Veru’s (NASDAQ: VERU) Repurposed COVID-19 Drug Facing Uphill Battle for EUA

At first glance Veru, Inc.’s (NASDAQ: VERU) COVID-19 therapy phase 3 top line results were notable but their battle for an emergency use authorization (EUA) is just beginning. Their lead candidate, sabizabulin, reduced mortality by 55% in moderate to severely ill hospitalized COVID-19 patients. As a result, the Independent Data Monitoring Committee (IDMC) halted the trial at 150 patients due to overwhelming efficacy. The trial was supposed to enroll 210 patients from various countries like the United States, Brazil, Mexico, Colombia, and Argentina. Sabizabulin achieved a clinically and statistically meaningful reduction of 55% of mortality (p=0.0029) in the intent-to-treat (ITT) population. The placebo group showed a 45% mortality rate as opposed to 20% in the Sabizabulin group. After the announcement the conference call was very positive, but not one analyst asked about the competition or questioned such a high mortality rate in the placebo, and therein lies the challenge.

Rocky Road to an EUA

Since the pandemic, only one drug maker Gilead Sciences (NYSE: GILD), remdesivir has had the only EUA to turn into a full approval. Additionally, the FDA is just not handing out EUA like they used to for monoclonal antibody treatments and has even revoked some of the monoclonal antibody treatments it authorized. While the filing of an EUA used to be something to cheer about, the reality is much different. There are drugs in the hospitalized setting with a much higher degree of efficacy than sabizabulin that have not gotten approval. Stopping a study for efficacy is no longer an automatic approval.The first hurdle to cross is safety. At first glance, the safety of the drug seems to be pretty good. In general, almost all antivirals have side effects. In cancer, sabizabulin had gastrointestinal side effects that included nausea and diarrhea. The dosage used in prostate cancer was 63 mg daily versus only 9 mg daily in COVID-19. Given the significantly lower dosage it appears that drug safety is unlikely to be an issue for the FDA.

Yellow Flags Thrown After Top Line Results

So much emphasis is placed on meeting top line results that common sense sometimes gets thrown out the window. Investors need to ask themselves: does it make sense that 45% of the people that go to the hospital for COVID-19 die in 60 days? At the pandemic’s peak there were 159,000 hospitalizations over a 7-day period. That translated into 71,550 deaths weekly. At this death rate, 3 months would have been the equivalent number of deaths from the entire pandemic from its inception. The death rate of 45% in the control group is inexplicably high and the FDA would be unlikely to accept this number without an extensive audit.Various other clinical trials and academic literature have reported the death rate in hospitalized COVID-19 patients to be much lower than 45%, especially for those not in critical condition, i.e. not on a ventilator. Humanigen’s (NASDAQ: HGEN) phase 3 study top line results showed that, in a similar patient population as Veru’s, mortality or progression to mechanical ventilation was 22.1% in the placebo group. Gilead’s (NASDAQ: GILD) phase 3 study had 29-day mortality rates of 4.8%, 12.7%, and 20.4% for patients categorized with an Ordinal Scale classification of 4, 5, and 6 in the placebo arm. This would be the same criteria as Veru’s study: enrolling those with classifications of 4, 5, and 6 (hospitalized, ranging from no oxygen required to high flow oxygen required but no mechanical ventilation).Additionally, academic literature cites mild, moderate, and severe acute respiratory distress syndrome (ARDS) patients—those on ventilators and with full blown respiratory failure—have mortality rates of 35% (mild), 40% (moderate), and 46% (severe). Why did Veru’s placebo arm, which enrolled patients with moderate-to-severe COVID-19 hospitalization (and not even with ARDS) display mortality rates that one might see in the placebo arm of an ARDS trial? Other trials enrolling critically ill patients—much more sick than in Veru’s study—had placebo mortality rates at about half of Veru’s placebo mortality rate.The trial might have achieved statistical significance and stratified according to plan, but what couldn’t possibly have been part of that plan was a stratification of clinical trial sites. There were 60 clinical trial sites and only 55 placebo patients. The standard of care could be responsible for the very high mortality rate.

Major Flaw in Study Design

There were only 50 placebo patients in the study yet there were 60 recruiting locations in the United States, Brazil, Mexico, Argentina, Bulgaria, and Columbia. If a number of placebo patients were from Mexico and Brazil with extreme mortality rates, it could have completely thrown off the study with as little as 5 - 10 placebo patients from those sites. The study may have stratified by age, sex, WHO score, and variant, but when examining mortality as an endpoint, the stratification may have ended there. This is the primary reason for investors to be extremely cautious and critical about the clinical trial results until more detail about the stratification is known. According to ClinicalTrials.gov the country wasn’t part of the statistical plan, which means they could have had more people in one country over another.Well, renowned COVID-19 expert, Eric Topol criticized the results in the following retweet from the New York Times. His contention seemed to be based on the size of the study. No other small biotech has gotten an EUA with such a small sample. Typically the FDA needs to see 400+ patients in a phase 3 clinical trial. Veru is far short of that and follows in the footsteps of other biotechs like CytoDyn Inc. (OTCMKTS: CYDY) which achieved 82% reduction in 14-day mortality (p=.029) in critically ill patients who took a subcutaneous injection of leronlimab. Leonlimab has a much better efficacy profile and more patients (309) than VERU’s sabizabulin, but didn’t receive an EUA. The best comparable to sabizabulin, however, is Tollovir™, manufactured by Todos Medical (OTCMKTS: TOMDF) which had a 100% reduction in mortality in severe to critical patients and reduced time of hospitalization and progression to a ventilator. For comparison purposes, the placebo group in leronlimab had a 24% mortality rate for severe to critical but they did not age stratify properly. The placebo group for Tollovid had a 22% mortality in severe to critical. In the active arm of Veru’s Sabizabulin phase 3 trial, the mortality rate was 20% for moderate-to-severe hospitalized COVID-19 patients. Discrepancies so far from the norm need to be explained. The theory that explains this discrepancy traces back to the enormous differences in case fatality by country.The GILD, HGEN, TOMDF, and CYDY mortality data reconciles to real world conditions. The only thing that doesn’t make sense is: why the regulatory process wasn’t accelerated for any of the drugs besides Gilead’s on the announcement of such good data during a pandemic.If we learned anything from CytoDyn’s mishaps, it was that even 309 patients isn’t necessarily enough for an EUA. Granted, CytoDyn had issues with statistical significance without post-hoc age stratification as their CRO failed to balance placebo and drug arms with respect to age, skewing results. However, the issues with Veru’s smaller trial, including not even having enough placebo patients to account for one per site, coupled with potential dissimilar standards of care (SOC) or patient management means that there probably isn’t balanced enrollment with respect to clinical sites and their standard practices. Also, the death rate in Veru’s trial is likely to raise eyebrows at the FDA if the company ever requests an EUA as a variety of other trials as well as academic literature suggest that the death rate for moderate to severe COVID-19 is not as high as 45%; it tends to track closer to 20%, especially ever since the SOC incorporated antivirals like remdesivir, and for critically ill patients, dexamethasone.

Investment Summary

While Veru’s data appears very good on the surface and the CEO makes a compelling case for approval, an EUA is nowhere near a slam dunk for VERU. Investors that pile into this name at an $800 million market cap (probably mostly supported by COVID-19 efforts) may become bagholders when the data is held to a higher standard. They simply do not have the most efficacious drug. The FDA does not have to take the recommendation of the IDMC. In all likelihood the drug does work and appears to provide benefit, but there is still a question as to how much based on such a small trial and the case mortality rate issue.The safer bet in hospitalized COVID-19 is TOMDF and their Tollovir. They have been seeking an EUA in either Greece or Israel for the past couple of months after their clinical data showed a 100% reduction in mortality. At a $16 million market cap, an EUA could easily send the stock into the stratosphere to match VERU’s $800 million market cap. In their Phase 2 clinical trial Tollovir beat Gilead’s remdesivir and took dying off the table, but their study wasn’t powered high enough. Nor did they have the PR headlines that the trial was stopped early for efficacy even though it technically was. Investors may still take issue with the power of the study and unbelievably good results, but Tollovir targets the same biological target, the 3CL protease, as Pfizer’s (NYSE: PFE) drug Paxlovid, which displayed incredible efficacy in the outpatient setting, reducing hospitalizations and death by 89%. PFE’s 3CL inhibition is a proven Mechanism of Action (MOA) which makes TOMDF’s results very believable. The primary differences between the drugs are the safety due to Tollovir’s all natural composition versus Paxlovid’s small molecule chemical design. Tollovir also has an anti-inflammatory aspect in addition to its antiviral properties. Investors dead set on holding VERU for the EUA should consider

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