based on these results, but the agency's response to the planned study could introduce additional risk.

In this morning's release, Veru also pointed to a statistically significant reduction in the number of patients who lost more than 10% of their ability to climb stairs, with 19.4% of enobosarm patients experiencing this compared to 31.9% of the placebo group. This finding suggests that enobosarm could help maintain physical function and mobility during weight loss, which is particularly important for older patients.

Veru CEO Mitchell Steiner, M.D., acknowledged the potential for further reduction in physical function because of ongoing loss of lean mass with chronic GLP-1 RA therapy, stating that the "expectation is that all GLP-1 RA containing drugs could cause significant loss of lean mass in older patients raising concerns for potential declines in physical function, mobility disability, functional limitations, and loss of balance with a higher risk for falls and fractures." Steiner added that the company plans to host a conference call today at 8:00 am ET to discuss topline results.

In conclusion, Veru's shares tumbled despite the positive topline results from the Phase 2b QUALITY clinical study, as investors grapple with uncertainty about safety data, potential implications of lean mass loss with GLP-1 RA therapy, and the FDA's response to the planned Phase 3 study. The company plans to present the full clinical efficacy and safety data set for the Phase 2b QUALITY clinical study in future scientific conferences and publications after the Phase 2b extension portion of study is completed and unblinded. Veru will also host a conference call today to discuss the topline results and address investor concerns. As the company moves forward with its Phase 3 clinical program, investors will be watching closely for further developments and clarity on the safety and efficacy of enobosarm.