After Veru (VERU 6.31%) got a thumbs-down from a nonbinding advisory committee at the Food and Drug Administration (FDA) on Nov. 9 regarding its drug sabizabulin for the treatment of severe COVID-19, shares of the company fell by more than 60%, and recovery is nowhere in sight.

And while the final call regarding whether to approve Veru's request for an Emergency Use Authorization (EUA) for sabizabulin is still to come, the outlook is dire, since it's rare for regulators at the FDA to disagree with the vote of advisory committees. 

That means Veru's future is much more precarious than it seemed a mere month ago, and so it's natural for investors to wonder whether the ship has sailed when it comes to buying some of its stock. Let's address that question by breaking down the biotech's growth prospects and analyzing its valuation.

It could be the end of the road for sabizabulin for COVID, but there's more to the story

The first thing to note is that sabizabulin isn't the only medicine in Veru's pipeline, nor is its potential to treat severe COVID the only indication it's being investigated for.

The company is also testing it in a trio of other applications, including for two subtypes of metastatic breast cancer and metastatic treatment-resistant prostate cancer. All three of those programs are in late-stage clinical trials. Therefore, the drug could still eventually be approved for sale. There are also four other late-stage programs based on other candidates, all of which also treat various types of prostate and breast cancers.

So, for investors hoping for Veru's stock to rise on a future drug approval or favorable clinical trial results, the investment thesis is still alive and well, even with the probable loss of the COVID program. The risk of some of the company's remaining programs failing to clear their trials is very real, and investors should consider it to be almost as risky as biotech businesses that haven't yet brought a drug to the market. 

The reason why it's only "almost" as risky is that Veru currently has a pair of products on the market, which brought it $61.2 million in revenue in 2021. There's its drug Entadfi, which treats benign prostate hyperplasia, and its FC2 female condom. The trouble is, those two aren't selling enough to make the company profitable, so the top line is shrinking; in the third quarter, its sales dropped by 46% compared to a year prior, reaching $9.6 million. That makes it unlikely for Veru to return to growth without scoring a win in its clinical trials, but it doesn't necessarily mean that it's too late to buy stock. 

It has plenty of cash, and the valuation isn't a dealbreaker

Given that Veru could still commercialize the projects in its pipeline, the next question to consider is whether it has a realistic chance of successfully doing so. 

Veru's trailing-12-month total expenses are around $92.8 million, and its trailing-12-month cash burn is only $28.2 million. It also has cash and equivalents worth over $100.5 million. In other words, it has a cash runway of at least three years before it'll need to issue more stock to raise capital, take out new debt, or slash its expenses. So the risk of the stock going to zero is low even if its clinical trials founder, at least for now. 

What's more, the stock's valuation shouldn't scare investors away. The biotechnology industry's average trailing-12-month price-to-sales (P/S) ratio is 9, and Veru's is 9.7. Even after the stock's sharp drop, it isn't exactly priced at a bargain. Nor does its valuation make it prohibitively expensive, so it's safe to say it isn't too late to buy. 

That isn't to imply that you should be rushing to buy Veru stock. The risks of more clinical-trial failures remain high, and the impending loss of the COVID program to what will probably be a definitive "no" from the FDA's binding committee will likely make sentiment about the biotech even poorer

But, if you're willing to take on the significant and somewhat speculative level of risk associated with most early-stage biotechs, Veru could still be an option. Investors who start a position now could see their shares multiply in value over the coming years if the company can get more of its therapies out the door. Just don't expect its already commercialized products to make things much easier in financial terms between now and then.