Lipocine Inc

Previous wording

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto and other financial information included elsewhere in this report.

Current wording

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto and other financial information included elsewhere in this Annual Report. As used in the discussion below, “we,” “our,” and “us” refers to the historical financial results of Lipocine.

Previous wording

We are a biopharmaceutical company focused on leveraging our proprietary Lip’ral platform to develop differentiated products through the oral delivery of previously difficult to deliver molecules, focused on treating Central Nervous System (“CNS”) disorders. Our proprietary delivery technologies are designed to improve patient compliance and safety through orally available treatment options. Our primary development programs are based on oral delivery solutions for poorly bioavailable drugs. We have a portfolio of differentiated innovative product candidates that target high unmet needs for neurological and psychiatric CNS disorders, liver diseases, and hormone supplementation for men and women.

Current wording

We are a biopharmaceutical company focused on leveraging our proprietary Lip’ral platform to develop differentiated products through the oral delivery of previously difficult to deliver molecules. Our proprietary delivery technologies are designed to improve patient compliance and safety through orally available treatment options. Our primary development programs are based on oral delivery solutions for poorly bioavailable drugs. We have a portfolio of differentiated innovative product candidates that target high unmet needs for neurological and psychiatric CNS disorders, liver diseases, and hormone supplementation for men and women.

Previous wording

We entered into a license agreement for the development and commercialization our product candidate, TLANDO®, an oral testosterone replacement therapy (“TRT”) comprised of testosterone undecanoate (“TU”). On January 12, 2024, we entered into a license agreement (the “Verity License Agreement”) with Verity Pharmaceuticals, Inc. (“Verity” or our “Licensee”), pursuant to which we granted to Verity an exclusive, royalty-bearing, sublicensable right and license to develop and commercialize the TLANDO product for TRT in the U.S. and Canada. Any FDA required post-marketing studies will also be the responsibility of our Licensee, Verity. On March 28, 2022, the FDA approved TLANDO as a TRT in adult males for conditions associated with a deficiency of endogenous testosterone, also known as hypogonadism. On June 7, 2022, our former commercial partner Antares (a wholly owned subsidiary of Halozyme) announced the commercial launch of TLANDO, an oral treatment indicated for testosterone replacement therapy in adult males for conditions associated with a deficiency or absence of endogenous testosterone (primary or hypogonadotropic hypogonadism).

Current wording

We entered into a license agreement for the development and commercialization our product candidate, TLANDO®, an oral testosterone replacement therapy comprised of testosterone undecanoate. On March 28, 2022, the FDA approved TLANDO as a TRT in adult males for conditions associated with a deficiency of endogenous testosterone, also known as hypogonadism. On June 7, 2022, our former commercial partner Antares (a wholly owned subsidiary of Halozyme) announced the commercial launch of TLANDO.

Previous wording

Additional clinical development pipeline candidates include: LPCN 1154 for postpartum depression (“PPD”); LPCN 2101 for epilepsy; and LPCN 2203 for essential tremor. In addition to our CNS product candidates, we have assets for which we expect to seek partnerships to enable further development including TLANDO for territories outside of North America, LPCN 1148 comprising a novel prodrug of testosterone, and testosterone laurate (“TL”), for the management of decompensated cirrhosis, LPCN 1144, an oral prodrug of androgen receptor modulator for the treatment of non-cirrhotic non-alcoholic steatohepatitis (“NASH”) which has completed Phase 2 testing; and LPCN 1107, potentially the first oral hydroxy progesterone caproate (“HPC”) product indicated for the prevention of recurrent preterm birth (“PTB”), which has completed a dose finding clinical study in pregnant women and has been granted orphan drug designation by the FDA.

Current wording

Additional clinical development pipeline candidates include: LPCN 1154 for PPD, LPCN 2101 for epilepsy, LPCN 2203 for essential tremor and LPCN 2401 for improved body composition in obesity management. In addition to our clinical development product candidates, we have assets for which we expect to seek partnerships to enable further development including TLANDO for territories outside of North America, South Korea, and the GCC, LPCN 1148 comprising a novel prodrug of testosterone, and TL, for the management of cirrhosis, LPCN 1144, an oral prodrug of androgen receptor modulator for the treatment of non-cirrhotic MASH which has completed Phase 2 testing, and LPCN 1107, potentially the first oral HPC product indicated for the prevention of recurrent PTB, which has completed a dose finding clinical study in pregnant women and has been granted orphan drug designation by the FDA.

Previous wording

We have incurred losses in most years since our inception. As of December 31, 2023, we had an accumulated deficit of $199.8 million. Income and losses fluctuate year to year, primarily depending on the nature and timing of research and development occurring on our product candidates. Our net loss was $16.4 million for the year ended December 31, 2023, compared to $10.8 million for the year ended December 31, 2022. Substantially all of our operating losses resulted from expenses incurred in connection with our product candidate development programs, our research activities and general and administrative costs associated with our operations.

Current wording

We have incurred losses in most years since our inception. As of December 31, 2024, we had an accumulated deficit of approximately $199.8 million. Income and losses fluctuate year to year, primarily depending on the nature and timing of research and development occurring on our product candidates. Our net income was approximately $8,000 for the year ended December 31, 2024, compared to approximately $16.4 million for the year ended December 31, 2023. Substantially all of our operating losses resulted from expenses incurred in connection with our product candidate development programs, our research activities and general and administrative costs associated with our operations.

Previous wording

Our goal is to become a leading biopharmaceutical company focused on leveraging our proprietary Lip’ral drug delivery technology platform to develop differentiated products through oral delivery of previously difficult to deliver molecules for CNS disorders. The key components of our strategy are to:

Current wording

Our goal is to become a leading biopharmaceutical company focused on leveraging our proprietary Lip’ral drug delivery technology platform to develop differentiated products through oral delivery of previously difficult to deliver molecules. The key components of our strategy are to:

Previous wording

Advance LPCN 1154 and other CNS product candidates. We intend to focus on the development of endogenous neuroactive steroids (“NAS”) which have broad applicability in treating various CNS conditions where we can leverage our technology platform to develop highly differentiated oral therapeutics. Our priority is on the development of LPCN 1154, a fast-acting oral antidepressant for postpartum depression (“PPD”) with potential for outpatient use.

Current wording

Advance LPCN 1154 and other CNS product candidates. We intend to focus on the development of NASs which have broad applicability in treating various CNS conditions where we can leverage our technology platform to develop highly differentiated oral therapeutics. Our priority is on the development of LPCN 1154, a fast-acting oral antidepressant for PPD with potential for outpatient use.

Previous wording

Support our Licensee in commercialization of our licensed oral TRT option. We believe the TRT market needs a differentiated, convenient oral option. We have exclusively licensed rights to TLANDO to Verity for commercialization of TLANDO in the U.S. and Canada. We plan to support our Licensee’s efforts to effectively enable the availability of TLANDO to patients in a timely manner, in addition to receiving milestone and royalty payments associated with TLANDO commercialization as agreed to in the Verity License Agreement.

Current wording

Support our licensees, Verity, SPC, and Pharmalink in commercialization and/or of our licensed oral TRT product. We believe the TRT market needs a differentiated, convenient oral option. We have exclusively licensed rights to TLANDO to Verity for commercialization of TLANDO in the Licensed Verity Territory, to SPC for commercialization in the SPC Territory, and to Pharmalink in the Pharmalink Territory. We plan to support Verity’s, SPC’s and Pharmalink’s efforts to effectively enable the availability of TLANDO to patients in a timely manner, in addition to receiving milestone payments, royalty payments, and/or payments for product sales associated with TLANDO commercialization as agreed to in the Verity License Agreement, the SPC License Agreement and the Pharmalink Distribution Agreement.

Previous wording

Develop partnership(s) to continue the advancement of non-core pipeline assets. We continuously strive to prioritize our resources in seeking partnerships of our pipeline assets. We are currently exploring partnering of our liver programs LPCN 1144, our candidate for treatment of non-cirrhotic NASH and LPCN 1148 for the management of decompensated cirrhosis, and LPCN 1107, our candidate for prevention of pre-term birth. We are exploring the possibility of licensing LPCN 1021 (known as TLANDO in the United States) and LPCN 1111 to third parties outside the United States and Canada, although no licensing agreement has been entered into by the Company.

Current wording

Develop partnership(s) to continue the advancement of pipeline assets. We continuously strive to prioritize our resources in seeking partnerships of our pipeline assets. We are currently exploring partnerships for our liver programs LPCN 1144, our candidate for treatment of non-cirrhotic MASH and LPCN 1148 for the management of cirrhosis including prevention of the recurrence of overt hepatic encephalopathy; LPCN 2401 for improved body composition in obesity management as an adjunct therapy to or as a monotherapy post cessation of incretin mimetics use; and LPCN 1107, our candidate for prevention of pre-term birth. We are exploring the possibility of licensing TLANDO to third parties outside of the Currently Licensed TLANDO Territories, although as of the date of this Annual Report, no additional licensing agreements have been entered into by the Company in any other territories.

Previous wording

To date, we have not generated any revenues from product sales and do not expect to do so until one of our product candidates receives approval from the FDA. Revenues to date have been generated substantially from license fees, royalty and milestone payments and research support from our licensees. Since our inception through December 31, 2023, we have generated $41.9 million in revenue under our various license and collaboration arrangements and from government grants. We have entered into the Verity License Agreement with the potential for revenue from future milestones and royalties, but we may never generate revenues from any of our clinical or preclinical development programs or licensed products as we may never succeed in obtaining regulatory approval or commercializing any of these product candidates.

Current wording

To date, we have not generated any revenues from product sales and do not expect to do so until our FDA approved product receives regulatory approval in the SPC Territory or the Pharmalink Territory or until one of our other product candidates receives approval from the FDA. Revenues to date have been generated substantially from license fees, royalty and milestone payments and research support from our licensees. Since our inception through December 31, 2024, we have generated $53.1 million in revenue under our various license and collaboration arrangements and from government grants. We have entered into the Verity License Agreement, the SPC License Agreement and the Pharmalink Distribution Agreement with the potential for revenue from future milestones, royalties, and/or product sales, but we may never generate revenues from any of our clinical or preclinical development programs or licensed products as we may never succeed in obtaining regulatory approval or commercializing any of these product candidates.

Previous wording

Research and development expenses consist primarily of salaries, benefits, stock-based compensation and related personnel costs, fees paid to external service providers such as contract research organizations and contract manufacturing organizations, contractual obligations for clinical development, clinical sites, manufacturing and scale-up for late-stage clinical trials, formulation of clinical drug supplies, and expenses associated with regulatory submissions. Research and development expenses also include an allocation of indirect costs, such as those for facilities, office expense and depreciation of equipment based on the ratio of direct labor hours for research and development personnel to total direct labor hours for all personnel. We expense research and development expenses as incurred. Since our inception, we have spent approximately $147.2 million in research and development expenses through December 31, 2023.

Current wording

Research and development expenses consist primarily of salaries, benefits, stock-based compensation and related personnel costs, fees paid to external service providers such as contract research organizations and contract manufacturing organizations, contractual obligations for clinical development, clinical sites, manufacturing and scale-up for late stage clinical trials, formulation of clinical drug supplies, and expenses associated with regulatory submissions. Research and development expenses also include an allocation of indirect costs, such as those for facilities, office expense, and depreciation of equipment based on the ratio of direct labor hours for research and development personnel. We expense research and development expenses as incurred. Since our inception, we have spent approximately $154.6 million in research and development expenses through December 31, 2024.

Previous wording

We expect to continue to incur significant costs as we develop our other product candidates, including our CNS product candidates as well as the development of any future pipeline product candidates.

Current wording

We expect to continue to incur significant costs in the development of future pipeline product candidates.

Previous wording

Given the stage of clinical development and the significant risks and uncertainties inherent in the clinical development, manufacturing and regulatory approval process, we are unable to estimate with any certainty the time or cost to complete the development of LPCN 1154, LPCN 2101, LPCN 2203, LPCN 1148, LPCN 1144, LPCN 1111, LPCN 1107 and other product candidates. Clinical development timelines, the probability of success and development costs can differ materially from expectations and results from our clinical trials may not be favorable. If we are successful in progressing LPCN 1154, LPCN 2101, LPCN 2203 or other future product candidates into later stage development, we will require additional capital. The amount and timing of our future research and development expenses for these product candidates will depend on the pre-clinical and clinical success of both our current development activities and potential development of new product candidates, as well as ongoing assessments of the commercial potential of such activities. We will continue efforts to enter into partnership arrangements for the continued development and/or marketing of LPCN 1144, LPCN 1148, LPCN 1107 and for TLANDO and LPCN 1111 outside of the U.S. and Canada.

Current wording

Given the stage of clinical development and the significant risks and uncertainties inherent in the clinical development, manufacturing and regulatory approval process, we are unable to estimate with any certainty the time or cost to complete the development of LPCN 1154, LPCN 2401, LPCN 2101, LPCN 2203, LPCN 1148, LPCN 1144, LPCN 1107 and other product candidates. Clinical development timelines, the probability of success and development costs can differ materially from expectations and results from our clinical trials may not be favorable. If we are successful in progressing LPCN 1154, LPCN 2401, LPCN 2101, LPCN 2203 or other future product candidates into later stage development, we will require additional capital. The amount and timing of our future research and development expenses for these product candidates will depend on the pre-clinical and clinical success of both our current development activities and potential development of new product candidates, as well as ongoing assessments of the commercial potential of such activities. We will continue efforts to enter into partnership arrangements for the continued development and/or marketing of LPCN 1144, LPCN 1148, LPCN 2401, LPCN 1107, for the development and commercialization of TLANDO outside of the United States, Canada, South Korea, and the GCC countries and LPCN 1111 outside of the United States and Canada.

Previous wording

We expect research and development expenses to increase in the future as we complete on-going clinical studies, including the studies for our CNS product candidates and as we conduct future clinical studies, including when and if we conduct Phase 2 clinical studies with our development product candidates and when and if we conduct Phase 3 clinical studies with LPCN 1144, LPCN 1148, and LPCN 1107. We are exploring the possibility of licensing LPCN 1144, LPCN 1148, and LPCN 1107, although we have not entered into a licensing agreement and no assurance can be given that any license agreement will be completed, or, if an agreement is completed, that such an agreement would be on terms favorable to us. If we are unable to raise additional capital or obtain non-dilutive financing, we may need to reduce research and development expenses in order to extend our ability to continue as a going concern.

Current wording

We expect to incur significant research and development expenses in the future as we conduct future clinical studies, including when and if we conduct Phase 2 clinical studies with our development product candidates and when and if we conduct Phase 3 clinical studies with LPCN 1144, LPCN 1148, and LPCN 1107. We are also exploring the possibility of licensing LPCN 1144, LPCN 1148, LPCN 2401 and LPCN 1107, although we have not entered into a licensing agreement and no assurance can be given that any license agreement will be completed, or, if an agreement is completed, that such an agreement would be on terms favorable to us. If we are unable to raise additional capital or obtain non-dilutive financing, we may need to reduce research and development expenses in order to extend our ability to continue as a going concern.

Previous wording

General and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation related to our executive, finance, business development, and support functions. Other general and administrative expenses include rent and utilities, travel expenses, professional fees for auditing, tax, legal and various other services.

Current wording

General and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation and outside consulting services related to our executive, finance, business development, and administrative support functions. Other general and administrative expenses include rent and utilities, travel expenses, and professional fees for auditing, tax, legal and various other services.

Previous wording

We expect that general and administrative expenses will increase in the future as we continue as a public company, including legal and consulting fees, accounting and audit fees, director fees, directors’ and officers’ insurance premiums, fees for investor relations services and enhanced business and accounting systems, litigation costs, professional fees and other costs. However, if we are unable to raise additional capital, we may need to reduce general and administrative expenses in order to extend our ability to continue as a going concern.

Current wording

We expect that general and administrative expenses will increase in the future as we continue as a public company. These fees include legal and consulting fees, accounting and audit fees, director fees, directors’ and officers’ insurance premiums, fees for investor relations services and enhanced business and accounting systems, litigation costs, professional fees and other costs. However, if we are unable to raise additional capital, we may need to reduce general and administrative expenses in order to extend our ability to continue as a going concern.

Previous wording

Other expense (income), net consists primarily of interest income earned on our cash, cash equivalents and marketable investment securities, imputed interest on minimum royalties under the license agreement we had with Antares, which was terminated January 31, 2024, gains on our warrant liability and gains on our litigation liability.

Current wording

Other income and expense consists primarily of interest income earned on our cash, cash equivalents and marketable investment securities, imputed interest on minimum royalties under the Antares Licensing Agreement in 2023, and gains on our warrant liability.

Previous wording

We recognized a net reversal of variable consideration revenue of $2.9 million during the year ended December 31, 2023, compared to revenue of $500,000 during the year ended December 31, 2022. Net reversal of variable consideration revenue in 2023 was mainly attributable to the reversal of variable consideration revenue recognized for minimum guaranteed royalties in 2021 under the license agreement with Antares, offset by $110,000 in license revenue payments received from Spriaso under a licensing agreement in the cough and cold field. License revenue in 2022 was related to a non-refundable cash fee of $500,000 received from Antares for consideration of a 90-day extension to exercise its option to license LPCN 1111. On June 30, 2022, Antares’ option to license TLANDO XR expired and was not exercised. On October 2, 2023, the Company received notice from Antares of Antares’ termination of the Antares License Agreement which stated that the Antares License Agreement will terminate effective January 31, 2024. On January 12, 2024, the Company entered into the Verity License Agreement with Verity. Upon termination of the Antares License Agreement, all rights and licenses granted by the Company to Antares under the Antares License Agreement terminated and all rights in TLANDO were transferred to the Company’s new licensing partner, Verity.

Current wording

We recognized revenue of $11.2 million during the year ended December 31, 2024, compared to a net reversal of variable consideration revenue of $2.9 million during the year ended December 31, 2023. Revenue in 2024 primarily consisted of revenue from our licensees, Verity, SPC and Pharmalink and royalty revenue from TLANDO sales. Net reversal of variable consideration revenue in fiscal year ended December 31, 2023 was mainly attributable to the reversal of variable consideration revenue recognized for minimum guaranteed royalties in 2021 under the license agreement with Antares, offset by $110,000 in license revenue payments received from Spriaso under a licensing agreement in the cough and cold field. The Antares License Agreement was terminated effective January 31, 2024. On January 12, 2024, we entered into the Verity License Agreement with Verity. Upon termination of the Antares License Agreement, all rights and licenses granted by us to Antares under the Antares License Agreement terminated and all rights in TLANDO were transferred to our new licensing partner, Verity.

Previous wording

We recorded research and development expenses of $10.2 million and $8.6 million, respectively, for the years ended December 31, 2023 and 2022. The increase in research and development expenses during the year ended December 31, 2023 was primarily due to a $1.2 million increase in contract research organization expense related to our LPCN 1154 clinical studies, a $591,000 increase in TLANDO manufacturing related costs, a $560,000 increase related to our Phase 2 POC study in male patients with cirrhosis with LPCN 1148, and a $537,000 increase in personnel expense primarily resulting from additional headcount. These increases are offset by a $600,000 decrease related to LPCN 1111 scale up costs in 2022, a $416,000 decrease in contract research organization expense and outside consulting costs related to the LPCN 1144LiFT Phase 2 clinical study in NASH subjects, a $144,000 decrease in our LPCN 1107 clinical study, and a $123,000 decrease in other research and development activities.

Current wording

We recorded research and development expenses of $7.4 million and $10.2 million, respectively, for the years ended December 31, 2024 and 2023. The decrease in research and development expenses during the year ended December 31, 2024 was primarily due to a $3.1 million decrease related to the completion of our LPCN 1148 Phase 2 POC study in male patients with cirrhosis in 2023, a $584,000 decrease in TLANDO related costs, and a $348,000 decrease in personnel related costs. These decreases were offset by a $996,000 increase in LPCN 1154 clinical studies, a $188,000 increase in other lab supplies and research costs, and a $46,000 increase in LPCN 2401 costs.

Previous wording

We recorded general and administrative expenses of $4.9 million and $4.1 million, respectively, for the years ended December 31, 2023 and 2022. The increase in general and administrative expenses during the year ended December 31, 2023 was primarily due to a $374,000 increase in business development and strategic advisory services related expenses, a $217,000 increase in legal fees relating to corporate matters such as our reverse stock split, potential licensing partnerships, and corporate strategy, a $219,000 increase in personnel related costs, a $188,000 increase in franchise taxes resulting from our increase in authorized shares and reverse stock split, a $133,000 increase in director fees, a $41,000 increase in other general and administrative expenses and a $22,000 increase in royalty expense relating to the net sales of TLANDO. These increases were offset by a $222,000 decrease in corporate insurance expense, a $138,000 decrease related to the recruitment of two additional directors, and a $8,000 decrease in our various consulting and professional fees.

Current wording

We recorded general and administrative expenses of $5.0 million and $4.9 million, respectively, for the years ended December 31, 2024 and 2023. The increase in general and administrative expenses during the year ended December 31, 2024 was primarily due to a $800,000 increase in business development and strategic advisory services related expenses and a $53,000 increase in intellectual property and patent expenses, offset by a $222,000 decrease in corporate insurance expense, a $208,000 decrease in personnel related costs, a $161,000 decrease in professional fees relating to our annual shareholder’s meeting and subsequent decision to enact a reverse stock split, a $146,000 decrease in other various consulting and professional fees, and a $20,000 decrease in other general and administrative expenses.

Previous wording

The increase in interest and investment income during the year ended December 31, 2023 was due to higher interest rates in 2023 compared to 2022, despite declining cash and marketable investment securities balances quarter over quarter in 2023.

Current wording

The decrease in interest and investment income of approximately $220,000 during the year ended December 31, 2024 was due to declining cash and marketable investment securities balances in fiscal year ended December 31, 2024 compared to 2023.

Previous wording

Unrealized Loss (Gain) on Warrant Liability

Current wording

Unrealized Gain on Warrant Liability

Previous wording

We recorded gains of $213,000 and $566,000, respectively, on warrant liability during the years ended December 31, 2023 and 2022 related to the change in the fair value of outstanding common stock warrants issued in the November 2019 Offering. The gains in 2023 and 2022 were attributable to a decrease in the value of warrants outstanding as of December 31, 2023 as compared to December 31, 2022, and a decrease in the value of warrants outstanding as of December 31, 2022 as compared to December 31, 2021. These decreases in value were due to a decrease in our stock price and a shorter term remaining on the outstanding warrants. There were no common stock warrants from the November 2019 Offering exercised during 2023 or 2022. The warrants are classified as a liability due to a provision contained within the warrant agreement which allows the warrant holder the option to elect to receive an amount of cash equal to the value of the warrants as determined in accordance with the Black-Scholes option pricing model with certain defined assumptions upon a change of control. The warrant liability will continue to fluctuate in the future based on inputs to the Black-Scholes model including our current stock price, the remaining life of the warrants, the volatility of our stock price, the risk-free interest rate and the number of common stock warrants outstanding.

Current wording

We recorded gains of $17,000 and $213,000, respectively, on warrant liability during the fiscal years ended December 31, 2024 and 2023 related to the change in the fair value of outstanding common stock warrants issued in November 2019. The gain in fiscal year ended December 31, 2024 was attributable to the expiration in November 2024 of the warrant issued in the November 2019 Offering. The gain in fiscal year ended December 31, 2023 was the result of a decreased stock price and shorter term remaining on the warrants as compared to the stock price and remaining term of the warrants as of December 31, 2022. There were no common stock warrants from the November 2019 Offering exercised during fiscal years ended December 31, 2024 or 2023. The warrants were classified as a liability due to a provision contained within the warrant agreement which allowed the warrant holder the option to elect to receive an amount of cash equal to the value of the warrants as determined in accordance with the Black-Scholes option pricing model with certain defined assumptions upon a change of control.

Previous wording

Since our inception, our operations have been primarily financed through sales of our equity securities, debt and payments received under our license and collaboration arrangements. We have devoted our resources to funding research and development programs, including discovery research, preclinical and clinical development activities. We have incurred operating losses in most years since our inception and we expect to continue to incur operating losses into the foreseeable future as we advance clinical development of LPCN 1154, LPCN 2101, LPCN 2203 and any other product candidate, including continued research efforts.

Current wording

Since our inception, our operations have been primarily financed through sales of our equity securities, debt and payments received under our license and collaboration arrangements. We have devoted our resources to funding research and development programs, including discovery research, preclinical and clinical development activities. We have incurred operating losses in most years since our inception and we expect to continue to incur operating losses into the foreseeable future as we advance clinical development of LPCN 1154, LPCN 2101, LPCN 2203, LPCN 2401 and any other product candidate, including continued research efforts.

Previous wording

As of December 31, 2023, we had $22.0 million of unrestricted cash, cash equivalents and marketable investment securities compared to $32.5 million at December 31, 2022.

Current wording

As of December 31, 2024, we had $21.6 million of unrestricted cash, cash equivalents and marketable investment securities compared to $22.0 million as of December 31, 2023.

Previous wording

On January 12, 2024, we entered into the Verity License Agreement with Verity, pursuant to which we granted to Verity an exclusive, royalty-bearing, sublicensable right and license to develop and commercialize our TLANDO product with respect to TRT in the U.S. and Canada. Upon execution of the Verity License Agreement in January 2024 and upon transition of the commercialization of TLANDO from Antares to Verity in February 2024, Verity paid to us initial payments of $2.5 million and $5 million, respectively. Verity has also agreed to make additional payments to us of $2.5 million before January 1, 2025 and $1 million before January 1, 2026. The Verity License Agreement also provides Verity with a license to develop and commercialize TLANDO XR (LPCN 1111), the Company’s potential next generation, once daily oral product candidate for testosterone replacement therapy comprised of testosterone tridecanoate (“TT”), in the U.S. and Canada. We are also eligible to receive milestone payments of up to $259 million in the aggregate, depending on the achievement of certain development milestones and sales milestones in a single calendar year with respect to all products licensed by Verity under the Verity License Agreement. In addition, we receive tiered royalty payments at rates ranging from percentages of 12% up to 18% of net sales of all products licensed to Verity in the United States and Canada. Our ability to realize benefits from the Verity License Agreement, including milestone and royalty payments, is subject to a number of risks. We may not realize milestone or royalty payments in anticipated amounts, or at all.

Current wording

On January 12, 2024, we entered into the Verity License Agreement with Verity, pursuant to which we granted to Verity an exclusive, royalty-bearing, sublicensable right and license to develop and commercialize our TLANDO product with respect to TRT in the Licensed Verity Territory. Upon execution of the Verity License Agreement in January 2024 and upon transition of the commercialization of TLANDO from Antares to Verity in February 2024, Verity paid to us an initial payment of $2.5 million, and subsequent payments of $5 million and $2.5 million in February 2024 and December 2024, respectively. Verity has also agreed to make an additional payment to us of $1 million before January 1, 2026. The Verity License Agreement also provides Verity with a license to develop and commercialize TLANDO XR (“LPCN 1111”), our potential next generation, once daily oral product candidate for testosterone replacement therapy comprised of testosterone tridecanoate, in the Licensed Verity Territory. We are also eligible to receive milestone payments of up to $259 million in the aggregate, depending on the achievement of certain development milestones and sales milestones in a single calendar year with respect to all products licensed by Verity under the Verity License Agreement. In addition, we receive tiered royalty payments at rates ranging from percentages of 12% up to 18% of net sales of all products licensed to Verity in the Licensed Verity Territory. Our ability to realize benefits from the Verity License Agreement, including milestone and royalty payments, is subject to a number of risks. We may not realize milestone or royalty payments in anticipated amounts, or at all.

Previous wording

As of December 31, 2023, we had sold an aggregate of 964,711 shares at a weighted-average sales price of $34.52 per share under the At the Market Offering (the “ATM Offering”) for aggregate gross proceeds of $33.3 million and net proceeds of $32.1 million, after deducting sales agent commission and discounts and our other offering costs. During the year ended December 31, 2023, we sold 81,000 shares of our common stock pursuant to the ATM Offering at a weighted-average sales price of $5.36 per share, resulting in net proceeds of approximately $405,000, under the Sales Agreement which is net of approximately $24,000 in expenses. During the year ended December 31, 2022, we did not sell any shares of our common stock pursuant to the ATM Offering. As of December 31, 2023, we had $40.8 million available for sale under the Sales Agreement. However, as of November 22, 2023, we are subject to General Instruction I.B.6 of Form S-3 which limits the amounts that we may sell under the registration statement. As a result of such limitations, we have currently registered the offer and sale of shares of common stock pursuant to the Sales Agreement having an aggregate offering price of up to $5.3 million.

Current wording

Previously on March 6, 2017, we entered into a sales agreement (“Cantor Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”) under which we agreed to sell shares of our common stock, having registered up to $50.0 million for sale under the Cantor Sales Agreement. During the year ended December 31, 2024, we sold 32,110 shares of our common stock under the Cantor Sales Agreement at a weighted-average sales price of $6.77 per share, resulting in net proceeds of approximately $209,000, which is net of approximately $8,000 in expenses. During the year ended December 31, 2023, we sold 81,000 shares of our common stock under the Cantor Sales Agreement at a weighted-average sales price of $5.36 per share, resulting in net proceeds of approximately $405,000, which is net of approximately $24,000 in expenses. On April 24, 2024, we terminated the Cantor Sales Agreement. From the inception to the termination of the Cantor Sales Agreement, we sold in aggregate 996,821 shares of our common stock for $33.5 million.

Previous wording

On March 6, 2017, we entered into a sales agreement (“Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”) pursuant to which we may issue and sell, from time to time, shares of our common stock having an aggregate offering price of up to the amount we have registered on an effective registration statement pursuant to which the offering is being made. We currently have registered up to $50.0 million for sale under the Sales Agreement, pursuant to our Registration Statement on Form S-3 (the “Form S-3”), through Cantor as our sales agent. Cantor may sell our common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended, including sales made directly on or through the NASDAQ Capital Market or any other existing trade market for our common stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related to prevailing market prices, or any other method permitted by law. Cantor uses its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell these shares. We pay Cantor 3.0% of the aggregate gross proceeds from each sale of shares under the Sales Agreement. We have also provided Cantor with customary indemnification rights.

Current wording

On April 26, 2024, we entered into a sales agreement (the “A.G.P. Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”) pursuant to which we may issue and sell, from time to time, shares of our common stock having an aggregate offering price of up to the amount we registered on an effective registration statement pursuant to which the offering is being made. We currently have registered up to $10,616,169 of shares of common shares for sale under the A.G.P. Sales Agreement, pursuant to the Registration Statement on Form S-3, as amended (File No. 333-275716) (the “Form S-3”), through A.G.P. as sales agent. A.G.P. may sell our common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act, including sales made directly on or through the Nasdaq Capital Market or any other existing trade market for our common stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related to prevailing market prices, or any other method permitted by law. A.G.P. will use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell shares under the A.G.P. Sales Agreement. We will pay A.G.P. 3.0% of the aggregate gross proceeds from each sale of shares under the A.G.P. Sales Agreement. In addition, we have also provided A.G.P. with customary indemnification rights. Our shares of common stock to be sold under the A.G.P. Sales Agreement will be sold and issued pursuant to the Form S-3, as amended, which was previously declared effective by the SEC, and the related prospectus and one or more prospectus supplements. We are not obligated to make any sales of our common stock under the A.G.P. Sales Agreement. The offering of common stock pursuant to the A.G.P. Sales Agreement will terminate upon the termination of the A.G.P. Sales Agreement as permitted therein. We and A.G.P. may each terminate the A.G.P. Sales Agreement at any time upon ten days’ prior notice. As of December 31, 2024, we had not sold any shares under the A.G.P. Sales Agreement.

Previous wording

We believe that our existing capital resources, together with interest thereon, will be sufficient to meet our projected operating requirements through at least March 31, 2025 which include on-going clinical studies for LPCN 1154 and/or LPCN 2101 or LPCN 2203 and research and development activities and compliance with regulatory requirements. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect if additional activities are performed by us including new clinical studies for LPCN 1148, LPCN 1144, and/or LPCN 1107. While we believe we have sufficient liquidity and capital resources to fund our projected operating requirements through at least March 31, 2025, we will need to raise additional capital at some point through the equity or debt markets or through additional out-licensing activities, either before or after March 31, 2025, to support our operations. If we are unsuccessful in raising additional capital as necessary, our ability to continue as a going concern will be limited. Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for product development, regulatory compliance and clinical trial activities sooner than planned. In addition, our capital resources may be consumed more rapidly if we pursue additional clinical studies for LPCN 1154, LPCN 2101, LPCN 2203, LPCN 1148, LPCN 1144, and/or LPCN 1107. Conversely, our capital resources could last longer if we reduce expenses, reduce the number of activities currently contemplated under our operating plan or if we terminate, modify or suspend on-going clinical studies. We can raise capital pursuant to the Sales Agreement but may choose not to issue common stock if our market price is too low to justify such sales in our discretion. There are numerous risks and uncertainties associated with the development and, subject to approval by the FDA, commercialization of our product candidates. There are numerous risks and uncertainties impacting our ability to enter into collaborations with third parties to participate in the development and potential commercialization of our product candidates. We are unable to precisely estimate the amounts of increased capital outlays and operating expenditures associated with our anticipated or unanticipated clinical studies and ongoing development efforts. All of these factors affect our need for additional capital resources. To fund future operations, we will need to ultimately raise additional capital and our requirements will depend on many factors, including the following:

Current wording

We believe that our existing capital resources, together with interest thereon, will be sufficient to meet our projected operating requirements through at least March 31, 2026 which include a clinical study for LPCN 1154, research and development activities and compliance with regulatory requirements. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect if additional activities are performed by us including new clinical studies for LPCN 2401, LPCN 2101, LPCN 1148, LPCN 1144, and/or LPCN 1107. While we believe we have sufficient liquidity and capital resources to fund our projected operating requirements through at least March 31, 2026, we will need to raise additional capital at some point through the equity or debt markets or through additional out-licensing activities, either before or after March 31, 2026, to support our operations. If we are unsuccessful in raising additional capital as necessary, our ability to continue as a going concern will be limited. Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for product development, regulatory compliance and clinical trial activities sooner than planned. In addition, our capital resources may be consumed more rapidly if we pursue additional clinical studies for LPCN 1154, LPCN 2401, LPCN 2101, LPCN 2203, LPCN 1148, LPCN 1144, and/or LPCN 1107. Conversely, our capital resources could last longer if we reduce expenses, reduce the number of activities currently contemplated under our operating plan or if we terminate, modify or suspend on-going and/or planned clinical studies. We can raise capital pursuant to the A.G.P. Sales Agreement but may choose not to issue common stock if our market price is too low to justify such sales in our discretion. There are numerous risks and uncertainties associated with the development and, subject to approval by the FDA, commercialization of our product candidates. There are numerous risks and uncertainties impacting our ability to enter into collaborations with third parties to participate in the development and potential commercialization of our product candidates. We are unable to precisely estimate the amounts of increased capital outlays and operating expenditures associated with our anticipated or unanticipated clinical studies and ongoing development efforts. All of these factors affect our need for additional capital resources. To fund future operations, we will need to ultimately raise additional capital and our requirements will depend on many factors, including the following:

Previous wording

Funding may not be available to us on favorable terms, or at all. Also, market conditions may prevent us from accessing the debt and equity capital markets, including sales of our common stock through the Sales Agreement. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our clinical studies, research and development programs or, if any of our product candidates receive approval from the FDA, commercialization efforts. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, including the Sales Agreement, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. These arrangements may not be available to us or available on terms favorable to us. To the extent that we raise additional capital through marketing and distribution arrangements, other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences, warrants or other terms that adversely affect our stockholders’ rights or further complicate raising additional capital in the future. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable, for any reason, to raise needed capital, we will have to reduce costs, delay research and development programs, liquidate assets, dispose of rights, commercialize products or product candidates earlier than planned or on less favorable terms than desired or reduce or cease operations.

Current wording

Funding may not be available to us on favorable terms, or at all. Also, market conditions may prevent us from accessing the debt and equity capital markets, including sales of our common stock through the A.G.P. Sales Agreement. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our clinical studies, research and development programs or, if any of our product candidates receive approval from the FDA, commercialization efforts. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, including the A.G.P. Sales Agreement, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. These arrangements may not be available to us or available on terms favorable to us. To the extent that we raise additional capital through marketing and distribution arrangements, other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences, warrants or other terms that adversely affect our stockholders’ rights or further complicate raising additional capital in the future. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable, for any reason, to raise needed capital, we will have to reduce costs, delay research and development programs, liquidate assets, dispose of rights, commercialize products or product candidates earlier than planned or on less favorable terms than desired or reduce or cease operations.

Previous wording

During each of the years ended December 31, 2023 and 2022, net cash used in operating activities was $11.9 and $12.0 million, respectively.

Current wording

During each of the years ended December 31, 2024 and 2023, net cash used in operating activities was $1.2 million and $11.9 million, respectively.

Previous wording

Net cash used in operating activities during 2023 and 2022 was primarily attributable to cash outlays to support on-going operations, including research and development expenses and general and administrative expenses. During 2023, we were performing activities mainly related to our LPCN 1154 clinical studies and our LPCN 1148 Phase 2 POC Study in male subjects with cirrhosis. During 2022, we were performing activities related to our Phase 2 POC study in male subjects with cirrhosis with LPCN 1148, our PK and food effect studies with LPCN 1154 and LPCN 1107, and the LPCN 1111 manufacturing scale up.

Current wording

Net cash used in operating activities during 2024 was primarily attributable to cash outlays to support on-going operations, including research and development expenses primarily related to our LPCN 1154 clinical studies and manufacturing scale up, in addition to general and administrative expenses. These cash outlays were offset by cash provided by the licensee and distribution agreements we entered into during 2024 of $11.2 million. During 2023, we were performing activities mainly related to our LPCN 1154 clinical studies and our LPCN 1148 Phase 2 POC Study in male subjects with cirrhosis.

Previous wording

During the year ended December 31, 2023, net cash provided by investing activities was $13.1 million and during the year ended December 31, 2022, net cash used in investing activities was $14.3 million.

Current wording

During the years ended December 31, 2024 and 2023, net cash used in investing activities was $2.4 million and $13.1 million.

Previous wording

Net cash provided by investing activities during 2023 and 2022 was primarily the result of the maturity of marketable investment securities, net of $36.0 million and $59.5 million, respectively. There were $13,000 and $134,000 in capital expenditures for the years ended December 31, 2023 and 2022, respectively.

Current wording

Net cash provided by investing activities during 2024 and 2023 was primarily the result of the maturity of marketable investment securities of $35.4 million and $36.0 million, respectively offset by the purchase of marketable investment securities of $32.9 million and $22.9 million, respectively. There were $90,000 and $13,000 in capital expenditures for the years ended December 31, 2024 and 2023, respectively.

Previous wording

Net cash provided by financing activities during the year ended December 31, 2023, was related to the sale of 81,000 shares of our common stock under our ATM Offering, less associated costs. Net cash used in financing activities during the year ended December 31, 2022 was mainly due to loan repayments of $1.7 million and payment of the Final Payment Charge of $650,000 related to the SVB Loan and Security Agreement, offset by $211,000 in cash provided by proceeds from stock option exercises.

Current wording

Net cash provided by financing activities during the year ended December 31, 2024 and 2023, was related to the sale of 32,110 shares of our common stock for net proceeds of $209,000 and 81,000 shares of our common stock for net proceeds of $405,000, respectively, under the Cantor Sales Agreement, less associated costs.

Previous wording

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements which we have prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In preparing our financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We have identified the following accounting policies that we believe require application of management’s most subjective judgments, often requiring the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Our actual results could differ from these estimates and such differences could be material.

Current wording

We have identified the following accounting policies that we believe require application of management’s most subjective judgments, often requiring the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Our actual results could differ from these estimates and such differences could be material.

Previous wording

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09,*Revenue from Contracts with Customers (Topic 606)with amendments in 2015 (ASU 2015-14) and 2016 (ASU 2016-8, ASU 2016-10, ASU 2016-12 and ASU 2016-20).*The updated standard is a new comprehensive revenue recognition model that requires revenue to be recognized in a manner that depicts the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We adopted this pronouncement effective January 1, 2017. We recognized net reversal of variable consideration revenue of $2.9 million during the year ended December 31, 2023, and license revenue of $500,000 during the year ended December 31, 2022. Net reversal of variable consideration revenue in 2023 was mainly attributable to the reversal of variable consideration revenue recognized for minimum guaranteed royalties in 2021 under the license agreement with Antares, offset by $110,000 in license revenue payments received from Spriaso under a licensing agreement in the cough and cold field. License revenue in 2022 was related to a non-refundable cash fee of $500,000 received from Antares for consideration of a 90-day extension to exercise its option to license LPCN 1111. On June 30, 2022, Antares’ option to license TLANDO XR expired and was not exercised.

Current wording

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09,*Revenue from Contracts with Customers (Topic 606)with amendments in 2015 (ASU 2015-14) and 2016 (ASU 2016-8, ASU 2016-10, ASU 2016-12 and ASU 2016-20).*The updated standard is a new comprehensive revenue recognition model that requires revenue to be recognized in a manner that depicts the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We adopted this pronouncement effective January 1, 2017. We recognized license and royalty revenue of $11.2 million during the year ended December 31, 2024 and a net reversal of variable consideration revenue of $2.9 million during the year ended December 31, 2023. Net reversal of variable consideration revenue in 2023 was mainly attributable to the reversal of variable consideration revenue recognized for minimum guaranteed royalties in 2021 under the license agreement with Antares, offset by $110,000 in license revenue payments received from Spriaso under a licensing agreement in the cough and cold field.

Previous wording

As of December 31, 2023, there was $455,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Company’s stock option plan.

Current wording

As of December 31, 2024, there was $440,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Company’s stock option plan.

Previous wording

In connection with the November 2019 public offering, we issued warrants to purchase common stock. The warrants require us to pay such holders an amount of cash in the event of a fundamental transaction, as defined in the warrant agreement. As the cash payment is at the option of the warrant holder, we account for the common stock warrants as a liability, which is adjusted to fair value each reporting period as well as upon exercise of such warrants. The Company estimates the fair value of the warrant liability based on a hypothetical payout associated with a fundamental transaction. The fair value estimate utilizes a pricing model and unobservable inputs. Unlike the fair value of other assets and liabilities which are readily observable and therefore more easily independently corroborated, the warrants are not actively traded, and fair value is determined based on significant judgments regarding models, unobservable inputs and valuation methodologies.

Current wording

In connection with the November 2019 public offering, we issued warrants to purchase common stock. The warrants would have required us to pay such holders an amount of cash in the event of a fundamental transaction, as defined in the warrant agreement. As the cash payment was at the option of the warrant holder, we accounted for the common stock warrants as a liability, which was adjusted to fair value each reporting period as well as upon exercise of such warrants. The Company estimated the fair value of the warrant liability based on a hypothetical payout associated with a fundamental transaction. The fair value estimate utilized a pricing model and unobservable inputs. Unlike the fair value of other assets and liabilities which are readily observable and therefore more easily independently corroborated, the warrants were not actively traded, and fair value was determined based on significant judgments regarding models, unobservable inputs and valuation methodologies.

Previous wording

As of December 31, 2023 and 2022, the warrant liability was $17,000 and $230,000, respectively.

Current wording

The warrants issued under the November 2019 public offering expired in November 2024, and there were no warrants from the November 2019 offering outstanding as of December 31, 2024. As of December 31, 2024 and 2023, the warrant liability was $0 and $17,000, respectively.