Part 1: New Red Flags Emerge From Veru’s Phase 3 Covid Trial, Suggesting An FDA Rejection Is Likely – White Diamond Research
Veru's Sabizabulin COVID-19 drug faces potential FDA rejection due to critical Phase 3 trial design flaws, small sample size, patient selection issues, and questionable mortality data suggesting ineffective treatment.
Veru's EUA application for its COVID-19 treatment Sabizabulin shows critical deficiencies in its Phase 3 trial design and results that strongly suggest an FDA rejection is imminent. White Diamond Research's analysis reveals significant data irregularities, patient selection issues, and concerning trial modifications that undermine the drug's reported efficacy.
Stock info:
- Ticker: VERU (NASDAQ)
- Position: White Diamond Research is short VERU stock
Why it matters:
- Veru's Phase 3 trial shows an implausibly high 62% mortality rate in the US placebo group, suggesting serious issues with patient selection
- Trial design was altered mid-study to widen eligibility criteria, compromising data integrity
- Baseline patient characteristics were significantly imbalanced, with sicker patients disproportionately assigned to the placebo group (11.5% WHO level 6 patients in placebo vs only 5.1% in treatment group)
- Sample size of just 150 patients across 57 sites is inadequate for FDA approval (less than one placebo patient per site)
- Treatment benefits disappeared after Day 14, with similar mortality rates between treatment and placebo groups from Days 15-29
- FDA is likely to reject or significantly delay Sabizabulin's EUA application, potentially dropping Veru's market cap below $500M
Zoom in:
- Oxygen saturation levels reveal startling disparities: placebo group had readings as low as 48, while treatment group had no readings below 84
- Mid-trial protocol changes removed comorbidity requirements after August 2021, fundamentally altering the patient population
- Bullish sell-side analysts supporting Veru have extremely poor track records (zero-star ratings on Tipranks)
- Study size (150 patients) is drastically smaller than other successful COVID EUAs, which typically included 966-10,000+ patients
- Each trial site enrolled an average of just 2.6 patients total, making statistical validity highly questionable
FAQs:
What are the main red flags in Veru's COVID-19 drug trial?
The most concerning issues include an unusually high 62% mortality rate in the US placebo group, significant changes to patient eligibility criteria mid-trial, baseline imbalances favoring the treatment group, and an inadequate sample size of only 150 patients spread across 57 sites.
Why does the trial's small sample size matter?
With just 150 patients across 57 sites (averaging less than one placebo patient per site), the trial lacks statistical power and cannot reliably demonstrate efficacy. Successful COVID-19 EUA applications typically include 966 to over 10,000 patients.
What evidence suggests the placebo and treatment groups weren't properly randomized?
The placebo group had significantly sicker patients, with 11.5% classified as WHO level 6 compared to only 5.1% in the treatment group. Oxygen saturation levels also show concerning disparities, with placebo patients having readings as low as 48 while no treatment patient had readings below 84.
How did the trial design change during the study?
The trial initially required severely ill US patients with comorbidities but later expanded to include less critical patients from other countries and removed the comorbidity requirement after August 2021, fundamentally altering the patient population.
What do the mortality patterns reveal about the drug's effectiveness?
While Sabizabulin appeared to reduce deaths in the first 14 days, this benefit disappeared between days 15-29, when both groups showed similar mortality rates (approximately 10%). This suggests the drug's reported efficacy may be due to patient selection issues rather than therapeutic effect.
What is the likely FDA response to Veru's application?
Based on the numerous trial design flaws and data inconsistencies, the FDA is likely to either reject the EUA application outright or request additional data, significantly delaying any potential approval.
How might an FDA rejection impact Veru's stock price?
White Diamond Research projects that an FDA rejection could cause Veru's market cap to drop below $500 million, potentially pushing the stock price under $6, in line with valuations for companies with unproven mid-stage pharmaceuticals.
Disclaimer
This summary is based on a report by White Diamond Research. For the full, detailed analysis, please refer to the original source material: https://whitediamondresearch.com/research/new-red-flags-emerge-from-verus-phase-3-covid-trial-suggesting-an-fda-rejection-is-likely/
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