Dare Bioscience, Inc.

Previous wording

See ITEM 1. “BUSINESS– Our Pipeline: Clinical-Stage Programs– Ovaprene®– Pivotal Phase 3 Clinical Study” in Part I of this report for a discussion of the impact of executive orders and other actions taken by the new U.S. presidential administration in the first quarter of 2025 on the Phase 3 clinical study of Ovaprene and NICHD’s ability to carry out its responsibilities under the CRADA.

Current wording

Our Pipeline: Clinical Stage and Pre-Clinical Stage Programs

Previous wording

•Ovaprene®, a hormone-free, monthly intravaginal contraceptive;

Current wording

Our product candidates are in various stages of development, from pre-clinical through a pivotal Phase 3 clinical study, and will require review and approval from the FDA, or a comparable foreign regulatory authority, prior to being marketed and sold. The most clinically advanced product candidates we are developing are: Ovaprene®, an investigational, hormone-free, monthly intravaginal contraceptive currently being evaluated in a pivotal Phase 3 clinical study. Sildenafil Cream, 3.6%, or Sildenafil Cream, an investigational cream formulation of sildenafil, the active ingredient in Viagra®, for topical administration for the treatment of female sexual arousal disorder, or FSAD; DARE-HRT1, an intravaginal ring designed to deliver combination menopausal hormone therapy, bio-identical 17β-estradiol and progesterone together, continuously over a 28-day period for the treatment of moderate to severe vasomotor symptoms, also known as hot flashes; DARE-VVA1, an investigational formulation of tamoxifen in a soft gelatin capsule for intravaginal administration as a hormone-free alternative to estrogen-based therapies for the treatment of moderate-to-severe dyspareunia, or pain during sexual intercourse; and DARE-HPV, an investigational, proprietary fixed-dose formulation of lopinavir and ritonavir in a soft gel vaginal insert for the treatment of genital human papillomavirus (HPV) infection in women as well as treatment of cervical intraepithelial neoplasia (also known as cervical dysplasia), and other HPV-related pathologies.

Previous wording

The first FDA-approved product to emerge from our portfolio is XACIATO. We achieved FDA approval of XACIATO three years after acquiring rights to the program. In 2022, we entered into an agreement with Organon, whereby Organon licensed exclusive worldwide rights to develop, manufacture and commercialize XACIATO. Organon commenced U.S. marketing of XACIATO in the fourth quarter of 2023 and, in January 2024, Organon announced that XACIATO was available nationwide. As discussed below, to provide funding for the development of the product candidates in our pipeline, in April 2024, we entered into an agreement with XOMA whereby we sold our rights to all royalty and potential milestone payments based on net sales of XACIATO under our agreement with Organon, net of our obligations to certain third parties, until XOMA receives a specified return on its investment, after which we will share equally in the royalty and milestone payments earned on net sales of XACIATO from Organon.

Current wording

The first FDA-approved product to emerge from our portfolio is XACIATO® (clindamycin phosphate) vaginal gel 2%, or XACIATO (pronounced zah-she-AH-toe). XACIATO was approved by the FDA in December 2021, three years after we acquired rights to the program, as a single-dose prescription medication for the treatment of bacterial vaginosis in females 12 years of age and older. In 2022, we licensed exclusive worldwide rights to develop, manufacture and commercialize XACIATO to Organon. In January 2024, Organon announced that XACIATO was available nationwide in the U.S. In April 2024, we sold our rights to all royalty and potential milestone payments based on net sales of XACIATO under our agreement with Organon to XOMA. See Note 3 “Strategic Agreements” and Note 13 “Royalty Purchase Agreements” to the consolidated financial statements included in this report for information regarding our exclusive license agreement with Organon and our royalty purchase agreements with XOMA, respectively.

Previous wording

Our primary operations consist of research and development activities to advance our portfolio of product candidates through late-stage clinical development and/or regulatory approval. During 2025, we are also taking action to bring our proprietary Sildenafil Cream formulation to market under Section 503B of the FDCA. Until we secure additional capital to fund our operating needs, we will focus our resources primarily on advancement of Ovaprene. 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 by non-dilutive funding, with respect to DARE-LARC1, through at least 2026, and with respect to DARE-HPV, through October 2026. See Note 15, "Grant Awards" to the accompanying consolidated financial statements for additional information.

Current wording

Our primary operations consist of research and development activities to advance our portfolio of product candidates through late-stage clinical development and/or regulatory approval, and commercialization activities for the 503B and consumer health products we seek to bring to market. Until we secure additional capital to fund our operating needs, we will focus our research and development resources primarily on advancement of Ovaprene. 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 by non-dilutive funding, with respect to DARE-LARC1, through December 2027, and with respect to DARE-HPV, through October 2026. See Note 15, "Grant Awards" to the accompanying consolidated financial statements for additional information.

Previous wording

Grant Agreement to Support the Ovaprene Phase 3 Study and Identification & Development of a New Non-Hormonal Contraceptive Candidate

Current wording

Receipt of Grant Funding Installment to Support the Ovaprene Phase 3 Study and Identification & Development of a New Non-Hormonal Contraceptive Candidate

Previous wording

In November 2024, we entered into a grant agreement with the Foundation, under which we were awarded a new grant of up to approximately $10.7 million to support (i) expansion of the number of study sites in the ongoing Phase 3 clinical trial of Ovaprene, and (ii) activities that will aid in the identification and development of a novel non-hormonal intravaginal contraceptive candidate, suitable for and acceptable to women in low- and middle-income country settings who need or would prefer to use such a product to avoid an unplanned pregnancy. We received an initial payment under the grant agreement of approximately $5.4 million in November 2024. Additional payments are contingent upon our achievement of specified development and reporting milestones during the term of the grant agreement, which extends through October 2026. See Note 15, "Grant Awards--Other Non-Dilutive Grant Funding--2024 Contraceptive Product Candidate Grant Agreement" to the accompanying financial statements for additional information regarding the grant agreement.

Current wording

In November 2025, we received a payment of $3.6 million as the latest installment under a grant of up to approximately $10.7 million to support (i) expansion of the number of study sites in the ongoing Phase 3 clinical trial of Ovaprene, and (ii) activities that will aid in the identification and development of a novel non-hormonal intravaginal contraceptive candidate, suitable for and acceptable to women in low- and middle-income country settings who need or would prefer to use such a product to avoid an unplanned pregnancy. Additional payments are contingent upon our achievement of specified development and reporting milestones during the term of the grant agreement, which extends through March 2027. See Note 15, "Grant Awards--Other Non-Dilutive Grant Funding--2024 Contraceptive Product Candidate Grant Agreement" to the accompanying consolidated financial statements for additional information regarding the grant agreement.

Previous wording

There may be significant future effects on the women's health sector and the pharmaceutical and biopharmaceutical industries as a result of federal policy and regulatory changes under the new U.S. presidential administration, including in areas relating to regulatory framework and oversight, research and development funding, drug pricing reform, global trade policy and tariffs, and others. We continue to monitor these developments, which could result in new opportunities as well as challenges. The potential effects of these changes on our business could be significant. Our business strategy has included seeking non-dilutive sources of funding and collaborations to support product development, and we have received federal government grants and awards in support of several of our development programs. Our pivotal Phase 3 study of Ovaprene and our DARE-HPV program are being significantly supported by federal government funding. Our pivotal Phase 3 study of Ovaprene is being conducted, in part, under our CRADA with NICHD, and advancement of our DARE-HPV program is being supported by federal government funding under our October 2024 subaward agreement with VentureWell and a December 2024 grant award from NIAID. Our subaward agreement will automatically terminate if the prime agreement from which the federal government funding flows is terminated and may be terminated for convenience by VentureWell if the prime agreement is materially changed in a way that would materially adversely affect VentureWell financially and, if so terminated, we would be paid only for milestones achieved up to the date of termination. As discussed in ITEM 1. "BUSINESS– Our Pipeline: Clinical-Stage Programs– Ovaprene®– Pivotal Phase 3 Clinical Study" in Part I of this report, executive orders and other actions taken by the U.S. presidential administration in the first quarter of 2025 have negatively impacted the Phase 3 study and NICHD's ability to carry out its responsibilities under the CRADA, and future developments, including relating to executive orders issued in January 2025, could have a material adverse impact on the study. Given the high level of uncertainty regarding federal policy and enforcement and regulatory changes under the new U.S. presidential administration and that circumstances are rapidly evolving, including as a result of legal challenges to federal government actions, we are not able to reasonably predict the potential impact on our business at this time.

Current wording

There may be significant future effects on the women's health sector and the pharmaceutical and biopharmaceutical industries as a result of federal policy and regulatory changes under the current U.S. presidential administration, including in areas relating to regulatory framework and oversight, research and development funding, drug pricing reform, global trade policy and tariffs, and others. Recent initiatives have resulted in material reductions in staffing levels at the FDA and NIH, including through workforce reductions and reorganizations, and have impacted the agencies’ ability to retain remaining key personnel and hire additional personnel, disrupting their ability to perform routine activities or function in the normal course. A prolonged federal government shutdown with additional agency staff furloughed or laid off could exacerbate these risks. With respect to the FDA, this may result in delays or limitations on our ability to obtain guidance from agency staff, slow review times for applications we submit to commence clinical studies and obtain requisite regulatory approvals in the future, and consequently, negatively impact the cost and timelines for developing and obtaining regulatory approval of our product candidates. Moreover, our business strategy has included seeking non-dilutive sources of funding and collaborations to support product development, and we have benefited significantly from federal government funding through grants and other agreements in support of several of our development programs, including Ovaprene and DARE-HPV. See Note 15 “Grant Awards” to the accompanying consolidated financial statements. Beginning in early 2025, the U.S. presidential administration took actions to freeze or terminate billions of dollars in NIH grants, and the future of the NIH’s budget and research funding remains highly uncertain. These actions have already begun to adversely affect the broader research and development funding environment, and our business, financial condition and operating results may be significantly adversely affected if existing grants or other arrangements supporting our development programs are frozen or terminated or we are unable to secure additional grants or other federal government funding in the future. Given the high level of uncertainty regarding federal policy and enforcement and regulatory changes and that circumstances are rapidly evolving, including as a result of legal challenges to recent federal government actions, we are not able to reasonably predict the full extent of the potential impact on our business at this time. We continue to monitor these evolving developments and conditions and their potential impacts on our business, financial condition, and results of operations, and will attempt to adjust our plans, as appropriate, to mitigate risks. For additional information, see the risk factors described in Item 1A. Risk Factors of this report.

Previous wording

In the future, we may generate revenue from license fees, milestone payments, and research and development payments in connection with strategic collaborations, as well as product sales of future products, if any. Our ability to generate such revenue will depend on the extent to which clinical development of our product candidates is successful and we or a strategic collaborator receive regulatory approvals to market such product candidates, as well as the eventual commercial success of the approved products. If we fail to complete the development of our product candidates in a timely manner, or to receive regulatory approval for such product candidates, our ability to generate future revenue and our results of operations would be materially adversely affected.

Current wording

In the future, we may generate revenue from license fees, milestone payments, and research and development payments in connection with strategic collaborations, and from product sales, including sales of 503B compounded products, consumer health products, and FDA-approved products, if any. We expect to begin recording revenue from sales of DARE to PLAY and Flora Sync LF5 in the second quarter of 2026. Our ability to generate such revenue will depend on the extent to which we are successful in executing against our Section 503B and consumer health product business models, the extent to which the clinical development of our product candidates is successful, and whether we or a strategic collaborator receive the regulatory approvals necessary to market such product candidates, as well as the eventual commercial success of any FDA-approved products. If we fail to successfully achieve any of the foregoing, our ability to generate future revenue and our results of operations would be materially adversely affected.

Previous 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. We expect our R&D expenses will continue to represent the majority of our operating expenses for at least the next twelve months. R&D expenses consist primarily of:

Current wording

We expect our R&D expenses will continue to represent the majority of our operating expenses, on a pre-contra R&D expenses basis, for at least the next twelve months. R&D expenses consist primarily of:

Previous wording

At any one time, we are working on multiple programs at various stages of development. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each development program on an ongoing basis based on our cash resources and in response to the results of ongoing and future clinical trials and preclinical studies, regulatory developments, and our ongoing assessments as to the commercial potential of each product candidate. We generally track direct R&D costs on a specific basis and will present direct costs for our key development programs on a program-by-program basis. We plan to present direct costs for all other programs on a consolidated basis generally by stage of development. Specifically, we will present consolidated direct costs for (a) such programs that are in (i) advanced clinical development (Phase 2-ready to Phase 3), (ii) Phase 1 clinical development or that we believe are Phase 1-ready, and (iii) preclinical stage, and (b) other development programs. We do not track indirect costs on a program-by-program basis because those costs generally are deployed across multiple development programs.

Current wording

We generally track direct R&D costs on a specific basis and present direct costs for our key development programs on a program-by-program basis. We present direct costs for all other programs on a consolidated basis generally by stage of development. Specifically, we present consolidated direct costs for (a) such programs that are in (i) advanced clinical development (Phase 2-ready to Phase 3), (ii) Phase 1 clinical development or that we believe are Phase 1-ready, and (iii) preclinical stage, and (b) other development programs. We do not track indirect costs on a program-by-program basis because those costs generally are deployed across multiple development programs.

Previous 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 the accompanying consolidated financial statements. For the years ended December 31, 2024 and 2023, we recognized contra-research and development expense of approximately $8.8 million and $9.3 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 the accompanying consolidated financial statements. For the years ended December 31, 2025 and 2024, we recognized contra-R&D expense of approximately $16.4 million and $8.8 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. 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 any products we develop.

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. 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 any products we develop.

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 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.

Current wording

SG&A expenses consist of personnel costs, facility expenses, expenses for outside professional services, including legal, audit and accounting services, commercial-readiness expenses, including for Section 503B compounded drug products and consumer health products, 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

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations and cash flows is discussed in Note 2 to our audited financial statements included elsewhere in this Annual Report on Form 10-K.

Current wording

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations and cash flows is discussed in Note 2 to the accompanying consolidated financial statements.

Previous wording

License Fee Revenue. If the license to our intellectual property is determined to be distinct from the other performance obligations identified in a contract, we recognize revenues from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. To date, we have recognized $11.0 million in license fee revenue, all from payments received under our license agreement with Organon to commercialize XACIATO.

Current wording

License Fee Revenue. If the license to our intellectual property is determined to be distinct from the other performance obligations identified in a contract, we recognize revenues from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. To date, we have recognized $12.8 million in license fee revenue, all of which, other than $1.0 million recognized upon the termination of the license agreement with Bayer, is from payments received under our license agreement with Organon to commercialize XACIATO.

Previous wording

Royalties. For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and for which the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, we have recognized approximately $18,000 of royalty revenue.

Current wording

Royalties. For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and for which the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, we have recognized approximately $26,000 of royalty revenue.

Previous wording

On April 29, 2024, we entered into and closed a traditional royalty purchase agreement and a synthetic royalty purchase agreement with XOMA (US) LLC (“XOMA”) pursuant to which we sold our right, title and interest in the following to XOMA (i) all future net royalty and potential net milestone payments we would otherwise receive from Organon based on net sales of XACIATO, (ii) a portion of future net sales of Ovaprene and a portion of a potential future milestone payment we may receive under our license agreement with Bayer related to Ovaprene, and (iii) a portion of future net sales of Sildenafil Cream. We received $22.0 million from XOMA in connection with entering into the royalty purchase agreements. Under the terms of the royalty purchase agreements, if XOMA receives total payments under the royalty purchase agreements equal to an amount that exceeds $88.0 million, XOMA will pay $11.0 million to us for each successive $22.0 million XOMA receives under the royalty purchase agreements. If we earn any such payments, they will be accounted for as variable consideration under ASC 606, Revenue Recognition, and will be recorded as income when such payments are received.

Current wording

On April 29, 2024, we entered into and closed a traditional royalty purchase agreement and a synthetic royalty purchase agreement with XOMA pursuant to which we sold our right, title and interest in the following to XOMA (i) all future net royalty and potential net milestone payments we would otherwise receive from Organon based on net sales of XACIATO, (ii) a portion of future net sales of Ovaprene and a portion of the $20.0 million payment that we could have potentially received under our since terminated license agreement with Bayer relating to Ovaprene, and (iii) a portion of future net sales of Sildenafil Cream. We received $22.0 million from XOMA in connection with entering into the royalty purchase agreements. Under the terms of the royalty purchase agreements, if XOMA receives total payments under the royalty purchase agreements equal to an amount that exceeds $88.0 million, XOMA will pay $11.0 million to us for each successive $22.0 million XOMA receives under the royalty purchase agreements. If we earn any such payments, they will be accounted for as variable consideration under ASC 606, Revenue Recognition, and will be recorded as income when such payments are received.

Previous wording

We evaluated the expected cash flows to XOMA from royalties and milestone payments expected to be earned on XACIATO, Ovaprene and Sildenafil Cream over the period that we expect it will take for XOMA to receive total payments of $88.0 million under the royalty purchase agreements, and determined to allocate the $22.0 million we received from XOMA in connection with entering into the royalty purchase agreements, net of transaction costs of approximately $1.6 million, to the traditional royalty purchase agreement for XACIATO, and none of it to the synthetic royalty purchase agreement for Ovaprene and Sildenafil Cream. Until such time that we are certain of commercialization, the cash flows to XOMA from royalties and milestone payments expected to be earned on Ovaprene and Sildenafil Cream are expected to be de minimis over the period that we expect it will take for XOMA to receive total payments of $88.0 million under the royalty purchase agreements because, unlike XACIATO, Ovaprene and Sildenafil Cream are not commercial assets at this time.

Current wording

We evaluated the expected cash flows to XOMA from royalties and milestone payments expected to be earned on XACIATO, Ovaprene and Sildenafil Cream over the period that we expected it would take for XOMA to receive total payments of $88.0 million under the royalty purchase agreements, and determined to allocate the $22.0 million we received from XOMA in connection with entering into the royalty purchase agreements, net of transaction costs of approximately $1.6 million, to the traditional royalty purchase agreement for XACIATO, and none of it to the synthetic royalty purchase agreement for Ovaprene and Sildenafil Cream. The cash flows to XOMA from royalties and milestone payments expected to be earned on Ovaprene and Sildenafil Cream were expected to be de minimis over the period that we expected it would take for XOMA to receive total payments of $88.0 million under the royalty purchase agreements because, unlike XACIATO, Ovaprene and Sildenafil Cream were not commercial assets at the time the evaluation was made.

Previous wording

We determined that the traditional royalty purchase agreement represents a complete sale of a nonfinancial asset (our right, title and interest in and to future payments related to commercial sales of XACIATO) for which XOMA bears all benefit and for which we have no obligations or involvement going forward, and therefore should be accounted for within the scope of Accounting Standards Codification ("ASC") 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets. The $22.0 million net of transaction costs of approximately $1.6 million was recorded as other income on our consolidated statements of operations and comprehensive loss.

Current wording

We determined that the traditional royalty purchase agreement represented a complete sale of a nonfinancial asset (our right, title and interest in and to future payments related to commercial sales of XACIATO) for which XOMA would bear all benefit and for which we had no obligations or involvement going forward, and therefore should be accounted for within the scope of Accounting Standards Codification ("ASC") 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets. The $22.0 million net of transaction costs of approximately $1.6 million was recorded as other income on our consolidated statements of operations and comprehensive loss for the year ended December 31, 2024.

Previous wording

The decrease of approximately $3.0 million in general and administrative expenses from 2023 to 2024 was primarily attributable to decreases in (i) commercial-readiness expenses of approximately $1.6 million, (ii) personnel costs of approximately $0.6 million due to reduced headcount, (iii) stock-based compensation expense of approximately $0.3 million, (iv) 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, and (v) professional services expenses of approximately $0.2 million.

Current wording

The decrease of approximately $0.4 million in SG&A expenses from 2024 to 2025 was primarily attributable to decreases in (i) stock-based compensation expense of approximately $0.5 million, (ii) personnel costs of approximately $0.3 million due to reduced compensation expense, and (iii) general corporate overhead expenses of approximately $0.3 million. Such decreases were partially offset by increases in commercial-readiness expenses of approximately $0.4 million primarily for DARE to PLAY and professional services expenses of approximately $0.3 million.

Previous wording

The $20.4 million of other net income for 2024 represents the $22.0 million payment to us in April 2024 under the Royalty Purchase Agreements, net of approximately $1.6 million in transaction costs.

Current wording

The $20.4 million of other net income for 2024 represents the $22.0 million payment to us in April 2024 under the royalty purchase agreements we entered into with XOMA, net of approximately $1.6 million in transaction costs.

Previous wording

The decrease of $1.8 million in other income (expense) for 2024 as compared to 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 2024 of approximately $0.8 million, and decreased interest earned on cash balances in 2024.

Current wording

The increase of $1.1 million in other income (expense) for 2025 as compared to 2024 was primarily due to increased interest earned on cash balances in 2025 and the receipt in the current year of approximately $0.3 million of employee retention credits for applications filed during 2023, offset by a loss on the disposal of a fixed asset of $0.6 million in 2024.

Previous wording

At December 31, 2024, we had an accumulated deficit of approximately $175.3 million, cash and cash equivalents of approximately $15.7 million, and a working capital deficit of approximately $3.2 million. We will need additional capital to fund our operating needs into the third quarter of 2025 and to meet our current obligations as they become due. All of our cash and cash equivalents at December 31, 2024 represented funds received under grant agreements that generally may be applied solely toward direct costs of carrying out the respective projects under those grant agreements.

Current wording

At December 31, 2025, we had cash and cash equivalents of approximately $24.7 million and working capital of approximately $3.4 million. We will need additional capital to fund our operating needs through the fourth quarter of 2026 and to meet our current obligations as they become due. Our cash and cash equivalents at December 31, 2025 included funds received under grant agreements that generally may be applied solely toward direct costs for the funded project under those grant agreements other than an approximately 5% to 22% indirect cost allowance, and as of December 31, 2025, our deferred grant funding liability was approximately $19.7 million, substantially all of which consisted of funds intended to support the DARE-LARC1 program, the Ovaprene Phase 3 clinical study, and the DARE-HPV program. For more information about these grant agreements, see "—Contractual Obligations and Other Commitments—Grant Agreements" below, and Note 2 "Basis of Presentation and Summary of Significant Accounting Policies—Grant Funding" and Note 15 "Grant Awards—Other Non-Dilutive Grant Funding" to the accompanying consolidated financial statements.

Previous wording

We are in ongoing discussions with potential third-party sources of additional capital, and we will continue to evaluate and may pursue a variety of capital raising options, including sales of equity (including sales of our common stock under our equity line arrangement and in ATM offerings (see “—Capital Resources,” below)), debt financings, government or other grant funding, collaborations, structured financings, and strategic alliances or other similar types of arrangements. However, our ability to raise additional capital will depend on a variety of factors, many aspects of which 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. Raising additional capital may cause substantial dilution to our stockholders, restrict our operations or require us to relinquish rights in our technologies or product candidates and their future revenue streams. See the risk factors under “Risks Related to Our Financial Position and Capital Needs” in ITEM 1A. RISK FACTORS of this report.

Current wording

In addition to our ongoing Regulation A offering, we will continue to evaluate and may pursue various other capital raising options, including sales of equity, debt financings, government or other grant funding, collaborations, structured financings, and commercial collaborations or other strategic transactions. Our ability to obtain additional capital, including through our ongoing Regulation A offering, and the timing and terms thereof, depend on various factors, many aspects of which are not entirely within our control, and there can be no assurance that capital will be available when needed or, if available, on terms favorable to us and our stockholders. Raising additional capital may cause substantial dilution to our stockholders, restrict our operations or require us to relinquish rights in our technologies or product candidates and their future revenue streams. If we cannot raise capital when needed, on favorable terms or at all, we will need to reevaluate our planned operations and may need to delay, scale back or eliminate some or all of our product candidate programs and/or reduce expenses.

Previous wording

We prepared the accompanying 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 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. We are dependent on securing substantial additional capital from one or more third-party sources 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 consolidated financial statements. These circumstances raise substantial doubt about our ability to continue as a going concern. The accompanying 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

At December 31, 2025, our accumulated deficit was approximately $188.7 million, and we had a net loss of approximately $13.4 million and negative cash flows from operations of approximately $9.9 million for the year ended December 31, 2025. Because we are in the early stages of executing against our Section 503B compounding and consumer health products business strategies and, as an organization, we have no experience in or infrastructure for commercializing products, both the timing and amount of potential revenue we may generate remain uncertain. As a result, we may continue to incur significant losses from operations and negative cash flows from operations for the next several years, and may never generate sufficient revenues to finance our operations or achieve profitability. Based on our current analysis of the conditions described above, there is substantial doubt about our ability to continue as a going concern within the 12-month period from the issuance date of the accompanying consolidated financial statements. The accompanying consolidated financial statements were prepared on a going concern basis, which assumes that we will realize our assets and satisfy our liabilities in the normal course of business. The accompanying 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

We expect our operating expenses for the foreseeable future to continue to be R&D expenses and general and administrative expenses consistent with the nature of such expenses described above under “Financial Overview.” Our future expenses 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. Our future capital requirements are difficult to predict because they will depend on many factors that are highly variable and difficult to predict, including, but not limited to, those discussed under “Risks Related to Our Financial Position and Capital Needs” in ITEM 1A. RISK FACTORS of this report. We cannot accurately determine the duration and completion costs of our development programs, or if, when and to what extent we will generate revenue from any products we develop.

Current wording

We expect our operating expenses will increase substantially in the future as we continue to develop and seek FDA approval for our product candidates and expand our capabilities to support our 503B compounding and consumer health business strategies. Our future capital requirements are difficult to predict because they will depend on many factors that are highly variable and difficult to predict, including, but not limited to, those discussed in the risk factors in Part I, Item 1A of this report under “Risks Related to Our Financial Position and Capital Needs.”

Previous wording

We have a sales agreement with Stifel, Nicolaus & Company, Incorporated, or Stifel, to sell shares of our common stock from time to time through an ATM offering under which Stifel acts as our agent. During 2024, we sold 109,655 shares of our common stock under the sales agreement for net proceeds of approximately $0.5 million. Shares of our common stock sold under the sales agreement will be offered and sold under our shelf registration statement on Form S-3 (File No. 333-278380), declared effective by the SEC on May 10, 2024, the base prospectus included therein and the prospectus supplement thereto dated May 10, 2024 relating to the offering of up to $18.1 million of shares of our common stock, and any subsequent prospectus supplement related to the offering of shares of our common stock under the sales agreement.

Current wording

We have a sales agreement with Stifel, Nicolaus & Company, Incorporated, or Stifel, to sell shares of our common stock from time to time through an ATM offering under which Stifel acts as our agent. During 2025, we sold 4,329,116 shares of our common stock under the sales agreement for net proceeds of approximately $17.6 million. Shares of our common stock sold under the sales agreement were offered and sold under our shelf registration statement on Form S-3 (File No. 333-278380), declared effective by the SEC on May 10, 2024. Because the market value of our outstanding shares of common stock held by non-affiliates, or our public float, is less than $75.0 million, our use of a shelf registration statement is currently limited by what is known as the SEC’s “baby shelf rule” to one-third of our public float in any 12-month period. Because of the "baby shelf rule" and based on sales of shares of our common stock under our ATM sales agreement, we do not expect to sell any additional shares under our ATM sales agreement during the approximately 12-month period from July 2025, unless and until our public float exceeds approximately $54.0 million, as determined in accordance with SEC rules.

Previous wording

We have a purchase agreement with Lincoln Park under which, subject to the conditions thereof, we have the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase, up to $15.0 million in shares of our common stock. Such sales of our common stock to Lincoln Park, if any, will be subject to certain limitations, and may occur from time to time, at our sole discretion, over the 24-month period commencing on November 27, 2024. We did not sell any shares of our common stock under this purchase agreement during 2024. See “—Recent Events—Equity Line,” above.

Current wording

We have a purchase agreement with Lincoln Park Capital Fund, LLC, or Lincoln Park, under which, subject to the conditions thereof, we have the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase, up to $15.0 million in shares of our common stock. Such sales of our common stock to Lincoln Park, if any, are subject to certain limitations, and may occur from time to time, at our sole discretion, over the 24-month period commencing on November 27, 2024. We sold 1,470,000 shares of our common stock under this purchase agreement during 2025 for net proceeds of approximately $3.1 million. As of the filing date of this report, due to the limitations in the purchase agreement on the number of shares we can sell at an average price of less than $3.59, unless we obtain stockholder approval to do so, we do not expect to sell any more shares to Lincoln Park. See Note 9 "Stockholders’ Equity—Equity Line " to the accompanying consolidated financial statements for additional information regarding these limitations.

Previous wording

Cash used in operating activities during the year ended December 31, 2023 included the net loss of $30.2 million, decreased by non-cash stock-based compensation expense of approximately $2.5 million. Components providing operating cash were an increase in accounts payable of approximately $1.4 million, a decrease in other receivables of approximately $0.8 million, and a decrease in prepaid expenses of approximately $0.5 million. Components reducing operating cash were a decrease in accrued expenses of approximately $8.3 million, a decrease in deferred grant funding of approximately $4.6 million, an increase in deposits of $1.2 million primarily related to deposits paid for the construction of capital equipment, and a decrease in other non-current assets of approximately $10,000.

Current wording

Cash used in operating activities during the year ended December 31, 2025 included the net loss of $13.4 million, decreased by non-cash stock-based compensation expense of approximately $1.5 million. Changes in operating assets and liabilities included a decrease in deferred revenue of $1.0 million related to revenue recognized during the period for amounts previously received, which reduced operating cash. Components providing operating cash were an increase in deferred grant funding of approximately $3.1 million, a decrease in prepaid expenses of approximately $0.7 million, and an increase in interest payable of approximately $0.6 million related to our royalty interest financing agreement with UiE. Components reducing operating cash were (i) a decrease in accrued expenses of approximately $2.3 million primarily as a result of prior year accruals not present in the current year including a $1.0 million milestone due under a license agreement, approximately $0.5 million related to the construction of capital equipment, and approximately $0.8 million of accrued bonus expense, (ii) an increase in other receivables of approximately $0.3 million, and (iii) a decrease in accounts payable of approximately $0.3 million.

Previous wording

Cash used in operating activities during the year ended December 31, 2024 included the net loss of $4.1 million, decreased by non-cash stock-based compensation expense of approximately $2.2 million. Components providing operating cash were a decrease in prepaid expenses of approximately $3.6 million, an increase in deferred grant funding of approximately $2.8 million, a decrease in other receivables of approximately $0.7 million, an increase in interest payable of approximately $0.5 million related to the Royalty Interest Financing Agreement, an increase in accrued expenses of $0.2 million, and a decrease in deposits of $0.4 million. Components reducing operating cash were a decrease in accounts payable of approximately $1.9 million and a decrease in other non-current assets of approximately $34,000.

Current wording

Cash provided by operating activities during the year ended December 31, 2024 included the net loss of $4.1 million, decreased by non-cash stock-based compensation expense of approximately $2.2 million. Components providing operating cash were a decrease in prepaid expenses of approximately $3.6 million, an increase in deferred grant funding of approximately $2.8 million, a decrease in other receivables of approximately $0.7 million, an increase in interest payable of approximately $0.5 million related to our royalty interest financing agreement with UiE, an increase in accrued expenses of $0.2 million, and a decrease in deposits of $0.4 million. Components reducing operating cash were a decrease in accounts payable of approximately $1.9 million and a decrease in other non-current assets of approximately $34,000.

Previous wording

Net cash used in investing activities during the years ended December 31, 2024 and December 31, 2023 was related to purchases of property and equipment of approximately $573,000 and $629,000, respectively.

Current wording

Net cash used in investing activities during the years ended December 31, 2025 and December 31, 2024 was related to purchases of property and equipment of approximately $0.4 million and $0.6 million, respectively.

Previous wording

Net cash provided by financing activities during the year ended December 31, 2024 was approximately $0.4 million and primarily consisted of proceeds from (i) the sale of our common stock under our ATM sales agreement and (ii) the financing of certain director and officer and other liability insurance premiums, partially offset by payments on the insurance financing payable.

Current wording

Net cash provided by financing activities during the year ended December 31, 2024 primarily consisted of proceeds from (i) the sale of our common stock under our ATM sales agreement and (ii) the financing of certain director and officer and other liability insurance premiums, partially offset by payments on the insurance financing payable.

Previous wording

We have assembled our product pipeline primarily through acquisitions, in-license agreements, and other collaborations. We agreed to make royalty and milestone payments, and in some cases annual license fee payments, under the license and development agreements related to XACIATO, Ovaprene, and Sildenafil Cream and under other agreements related to our other clinical and preclinical candidates. The amount and timing of most of these payments are difficult to predict because the timing of milestone payments for pre-commercial programs generally depends on the progress of and success in development of a particular program, which is subject to many risks and uncertainties as discussed elsewhere in this report and difficult to predict, and the timing and amount of royalty and milestone payments related to commercial products generally depends on their commercial success, which may, as it is with XACIATO, be outside of our control. During 2025, based on our current expectations regarding the progress of development of our product candidates and sales of XACIATO, we expect approximately $0.1 million of such payments to upstream licensors to become payable. With respect to our license agreement relating to XACIATO, royalties payable by us to upstream licensors will be funded by royalty payments made by our licensee, Organon. For further discussion of these potential payments, see Note 3 "Strategic Agreements—Strategic Agreements for Pipeline Development" to the accompanying consolidated financial statements.

Current wording

We have assembled our pipeline primarily through acquisitions, in-license agreements, and other collaborations. We agreed to make royalty and milestone payments, and in some cases annual license fee payments, under the license and development agreements under which we acquired rights to intellectual property from third parties. For information about these obligations see Note 3 "Strategic Agreements—Strategic Agreements for Pipeline Development" to the accompanying consolidated financial statements. The amount and timing of most of these payments are difficult to predict because the timing of milestone payments for pre-commercial programs generally depends on the progress of and success in development of a particular program, which is subject to many risks and uncertainties as discussed elsewhere in this report and difficult to predict, and the timing and amount of royalty and milestone payments related to commercial products generally depends on their commercial success, which may, as it is with XACIATO, be out of our control.

Previous wording

For information regarding our grant agreements with the Foundation, see "--Deferred Grant Funding," above, Note 2, "Basis of Presentation and Summary of Significant Accounting Policies—Grant Funding" and Note 15, "Grant Awards-Other Non-Dilutive Grant Funding" to the accompanying consolidated financial statements.

Current wording

For information regarding our grant agreements with the Foundation, see "--Deferred Grant Funding," above, and Note 2, "Basis of Presentation and Summary of Significant Accounting Policies—Grant Funding" and Note 15, "Grant Awards-Other Non-Dilutive Grant Funding" to the accompanying consolidated financial statements.

Previous wording

In April 2024, we entered into a traditional royalty purchase agreement and a synthetic royalty purchase agreement with XOMA (which, together, we refer to as the Royalty Purchase Agreements) pursuant to which we sold our right, title and interest in the following to XOMA: (a) all of the royalties and potential milestone payments we would otherwise have the right to receive from and after April 1, 2024 under our exclusive license agreement with Organon based on net sales of XACIATO, net of our obligations to upstream licensors and UiE (such net amount we refer to as the Purchased Receivables); (b) a portion of a potential future $20.0 million payment from Bayer under our license agreement relating to Ovaprene and a portion of future net sales of Ovaprene; and (c) a portion of future net sales of Sildenafil Cream (such amounts described in the foregoing clauses (b) and (c) we collectively refer to as the Revenue Participation Right). We received $22.0 million from XOMA in connection with entering into the Royalty Purchase Agreements. If XOMA receives total payments equal to an amount that exceeds $88.0 million, XOMA will pay $11.0 million to us for each successive $22.0 million XOMA receives under the Royalty Purchase Agreements.

Current wording

In April 2024, we entered into a traditional royalty purchase agreement and a synthetic royalty purchase agreement with XOMA pursuant to which, among other things, we sold our right, title and interest in the following to XOMA: (a) all of the royalties and potential milestone payments we would otherwise have the right to receive from and after April 1, 2024 under our exclusive license agreement with Organon based on net sales of XACIATO, net of our obligations to upstream licensors and UiE; and (b) a portion of future net sales of Ovaprene, Sildenafil Cream and DARE to PLAY.

Previous wording

In December 2023, we entered into a royalty interest financing agreement with UiE pursuant to which we sold an interest in the royalty and milestone payments we are entitled to receive in respect of net sales of XACIATO under our license agreement with Organon and received a payment of $5.0 million from UiE. We have not elected to receive any of the up to $7.0 million in potential additional payments from UiE under the agreement, and we cannot do so without XOMA’s prior written consent. In exchange for any payments to us from UiE under the agreement, we agreed to make payments to UiE out of royalty and milestone payments earned on net sales of XACIATO from Organon, net of our obligations to upstream licensors, until UiE receives a specified return on its investment. As described above, XOMA, at its sole cost and discretion, may repay in full and retire all of our payment obligations to UiE under the royalty interest financing agreement.

Current wording

In December 2023, we entered into a royalty interest financing agreement with UiE pursuant to which we sold to UiE an interest in the royalty and milestone payments we are entitled to receive in respect of net sales of XACIATO under our license agreement with Organon. In exchange for any payments to us from UiE under the agreement, we agreed to make payments to UiE out of royalty and milestone payments earned on net sales of XACIATO from Organon, net of our obligations to upstream licensors, until UiE receives a specified return on its investment, or using our other sources of assets or income to complete such payments if UiE has not received the specified return on its investment by the end of 2035. We have the right to make prepayments on or pay in full and retire all of our payment obligations to UiE.

Previous wording

We enter into contracts in the normal course of business with various third parties for research studies, clinical trials, testing and other services. These contracts generally provide for termination upon notice, and we do not believe that our non-cancelable obligations under these agreements are material.

Current wording

We enter into contracts in the normal course of business with various third parties for research studies, clinical trials, testing and other services, and with Section 503B-registered outsourcing facilities, dispensing pharmacies, telehealth providers, and other third parties to help bring our proprietary formulations to market. These contracts generally provide for termination upon notice, and we do not believe that our non-cancelable obligations under these agreements are material.