Dare Bioscience Inc

Previous wording

We are a biopharmaceutical company committed to advancing innovative products for women’s health. We are driven by a mission to identify, develop and bring to market a diverse portfolio of differentiated therapies that prioritize women's health and well-being, expand treatment options, and improve outcomes, primarily in the areas of contraception, vaginal health, reproductive health, menopause, sexual health and fertility. Our business strategy is to in-license or otherwise acquire the rights to differentiated product candidates in our areas of focus, some of which have existing clinical proof-of-concept data, to take those candidates through mid to late-stage clinical development or regulatory approval, and to establish and leverage strategic collaborations to achieve commercialization. We and our wholly-owned subsidiaries operate in one business segment.

Current wording

We are a biopharmaceutical company committed to advancing innovative products for women’s health. We are driven by a mission to identify, develop and bring to market a diverse portfolio of differentiated therapies that prioritize women's health and well-being, expand treatment options, and improve outcomes, primarily in the areas of contraception, sexual health, pelvic pain, fertility, infectious disease and menopause. Our business strategy is to in-license or otherwise acquire the rights to differentiated product candidates in our areas of focus, some of which have existing clinical proof-of-concept data, to take those candidates through mid to late-stage clinical development or regulatory approval, and to establish and leverage strategic collaborations to achieve commercialization. We and our wholly-owned subsidiaries operate in one business segment.

Previous wording

Our product pipeline includes diverse programs that target unmet needs in women's health in the areas of contraception, vaginal health, reproductive health, menopause, sexual health and fertility, and aim to expand treatment options, enhance outcomes and improve ease of use for women. We are primarily focused on progressing the development of our existing portfolio of product candidates. However, we also explore opportunities to expand our portfolio by leveraging assets to which we hold rights or obtaining rights to new assets, with continued focus solely on women's health.

Current wording

Our product pipeline includes diverse programs that target unmet needs in women's health in the areas of contraception, sexual health, pelvic pain, fertility, infectious disease and menopause, and aim to expand treatment options, enhance outcomes and improve ease of use for women. We are primarily focused on progressing the development of our existing portfolio of product candidates. However, we also explore opportunities to expand our portfolio by leveraging assets to which we hold rights or obtaining rights to new assets, with continued focus solely on women's health.

Previous wording

•DARE-HPV, a proprietary, fixed-dose formulation of lopinavir and ritonavir in a soft gel vaginal insert for the treatment of cervical intraepithelial neoplasia and other human papillomavirus (HPV)-related pathologies.

Current wording

•DARE-HPV, a proprietary, fixed-dose formulation of lopinavir and ritonavir in a soft gel vaginal insert for the treatment of human papillomavirus (HPV)-related cervical diseases.

Previous wording

Our primary operations have consisted of research and development activities to advance our portfolio of product candidates through late-stage clinical development and/or regulatory approval. We expect our research and development expenses will continue to represent the majority of our operating expenses for at least the next twelve months. Until we secure additional capital to fund our operating needs, we will focus our resources primarily on advancement of Ovaprene and Sildenafil Cream. In addition, we expect to incur significant research and development expenses for the DARE-LARC1 program, but we also expect such expenses will be supported by non-dilutive funding provided under a grant agreement we entered into in June 2021 through at least 2026.

Current wording

Our primary operations have consisted of research and development activities to advance our portfolio of product candidates through late-stage clinical development and/or regulatory approval. We expect our research and development expenses will continue to represent the majority of our operating expenses for at least the next twelve months. Until we secure additional capital to fund our operating needs, we will focus our resources primarily on advancement of Ovaprene and Sildenafil Cream. In addition, we expect to incur significant research and development expenses for the DARE-LARC1 and DARE-HPV programs, but we also expect such expenses will be supported, with respect to DARE-LARC1, through at least 2026 by non-dilutive funding provided under a grant agreement we entered into in June 2021, and with respect to DARE-HPV, through October 2026 by non-dilutive funding provided under a subaward agreement we entered into in October 2024.

Previous wording

In December 2023, we announced commencement of the multi-center, single arm, non-comparative, pivotal Phase 3 clinical study of Ovaprene to evaluate its effectiveness as a contraceptive along with its safety and acceptability (ClinicalTrials.gov ID: NCT06127199). The study aims to enroll sufficient participants across approximately 20 study sites in the U.S. to have approximately 250 participants complete approximately 12 months (13 menstrual cycles) of use. Based on typical dropout rates for contraceptive efficacy studies, we will seek to enroll more than double the number of subjects we target to complete 13 menstrual cycles of use. Based on the current enrollment rate across the 20 study sites, we anticipate that approximately 125 women, which is half of our target number of participants to complete the study, will complete approximately 6 months of Ovaprene use by the end of the second quarter of 2025.

Current wording

In December 2023, we announced commencement of the multi-center, single arm, non-comparative, pivotal Phase 3 clinical study of Ovaprene to evaluate its effectiveness as a contraceptive along with its safety and acceptability (ClinicalTrials.gov ID: NCT06127199). The study aims to enroll sufficient participants across approximately 20 study sites in the U.S. to have approximately 250 participants complete approximately 12 months (13 menstrual cycles) of use. Based on typical dropout rates for contraceptive efficacy studies, we will seek to enroll more than double the number of subjects we target to complete 13 menstrual cycles of use. Enrollment is currently proceeding at 10 study sites. Based on the current average enrollment rate, we anticipate that approximately 125 women, which is half of our target number of participants to complete the study, will complete approximately 6 months of Ovaprene use by the end of the second quarter of 2025. With the grant funds we expect to receive this year under the grant agreement we entered into in November 2024, we plan to add additional study sites, which we expect to accelerate the overall study timeline.

Previous wording

The Phase 3 study is being conducted under our Cooperative Research and Development Agreement, or CRADA, with the U.S. Department of Health and Human Services, as represented by the Eunice Kennedy Shriver National Institute of Child Health and Human Development, or NICHD, part of the NIH, and within NICHD’s Contraceptive Clinical Trial Network. We and NICHD will each provide medical oversight and final data review and analysis for the study and will work together to prepare the final report of the results of the study. We are responsible for providing clinical supplies of Ovaprene, coordinating interactions with the FDA, preparing and submitting supportive regulatory documentation, and providing a total of $5.5 million to NICHD to be applied toward the costs of conducting the Phase 3 study. At June 30, 2024,$5.0 million of the $5.5 million had been paid and the remaining $0.5 million was paid in July 2024. NICHD is responsible for the other costs related to the conduct of the Phase 3 study and for managing the payment of expenses to the contract research organization for the study, the clinical sites, and other parties involved with the study. Depending on the duration of the enrollment period and number of subjects enrolled in the Phase 3 study, there may be future costs associated with the study that are not reflected in the current budget under the CRADA. We and NICHD are in discussions regarding the CRADA, which may include discussing a mechanism to potentially provide for additional future payments by us in support of the Phase 3 study.

Current wording

The Phase 3 study is being conducted under our Cooperative Research and Development Agreement, or CRADA, with the U.S. Department of Health and Human Services, as represented by the Eunice Kennedy Shriver National Institute of Child Health and Human Development, or NICHD, part of the NIH, and within NICHD’s Contraceptive Clinical Trial Network. We and NICHD will each provide medical oversight and final data review and analysis for the study and will work together to prepare the final report of the results of the study. We are responsible for providing clinical supplies of Ovaprene, coordinating interactions with the FDA, preparing and submitting supportive regulatory documentation, and providing a total of $5.5 million to NICHD to be applied toward the costs of conducting the Phase 3 study, all of which had been paid as of September 30, 2024. NICHD is responsible for the other costs related to the conduct of the Phase 3 study and for managing the payment of expenses to the contract research organization for the study, the clinical sites, and other parties involved with the study. Depending on the duration of the enrollment period and number of subjects enrolled in the Phase 3 study, there may be future costs associated with the study that are not reflected in the current budget under the CRADA. We and NICHD are in discussions regarding the CRADA, which may include discussing a mechanism to potentially provide for additional future payments by us in support of the Phase 3 study.

Previous wording

In 2023 we completed our exploratory Phase 2b RESPOND clinical study of Sildenafil Cream, 3.6%, or Sildenafil Cream, in premenopausal women with FSAD and, in January 2024, we announced the successful completion of an end-of-Phase 2 meeting with the FDA. We and the FDA aligned on key elements of the Phase 3 program to support a new drug application, or NDA, filing, including confirming that FSAD is acceptable as an indication, the clinical trials can be conducted in a premenopausal FSAD-only population, and 12-weeks of blinded treatment to assess efficacy may be acceptable, provided that the trials are adequately powered for efficacy assessment. This is a shorter period of blinded treatment than the 24 weeks recommended in the FDA's 2016 draft guidance for industry on developing drugs for the treatment of low sexual interest, desire and/or arousal in women. We await additional feedback from the FDA on our proposed primary and secondary patient reported outcome endpoints for the Phase 3 pivotal trials of Sildenafil Cream, as well as additional information on data that may be needed in an NDA submission to appropriately qualify any ingredient (other than sildenafil) for the vaginal route of administration. We have also requested clarification on the safety database (size and duration exposure) that the FDA will require for an NDA submission. Initiating a Phase 3 study is contingent on aligning with the FDA regarding the foregoing. Based on FDA feedback we have received, two successful Phase 3 clinical studies of Sildenafil Cream will be required to support an NDA for Sildenafil Cream for the treatment of FSAD, and we anticipate that each Phase 3 study will cost approximately $15.0 million. We will take into account our capital resources before initiating a Phase 3 study.

Current wording

In 2023, we completed our exploratory Phase 2b RESPOND clinical study of Sildenafil Cream, 3.6%, or Sildenafil Cream, in premenopausal women with FSAD and, in January 2024, we announced the successful completion of an end-of-Phase 2 meeting with the FDA. We and the FDA aligned on key elements of the Phase 3 program to support a new drug application, or NDA, filing, including confirming that FSAD is acceptable as an indication, the clinical trials can be conducted in a premenopausal-only FSAD population, and 12-weeks of blinded treatment to assess efficacy may be acceptable, provided that the trials are adequately powered for efficacy assessment. This is a shorter period of blinded treatment than the 24 weeks recommended in the FDA's 2016 draft guidance for industry on developing drugs for the treatment of low sexual interest, desire and/or arousal in women. Ongoing discussions with the FDA are focused on aligning on primary and secondary patient reported outcome endpoints for the Phase 3 pivotal trials of Sildenafil Cream, as well as additional information on data that may be needed in an NDA submission to appropriately qualify any ingredient (other than sildenafil) for the vaginal route of administration. We have also requested clarification on the safety database (size and duration exposure) that the FDA will require for an NDA submission. Initiating a Phase 3 study is contingent on aligning with the FDA regarding the foregoing. Based on FDA feedback we have received, two successful Phase 3 clinical studies of Sildenafil Cream will be required to support an NDA for Sildenafil Cream for the treatment of FSAD, and we anticipate that each Phase 3 study will be approximately $15.0 million in direct costs. We will take into account our capital resources before initiating a Phase 3 study.

Previous wording

We continue to work on the development of our other clinical and preclinical-stage programs, including conducting activities necessary to enable submission of an investigational new drug, or IND, application to the FDA for a pivotal Phase 3 clinical study of DARE-HRT1, activities in preparation for a Phase 2 randomized, double-blinded, placebo-controlled, dose-finding clinical study of DARE-VVA1 based on our FDA-cleared IND relating to DARE-VVA1 and the anticipated study, and limited activities to support an IND submission to the FDA to enable Phase 2 clinical development of DARE-HPV in the United States. We do not plan to commence the Phase 3 study of DARE-HRT1 or a Phase 2 study of DARE-VVA1 or DARE-HPV until after we secure additional capital. See ITEM 1. "BUSINESS," in Part I of our 2023 10-K for additional information regarding our clinical and preclinical-stage programs.

Current wording

We continue to work on the development of our other clinical and preclinical-stage programs, including:

Previous wording

On August 12, 2024, we received written notice from Nasdaq notifying us that we do not meet the requirement in Nasdaq Listing Rule 5550(b)(2) to maintain a minimum Market Value of Listed Securities of $35.0 million that is required for continued listing on The Nasdaq Capital Market. The notice has no effect at this time on the listing of our common stock on The Nasdaq Capital Market. See Item 5(a) of Part II of this report for additional information.

Current wording

On August 12, 2024, we received written notice from Nasdaq notifying us that we do not meet the requirement in Nasdaq Listing Rule 5550(b)(2) to maintain a minimum Market Value of Listed Securities, or MVLS, of $35.0 million that is required for continued listing on The Nasdaq Capital Market. In accordance with Nasdaq Listing Rule 5810(c)(3)(C), we have a period of 180 days, or until February 10, 2025, to regain compliance with the minimum MVLS rule. We will regain compliance if at any time during the 180 day period, our MVLS closes at $35.0 million or more for a minimum of 10 consecutive business days. If we do not regain compliance prior to February 10, 2025, Nasdaq will notify us that our securities are subject to delisting, at which time we may appeal the delisting determination to a Nasdaq hearings panel. There can be no assurance that, if we were to appeal the delisting determination, such an appeal would be successful. We intend to actively monitor our MVLS and may, if appropriate, consider implementing available options to regain compliance with the minimum MVLS rule. There can be no assurance that we will be able to regain compliance with such rule or maintain compliance with any other listing requirements. See the risk factor titled, “If we fail to regain and maintain compliance with the continued listing requirements of The Nasdaq Capital Market, our common stock could be suspended and delisted, which could, among other things, limit demand for our common stock, substantially impair our ability to raise additional capital and have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock,” in Item 1A below.

Previous wording

All common stock share and per share data presented in this report for prior periods, including the period ended June 30, 2024, have been retroactively adjusted to reflect the impact of the reverse stock split, without giving effect to whole shares issued in lieu of fractional shares. See Note 2 toour condensed consolidated financial statements contained in this report for additional information.

Current wording

All common stock share and per share data presented in this report for prior periods have been retroactively adjusted to reflect the impact of the reverse stock split, without giving effect to whole shares issued in lieu of fractional shares. See Notes 2 and 4 toour condensed consolidated financial statements contained in this report for additional information.

Previous wording

The majority of our operating expenses during a fiscal year are research and development expenses, a significant portion of which, excluding those funded by non-dilutive grants, are associated with the clinical development for our product candidates that have reached the human clinical study development phase. Research and development expenses include research and development costs for our product candidates and transaction costs related to our acquisitions. We recognize all research and development expenses as they are incurred. Research and development expenses consist primarily of:

Current wording

The majority of our operating expenses during a fiscal year are research and development, or R&D, expenses, a significant portion of which, excluding those funded by non-dilutive grants, are associated with the clinical development for our product candidates that have reached the human clinical study development phase. R&D expenses consist primarily of:

Previous wording

•expenses incurred under agreements with clinical trial sites and consultants that conduct research and development and regulatory affairs activities on our behalf;

Current wording

◦expenses incurred under agreements with clinical research organizations (CROs), investigative sites and other third parties that assist in the conduct of our clinical trials and nonclinical studies and conduct other R&D and regulatory affairs activities on our behalf,

Previous wording

•contract manufacturing expenses, primarily for the production of clinical supplies;

Current wording

◦contract manufacturing expenses, primarily for the production of materials for use in our clinical trials and nonclinical studies,

Previous wording

•transaction costs related to acquisitions of companies, technologies and related intellectual property, and other assets;

Current wording

◦transaction costs related to acquisitions of companies, technologies and related intellectual property, and other assets, and

Previous wording

•milestone payments due to third parties under acquisition and in-licensing arrangements we incur, or the incurrence of which we deem probable; and

Current wording

◦milestone payments due to third parties under acquisition and in-licensing arrangements based on our product candidates' achievement of R&D and regulatory milestones specified therein, and

Previous wording

Investment in the development of and seeking regulatory approval for our clinical-stage and Phase 1-ready product candidates and the development of any other potential product candidates we may advance into and through clinical trials in the pursuit of regulatory approvals, will increase our research and development expenses. Activities associated with the foregoing will require a significant increase in investment in regulatory support, clinical supplies, inventory build-up related costs, and the payment of success-based milestones to licensors. In addition, we continue to evaluate opportunities to acquire or in-license other product candidates and technologies, which may result in higher research and development expenses due to, among other factors, license fee and/or milestone payments.

Current wording

Investment in the development of and seeking regulatory approval for our clinical-stage and Phase 1-ready product candidates and the development of any other potential product candidates we may advance into and through clinical trials in the pursuit of regulatory approvals, will increase our R&D expenses. Activities associated with the foregoing will require a significant increase in investment in regulatory support, clinical supplies, inventory build-up related costs, and the payment of success-based milestones to licensors. In addition, we continue to evaluate opportunities to acquire or in-license other product candidates and technologies, which may result in higher R&D expenses due to, among other factors, milestone payments.

Previous wording

Until the first commercial sale of XACIATO, we recognized contract manufacturing expenses associated with producing commercial supplies of XACIATO and costs of regulatory affairs activities related to XACIATO as research and development expenses. Following the first commercial sale of XACIATO, and during the interim period when we were the NDA holder of XACIATO and provided commercial supplies of XACIATO to Organon, those expenses were recognized as general and administrative expenses.

Current wording

Until the first commercial sale of XACIATO, we recognized contract manufacturing expenses associated with producing commercial supplies of XACIATO and costs of regulatory affairs activities related to XACIATO as R&D expenses. Following the first commercial sale of XACIATO, and during the interim period when we were the NDA holder of XACIATO and provided commercial supplies of XACIATO to Organon, those expenses were recognized as general and administrative expenses.

Previous wording

We recognize the Australian Research and Development Tax Incentive Program, or the Tax Incentive, as a reduction of research and development expenses. The amounts are determined based on our eligible research and development expenditures and are non-refundable, provided that in order to qualify for the Tax Incentive the filing entity must have revenue of less than AUD $20.0 million during the tax year for which a reimbursement claim is made and cannot be controlled by an income tax exempt entity. The Tax Incentive is recognized when there is reasonable assurance that the Tax Incentive will be received, the relevant expenditure has been incurred, and the amount can be reliably measured or reliably estimated.

Current wording

We recognize the Australian Research and Development Tax Incentive Program, or the Tax Incentive, as a reduction of R&D expenses. The amounts are determined based on our eligible R&D expenditures and are non-refundable, provided that in order to qualify for the Tax Incentive the filing entity must have revenue of less than AUD $20.0 million during the tax year for which a reimbursement claim is made and cannot be controlled by an income tax exempt entity. The Tax Incentive is recognized when there is reasonable assurance that the Tax Incentive will be received, the relevant expenditure has been incurred, and the amount can be reliably measured or reliably estimated.

Previous wording

We receive funding through grants that support activities related to the development of certain of our product candidates. As we incur eligible expenses under those grants, we recognize grant funding in the statements of operations as a reduction to research and development expenses (contra-research and development expense). For more information, see Note 2, Basis of Presentation and Summary of Significant Accounting Policies – Grant Funding, to our consolidated financial statements contained in our 2023 10-K and Note 10, Grant Awards, to our condensed consolidated financial statements contained in this report. For the three and six months ended June 30, 2024 and 2023, we recognized contra-research and development expense of approximately $2.2 million and $5.1 million, respectively, and $2.2 million and $4.7 million, respectively.

Current wording

We have received, and may in the future receive, funding through grants and other financial awards from governmental entities, private foundations and other organizations that support activities related to the development of certain of our product candidates. As we incur eligible expenses under those grants or awards, we recognize grant funding in our statements of operations as a reduction to R&D expenses (contra-R&D expense). For more information, see Note 2, Basis of Presentation and Summary of Significant Accounting Policies – Grant Funding, to our consolidated financial statements contained in our 2023 10-K and Note 10, Grant Awards, to our condensed consolidated financial statements contained in this report. For the three and nine months ended September 30, 2024 and 2023, we recognized contra-R&D expense of approximately $1.5 million and $6.6 million, respectively, and $2.6 million and $7.3 million, respectively.

Previous wording

Conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We may not obtain regulatory approval for any product candidate on a timely or cost-effective basis, or at all. The probability of success of our product candidates may be affected by numerous factors, including clinical results and data, competition, intellectual property rights, manufacturing capability and commercial viability. As a result, we cannot accurately determine the duration and completion costs of development projects or when and to what extent we will generate revenue from the commercialization of any of our product candidates.

Current wording

Conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We may not obtain regulatory approval for any product candidate on a timely or cost-effective basis, or at all. Our future R&D expenses and the probability of success of our product candidates may be affected by numerous factors, including the number, scope, rate of progress, expense, and results of our clinical trials and nonclinical R&D activities, the countries in which our clinical trials are conducted, the phase of clinical development of our product candidates, the cost and timing of manufacturing our product candidates, our ability to scale up manufacturing as needed to support later-stage clinical trials and, if approved, commercialization of our product candidates, the extent of changes in government regulation and regulatory guidance relating to development and approval of our product candidates, the timing, receipt, and terms of any clearances to conduct clinical trials and any marketing approvals from applicable regulatory authorities, competition and commercial viability of our product candidates, the extent to which we establish and maintain intellectual property rights, the extent to which we establish and maintain license, collaboration, or other arrangements. As a result, we cannot accurately determine the duration and completion costs of development projects or if, when and to what extent we will generate revenue from the commercialization of any of our product candidates.

Previous wording

General and administrative expenses consist of personnel costs, facility expenses, expenses for outside professional services, including legal, audit and accounting services, commercial-readiness expenses, and milestone expenses. Personnel costs consist of salaries, benefits and stock-based compensation. Facility expenses consist of rent and other related costs. Commercial-readiness expenses consist of consultant and advisor costs. Milestone expenses consist of payments we owe under our in-license agreements or other agreements under which we acquired rights to technology or other intellectual property we use in our investigational product programs based on achievement of the developmental and regulatory milestones specified in those agreements.

Current wording

General and administrative expenses consist of personnel costs, facility expenses, expenses for outside professional services, including legal, audit and accounting services, commercial-readiness expenses, and milestone expenses. Personnel costs consist of salaries, benefits and stock-based compensation. Facility expenses consist of rent and other related costs. Commercial-readiness expenses consist of consultant and advisor costs. Milestone expenses consist of amounts that become due to third parties under our in-license or other agreements under which we acquired rights to technology or other intellectual property we use in a product based on the product's achievement of commercial milestones specified therein.

Previous wording

We recorded net income of approximately $12.9 million and $6.2 million for the three and six months ended June 30, 2024, respectively, as compared to a net loss of approximately $8.8 million and $16.8 million for the three and six months ended June 30, 2023, respectively. Our net income for the three and six months ended June 30, 2024 was positively impacted by the approximately $20.4 million of net proceeds we received from the sale in April 2024 of our rights to future royalty and milestone payments and revenue to XOMA. See “—Royalty Monetization Transactions—Traditional and Synthetic Royalty Purchase Agreements with XOMA,” above.

Current wording

We recorded a net loss of approximately $4.7 million and net income of approximately $1.5 million for the three and nine months ended September 30, 2024, respectively, as compared to a net loss of approximately $8.3 million and approximately $25.1 million for the three and nine months ended September 30, 2023, respectively. Our net income (loss) for the three and nine months ended September 30, 2024 was positively impacted by the approximately $20.4 million of net proceeds we received from the sale in April 2024 of our rights to future royalty and milestone payments and revenue to XOMA. See “—Royalty Monetization Transactions—Traditional and Synthetic Royalty Purchase Agreements with XOMA,” above.

Previous wording

Revenues for the three months ended June 30, 2024 related to our license agreement with Organon to commercialize XACIATO. We did not recognize any revenue for the three months ended June 30, 2023.

Current wording

Revenues for the three months ended September 30, 2024 and 2023 related to our license agreement with Organon to commercialize XACIATO.

Previous wording

The decrease of approximately $0.5 million in general and administrative expenses for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 was primarily attributable to decreases in (i) personnel costs of approximately $0.3 million due to reduced headcount, (ii) professional services expense of approximately $0.2 million, and (iii) stock-based compensation expense of approximately $0.1 million. These decreases were partially offset by increased commercial readiness expenses of approximately $38,000 and increased general corporate overhead expense which includes rent and facilities costs and insurance expense of approximately $21,000.

Current wording

The decrease of approximately $0.7 million in general and administrative expenses for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 was primarily attributable to decreases in (i) professional services expense of approximately $0.3 million, (ii) commercial readiness expenses of approximately $0.2 million, (iii) stock-based compensation expense of approximately $0.1 million, and (iv) general corporate overhead expense which includes rent and facilities costs and insurance expense of approximately $26,000.

Previous wording

The decrease of approximately $1.1 million in research and development expenses for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 was primarily attributable to decreases in (i) costs related to development activities for Sildenafil Cream as a result of the completion of the Phase 2b RESPOND clinical study completed in June 2023 of approximately $1.5 million, (ii) costs related to development activities for our Phase 1 and Phase 1-ready programs of approximately $1.0 million, (iii) costs related to development activities for our Phase 2-ready programs of approximately $0.8 million, and (iv) costs related to development activities for our pre-clinical stage programs of approximately $0.4 million. These decreases were partially offset by increases in costs related to our ongoing pivotal Phase 3 clinical trial of Ovaprene and manufacturing and regulatory affairs activities for Ovaprene of approximately $2.5 million.

Current wording

The decrease in R&D expenses for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 was primarily attributable to a decrease in costs related to development activities for Sildenafil Cream as a result of the completion of the Phase 2b RESPOND clinical study completed in June 2023, partially offset by increases in costs related to our ongoing pivotal Phase 3 clinical trial of Ovaprene and manufacturing and regulatory affairs activities for Ovaprene.

Previous wording

The decrease of approximately $0.3 million in other income for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 was primarily due to a decrease in interest earned on cash balances in the current period.

Current wording

The decrease of approximately $0.1 million in other income for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 was primarily due to a decrease in interest earned on cash balances in the current period.

Previous wording

The decrease of approximately $1.1 million in general and administrative expenses for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 was primarily attributable to decreases in (i) personnel costs of approximately $0.4 million due to reduced headcount, (ii) commercial-readiness expenses of approximately $0.3 million, (iii) a one-time fraud loss of approximately $0.2 million, net of proceeds we received under an insurance policy, related to criminal fraud commonly referred to as "business email compromise fraud" to which we were subject, (iv) general corporate overhead expense which includes rent and facilities costs and insurance expense of approximately $0.1 million, and (v) stock-based compensation expense of approximately $0.1 million.

Current wording

The decrease of approximately $1.8 million in general and administrative expenses for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 was primarily attributable to decreases in (i) commercial-readiness expenses of approximately $0.5 million, (ii) personnel costs of approximately $0.4 million due to reduced headcount, (iii) a one-time fraud loss in the first quarter of 2023 of approximately $0.2 million, net of proceeds we received under an insurance policy, related to criminal fraud commonly referred to as "business email compromise fraud" to which we were subject, (iv) professional services expense of approximately $0.2 million, (v) stock-based compensation expense of approximately $0.2 million, and (vi) general corporate overhead expense, which includes rent and facilities costs and insurance expense, of approximately $0.2 million.

Previous wording

The decrease of approximately $2.8 million in research and development expenses for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 was primarily attributable to decreases in (i) costs related to development activities for Sildenafil Cream as a result of the completion of the Phase 2b RESPOND clinical study completed in June 2023 of approximately $3.4 million, (ii) costs related to development activities for our Phase 1 and Phase 1-ready programs of approximately $1.6 million, (iii) costs related to development activities for our pre-clinical stage programs of approximately $1.2 million, and (iv) costs related to development activities for our Phase 2-ready programs of approximately $0.9 million. These decreases were partially offset by increases in costs related to our ongoing pivotal Phase 3 clinical trial of Ovaprene and manufacturing and regulatory affairs activities for Ovaprene of approximately $4.4 million.

Current wording

The decrease in R&D expenses for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 was primarily attributable to a decrease in costs related to development activities for Sildenafil Cream as a result of the completion of the Phase 2b RESPOND clinical study completed in June 2023, partially offset by increases in costs related to our ongoing pivotal Phase 3 clinical trial of Ovaprene and manufacturing and regulatory affairs activities for Ovaprene.

Previous wording

Royalty expenses for the six months ended June 30, 2024 related to our license agreement with MilanaPharm and our royalty interest financing agreement with UiE. There were no royalty expenses for the six months ended June 30, 2023 because we did not recognize any royalty revenue during that period.

Current wording

Royalty expenses for the nine months ended September 30, 2024 related to our license agreement with MilanaPharm and our royalty interest financing agreement with UiE. There were no royalty expenses for the nine months ended September 30, 2023 because we did not recognize any royalty revenue during that period.

Previous wording

For each of the six months ended June 30, 2024 and June 30, 2023, we accrued $50,000 of the $100,000 annual license maintenance fee payable under our license agreement related to DARE-HRT1.

Current wording

For each of the nine months ended September 30, 2024 and September 30, 2023, we accrued $75,000 of the $100,000 annual license maintenance fee payable under our license agreement related to DARE-HRT1.

Previous wording

The increase of $20.4 million in other income for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 was due to the proceeds received in April 2024 under the Royalty Purchase Agreements we entered into with XOMA, $22.0 million of which was recorded as income, net of approximately $1.6 million in transaction costs.

Current wording

The increase of $20.4 million in other income for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 was due to the proceeds received in April 2024 under the Royalty Purchase Agreements we entered into with XOMA, $22.0 million of which was recorded as income, net of approximately $1.6 million in transaction costs.

Previous wording

The decrease of $1.4 million in other income (expense) for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 was primarily due to a loss on the disposal of a fixed asset of $0.6 million, interest expense related to the Royalty Interest Agreement in the current period of approximately $0.2 million, and decreased interest earned on cash balances in the current period.

Current wording

The decrease of $1.5 million in other income (expense) for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 was primarily due to a loss on the disposal of a fixed asset of $0.6 million, interest expense related to the Royalty Interest Agreement in the current period of approximately $0.6 million, and decreased interest earned on cash balances in the current period.

Previous wording

We prepared the accompanying condensed consolidated financial statements on a going concern basis, which assumes that we will realize our assets and satisfy our liabilities in the normal course of business. We have a history of losses from operations and, although we reported net income and positive cash flow from operations for the six months ended June 30, 2024 as a result of approximately $20.4 million of net proceeds we received from the sale in April 2024 of our rights to future royalty and milestone payments and revenue, we expect significant losses from operations, net losses and negative cash flows from operations for at least the next several years as we continue to develop and seek to bring to market our product candidates. At June 30, 2024, our accumulated deficit was approximately $165.1 million, our cash and cash equivalents were approximately $16.4 million, and our working capital was approximately $6.2 million. Based on our current operating plan estimates, we do not have sufficient cash to satisfy our working capital needs and other liquidity requirements over at least the next 12 months from the date of issuance of the accompanying condensed consolidated financial statements. These circumstances raise substantial doubt about our ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and reclassification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty of our ability to remain a going concern.

Current wording

We prepared the accompanying condensed consolidated financial statements on a going concern basis, which assumes that we will realize our assets and satisfy our liabilities in the normal course of business. We have a history of losses from operations and, although we reported net income and positive cash flow from operations for the nine months ended September 30, 2024 as a result of approximately $20.4 million of net proceeds we received from the sale in April 2024 of our rights to future royalty and milestone payments and revenue, we expect significant losses from operations, net losses and negative cash flows from operations for at least the next several years as we continue to develop and seek to bring to market our product candidates. At September 30, 2024, our accumulated deficit was approximately $169.8 million, our cash and cash equivalents were approximately $11.2 million, and our working capital was approximately $1.8 million. Based on our current operating plan estimates, we do not have sufficient cash to satisfy our working capital needs and other liquidity requirements over at least the next 12 months from the date of issuance of the accompanying condensed consolidated financial statements, even after taking into account the non-dilutive funding we expect to receive under our October 2024 grant agreement with the Foundation and as an October 2024 awardee of ARPA-H’s Sprint for Women’s Health and the additional capital we may raise under the equity line arrangement we established in October 2024. These circumstances raise substantial doubt about our ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and reclassification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty of our ability to remain a going concern.

Previous wording

Our cash and cash equivalents at June 30, 2024 represented funds received under our grant agreements related to DARE-LARC1 and bacteria-based live biotherapeutic product development, and such funds may be applied solely toward direct costs of such matters, other than approximately 10% of such funds, which may be applied toward general overhead and administration expenses that support our entire operations. For additional information about these grant agreements, see "—Deferred Grant Funding" and "—Grant Agreements," below.

Current wording

Our cash and cash equivalents at September 30, 2024 includes funds received under our grant agreements related to DARE-LARC1 and bacteria-based live biotherapeutic product development, and such funds may be applied solely toward direct costs of such matters, other than approximately 10% of such funds, which may be applied toward general overhead and administration expenses that support our entire operations. For additional information about these grant agreements, see "—Deferred Grant Funding" and "—Grant Agreements," below.

Previous wording

The majority of our operating expenses during a fiscal year are research and development expenses, a significant portion of which, excluding those funded by non-dilutive grants, are associated with the clinical development for our product candidates that have reached the human clinical study development phase. In large part, we can control the pace of advancement of our development programs and therefore, we can control the timing of when we incur most of our research and development expenses. We expect our primary uses of capital to be staff-related expenses, the cost of clinical trials and regulatory activities related to our product candidates, costs associated with contract manufacturing services and third-party clinical research and development services, payments to third-party licensors upon the occurrence of development milestones for our product candidates pursuant to terms of the agreements under which we acquired or in-licensed rights to those programs, legal expenses, other regulatory expenses and general overhead costs. Our future funding requirements could also include significant costs related to commercialization of our product candidates, if approved, depending on the type, nature and terms of commercial collaborations we establish, and in particular, if we determine to engage in commercialization activities directly as opposed to through a third-party collaborator. We anticipate our general and administrative expenses for 2024 will be less than our general and administrative expenses for 2023.

Current wording

The majority of our operating expenses during a fiscal year are R&D expenses, a significant portion of which, excluding those funded by non-dilutive grants, are associated with the clinical development for our product candidates that have reached the human clinical study development phase. In large part, we can control the pace of advancement of our development programs and therefore, we can control the timing of when we incur most of our R&D expenses. We expect our primary uses of capital to be staff-related expenses, the cost of clinical trials and regulatory activities related to our product candidates, costs associated with contract manufacturing services and third-party clinical R&D services, payments to third-party licensors upon the occurrence of development milestones for our product candidates pursuant to terms of the agreements under which we acquired or in-licensed rights to those programs, legal expenses, other regulatory expenses and general overhead costs. Our future funding requirements could also include significant costs related to commercialization of our product candidates, if approved, depending on the type, nature and terms of commercial collaborations we establish, and in particular, if we determine to engage in commercialization activities directly as opposed to through a third-party collaborator. We anticipate our general and administrative expenses for 2024 will be less than our general and administrative expenses for 2023.

Previous wording

We closely monitor our cash resources and we have implemented cost-savings measures, primarily by controlling our spend on research and development activities related to clinical-stage programs other than Ovaprene and Sildenafil Cream. Our research and development expenses for 2024, until we secure additional capital to fund our operating needs, will continue to be primarily associated with manufacturing activities in connection with our ongoing pivotal Phase 3 clinical study of Ovaprene and activities, including regulatory affairs activities, related to advancing Sildenafil Cream toward a Phase 3 clinical study. However, we plan to continue to advance preclinical development of DARE-LARC1, the costs of which are being supported by grant funding. Based on anticipated costs for two Phase 3 studies of Sildenafil Cream, we will need to raise significant additional capital to advance Sildenafil Cream through Phase 3 development. We currently anticipate our research and development expenses for 2024 will be less than our research and development expenses for 2023.

Current wording

We closely monitor our cash resources and we implemented cost-savings measures in 2024, primarily by controlling our spend on R&D activities related to clinical-stage programs other than Ovaprene and Sildenafil Cream. Our R&D expenses for the remainder of 2024 and into 2025, until we secure additional capital to fund our operating needs, will continue to be primarily associated with our ongoing pivotal Phase 3 clinical study of Ovaprene and with advancing Sildenafil Cream toward a Phase 3 clinical study. However, we plan to continue to advance preclinical development of DARE-LARC1, the costs of which are being supported by grant funding, and, with the support of ARPA-H’s Sprint for Women’s Health funding, to advance development of DARE-HPV toward a Phase 2 clinical study. Based on anticipated costs for two Phase 3 studies of Sildenafil Cream, we will need to raise significant additional capital to advance Sildenafil Cream through Phase 3 development. We currently anticipate our R&D expenses for 2024 will be less than our R&D expenses for 2023.

Previous wording

Historically, the cash used to fund our operations has come from a variety of sources and predominantly from sales of shares of our common stock. We have also received a significant amount of cash through non-dilutive grants, strategic collaborations and royalty monetization transactions. We will continue to evaluate and may pursue a variety of capital raising options on an on-going basis, including sales of equity (including sales of our common stock in ATM offerings), debt financings, government or other grant funding, collaborations, structured financings, and strategic alliances or other similar types of arrangements. Many aspects of our ability to obtain additional capital are not entirely within our control and there can be no assurance that capital will be available when needed or that, if available, it will be obtained on terms favorable to us and our stockholders. Our ability to raise capital through sales of our common stock will depend on a variety of factors including, among others, market conditions, the trading price and volume of our common stock, our clinical and commercial developments, and investor sentiment. In addition, macroeconomic factors and volatility in the financial market, which may be exacerbated in the short term by concerns over inflation, interest rates, economic recession, adverse developments affecting financial institutions or the financial services industry, impacts of the wars in Ukraine and the Middle East, strained relations between the U.S. and several other countries, and social and political discord and unrest in the U.S., among other things, may make equity or debt financings more difficult, more costly or more dilutive to our stockholders, and may increase competition for, or limit the availability of, funding from other potential third-party sources of capital, such as strategic collaborators and sources of grant funding. In addition, equity or debt financings may have a dilutive effect on the holdings of our existing stockholders, and debt financings may subject us to restrictive covenants, operational restrictions and security interests in our assets. If we raise capital through collaborations, structured financings, strategic alliances or other similar types of arrangements, we may be required to relinquish some or all of our rights to potential revenue or to intellectual property rights for our product candidates on terms that are not favorable to us.

Current wording

Historically, the cash used to fund our operations has come from a variety of sources and predominantly from sales of shares of our common stock. We have also received a significant amount of cash through non-dilutive grants, strategic collaborations and royalty monetization transactions. We will continue to evaluate and may pursue a variety of capital raising options on an on-going basis, including sales of equity (including sales of our common stock under our equity line arrangement and in ATM offerings), debt financings, government or other grant funding, collaborations, structured financings, and strategic alliances or other similar types of arrangements. Many aspects of our ability to obtain additional capital are not entirely within our control and there can be no assurance that capital will be available when needed or that, if available, it will be obtained on terms favorable to us and our stockholders. Our ability to raise capital through sales of our common stock will depend on a variety of factors including, among others, market conditions, the trading price and volume of our common stock, our clinical and commercial developments, and investor sentiment. In addition, macroeconomic factors and volatility in the financial market, which may be exacerbated in the short term by concerns over inflation, interest rates, economic recession, adverse developments affecting financial institutions or the financial services industry, impacts of the wars in Ukraine and the Middle East, strained relations between the U.S. and several other countries, and social and political discord and unrest in the U.S., among other things, may make equity or debt financings more difficult, more costly or more dilutive to our stockholders, and may increase competition for, or limit the availability of, funding from other potential third-party sources of capital, such as strategic collaborators and sources of grant funding. In addition, equity or debt financings may have a dilutive effect on the holdings of our existing stockholders, and debt financings may subject us to restrictive covenants, operational restrictions and security interests in our assets. If we raise capital through collaborations, structured financings, strategic alliances or other similar types of arrangements, we may be required to relinquish some or all of our rights to potential revenue or to intellectual property rights for our product candidates on terms that are not favorable to us.

Previous wording

We have received substantial funding under grant agreements related to DARE-LARC1 and DARE-LBT. Under these agreements, and under the agreement we received from the Foundation in January 2024 to fund activities related to bacteria-based live biotherapeutic product development, we generally receive grant funds before we incur the eligible expenses. Funds received that have not been spent are recorded both as cash and cash equivalents and as a deferred grant funding liability in our consolidated balance sheets. Our deferred grant funding liability also includes grant funds spent but not yet expensed in accordance with GAAP. As of June 30, 2024, our deferred grant funding liability was approximately $10.9 million, which primarily consisted of unspent funds for the DARE-LARC1 program. For more information about these grant agreements, see "—Grant Agreements" below, Note 2, Basis of Presentation and Summary of Significant Accounting Policies—Grant Funding to our consolidated financial statements in our 2023 10-K, and Note 10, Grant Awards-Other Non-Dilutive Grant Funding to our condensed consolidated financial statements contained in this report.

Current wording

We have received substantial funding under grant agreements with the Foundation, and we generally receive funds under those agreements before we incur the eligible expenses. Funds received that have not been spent are recorded both as cash and cash equivalents and as a deferred grant funding liability in our consolidated balance sheets. Our deferred grant funding liability also includes grant funds spent but not yet expensed in accordance with GAAP. As of September 30, 2024, our deferred grant funding liability was approximately $9.8 million, which primarily consisted of unspent funds for the DARE-LARC1 program. For more information about our grant agreements, see "—Grant Agreements" below, Note 2, Basis of Presentation and Summary of Significant Accounting Policies—Grant Funding to our consolidated financial statements in our 2023 10-K, and Note 10, Grant Awards-Other Non-Dilutive Grant Funding and Note 12, Subsequent Events to our condensed consolidated financial statements contained in this report.

Previous wording

Cash provided by operating activities for the six months ended June 30, 2024 included the net income of $6.2 million, decreased by non-cash stock-based compensation expense of approximately $1.2 million. Components providing operating cash were a decrease in prepaid expenses of approximately $2.6 million, a decrease in deposits of approximately $0.7 million, an increase in interest payable of approximately $0.2 million, a decrease in other receivables of approximately $75,000, and an increase in other non-current assets of approximately $36,000. Components reducing operating cash were a decrease in deferred grant funding of approximately $2.8 million, a decrease in accounts payable of approximately $1.5 million, a decrease in accrued expenses of approximately $1.4 million, and an increase in accounts receivable of approximately $28,000.

Current wording

Cash provided by operating activities for the nine months ended September 30, 2024 included net income of $1.5 million, increased by non-cash stock-based compensation expense of approximately $1.7 million. Components providing operating cash were a decrease in prepaid expenses of approximately $2.9 million, a decrease in other receivables of approximately $0.4 million, and an increase in interest payable of approximately $0.4 million. Components reducing operating cash were a decrease in deferred grant funding of approximately $4.0 million, a decrease in accounts payable of approximately $2.3 million, a decrease in accrued expenses of approximately $1.2 million, and a decrease in deposits of approximately $57,000.

Previous wording

Cash used in operating activities for the six months ended June 30, 2023 included the net loss of $16.8 million, decreased by non-cash stock-based compensation expense of approximately $1.3 million. Components providing operating cash were an increase in accounts payable of approximately $4.5 million, a decrease in other receivables of approximately $1.1 million, and an increase in deferred revenue of approximately $0.2 million related to XACIATO commercial product supply. Components reducing operating cash were a decrease in accrued expenses of approximately $6.7 million, a decrease in deferred grant funding of approximately $4.6 million, an increase in prepaid expenses of approximately $1.4 million, and a one-time cybersecurity fraud loss of $0.2 million to which we were subject, net of insurance reimbursement, which was recognized in general and administrative expenses.

Current wording

Cash used in operating activities for the nine months ended September 30, 2023 included the net loss of $25.1 million, decreased by non-cash stock-based compensation expense of approximately $1.9 million. Components providing operating cash were an increase in accounts payable of approximately $3.0 million, a decrease in other receivables of approximately $0.6 million, an increase in deferred revenue of approximately $0.2 million related to XACIATO commercial product supply, and a decrease in prepaid expenses of approximately $0.1 million. Components reducing operating cash were a decrease in accrued expenses of approximately $6.1 million, a decrease in deferred grant funding of approximately $2.6 million, an increase in deposits of approximately $1.8 million primarily related to deposits paid for the construction of capital equipment, an increase in other current assets of approximately $0.8 million primarily related to the financing of certain director and officer and other liability insurance premiums recorded as insurance financing payable, deferred financing costs related to our ATM sales agreement, and inventory of XACIATO commercial supply, and a one-time fraud loss of $0.2 million related to a "business email compromise fraud" to which we were subject, net of insurance reimbursement, which was recognized in general and administrative expenses.