Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes: x No ¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange ~~Act.~~Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of November ~~8, 2017,~~9, 2020, the registrant had ~~21,196,537~~65,686,150 shares of common stock outstanding.

~~See accompanying notes to unaudited condensed consolidated financial statements~~

The accompanying unaudited condensed consolidated financial statements included herein have been prepared by Lipocine Inc. (“Lipocine” or the “Company”) in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements are comprised of the financial statements of Lipocine and its subsidiaries, collectively referred to as the Company. In management's opinion, the interim financial data presented includes all adjustments (consisting solely of normal recurring items) necessary for fair presentation. All intercompany accounts and transactions have been eliminated. Certain information required by U.S. generally accepted accounting principles has been condensed or omitted in accordance with rules and regulations of the SEC. Operating results for the three and nine months ended September 30, ~~2017~~2020 are not necessarily indicative of the results that may be expected for any future period or for the year ending December 31, ~~2017.~~2020.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto for the year ended December 31, ~~2016.~~2019.

The preparation of the unaudited condensed consolidated financial statements requires management to make estimates and assumptions relating to reporting of the assets and liabilities and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period in conformity with U.S. generally accepted accounting principles. Actual results could differ from these estimates.

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the previously reported net loss.

The Company believes that its existing capital resources, together with interest thereon, will be sufficient to meet its projected operating requirements through at least September 30, 2021 which includes an on-going clinical study for LPCN 1144, compliance with regulatory requirements and on-going litigation activities. The Company has based this estimate on assumptions that may prove to be wrong, and the Company could utilize its available capital resources sooner than it currently expects if additional activities are performed by the Company including pre-commercial and commercial activities for TLANDO and new clinical studies for LPCN 1144, TLANDO XR and LPCN 1148 .While the Company believes it has sufficient liquidity and capital resources to fund our projected operating requirements through at least September 30, 2021, the Company will need to raise additional capital at some point through the equity or debt markets or through out-licensing activities, before or after September 30, 2021, to support its operations. If the Company is unsuccessful in raising additional capital, its ability to continue as a going concern will become a risk. Further, the Company’s operating plan may change, and the Company 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, the Company’s capital resources may be consumed more rapidly if it pursues additional clinical studies for LPCN 1144, TLANDO XR and LPCN 1148. Conversely, the Company’s capital resources could last longer if it reduces expenses, reduces the number of activities currently contemplated under our operating plan, if it terminates, modifies the design or suspends on-going clinical studies, or if it terminates or settles any on-going litigation activities.

Basic earnings (loss) per share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Net income (loss) available to common shareholders for the three and nine months ended September 30, 2017 and 2016 was calculated using the two-class method, which is an earnings (loss) allocation method for computing earnings (loss) per share when an entity’s capital structure includes common stock and participating securities. The two-class method determines earnings (losses) per share based on dividends declared on common stock and participating securities (i.e., distributed earnings) and participation rights of participating securities in any undistributed earnings (loss). The application of the two-class method was required since the Company’s historical unvested restricted stock contained non-forfeitable rights to dividends or dividend equivalents. However, unvested restricted stock grants were not included in computing basic earnings (loss) per share for periods where the Company has losses as these securities are not contractually obligated to share in losses of the Company.

Diluted earnings (loss) per share is based on the weighted average number of common shares outstanding plus, where applicable, the additional potential common shares that would have been outstanding related to dilutive options, warrants and, unvested restricted stock units to the extent such shares are dilutive.

The following table sets forth the computation of basic and diluted earnings (loss) per share of common stock for the three and nine months ended September 30, ~~2017~~2020 and ~~2016:~~2019:

The computation of diluted loss per share for the ~~three and~~ nine months ended September 30, ~~2017~~2020 and ~~2016~~2019 does not include the following stock options and warrants to purchase shares or unvested restricted stock units ~~to purchase shares~~ in the computation of diluted loss per share because these instruments were antidilutive:

The Company has classified its marketable investment securities as available-for-sale securities, all of which are debt securities. These securities are carried at fair value with unrealized holding gains and losses, net of the related tax effect, included in accumulated other comprehensive ~~loss~~income (loss) in stockholders’ equity until realized. Gains and losses on investment security transactions are reported on the specific-identification method. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value for available-for-sale securities by major security type and class of security at September 30, ~~2017~~2020 and December 31, ~~2016~~2019 were as follows:

Maturities of debt securities classified as available-for-sale securities at September 30, ~~2017~~2020 are as follows:

There were no sales of marketable investment securities during the three and nine months ended September ~~30, 2017~~31, 2020 and ~~2016~~2019 and therefore no realized gains or losses. Additionally, ~~$8.4 million~~$450,000 and ~~$11.6~~$8.5 million of marketable investment securities matured during the three months ended September 30, ~~2017~~2020 and ~~2016, respectively. Also, $29.7~~September 30, 2019, respectively, and $4.8 million and ~~$19.7~~$17.5 million of marketable investment securities matured during the nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively. The Company determined there were no other-than-temporary impairments for the three and nine months ended September 30, ~~2017~~2020 and ~~2016.~~2019.

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

All of the Company’s financial instruments are valued using quoted prices in active markets or based on other observable inputs. For accrued interest income, prepaid and other current assets, accounts payable, and accrued expenses, the carrying amounts approximate fair value because of the short maturity of these instruments. The following table presents the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis at September 30, ~~2017~~2020 and December 31, ~~2016:~~2019:

The following methods and assumptions were used to determine the fair value of each class of assets and liabilities recorded at fair value in the balance sheets:

Cash equivalents: Cash equivalents primarily consist of ~~highly rated~~highly-rated money market funds, ~~and~~ commercial paper and treasury bills with original maturities to the Company of three months or less and are purchased daily at par value with specified yield rates. Cash equivalents related to money market funds and treasury bills are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices or broker or dealer quotations for similar assets. Cash equivalents related to commercial paper are classified within Level 2 of the fair value hierarchy because they are valued using broker/dealer quotes, bids and offers, benchmark yields and credit spreads and other observable inputs.

Government ~~bonds and notes:~~treasury bills: The Company uses a third-party pricing service to value these investments. United States ~~Treasury bonds and notes~~treasury bills are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets for identical assets and reportable trades. ~~Other United States government agency~~

Corporate bonds, notes, and commercial paper: The Company uses a third-party pricing service to value these investments. Corporate bonds, notes and commercial paper are classified within Level 2 of the fair value hierarchy because they are valued using broker/dealer quotes, bids and offers, benchmark yields and credit spreads and other observable inputs.

Warrant liability: The warrant liability (which relates to warrants to purchase shares of common stock) is marked-to-market each reporting period with the change in fair value recorded to other income (expense) in the accompanying statements of operations until the warrants are exercised, expire or other facts and ~~commercial paper:~~circumstances lead the warrant liability to be reclassified to stockholders’ equity. The ~~Company uses~~fair value of the warrant liability is estimated using a ~~third-party~~Black-Scholes option-pricing model. The significant assumptions used in preparing the option pricing ~~service to~~model for valuing the warrant liability as of September 30, 2020, include (i) volatility of 103.45%, (ii) risk free interest rate of 0.22%, (iii) strike price of $0.50, (iv) fair value ~~these investments.~~of common stock of $1.41, and (v) expected life of 4.13 years. The significant assumptions used in preparing the option pricing ~~service utilizes broker/dealer quotes, bids~~model for valuing the warrant liability as of December 31, 2019, include (i) volatility of 225.93%, (ii) risk free interest rate of 1.69%, (iii) strike price of $0.50, (iv) fair value of common stock of $0.385, and ~~offers, benchmark yields and credit spreads and other observable inputs.~~(v) expected life of 4.9 years.

The Company’s accounting policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 1, Level 2, or Level 23 for the three and nine months ended September 30, ~~2017.~~2020.

On January 5, 2018, the Company entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Silicon Valley Bank (“SVB”) pursuant to ~~our initiative~~which SVB agreed to ~~restructure operations~~lend the Company $10.0 million. The principal borrowed under the Loan and Security Agreement bears interest at a rate equal to the Prime Rate, as reported in the money rates section of The Wall Street Journal or any successor publication representing the rate of interest per annum then in effect, plus one percent per annum (4.25% as of September 30, 2020), which interest is payable monthly. Additionally on April 1, 2020, the Company and SVB entered into a Deferral Agreement. Under the Deferral Agreement, principal repayments are deferred by six months and the Company is only required to make monthly interest payments. The loan matures on June 1, 2022. Previously, the Company only made monthly interest payments until December 31, 2018, following which the Company also made equal monthly payments of principal and interest until the signing of the Deferral Agreement. The Company will also be required to pay an additional final payment at maturity equal to $650,000 (the “Final Payment Charge”). The Final Payment Charge will be due on the scheduled maturity date and to date approximately $568,000 has been recognized as an increase to the principal balance with a corresponding charge to interest expense with the remaining final payment charge to be recognized over the term of the facility using the effective interest method. At its option, the Company may prepay all amounts owed under the Loan and Security Agreement (including all accrued and unpaid interest and the Final Payment Charge).

In connection with the Loan and Security Agreement, the Company granted to SVB a security interest in substantially all of the Company’s assets now owned or hereafter acquired, excluding intellectual property and certain other assets. In addition, as TLANDO was not approved by the ~~board of directors on July 13, 2016. Under the July 2016 restructuring,~~United States Food and Drug Administration (“FDA”) prior to May 31, 2018, the Company ~~reduced~~maintains $5.0 million of cash collateral at SVB as required under the Loan and Security Agreement until such time as TLANDO is approved by the FDA.

While any amounts are outstanding under the Loan and Security Agreement, the Company is subject to a number of affirmative and negative covenants, including covenants regarding dispositions of property, business combinations or acquisitions, incurrence of additional indebtedness and transactions with affiliates, among other customary covenants. The credit facility also includes events of default, the occurrence and continuation of which could cause interest to be charged at the rate that is otherwise applicable plus 5.0% and would provide SVB, as collateral agent, with the right to exercise remedies against the Company and the collateral securing the credit facility, including foreclosure against the property securing the credit facilities, including its ~~workforce~~cash. These events of default include, among other things, any failure by ~~eight positions, constituting 33%~~the Company to pay principal or interest due under the credit facility, a breach of certain covenants under the credit facility, the Company’s insolvency, a material adverse change, and one or more judgments against the Company in an amount greater than $100,000 individually or in the aggregate.

Future maturities of principal payments on the Loan and Security Agreement at September 30, 2020, are as follows:

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheet that sum to the total of the ~~Company’s workforce.~~same such amounts shown in the statement of cash flows.

Amounts included in restricted cash represent those required to be set aside by the Loan and Security Agreement. The ~~reduction in workforce involved all functional disciplines including general~~restriction will lapse if and ~~administrative employees, sales and marketing and research and development personnel. Additionally,~~when TLANDO is approved by the ~~Board approved a further restructuring in October 2016 whereby~~FDA.

On April 21, 2020, the Company ~~reduced its workforce by an additional two positions~~was granted a loan from SVB in the ~~sales and marketing functions. The restructurings that occurred in 2016 are jointly referred~~aggregate amount of $233,537, pursuant to as the ~~2016 Restructuring Plan.~~Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020.

The PPP loan, which was in the form of a note dated April 21, 2020 issued by SVB, matures on April 21, 2022 and bears interest at a rate of 1.0% per annum, payable monthly commencing on November 21, 2020 (“Note”). The Note may be prepaid by the Company ~~did not recognize~~at any ~~charges related~~time prior to maturity with no prepayment penalties. Funds from the ~~2016 Restructuring Plan during~~PPP loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. The Company intends to use the ~~three~~entire PPP loan amount for qualifying expenses. Under the terms of the PPP loan, certain amounts of the PPP loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. The Company has requested forgiveness of the PPP loan and ~~nine months ended~~is awaiting a final decision from the Small Business Administration.

Future maturities of principal payments on the PPP Loan at September 30, ~~2017 and 2016. The activity for the nine months ended September 30, 2017 for restructuring charges is~~2020, are as follows:

Effective June 15, 2020, the Company began deferring Federal Insurance Contributions Act (“FICA”) taxes under the CARES Act Section 2302. Payment of these tax deferrals are delayed to December 31, 2021 and December 31, 2022.

The tax provision for interim periods is determined using an estimate of the Company’s effective tax rate for the full year adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter the Company updates its estimate of the annual effective tax rate, and if the estimated tax rate changes, the Company makes a cumulative adjustment.

At September 30, ~~2017~~2020 and December 31, ~~2016,~~2019, the Company had a full valuation allowance against its deferred tax assets, net of expected reversals of existing deferred tax liabilities, as it believes it is more likely than not that these benefits will not be realized.

On March 29, 2012, the Company terminated its collaborative agreement with Solvay Pharmaceuticals, Inc. (later acquired by Abbott Products, Inc.) for TLANDO. As part of the termination, the Company reacquired the rights to the intellectual property from Abbott. All obligations under the prior license agreement have been completed except that Lipocine will owe Abbott a perpetual 1% royalty on net sales. Such royalties are limited to $1.0 million in the first two calendar years following product launch, after which period there is not a cap on royalties and no maximum aggregate amount. If generic versions of any such product are introduced, then royalties are reduced by 50%. The Company did not incur any royalties during the three and nine months ended September 30, ~~2017~~2020 and ~~2016.~~2019.

The Company has entered into agreements with various contract organizations that conduct preclinical, clinical, analytical and manufacturing development work on behalf of the Company as well as a number of independent contractors and primarily clinical researchers who serve as advisors to the Company. The Company incurred expenses of ~~$1.4~~$1.8 million and ~~$938,000~~$1.2 million, respectively, for the three months ended September 30, ~~2017~~2020 and ~~2016,~~2019 and ~~$7.3~~$5.1 million and ~~$4.7~~$4.0 million, respectively, for the nine months ended September 30, ~~2017~~2020 and ~~2016~~2019 under these agreements and has recorded these expenses in research and development expenses.

On August 6, 2004, the Company assumed a non-cancelable operating lease for office space and laboratory facilities in Salt Lake City, Utah. On May 6, 2014, the Company modified and extended the lease through February 28, 2018. ~~Additionally, on December 28, 2015,~~On February 8, 2018, the Company ~~entered into an operating~~extended the lease ~~for office space in Lawrenceville, New Jersey~~ through February 28, 2019, on January ~~31, 2018.~~ 2, 2019, the Company extended the lease through February 29, 2020, and on February 24, 2020, the Company extended the lease through February 28, 2021.

Future minimum lease payments under ~~non-cancellable~~non-cancelable operating leases ~~(with initial or remaining lease terms in excess of one year)~~ as of September 30, ~~2017~~2020 are:

The Company’s rent expense was ~~$95,000 and $95,000~~$83,000 for each of the three months ended September 30, ~~2017~~2020 and ~~2016,~~2019 and ~~$285,000~~was $248,000 and ~~$279,000~~$246,000, respectively, for the nine months ended September 30, ~~2017~~2020 and ~~2016.~~2019.

On February 27, 2020, the Company completed a registered direct offering of securities registered under an effective registration statement filed pursuant to the Securities Act of 1933, as amended (“February 2020 Offering”). The gross proceeds from the February 2020 Offering were approximately $6.0 million, before deducting placement agent fees and other offering expenses of approximately $347,000. In the February 2020 Offering, the Company sold 10,084,034 Class A Units at an offering price of $0.595 per unit, with each Class A Unit consisting of one share of its common stock and one-half of a common warrant to purchase one share of common stock at an exercise price of $0.53 per share of common stock. Additionally, the common stock warrants were immediately exercisable and expire on February 27, 2025. By their terms, however, the common stock warrants cannot be exercised at any time that the common stock warrant holder would beneficially own, after such exercise, more than 4.99% (or, at the election of the holder, 9.99%) of the shares of common stock then outstanding after giving effect to such exercise.

On November 18, 2019, the Company completed a public offering of securities registered under an effective registration statement filed pursuant to the Securities Act of 1933, as amended (“November 2019 Offering”). The gross proceeds from the November 2019 Offering were approximately $6.0 million, before deducting placement agent fees and other offering expenses of $404,000. In the November 2019 Offering, the Company sold (i) 10,450,000 Class A Units, with each Class A Unit consisting of one share of its common stock and a common warrant to purchase one share of its common stock, and (ii) 1,550,000 Class B Units, with each Class B Unit consisting of one pre-funded warrant to purchase one share of its common stock and a common warrant to purchase one share of its common stock, at a price of $0.50 per Class A Unit and $0.4999 per Class B Unit. The pre-funded warrants, which were exercised for common stock in December 2019, were issued in lieu of common stock in order to ensure the purchaser did not exceed certain beneficial ownership limitations. The pre-funded warrants were immediately exercisable at an exercise price of $.0001 per share, subject to adjustment. Additionally, the common stock warrants were immediately exercisable at an exercise price of $0.50 per share, subject to adjustment, and expire on November 17, 2024. By their terms, however, neither the pre-funded warrants nor the common stock warrants can be exercised at any time that the pre-funded warrant holder or the common stock warrant holder would beneficially own, after such exercise, more than 4.99% (or, at the election of the holder, 9.99%) of the shares of common stock then outstanding after giving effect to such exercise. On the date of the November 2019 Offering, the Company allocated approximately $768,000 and $4.8 million to common stock/additional paid-in capital and warrant liability, respectively.

In March 2017, the Company entered into a Controlled Equity Offering Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), to sell shares of our common stock, with aggregate gross sales proceeds of up to $20.0 million, from time to time, through an “at the ~~market,”~~ market” (“ATM”), equity offering program, under which Cantor acts as sales agent. The shares of common stock to be sold under the Sales Agreement ~~will be~~were originally sold and issued pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-199093) (the ~~“Existing~~“Prior Form S-3”), which was previously declared effective by the Securities and Exchange Commission, and the related prospectus and one or more prospectus supplements. As of September 30, 2017, we had sold an aggregate of 2,518,109 shares at a weighted-average sales price of $4.40 per share under the ATM for aggregate gross proceeds of $11.1 million and net proceeds of $10.6 million, after deducting sales agent commission and discounts and our other offering costs.

On October 13, 2017, the Company filed a Form S-3 (File No. 333-220942) (the “New Form S-3”) to replace the ~~Existing~~Prior Form S-3. The New Form S-3 has ~~not yet~~ been declared effective by the Securities and Exchange ~~Commission.~~Commission, and the Prior Form S-3 has been terminated. The New Form S-3 ~~when effective, will register~~registered the sale of up to $150.0 million of any combination of common stock, preferred stock, debt securities, warrants and units pursuant to a shelf registration statement. The New Form S-3 also contains a prospectus pursuant to which we may sell, from time to time, shares of our common stock having an aggregate offering price of up to $25.0 million through Cantor as our sales agent, pursuant to the Sales Agreement. ~~Pursuant~~On August 21, 2020, the Company filed a prospectus supplement in which the Company increased the aggregate offering price in which shares of our common stock can be sold through Cantor as our sales agent, pursuant to ~~Rule 415(a)(6)~~the Sales Agreement to a total of $63.0 million of which $13.0 million of our common stock has already been sold under the ~~Securities Act~~Sales Agreement.

As of ~~1933, as amended,~~September 30, 2020, we had sold an aggregate of 9,465,535 shares at a weighted-average sales price of $2.54 per share under the ATM for aggregate gross proceeds of $24.1 million and net proceeds of $23.2 million, after deducting sales agent commission and discounts and our other offering costs. During the three and nine months ended September 30, 2020, the Company sold 2,830,000 shares at a weighted-average sales price of ~~securities on~~$1.43 per share under the ~~Existing Form S-3 will be deemed terminated as~~ATM for aggregate gross proceeds of $4.0 million and net proceeds of $3.9 million. During the ~~date~~three months ended September 30, 2019, the Company sold an aggregate of ~~effectiveness~~283,782 shares at a weighted-average sales price of $2.22 per share under the ~~New Form S-3.~~ ATM for aggregate gross proceeds of $629,000 and $604,000 in net proceeds. During the nine months ended September 30, 2019, the Company sold an aggregate of 3,276,286 shares at a weighted-average sales price of $2.19 per share under the ATM for aggregate gross proceeds of $7.2 million and $6.9 million in net proceeds.

On November 13, 2015, the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent, entered into a Rights Agreement. Also on November 12, 2015, the board of directors of the Company authorized and the Company declared a dividend of one preferred stock purchase right (each a “Right” and collectively, the “Rights”) for each outstanding share of common stock of the Company. The dividend was payable to stockholders of record as of the close of business on November 30, 2015 and entitles the registered holder to purchase from the Company one one-thousandth of a fully paid non-assessable share of Series A Junior Participating Preferred Stock of the Company at a price of $63.96 per one-thousandth share (the “Purchase Price”). The Rights will generally become exercisable upon the earlier to occur of (i) 10 business days following a public announcement that a person or group of affiliated or associated persons has become an Acquiring Person (as defined below) or (ii) 10 business days (or such later date as may be determined by action of the board of directors prior to such time as any person or group of affiliated or associated persons becomes an Acquiring Person) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 15% or more of the outstanding common stock of the Company. Except in certain situations, a person or group of affiliated or associated persons becomes an “Acquiring Person” upon acquiring beneficial ownership of 15% or more of the outstanding shares of common stock of the Company.

In general, in the event a person becomes an Acquiring Person, then each Right not owned by such Acquiring Person will entitle its holder to purchase from the Company, at the Right’s then current exercise price, in lieu of shares of Series A Junior Participating Preferred Stock, common stock of the Company with a market value of twice the Purchase Price.

In addition, if after any person has become an Acquiring Person, (a) the Company is acquired in a merger or other business combination, or (b) 50% or more of the Company’s assets, or assets accounting for 50% or more of its earning power, are sold, leased, exchanged or otherwise transferred (in one or more transactions), proper provision shall be made so that each holder of a Right (other than the Acquiring Person, its affiliates and associates and certain transferees thereof, whose Rights became void) shall thereafter have the right to purchase from the acquiring corporation, for the Purchase Price, that number of shares of common stock of the acquiring corporation which at the time of such transaction would have a market value of twice the Purchase Price.

The Company will be entitled to redeem the Rights at $0.001 per Right at any time prior to the time an Acquiring Person becomes such. The terms of the Rights are set forth in the Rights Agreement, which is summarized in the Company's Current Report on Form 8-K dated November 13, 2015. The rights plan ~~will~~was originally set to expire on November 12, 2018; however, on November 5, 2018 our Board of Directors approved an Amended and Restated Rights Agreement pursuant to which the expiration date was extended to November 5, 2021, unless the rights are earlier redeemed or exchanged by the Company.

The Company recognizes stock-based compensation expense for grants of stock option awards, restricted stock units and restricted stock under the Company’s Incentive Plan to employees and nonemployee members of the Company’s board of directors based on the grant-date fair value of those awards. The grant-date fair value of an award is generally recognized as compensation expense over the award’s requisite service period. In addition, the Company grants stock options to nonemployee consultants from time to time in exchange for services performed for the Company. ~~Equity instruments granted to nonemployees are subject to periodic revaluation over their vesting terms.~~

The Company uses the Black-Scholes model to compute the estimated fair value of stock option awards. Using this model, fair value is calculated based on assumptions with respect to (i) expected volatility of the Company’s common stock price, (ii) the periods of time over which employees and members of the board of directors are expected to hold their options prior to exercise (expected term), (iii) expected dividend yield on the Common Stock, and (iv) risk-free interest rates. Stock-based compensation expense also includes an estimate, which is made at the time of grant, of the number of awards that are expected to be forfeited. This estimate is revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation cost that has been expensed in the statements of operations amounted to ~~$939,000~~approximately $352,000 and ~~$460,000~~$58,000, respectively, for the three months ended September 30, ~~2017~~2020 and ~~2016,~~2019 and ~~$2.2~~amounted to $1.1 million and ~~$1.9 million~~$781,000, respectively, for the nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, and is allocated as follows:

The Company did not issue any stock options during the three months ended September 30, ~~2017 and 2016,~~2020 and issued ~~50,000 and 602,000~~24,000 stock options during the three months ended September 30, 2019. Additionally, during the nine months ended September 30, ~~2017~~2020 and ~~2016. Additionally,~~2019, the Company issued ~~287,000 restricted~~739,000 and 79,000 stock units during the nine months ended September 30, 2017 and did not issue any restricted stock units during the nine months ended September 30, 2016 or the three months ended September 30, 2017 and 2016.options, respectively.

Key assumptions used in the determination of the fair value of stock options granted are as follows:

Expected Term: The expected term represents the period that the stock-based awards are expected to be outstanding. Due to limited historical experience of similar awards, the expected term was estimated using the simplified method in accordance with the provisions of Staff Accounting Bulletin (“SAB”) No. 107,Share-Based Payment, for awards with stated or implied service periods. The simplified method defines the expected term as the average of the contractual term and the vesting period of the stock option. For awards with performance conditions, and that have the contractual term to satisfy the performance condition, the contractual term was used.

Risk-Free Interest Rate: The risk-free interest rate used was based on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term.

Expected Dividend: The expected dividend assumption is based on management’s current expectation about the Company’s anticipated dividend policy. The Company does not anticipate declaring dividends in the foreseeable future.

Expected Volatility: ~~Since the Company did not have sufficient trading history, the~~The volatility factor ~~was~~is based solely on the average of similar public companies through August 2014. When selecting similar companies, the Company considered the industry, stage of life cycle, size, and financial leverage. Beginning in August 2014, the volatility factor was based on a combination of the Company'sCompany’s trading history since March ~~2014 and the average of similar public companies.~~2014.

For options granted during the nine months ended September 30, 2017 and 2016, the Company calculated the fair value of each option grant on the respective dates of grant using the following weighted average assumptions:

FASB ASC 718,Stock Compensation, requires the Company to recognize compensation expense for the portion of options that are expected to vest. Therefore, the Company applied estimated forfeiture rates that were derived from historical employee termination behavior. If the actual number of forfeitures differs from those estimated by management, additional adjustments to compensation expense may be required in future periods.

As of September 30, ~~2017,~~2020, there was ~~$2.1 million~~$430,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Company’s stock ~~plans.~~option plan. That cost is expected to be recognized over a weighted average period of ~~1.60~~1.59 years and will be adjusted for subsequent changes in estimated forfeitures. Additionally, as of September 30, ~~2017,~~2020, there was ~~$736,000~~$118,000 of total unrecognized compensation cost related to unvested restricted stock units that have either time-based or performance vesting.

In April 2014, the board of directors adopted the 2014 Stock and Incentive Plan ("2014 Plan") subject to shareholder approval which was received in June 2014. The 2014 Plan provides for the granting of nonqualified and incentive stock options, stock appreciation rights, restricted stock units, restricted stock and dividend equivalents. An aggregate of 1,000,000 shares ~~are~~were authorized for issuance under the 2014 Plan. Additionally, 271,906 remaining authorized shares under the 2011 Equity Incentive Plan ("2011 Plan") were issuable under the 2014 Plan at the time of the 2014 Plan adoption. Upon receiving shareholder approval in June 2016, the 2014 Plan was amended and restated to increase the authorized number of shares of common stock of the Company issuable under all awards granted under the 2014 Plan from 1,271,906 to 2,471,906. Additionally, upon receiving shareholder approval in June 2018, the 2014 Plan was further amended and restated to increase the authorized number of shares of common stock of the Company issuable under all awards granted under the 2014 Plan from 2,471,906 to 3,221,906. Finally, upon receiving shareholder approval in June 2020, the 2014 Plan was further amended and restated to increase the authorized number of shares of common stock of the Company issuable under all awards granted under the 2014 Plan from 3,221,906 to 5,721,906. The board of directors, on an option-by-option basis, determines the number of shares, exercise price, term, and vesting ~~period.~~period for options granted. Options granted generally have a ten-year contractual life. The Company issues shares of common stock upon the exercise of options with the source of those shares of common stock being either newly issued shares or shares held in treasury. An aggregate of ~~2,471,906~~5,721,906 shares are authorized for issuance under the 2014 Plan, with ~~896,020~~2,544,888 shares remaining available for grant as of September 30, ~~2017.~~2020.

The following table summarizes information about stock options outstanding and exercisable at September 30, ~~2017:~~2020:

The intrinsic value for stock options is defined as the difference between the current market value and the exercise price. ~~The total intrinsic value of~~There were no stock options exercised during the three and nine months ended September 30, ~~2017~~2020 and ~~2016 was $202,000 and $22,000. There~~there were ~~190,383 and 5,445~~20,000 stock options exercised during the three and nine months ended September 30, ~~2017 and 2016.~~2019.

The Company accounts for its common stock warrants under ASC 480, Distinguishing Liabilities from Equity, which requires any financial instrument, other than an outstanding share, that, at inception, embodies an obligation to repurchase the issuer’s equity shares, or is indexed to such an obligation, and requires or may require the issuer to settle the obligation by transferring assets, to be classified as a liability. In accordance with ASC 480, the Company’s outstanding warrants from the November 2019 Offering are classified as a liability. The liability is adjusted to fair value at each reporting period, with the changes in fair value recognized as gain (loss) on change in fair value of warranty liability in the Company’s consolidated statements of operations. The warrants issued in the November 2019 Offering allow the warrant holder, if certain change in control events occur, the option 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 fundamental transaction.

As of September 30, 2020, the Company had 1,104,030 common stock warrants outstanding from the November 2019 Offering to purchase an equal number of shares of common stock. The fair value of these warrants on September 30, 2020 and December 31, 2019 was determined using the Black-Scholes option pricing model with the following Level 3 inputs (as defined in the November 2019 Offering):

During the three and nine months ended September 30, 2020, the Company recorded a non-cash gain of approximately $140,000 and a non-cash loss of approximately $3.0 million, respectively, from the change in fair value of the November 2019 Offering warrants. The following table is a reconciliation of the warrant liability measured at fair value using level 3 inputs:

Additionally, in the February 2020 Offering, the Company issued 5,042,017 common stock warrants. However, the February 2020 Offering warrants do not provide the warrant holder the option to receive an amount of cash equal to the Black-Scholes value of the warrants upon a fundamental transaction. Therefore, the Company has not recorded a warrant liability with respect to the warrants issued in the February 2020 Offering.

The following table summarizes the number of common stock warrants outstanding and the weighted average exercise price:

During the three and nine months ended September 30, 2020, 1,478,844, and 15,097,651 common stock warrants to purchase one share of our common stock were exercised, respectively, resulting in proceeds of approximately $761,000 and $7.7 million, respectively, in the three and nine months ended September 30, 2020.

The following table summarizes information about common stock warrants outstanding at September 30, 2020:

The Company is involved in various lawsuits, claims and other legal matters from time to time that arise in the ordinary course of conducting business. The Company records a liability when a particular contingency is probable and estimable.

On February 15, 2019, a purported shareholder filed a shareholder derivative complaint in the Court of Chancery of the State of Delaware, John Wajda, derivatively on behalf of Lipocine Inc. v. Mahesh Patel, et al., against certain of the Company’s current and former officers and directors as well as the Company as a nominal defendant. The complaint asserts claims for alleged breaches of fiduciary duty and unjust enrichment arising out of the Company’s dissemination of purportedly false and misleading statements relating to the filing of the New Drug Application (“NDA”) for TLANDO. The relief sought in the complaint includes unspecified damages, changes to the Company’s corporate governance procedures, equitable and/or injunctive relief, restitution, and attorneys’ fees. On August 16, 2019, defendants filed a motion to dismiss the complaint. In response, the plaintiff’s filed an amended stockholder derivative complaint. Defendants’ motion to dismiss the amended complaint was filed on December 12, 2019; plaintiff’s response was filed on January 27, 2020 and defendants’ reply was filed on February 26, 2020. Oral arguments on the motion to dismiss were held on July 28, 2020. On July 30, 2020, the court entered an order dismissing the complaint in its entirety.

On April 2, 2019, the Company filed a lawsuit against Clarus in the United States District Court for the District of Delaware alleging that Clarus’s JATENZO® product infringes six of Lipocine’s issued U.S. patents: 9,034,858; 9,205,057; 9,480,690; 9,757,390; 6,569,463; and 6,923,988. Clarus has answered the complaint and asserted counterclaims of non-infringement and invalidity. The Company answered Clarus’s counterclaims on April 29, 2019. The Court held a scheduling conference on August 15, 2019, a claim construction hearing on February 11, 2020 and scheduled a five-day jury trial beginning on February 8, 2021. On February 11, 2020, the Company voluntarily dismissed allegations of patent infringement for expired U.S. Patent Nos. 6,569,463 and 6,923,988 in an effort to streamline the issues and associated costs for dispute. The parties are currently engaged in the fact discovery and expert testimony phase of the lawsuit.

On November 14, 2019, the Company and certain of its officers were named as defendants in a purported shareholder class action lawsuit, Solomon Abady v. Lipocine Inc. et al., 2:19-cv-00906-PMW, filed in the United District Court for the District of Utah. The complaint alleges that the defendants made false and/or misleading statements and/or failed to disclose that our filing of the NDA for TLANDO to the FDA contained deficiencies and as a result the defendants’ statements about our business and operations were false and misleading and/or lacked a reasonable basis in violation of federal securities laws. The lawsuit seeks certification as a class action (for a purported class of purchasers of the Company’s securities from March 27, 2019 through November 8, 2019), compensatory damages in an unspecified amount, and unspecified equitable or injunctive relief. The Company has insurance that covers claims of this nature. The retention amount payable by the Company under our policy is $1.25 million. The Company filed a motion to dismiss the class action lawsuit on July 24, 2020. In response, the plaintiff’s filed their response to the motion to dismiss the class action lawsuit on September 22, 2020. Further, the Company intends to vigorously defend itself and its current and former officers and directors against these allegations and has not ~~accrued for any contingency at September 30, 2017~~recorded a liability related to this shareholder class action lawsuit as the ~~Company does~~outcome is not ~~consider any contingency to be~~ probable nor ~~estimable. While complete assurance cannot~~can an estimate be ~~given to the outcome~~made of ~~these proceedings,~~loss, if any.

Beyond Solomon Abady v. Lipocine Inc. et al., 2:19-cv-00906-PM, management does not currently believe that any ~~of these matters,~~other matter, individually or in the aggregate, will have a material adverse effect on our financial condition, liquidity or results of operations.

In the ordinary course of business, the Company enters into agreements, such as lease agreements, licensing agreements, clinical trial agreements, and certain services agreements, containing standard guarantee and / or ~~indemnifications~~indemnification provisions. Additionally, the Company has indemnified its directors and officers to the maximum extent permitted under the laws of the State of Delaware.

On July 23, 2013, the Company entered into an assignment/license and a services agreement with Spriaso, a related-party that is majority-owned by certain current and former directors of Lipocine Inc. and their affiliates. Under the license agreement, the Company assigned and transferred to Spriaso all of the Company’s rights, title and interest in its intellectual property to develop products for the cough and cold field. In addition, Spriaso received all rights and obligations under the Company’s product development agreement with a third-party. In exchange, the Company will receive a royalty of 20 percent of the net proceeds received by Spriaso, up to a maximum of $10.0 million. Spriaso also granted back to the Company an exclusive license to such intellectual property to develop products outside of the cough and cold field. Under the service agreement, the Company provided facilities and up to 10 percent of the services of certain employees to Spriaso for a period of 18 months which expired January 23, 2015. Effective January 23, 2015, the Company entered into an amended services agreement with Spriaso in which the Company agreed to continue providing up to 10 percent of the services of certain employees to Spriaso at a rate of $230/hour for a period of six months. The agreement was further amended on July 23, 2015, on January 23, 2016, on July 23, 2016, on January 23, 2017, ~~and again~~ on July 23, 2017, on January 23, 2018, on July 23, 2018 and again on January 23, 2019 to extend the term of the agreement for an additional six months. The agreement was further amended on July 23, 2019 and again on July 23, 2020 to extend the term of the agreement for an additional twelve months. The agreement may be extended upon written agreement of Spriaso and the Company. The Company did not receive any reimbursements ~~for~~during the three ~~months ended September 30, 2017~~ and ~~2016 and received reimbursements of $31,000 and $3,100 for the~~ nine months ended September 30, ~~2017~~2020 and ~~2016.~~2019, respectively. Additionally, the Company did not receive any royalty payments from Spriaso during the three and nine months ended September 30, 2020. The Company received $165,000 during the three and nine months ended September 30, 2019. Spriaso filed its first NDA and as an affiliated entity of the Company, it used up the one-time waiver for user fees for a small business submitting its first human drug application to the FDA. Spriaso is considered a variable interest entity under the FASB ASC Topic 810-10,Consolidations;, however the Company is not the primary beneficiary and has therefore not consolidated Spriaso.

In ~~May 2017,~~2016, the FASB issued Accounting Standards Update (“ASU”) ~~2017-09,~~2016-13, ~~Compensation-Stock Compensation (Topic 718): Scope Modification Accounting~~Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ~~update provides guidance about which changes~~standard replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables, and requires entities to measure all expected credit losses for financial assets held at the ~~terms or~~reporting date based on historical experience, current conditions ~~of a share-based payment awards require an entity to apply modification accounting. This update is~~and reasonable and supportable forecasts. The original effective date for ASU 2016-13 was for annual and interim ~~reporting~~ periods beginning after December 15, 2017. Early adoption is permitted. The Company plans to adopt this pronouncement effective January 1, 2018 and does not believe it will have a material effect on the Company's financial position or results of operations.2019.

~~In August 2016,~~However, in October 2019, the FASB issued ASU ~~2016-15,~~~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~. This update addresses how certain cash inflows and outflows are classified in the statement of cash flows to eliminate existing diversity in practice. This update is effective for annual and interim reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company plans to adopt this pronouncement effective January 1, 2018 and does not believe it will have a material effect on the Company's financial position or results of operations.

~~In June 2016, the FASB issued ASU 2016-13,~~2019-10, Financial Instruments - Credit Losses,~~. The new standard amends guidance on reporting credit losses for assets held at amortized cost basis~~ Derivatives and ~~available-for-sale debt securities.ASU 2016-13 is effective for interim~~Hedging, and annual reporting periods beginning after December 15, 2019; early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach). The Company plans to adopt this pronouncement effective January 1, 2019 and does not believe it will have a material effect on the Company's financial position or results of operations.

~~In February 2016, FASB issued ASU 2016-02~~,~~Leases,~~which provides new guidance for lease accounting including recognizing most leases on-balance sheet. The standard becomes effective for annual and interim periods in fiscal years beginning after December 15, 2018. ASU 2016-02 mandates a modified retrospective transition method for all entities.The Company currently does not have any lease that extends beyond December 31, 2018 but will continue to evaluate the effect that ASU 2016-02 will have on our consolidated financial statements and related disclosures if we enter into new leases that extend beyond December 31, 2018. The Company plans to adopt this pronouncement effective January 1, 2019 and does not believe it will have a material effect on the Company's financial position or results of operations.

~~In January 2016, FASB issuedASU 2016-01,~~~~Financial Instruments, Recognition and Measurement of Financial Assets and Financial Liabilities~~Leases: Effective Dates, which provides new guidance for the recognition, measurement, presentation, and disclosure of financial assets and liabilities. The standard becomes effective for the Company beginning in the first quarter of our fiscal year ended December 31, 2018 and early adoption is permitted.~~The Company plans to adopt this pronouncement effective January 1, 2018 and does not believe it will have a material effect on the Company's financial position or results of operations.~~

~~In May 2014, the FASB issued 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. In July 2015, the FASB voted to approve the deferral ofdeferred the effective date of ASU ~~2014-09 by one year. Therefore, ASU 2014-09 will become effective~~2016-13 for certain entities, including those that are eligible to be smaller reporting companies. A company’s determination about whether it is eligible for the ~~Company in the first quarter~~deferral is a one-time assessment as of ~~our fiscal year ending December 31, 2018. Early adoption is permitted, but not earlier than the first quarter~~November 15, 2019 based on its most recent determination of its small reporting company eligibility as of the Company's fiscal year ending December 31, 2017. The Company adopted this pronouncement effective January 1, 2017 and it did not have any effect on the Company's financial position or results of operations as no revenue was recognized during the three and six months ended June 30, 2017 and 2016.

~~In March 2016, the FASB issued ASU 2016-09,~~~~Compensation-Stock Compensation (Topic 718)~~~~. The pronouncement was issued to simplify several aspects~~last business day of the ~~accounting~~most recently completed second quarter. Based on this determination, the Company qualifies as a smaller reporting entity and is therefore eligible for ~~share-based payment transactions, including immediate recognition of all excess tax benefits and deficiencies in~~ the income statement, classification of awards as either equity or liabilities and classification on the statement of cash flows, and application for forfeitures. The Company adopted ASU 2016-09 on January 1, 2017 prospectively (prior periods have not been restated). There was no impactdeferral of adoption of ~~this pronouncement as the Company did not have any excess tax benefits as~~ASU 2016-13, resulting in a new effective date of January 1, ~~2017.~~2023. The Company ~~elected to apply~~has historically not had credit losses on financial instruments and is currently evaluating the ~~change in classification for excess tax benefits in~~impact the statement of cash flows on a prospective basis, and elected to continue estimating stock-based compensation award forfeitures in determining the amount of compensation cost to be recognized each period. No other provisionsadoption of ASU ~~2016-09 had a material impact~~2016-13 will have on ~~the Company’s~~its consolidated financial statements ~~or disclosures.~~

~~All other issued and effective accounting standards during 2017 were not relevant to the Company.~~

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto and other financial information included elsewhere in this report. For additional context with which to understand our financial condition and results of operations, see the management’s discussion and analysis included in our Form 10-K, filed with the SEC on March ~~6, 2017~~13, 2020 as well as the financial statements and related notes contained therein.

As used in the discussion below, “we,” “our,” and “us” refers to Lipocine.

This section and other parts of this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements may refer to such matters as products, ~~expected~~ product benefits, pre-clinical and clinical development timelines, ~~results and timelines of ongoing or future studies,~~ clinical and regulatory expectations and plans, expected responses to regulatory actions, anticipated financial performance, future revenues or earnings, business prospects, projected ventures, new products and services, anticipated market performance, expected research and development and other expenses, future expectations for liquidity and capital resources needs and similar matters. Such words as “may”, “will”, “expect”, “continue”, “estimate”, “project”, ~~“potential”, “ anticipate”, “believe”, “could”, “plan”, “predict”, “should”, “would”~~ and “intend” and similar terms and expressions are intended to identify ~~forward-looking~~forward looking statements. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part II, Item 1A (Risk Factors) of ~~this~~our Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on May 7, 2020, in Part II, Item 1A (Risk Factors) of our Form 10-Q for the quarter ended June 30, ~~2017~~2020 filed with the SEC on August ~~7, 2017,~~6, 2020, in Item 1A (Risk Factors) of ~~our~~this Form 10-Q, ~~for the quarter ended March 31, 2017 filed with the SEC on May 8, 2017~~ or in Part I, Item 1A (Risk Factors) of our Form 10-K filed with the SEC on March ~~6, 2017.~~13, 2020. Except as required by applicable law, we assume no obligation to revise or update any forward-looking statements for any reason.

We are a ~~specialty pharmaceutical~~clinical-stage biopharmaceutical company focused on applying our oral drug delivery technology for the development of pharmaceutical products ~~in the area of men’s~~focusing on metabolic and ~~women’s health.~~endocrine 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 proprietary product candidates designed to produce favorable pharmacokinetic (“PK”) characteristics and facilitate lower dosing requirements, bypass first-pass metabolism in certain cases, reduce side effects, and eliminate gastrointestinal interactions that limit bioavailability.

Our ~~lead~~most advanced product candidate, TLANDO™ ~~or LPCN 1021,~~, is an oral testosterone replacement therapy (“TRT”) ~~and is currently under review by~~. On November 8, 2019 we received a Complete Response Letter ("CRL") from the United States Food and Drug Administration ~~(“FDA”~~("FDA") regarding our New Drug Application ("NDA") filed in May 2019 for TLANDO as a TRT in adult males for conditions associated with a deficiency of endogenous testosterone, also known as hypogonadism. A CRL is a communication from the FDA that informs companies that an application cannot be approved in its present form. The CRL identified one deficiency stating the efficacy trial did not meet the three secondary endpoints for maximal testosterone concentrations (“Cmax”). The CRL did not identify any specific issues relating to chemistry, manufacturing and controls (“CMC”) of TLANDO. We had our Post Action meeting with the FDA in January 2020 and discussed a potential path forward for the approval of TLANDO. Based on the Post Action meeting and written feedback, the FDA indicated our approach to addressing the deficiency through the reanalysis of existing data in accordance with FDA feedback appears to be a reasonable path forward. The FDA requested that the information generated by the reanalysis be submitted as part of an NDA resubmission with a six-month Prescription Drug User Fee Act (“PDUFA”) ~~action goal~~clock. We resubmitted the NDA on February 28, 2020 and it was assigned a PDUFA date of ~~February 8, 2018.~~August 28, 2020. However, on August 28, 2020 the FDA informed us that it needed additional time to complete its review of the NDA. On November 5, 2020, the FDA informed us that it is working towards taking action on the TLANDO NDA on or about the week of November 30, 2020. However, the Company cannot assure that the FDA will act in that time frame. The FDA has ~~deemed the resubmission a complete response to its June 2016 Complete Response Letter (“CRL”) that requested~~not asked for any additional ~~information related to the dosing algorithm for the proposed label. The TLANDO New Drug Application (“NDA”) is based on the results of the Dosing Validation (“DV”~~)study. The DV study confirmed the efficacy of TLANDO with a fixed dose regimen without need for dose adjustment. TLANDO was well tolerated upon 52-week exposure with no reports of drug related Serious Adverse Events (“SAEs”). Additionally, the Bone, Reproductivedata and ~~Urologic Drugs Advisory Committee (“BRUDAC”) of~~we have provided the FDA ~~plans~~with all information requested to discuss the NDA for TLANDO on January 10, 2018. Although there is no guarantee of approval of TLANDO, we believe the results from the DV study confirm the validity of a fixed dose approach without the need for dose titration to orally administering LPCN 1021. date.

Additional pipeline candidates include LPCN ~~1111,~~1144, an oral prodrug of bioidentical testosterone comprised of TU for the treatment of non-cirrhotic non-alcoholic steatohepatitis (“NASH”), TLANDO XR, a next generation oral ~~testosterone therapy~~TRT product with the potential for once daily dosing ~~that is currently in~~which has completed Phase 2 testing, LPCN 1148, an oral prodrug of bioidentical testosterone for the treatment of cirrhosis, and LPCN 1107, ~~which has the potential to become~~potentially the first oral hydroxyprogesterone caproate product indicated for the prevention of recurrent preterm birth, ~~and~~which has completed an End-of-Phase 2 meeting with the FDA.

LPCN 1144 is currently being tested in the LiFT (“Liver Fat intervention with oral Testosterone”) Phase 2 clinical study, a paired-biopsy study in confirmed pre-cirrhotic NASH subjects. Study enrollment has been completed and top-line primary endpoint results are expected in January 2021. Additionally, LPCN 1144 recently completed a Proof-Of-Concept (“POC”) liver imaging clinical study which demonstrated substantial liver fat reductions in hypogonadal males at risk of developing NASH as assessed using magnetic resonance imaging, proton density fat fraction (“MRI-PDFF”) technique.

To date, we have funded our operations primarily through the sale of equity securities, debt and convertible debt and through up-front payments, research funding and royalty and milestone payments from our license and collaboration arrangements. We have not generated any revenues from product sales and we do not expect to generate revenue from product sales unless and until we obtain regulatory approval of TLANDO or other products and (ii), if such approval is obtained, we are able to successfully commercialize such products.

We have incurred losses in most years since our inception. As of September 30, ~~2017,~~2020, we had an accumulated deficit of ~~$121.1~~$168 million. Income and losses fluctuate year to year, primarily depending on the nature and timing of ~~recognition of revenues from~~research and development occurring on our ~~license and collaboration agreements.~~product candidates. Our net loss was ~~$15.7~~$16.5 million for the nine months ended September 30, ~~2017, compared to $16.0~~2020 and $9.7 million for the nine months ended September 30, ~~2016.~~2019. 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, including on-going litigation activities, associated with our operations.

We expect to continue to incur significant expenses and operating losses for the foreseeable future as we:

To fund future long-term operations, including the potential commercialization of TLANDO or other products, we will need to raise additional capital. The amount and timing of future funding requirements will depend on many factors, including capital market conditions, regulatory requirements and outcomes related to TLANDO, regulatory requirements related to our other product development programs, the timing and results of our ongoing development efforts, the potential expansion of our current development programs, potential new development programs, our ability to license our products to third parties, the pursuit of various potential commercial activities and strategies associated with our development programs and related general and administrative support. We anticipate that we will seek to fund our operations through public or private equity or debt financings or other sources, such as potential license, partnering and collaboration agreements. In March 2017, we entered into a Controlled Equity Offering Sales Agreement (the “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 $20.0 million through Cantor as our sales agent (the “ATM Offering”). Through September 30, 2017, we have sold 2,518,109 shares for net proceeds of $10.6 million in the aggregate through the ATM Offering. However, even with the ATM Offering, weWe cannot be certain that anticipated additional financing will be available to us on favorable terms, in amounts sufficient to fund our operations (including the commercialization of TLANDO if we receive FDA approval), or at all. Although we have previously been successful in obtaining financing through public and private equity securities offerings and our license and collaboration agreements, there can be no assurance that we will be able to do so in the future. If we are unable to raise sufficient capital to fund our planned business operations and the continued development of our product candidates, we will have to reduce operations and expenses to conserve cash.

Our current portfolio ~~shown below,~~ includes our ~~lead~~most advanced product candidate, TLANDO, an oral testosterone replacement therapy product candidate, that is currently under review by the ~~FDA with a PDUFA goal date of February 8, 2018.~~FDA. Additionally, we are in the process of establishing our pipeline of other clinical candidates including LPCN 1144, an oral androgen therapy for the treatment of non-cirrhotic NASH, , TLANDO XR, a ~~next generation~~next-generation potential once daily oral testosterone replacement therapy, LPCN ~~1111,~~1148, an androgen therapy for the treatment of cirrhosis, and LPCN 1107, an oral therapy for the prevention of preterm ~~birth, LPCN 1107.~~birth.

These products are based on our proprietary Lip’ral promicellar drug delivery technology platform. Lip’ral promicellar technology is a patented technology based on lipidic compositions which form an optimal dispersed phase in the gastrointestinal environment for improved absorption of insoluble drugs. The drug loaded dispersed phase presents the solubilized drug efficiently at the absorption site (gastrointestinal tract membrane) thus improving the absorption process and making the drug less dependent on physiological variables such as dilution, gastro-intestinal pH and food effects for absorption. Lip’ral based formulation enables improved solubilization and higher drug-loading capacity, which can lead to improved bioavailability, reduced dose, faster and more consistent absorption, reduced variability, reduced sensitivity to food effects, improved patient compliance, and targeted lymphatic delivery where appropriate.

~~LPCN 1021:~~TLANDO: An Oral Product Candidate for Testosterone Replacement Therapy

Our ~~lead~~most advanced product, TLANDO, is an oral formulation of the chemical, ~~testosterone undecanoate (“TU”),~~TU, which is an ~~eleven carbon~~eleven-carbon side chain attached to ~~testosterone.~~T. TU is an ester prodrug of ~~testosterone.~~T. An ester is chemically formed by bonding an acid and an alcohol. Upon the cleavage, or breaking, of the ester bond, ~~testosterone~~T is formed. TU has been approved for use outside the United States for many years for delivery via intra-muscular injection and in oral dosage form and recently TU has received regulatory approval in the United States for delivery via intra-muscular injection. We are using our proprietary technology to facilitate steady gastrointestinal solubilization and absorption of TU. Proof of concept was initially established in 2006, and subsequently ~~LPCN 1021~~TLANDO was licensed in 2009 to Solvay Pharmaceuticals, Inc. which was then acquired by Abbott Products, Inc. ~~(“Abbott”~~("Abbott"). Following a portfolio review associated with the spin-off of AbbVie by Abbott in 2011, the rights to ~~LPCN 1021~~TLANDO were reacquired by us. All obligations under the prior license agreement have been completed except that Lipocine will owe Abbott a perpetual 1% royalty on net sales. Such royalties are limited to $1 million in the first two calendar years following product launch, after which period there is not a cap on royalties and no maximum aggregate amount. If generic versions of any such product are introduced, then royalties are reduced by 50%.

We resubmitted our NDA to the FDA in August 2017 based on the results of the DV study. The DV study confirmed the efficacy of TLANDO with a fixed dose regimen without need for dose adjustment. TLANDO was well tolerated upon 52-week exposure with no reports of drug related Serious Adverse Events (“SAEs”). The FDA accepted our NDA as a complete response to their CRL and assigned a PDUFA goal date of FebruaryOn November 8, ~~2018 for completion of the review. Additionally, the BRUDAC of the FDA plans to discuss the NDA for TLANDO on January 10, 2018. Previously on June 28, 2016,~~2019 we received a CRL from the FDA onregarding our ~~original~~ NDA ~~submission. A CRL is~~filed in May 2019 for TLANDO as a ~~communication from the FDA that informs companies that an application cannot be approved~~TRT in ~~its present form.~~adult males for conditions associated with a deficiency of endogenous testosterone, also known as hypogonadism. The CRL identified ~~deficiencies related~~one deficiency stating the efficacy trial did not meet the three Cmax secondary endpoints. The CRL does not identify any specific issues relating to the dosing algorithm for the label. Specifically, the proposed titration scheme for clinical practice was significantly different from the titration scheme used in the Phase 3 trial leading to discordance in titration decisions between the Phase 3 trial and real-world clinical practice. In response to the CRL, we metCMC of TLANDO. We had a Post Action meeting with the FDA in January 2020 and discussed a potential path forward for the approval of TLANDO. Based on the Post Action meeting and ~~proposed a dosing regimen to~~written feedback, the FDA indicated our approach to addressing the deficiency through the reanalysis of existing data in accordance with FDA feedback appears to be a reasonable path forward. The FDA requested that the information generated by the reanalysis be submitted as part of an NDA resubmission with a six-month PDUFA clock. We resubmitted the NDA on February 28, 2020 and it was assigned a PDUFA date of August 28, 2020. However, on August 28, 2020 the FDA informed us that it needed additional time to complete its review of the NDA. On November 5, 2020, the FDA informed us that it is working towards taking action on the TLANDO NDA on or about the week of November 30, 2020. However, the Company cannot assure that the FDA will act in that time frame. The FDA has not asked for any additional data and we have provided the FDA with all information requested to date. Previously, we have received two other CRL’s from the FDA on TLANDO NDA submissions. The first CRL was received on June 28, 2016 and the second CRL was received on May 8, 2018. We are exploring the possibility of licensing TLANDO to a third party should it receive approval, although no licensing agreement has been entered into by us yet. We are unable to estimate whether or when we will be able to out-license TLANDO, should it be approved. Additionally, the timing of the potential commercial launch of TLANDO should it receive approval, is uncertain. The timing of any commercial launch of TLANDO is contingent upon numerous factors including FDA approval, the availability of commercial launch supplies, the impact of COVID-19, our financial resources and our ability to license TLANDO to a third party or build out a commercial sales and marketing team/organization.

The ABPM Study was an open label, single arm study that enrolled 144 male hypogonadal subjects undergoing four months of treatment with TLANDO, 225 mg BID dosing, with 24-hour blood pressure measurements taken at baseline and at the end of the study. There were 138 subjects who received at least one dose of study drug and 126 subjects completed the study. There were 118 subjects enrolled in the ABPM Study with evaluable weighted average 24-hour ABPM data at both baseline and at the end of the study.

Subjects receiving treatment in the ABPM Study had the following baseline parameters:

SD = Standard Deviation, BMI = Body Mass Index, SBP = Systolic Blood Pressure, DBP = Diastolic Blood Pressure

Additionally, among the subjects enrolled in the ABPM Study, 48% of the subjects were hypertensive and 24% of subjects were type 2 diabetic.

CI = Confidence Interval, SBP = Systolic Blood Pressure, DBP = Diastolic Blood Pressure

Of the subjects (n=25) with baseline 24-hour average systolic blood pressure (“SBP”) greater than 140 mm Hg, 32% of the subjects were less than or equal to 140 mm Hg at the end of study. Additionally, of the subjects (n=93) with baseline 24-hour average SBP of less than or equal to 140 mm Hg, 9.7% of the subjects were greater than 140 mm Hg at the end of study.

The definitive phlebotomy study was designed based on ~~analyses of existing data. The FDA noted that while~~ the ~~proposed dosing regimen might be acceptable, validation in a clinical trial would be needed prior to resubmission. The DV study was~~FDA’s protocol recommendations and conducted in response to a deficiency cited in the TLANDO CRL by the FDA to confirm the reliability of TLANDO Phase 3 study results and to assess the impact of any material deviation from instructions on sample collection/processing times by clinical sites.

The definitive phlebotomy study measured testosterone concentrations in blood samples collected in plain serum separation tubes (“SST”) at three-hour and five-hour time points (N=24) post dose and processed within 30 minutes of sample collection under the tube manufacturer’s recommended conditions and consistent with Phase 3 instructions. The definitive phlebotomy study enrolled 12 hypogonadal male subjects and dosed subjects with a single oral 225 mg TU dose of TLANDO. The testosterone measurements in SST were compared against the FDA’s ~~request. Prior to initiating the DV study, the FDA reviewed the DV study protocol through a Special Protocol Assessment~~recommended time zero control (processed immediately) measurement of testosterone concentrations in blood samples in plasma tubes with EDTA (“~~SPA”~~PT”)~~. Lipocine received the FDA’s initial feedback on the protocol submitted via SPA prior to initiating the DV study in December 2016. We also initiated the Dosing Flexibility (“DF”) study~~ to assess ~~TLANDO in hypogonadal males on a fixed daily~~ex vivo conversion, if any.

The top-line results of the definitive phlebotomy study demonstrated that the overall (N=24) mean percentage difference and the associated percentage standard deviation post dose of 450 mg divided into three equal doses. Although there is no guarantee of FDA approval of TLANDO, we believe the results from the DV study confirm the validity of a fixed dose approach without the need for dose titration to orally administering TLANDO.testosterone concentrations measured between SST samples and PT samples are -1.0% and 9.2%, respectively.

The DV and DF studies were both an open-label, fixed dose (no titration), single treatment clinical study of oral TRT in hypogonadal males with low testosterone (T) (< 300 ng/dL) that assessed TLANDO in hypogonadal males on a fixed daily dose of 450 mg divided into two equal doses (“BID”) in the DV study and into three equal doses (“TID”) in the DF study. In total, 95 and 100 subjects were enrolled into DV and DF studies, respectively, with 94 and 98 subjects completing the DV and DF studies, respectively.

~~On June 19, 2017, we announced top-line results of the DV and DF studies. Although there is no guarantee of FDA approval of LPCN 1021, we~~We believe the results from the DV study confirm the validity of a fixed dose approach without the need for dose titration to orally administering ~~LPCN 1021.~~TLANDO although there is no guarantee of FDA approval of TLANDO. The DV study ~~will be~~is considered our pivotal efficacy clinical ~~study for the NDA resubmission.~~study. TLANDO successfully met the FDA primary efficacy guidelines in the DV study safety statistical analysis set (“SS”) where 80% of the subjects achieved average testosterone levels (“Cavg”) within the normal range with a lower bound confidence interval (“CI”) of 72%. The DF study restored 70% of the subjects’ average testosterone levels within the normal range (Cavg) confirming that twice daily (“BID”) dosing is the appropriate dosing regimen for TLANDO and was the basis for resubmission. The safety set is defined as any subject that was randomized into the study and took at least one dose (N=95 subjects in the DV study and N=100 in the DF study). A baseline carried forward approach was used to account for missing data as a result of subject discontinuation.

The primary efficacy endpoint is the percentage of subjects with Cavg within the normal range, which is defined as 300-1080 ng/dL. The FDA guidelines for primary efficacy success is that at least 75% of the subjects on active treatment achieve a testosterone Cavg within the normal range; and the lower bound of the 95% CI must be greater than or equal to 65%.

The adverse event profile of TLANDO in both the DV and DF studies was consistent with the previously conducted 52-week Phase 3 Study of Androgen Replacement (“SOAR”) clinical trial. All drug related adverse events (“AEs”) were either mild or moderate in intensity and none were severe. To date, the safety database of TLANDO includes ~~~525 unique hypogonadal men~~~591 subjects demonstrating a profile consistent with other TRT products.

The secondary endpoints assessed the maximum total testosterone concentration (“Cmax”) post dosing using predetermined limits developed by the FDA for transdermals. The FDA guidelines for secondary efficacy success is that at least 85% of the subjects achieve Cmax less than 1500 ng/dL; no greater than 5% of the subjects have Cmax between 1800 ng/dl and 2500 ng/dL; and zero percent of the subjects have Cmax greater than 2500 ng/~~dL.Consistent~~dL. Consistent with the definition of Cmax and the pharmacokinetic profile of multiple times a day dosing, two pre-specified analyses were performed, Cmax per dose and Cmax per day.

In the DV study SS Cmax per dose analysis, the percentage of subjects with Cmax less than 1500 ng/dL and between 1800 ng/dL and 2500 ng/dL were 85% and 7%, respectively. Deviations from the predetermined limits in the DV study were observed in the Cmax per day dose analysis for these thresholds. As such, this efficacy trial did not meet the three Cmax per day secondary endpoints. Only one subject, who was a major protocol violator, exceeded the 2500 ng/dL limit independent of per dose or per day dose analyses. Through reanalysis of Cmax data in the DV study, we resubmitted the NDA to the FDA on February 28, 2020 and have a PDUFA date of August 28, 2020. However, on August 28, 2020 the FDA informed us that it needed additional time to complete its review of the NDA. On November 5, 2020, the FDA informed us that it is working towards taking action on the TLANDO NDA on or about the week of November 30, 2020. However, the Company cannot assure that the FDA will act in that time frame.

Prior to conducting the DV study and the DF study, we completed our SOAR pivotal Phase 3 clinical study evaluating efficacy and 52-week safety of ~~LPCN 1021.~~TLANDO. The SOAR study is considered our pivotal safety clinical study for the NDA resubmission.

SOAR was a randomized, open-label, parallel-group, active-controlled, Phase 3 clinical study of ~~LPCN 1021~~TLANDO in hypogonadal males with low testosterone (< 300 ng/dL). In total, 315 subjects at 40 active sites were assigned, such that 210 were randomized to ~~LPCN 1021~~TLANDO and 105 were randomized to the active control, ~~Androgel~~AndroGel 1.62%®, for 52 weeks of treatment. The active control is included for safety assessment. ~~LPCN 1021~~TLANDO subjects were started at 225 mg TU (equivalent to ~ 142 mg of T) twice daily (“BID”) with a standard meal and then dose titrated, if needed, based on average T levels during the day, Cavg, and peak serumT levels, Cmax, up to 300 mg TU BID or down to 150 mg TU BID based on serum testosterone measured at weeks 3 and 7 based on PK profile with multiple blood samples drawn at each time period. The mean age of the subjects in the trial was ~53 years with ~91% of the patients < 65 years of age. The discontinuation rate for TLANDO was 38% compared to 32% for AndroGel 1.62%.

Primary statistical analysis was conducted using the Efficacy Population Set ~~(“EPS”~~("EPS"). The EPS is defined as subjects randomized into the study with at least one PK profile and no significant protocol deviations and includes imputed missing data by last observation carried forward, N=151. Further analysis was performed using the full analysis set ~~(“FAS”~~("FAS") (any subject randomized into the study with at least one post-baseline efficacy variable response, N=193) and the SS (any subject that was randomized into the study and took at least one dose, N=210).

The safety component of the SOAR trial was completed the last week of April 2015. The safety extension phase was designed to assess safety based on information such as metabolites, biomarkers, laboratory values, serious adverse events ~~(“SAEs”)~~SAEs and AEs, with subjects on their stable dose regimen in both the treatment arm and the active control arm. TLANDO treatment was well tolerated in ~~that~~ there were no hepatic, cardiac or drug related SAEs.

We also completed our labeling ~~“food effect”~~"food effect" study in May 2015. Results from the labeling ~~“food effect”~~"food effect" study indicate that bioavailability of testosterone from TLANDO is not affected by changes in meal fat content. The results demonstrate comparable testosterone levels between the standard fat meal (similar to the meal instruction provided in the Phase 3 clinical study) and both the low and high fat meals. The labeling “food effect” study was conducted per the FDA requirement and we submitted preliminary results from this study to the FDA in the second quarter of 2015 prior to submitting the NDA.

Based on our meetings with the FDA, we do not expect to be required to conduct a heart attack and stroke risk study ~~or any additional safety studies~~ prior to the potential approval of ~~our NDA for LPCN 1021.~~TLANDO. We may, however, be required to conduct a heart attack and stroke risk study on our own or with a consortium of sponsors that have an approved TRT product subsequent to the potential approval of TLANDO.

On October 20, 2017, Antares Pharma, Inc. announced that it had received a CRL from the FDA regarding its NDA for XYOSTED™ (testosterone enanthate) injection. The CRL indicated that the FDA cannot approve the Antares NDA in its present form and identified two deficiencies related to clinical data. Based on findings in two clinical studies, the FDA is concerned XYOSTED could cause a clinically meaningful increase in blood pressure. Additionally, the CRL also raised a concern regarding the occurrence of depression and suicidality.

~~On June 26, 2017,~~March 27, 2019, Clarus Therapeutics, Inc.’s (“Clarus”) ~~announced that it had completed its Phase 3 clinical trial for Jatenzo® (formerly Rextoro® and CLR-610)~~product JATENZO®, ~~a twice-daily~~an oral ~~softgel capsule of TU, and submitted an NDA to the FDA. If Jatenzo is~~testosterone undecanoate product, was approved by the FDA ~~before LPCN 1021,~~and also received three years of data exclusivity. It is unclear how Jatenzo’s three years of data exclusivity will impact the potential full approvability of TLANDO. The potential exists that, as a result of Clarus’ data exclusivity, the approval of TLANDO by the FDA, if received, could be delayed until March 27, 2022. On February 10, 2020, Clarus ~~may be in a position to commercially launch Jatenzo before we can commercially launch TLANDO.~~

~~Additionally,~~ o~~n July 6, 2017, Acrux confirmed~~announced that ~~a generic version of Axiron® Topical Solution, 30 mg/1.5 mL (Testosterone Topical Solution, 30 mg/1.5 mL).~~JATENZO® has been launched ~~in the United States by Perrigo Company plc. Acrux also confirmed the availability of an Authorized Generic version of Axiron in the United States, through a marketing~~ and ~~distribution agreement between Eli Lilly and Company and a leading authorized generics company.~~is commercially available.

LPCN ~~1111:~~1144: An Oral Prodrug of Bioidentical Testosterone Product Candidate for the Treatment of NASH

We are currently evaluating LPCN 1144, an oral prodrug of bioidentical testosterone comprised of TU, for the treatment of non-cirrhotic NASH. NASH is a more advanced state of non-alcoholic fatty liver disease (“NAFLD”) and can progress to a cirrhotic liver and eventually hepatocellular carcinoma or liver cancer. Twenty to thirty percent of the U.S. population is estimated to suffer from NAFLD and fifteen to twenty percent of this group progress to NASH, which is a substantially large population that lacks effective therapy. Currently, there are no FDA approved treatments for NASH. Approximately 50% of NASH patients are in adult males and the number of NASH cases is projected to increase 63% from 16.5 million cases in 2015 to 27.0 million cases in 2030. NAFLD/NASH is becoming more common due to its strong correlation with obesity and metabolic syndrome, including components of metabolic syndrome such as diabetes, cardiovascular disease and high blood pressure. In men, especially with comorbidities associated with NAFLD/NASH, testosterone deficiency has been associated with an increased accumulation of visceral adipose tissue and insulin resistance, which could be factors contributing to NAFLD/NASH.

The liver is the largest internal organ in the human body and its proper function is indispensable for many critical metabolic functions, including the regulation of lipid and sugar metabolism, the production of important proteins, including those involved in blood clotting, and purification of blood. There are over 100 described diseases of the liver, and because of its many functions, these can be highly debilitating and life-threatening unless effectively treated. Liver diseases can result from injury to the liver caused by a variety of insults, including hepatitis C virus (HCV), hepatitis B virus (HBV), obesity, chronic excessive alcohol use or autoimmune diseases. Regardless of the underlying cause of the disease, there are important similarities in the disease progression including increased inflammatory activity and excessive liver cell apoptosis, which if unresolved leads to fibrosis. Fibrosis, if allowed to progress, will lead to cirrhosis, or excessive scarring of the liver, and eventually reduced liver function. Some patients with liver cirrhosis have a partially functioning liver and may appear asymptomatic for long periods of time, which is referred to as decompensated liver disease. Decompensated liver disease is when the liver is unable to perform its normal functions. Many people with active liver disease remain undiagnosed largely because liver disease patients are often asymptomatic for many years.

Alanine aminotransferase (“ALT”) is an enzyme that is produced in liver cells and is naturally found in the blood of healthy individuals. In liver disease, liver cells are damaged and as a consequence, ALT is released into the blood, increasing ALT levels above the normal range. Physicians routinely test blood levels of ALT to monitor the health of a patient's liver. ALT level is a clinically important biochemical marker of the severity of liver inflammation and ongoing liver disease. Elevated levels of ALT represent general markers of liver cell death and inflammation without regard to any specific mechanism. Aspartate aminotransferase (“AST”) is a second enzyme found in the blood that is produced in the liver and routinely measured by physicians along with ALT. As with ALT, AST is often elevated in liver disease and, like ALT, is considered an overall marker of liver inflammation.

Preclinical and clinical studies in the NAFLD/NASH literature have shown the prevalence of testosterone deficiency across the NAFLD/NASH histological spectrum wherein low testosterone was independently associated with NAFLD/NASH with an inverse relationship between testosterone and NAFLD/NASH symptom severity. A recent National Institute of Diabetes and Digestive and Kidney Diseases (“NIDDK”) report suggests that 75% of biopsy confirmed NASH subjects have less than 372 ng/dL of total testosterone and that the degree of fibrosis severity is inversely related to free testosterone levels; thus, providing a good rationale for testing LPCN 1144 in adult NASH patients regardless of their hypogonadal status. Recently, we received clearance from the FDA to clinically investigate LPCN 1144 in an expanded target population of adult male NASH patients. Specifically, the FDA waived the limitation of only testing LPCN 1144 in NASH subjects with total testosterone levels below 300 ng/dL (threshold for hypogonadism).

Post hoc analyses of our existing clinical trials in subjects with comorbidities typically associated with NASH comorbidities indicate that testosterone therapy significantly and consistently reduced elevated levels of key serum biomarkers (liver function enzymes and serum triglyceride) generally associated with NAFLD/NASH.

We have completed a 16-week POC liver imaging clinical study to assess liver fat changes in hypogonadal men at risk of developing NASH using MRI-PDFF technique. Treatment results from the POC liver imaging study demonstrated that 48% of the treated NAFLD subjects, defined as baseline liver fat of at least 5%, had NAFLD resolution, defined as liver fat <5% post treatment. Additionally, 100% of the subjects experiencing NAFLD resolution had at least a 35% relative liver fat reduction from baseline with a relative mean liver fat reduction of 55% in this group. Further results from the POC liver fat clinical study after 16 weeks of treatment are as follows:

**Based on subjects who experienced at least a 30% reduction in liver fat from baseline.

We have also investigated the pharmacological effect of LPCN 1144 in a validated, non-genomic, multiple arm, 12-week high fat diet (“HFD”)-induced, rabbit animal model of NASH and hepatic fibrosis. NASH, induced by the HFD, lowered circulating T and free T levels. The results from this pre-clinical model demonstrate that LPCN 1144 treatment restores circulating T and free T levels. Additionally, the histological and biomarker results suggest LPCN 1144 decreases liver inflammation, ballooning, fibrosis, and visceral fat that were all increased due to the HFD, while normalizing insulin sensitivity, prostate and seminal vesicle weight.

Additionally, we have initiated the LiFT (“Liver Fat intervention with oral Testosterone”) Phase 2 clinical study, a paired-biopsy study in confirmed pre-cirrhotic NASH subjects with the first subject being dosed in the third quarter of 2019. The formulations being studied in the Phase 2 clinical trial are differentiated from TLANDO. The LiFT Phase 2 clinical study is a prospective, multi-center, randomized, double-blind, placebo-controlled multiple-arm study in biopsy-confirmed hypogonadal or eugonadal male NASH subjects with grade F2/F3 fibrosis and a NAFLD Activity Score (“NAS”) ≥ 4 with a 36-week treatment period. The LiFT clinical study has completed enrollment of 56 biopsy confirmed NASH male subjects, randomized into one of three arms (two test arms and one placebo arm) with a 1:1:1 randomization ratio. We currently expect top-line liver fat reduction data in January 2021 as measured by MRI-PDFF at 12 weeks, followed by 36-week biopsy data which is expected in mid-2021. Due to COVID-19, we believe that subject drop-out rates and the number of subjects that ultimately complete the clinical study could be negatively impacted.

~~LPCN 1111~~TLANDO XR is a next-generation, novel ester prodrug of testosterone which uses the Lip’ral technology to enhance solubility and improve systemic absorption. We completed a Phase 2b dose finding study in hypogonadal men in the third quarter of 2016. The primary objectives of the Phase 2b clinical study were to determine the starting Phase 3 dose of ~~LPCN 1111~~TLANDO XR along with safety and tolerability of ~~LPCN 1111~~TLANDO XR and its metabolites following oral administration of single and multiple doses in hypogonadal men. The Phase 2b clinical trial was a randomized, open label, two-period, multi-dose PK study that enrolled hypogonadal males into five treatment groups. Each of the 12 subjects in a group received treatment for 14 days. Results of the Phase 2b study suggest that the primary objectives were met, including identifying the dose expected to be tested in a Phase 3 study. Good dose-response relationship was observed over the tested dose range in the Phase 2b study. Additionally, the target Phase 3 dose met primary and secondary end points. Overall, ~~LPCN 1111~~TLANDO XR was well tolerated with no drug-related severe or serious adverse events reported in the Phase 2b study.

Additionally in October 2014, we completed a Phase 2a proof-of-concept study in hypogonadal men. The Phase 2a open-label, dose-escalating single and multiple dose study enrolled 12 males. Results from the Phase 2a clinical study demonstrated the feasibility of a once daily dosing with ~~LPCN 1111~~TLANDO XR in hypogonadal men and a good dose response. Additionally, the study confirmed that steady state is achieved by day 14 with consistent inter-day performance observed on day 14, 21 and 28. No subjects exceeded Cmax of 1500 ng/dL at any time during the 28-day dosing period on multi-dose exposure. Overall, ~~LPCN 1111~~TLANDO XR was well tolerated with no serious AE’s reported.

We have also completed ~~the~~a preclinical toxicology study with ~~LPCN 1111 which demonstrated that~~TLANDO XR in dogs.

In February 2018 we had a meeting with the overall toxicological profile, including off target effects, of LPCN 111 are closely aligned with general androgenic class pharmacology based on a preliminary evaluation. Additionally, we have been granted a FDA ~~meeting~~to discuss these pre-clinical results and to discuss the Phase 3 clinical study and path forward for ~~LPCN 1111.~~TLANDO XR. Based on the results of the FDA meeting ~~in the first quarter of 2018,~~and additional pre-clinical trials conducted after the FDA ~~may require additional pre-clinical or clinical trials before~~meeting, we have designed a Phase 3 protocol for TLANDO XR and have solicited FDA feedback. Based on initial FDA feedback, we expect the Phase 3 clinical trial design to follow the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (“ICH”) guidelines and will include a three-month efficacy treatment period and a one-year safety component for up to 100 subjects. We continue to refine the Phase 3 protocol and plan to request FDA approval of the protocol once it is finalized. Additionally, the FDA previously requested that a food effect study be completed, and that ABPM be included as part of the Phase 3 clinical study. Based on our capital resources and the clinical status of our product candidates, we plan to primarily focus our efforts in 2020 on TLANDO and LPCN 1144. We do not anticipate the initiation of a Phase 3 study with TLANDO XR to occur in 2020 unless and until additional capital is secured or the product candidate is out-licensed. We are exploring the possibility of licensing TLANDO XR to a third party, although no licensing agreement has been entered into by the Company.

LPCN 1148: An Oral Prodrug of Bioidentical Testosterone Product Candidate for the Treatment of Cirrhosis

Cirrhosis is an end stage NAFLD for which there is no FDA approved drug treatment. Liver cirrhosis is estimated to affect in excess of 600,000 Americans, with men affected at twice the rate of women, and results in approximately 45,000 deaths every year. Due to a lack of available organs, only a third of waitlisted patients are getting liver transplants, and patients that do receive a transplant are increasingly being described as frail. Low testosterone affects up to 90% of cirrhotic men, and is a predictor of mortality and increased adverse events including ascites, hepatic encephalopathy, and clinically significant portal hypertension.

We are currently formulating plans to conduct a proof-of-concept study in male cirrhotic subjects through consultations with the FDA and key opinion leaders to evaluate the therapeutic potential of LPCN 1148 for the treatment of cirrhotic subjects. On May 5, 2020 the FDA accepted our Investigational New Drug application ("IND") to initiate a Phase 2 proof-of-concept study to evaluate the therapeutic potential of LPCN 1148 for the treatment of liver cirrhosis in adult male cirrhotic patients. The planned Phase 2 clinical study ~~can be initiated.~~is a prospective, multi-center, randomized, placebo-controlled 52-week study in male cirrhotic patients that are on the liver transplant list. Based on our capital resources and the clinical status of our product candidates, we plan to primarily focus our efforts in 2020 on TLANDO and LPCN 1144. We do not anticipate the initiation of a Phase 2 study with LPCN 1148 in 2020 unless and until additional capital is secured or the product candidate is out-licensed. We are exploring the possibility of licensing LPCN 1148 to a third party, although no licensing agreement has been entered into by the Company

We believe LPCN 1107 has the potential to become the first oral hydroxyprogesterone caproate (“HPC”) product indicated for the reduction of risk of preterm birth (delivery less than 37 weeks) (“PTB”) in women with singleton pregnancy who have a history of singleton spontaneous PTB. Prevention of PTB is a significant unmet need as ~~~11.7%~~approximately 11.7% of all U.S. pregnancies result in PTB, ~~(delivery less than 37 weeks),~~ a leading cause of neonatal mortality and morbidity.

We have completed a multi-dose PK dose selection study in pregnant women. The objective of the multi-dose PK selection study was to assess HPC blood levels in order to identify the appropriate LPCN 1107 Phase 3 dose. The multi-dose PK dose selection study was an open-label, four-period, four-treatment, randomized, single and multiple dose, PK study in pregnant women of three dose levels of LPCN 1107 and the injectable intramuscular ("IM") HPC (Makena®). The study enrolled 12 healthy pregnant women (average age of 27 years) with a gestational age of approximately 16 to 19 weeks. Subjects received three dose levels of LPCN 1107 (400 mg BID, 600 mg BID, or 800 mg BID) in a randomized, crossover manner during the first three treatment periods and then received five weekly injections of HPC during the fourth treatment period. During each of the LPCN 1107 treatment periods, subjects received a single dose of LPCN 1107 on Day 1 followed by twice daily administration from Day 2 to Day 8. Following completion of the three LPCN 1107 treatment periods and a washout period, all subjects received five weekly injections of HPC. Results from this study demonstrated that average steady state HPC levels (C_avg~~0-24)~~(Cavg0-24) were comparable or higher for all three LPCN 1107 doses than for injectable HPC. Additionally, HPC levels as a function of daily dose were linear for the three LPCN 1107 doses. Also, unlike the injectable HPC, steady state exposure was achieved for all three LPCN 1107 doses within seven days. We have also completed a proof-of-concept Phase 1b clinical study of LPCN 1107 in healthy pregnant women in January 2015 and a proof-of-concept Phase 1a clinical study of LPCN 1107 in healthy non-pregnant women in May 2014. These studies were designed to determine the PK and bioavailability of LPCN 1107 relative to an IM HPC, as well as safety and tolerability.

A traditional pharmacokinetics/pharmacodynamics (“PK/PD”) based Phase 2 clinical study in the intended patient population is not expected to ~~be required~~occur prior to entering into Phase 3. Therefore, based on the results of our multi-dose PK study we had an End-of-Phase 2 meeting ~~with the FDA as well as other~~and subsequent guidance meetings with the FDA to define a Phase 3 development plan for LPCN 1107. ~~During the End-of-Phase 2 meeting and subsequent guidance meetings,~~However, these discussions will need to be updated based on recent developments with AMAG Pharmaceuticals’ (“AMAG”) Makena. We plan to resume our interactions with the FDA ~~agreed~~ to ~~a randomized, open-label, two-arm~~discuss Phase 3 clinical ~~study~~trial design and better understand next steps to ~~include~~advance LPCN 1107. Additionally, a ~~LPCN 1107 arm and a comparator IM arm with treatment up to 23 weeks. The FDA also provided preliminary feedback on other critical~~ Phase 3 study design considerations including: positive feedback on the proposed 800 mg BID Phase 3 dose and dosing regimen; confirmation of the use of a surrogate primary endpoint focusing on rate of delivery less than 37 weeks gestation rather on clinical infant outcomes; acknowledged that the use of a gestational age endpoint would likely lead to any FDA approval, if granted, being a Subpart H approval; and, recommended a non-inferiority study margin of 7% with interim analyses. A standard statistical design for a NI study based on the FDA feedback, a NI margin of 7% for the primary endpoint may require ~1,100 subjects per treatment arm with a 90% power. However, based on the FDA’s suggestion of including an interim analysis in the NI design, an adaptive study design is under consideration that may allow for fewer subjects. We submitted the initial LPCN 1107 Phase 3 protocol to the FDA via a SPA in June 2017 and have received FDA’s feedback. Agreement with the FDA on the Phase 3 protocol via SPA has not occurred and maywill not occur until the results from a planned food-effect study with LPCN 1107 are reviewed by the ~~FDA. Final agreement with the~~ FDA, ~~on the Phase 3 protocol, if reached, may or may not confirm the FDA’s preliminary feedback on the Phase 3 design. Additionally,~~though manufacturing scale-up work for LPCN 1107 ~~is on-going~~has been completed.

Based on our capital resources and ~~must occur before~~ the ~~start~~clinical status of our product candidates, we plan to primarily focus our efforts in 2020 on TLANDO and LPCN 1144. We do not anticipate the initiation of a Phase 3 ~~clinical~~ study ~~for~~with LPCN ~~1107.~~1107 to occur in 2020 unless and until additional capital is secured or the product candidate is out-licensed. We are exploring the possibility of licensing LPCN 1107 to a third party, although no licensing agreement has been entered into by the Company. 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 acceptable terms.

The FDA has granted orphan drug designation to LPCN 1107 based on a major contribution to patient care. Orphan designation qualifies Lipocine for various development incentives, including tax credits for qualified clinical testing, and a waiver of the prescription drug user fee when we file our NDA.

On October 5, 2020, the FDA’s Center for Drug Evaluation and Research (“CDER”) proposed that Makena be withdrawn from the market because the PROLONG trial failed to verify the clinical benefit of Makena and concluded that the available evidence does not show Makena is effective for its approved use.

CDER issued a notice of opportunity for a hearing (“NOOH”) to AMAG, the application holder of Makena. The FDA also sent the NOOH to the application holders for the approved generics to Makena for an opportunity to comment. The process that follows will depend, in part, on these companies’ decisions. AMAG could voluntarily agree to let the FDA withdraw approval of Makena and waive the opportunity for a hearing or it may request a public hearing. The FDA Commissioner would decide whether to grant a hearing, if requested by AMAG, would conduct the hearing and ultimately decide on whether to allow Makena to be marketed or withdraw approval. The process is expected to take months and during this time, Makena and the approved generics of Makena will remain on the market until the FDA makes a final decision about these products.

Currently, Makena and the approved generics of Makena are the only products approved for the prevention of recurrent preterm birth.

The FDA also indicated that it intends to hold a meeting with experts in obstetrics, neonatal care, and clinical trial design to discuss how to facilitate development of effective and safe therapies to treat preterm birth.

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 September 30, ~~2017,~~2020, we have generated ~~$27.5~~$28.1 million in revenue under our various license and collaboration arrangements and from government grants. We may never generate revenues from TLANDO or any of our other clinical or preclinical development programs or licensed products as we may never succeed in obtaining regulatory approval or commercializing any of these product candidates.

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, travel, 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 ~~$95.4~~$118.4 million in research and development expenses through September 30, ~~2017.~~2020.

As a result of the CRL we received from the FDA on TLANDO’s NDA, we are uncertain as to whether we will incur ~~approximately $2.5 million in~~ additional research and developments costs for ~~TLANDO as~~TLANDO. On January 16, 2020, we ~~complete on-going manufacturing activities and as we prepare for~~met with the FDA ~~Advisory Committee meeting.~~in a Post Action Meeting to review our CRL, and based on these discussions, we do not expect to conduct any additional clinical trials with TLANDO for TRT. However, ~~these~~any further expenditures, if needed, are subject to numerous uncertainties regarding timing and cost to completion.

~~Approval, if ever, of TLANDO will require approval by the FDA or the resubmitted NDA, and we~~We expect to continue to incur significant costs as we ~~seek approval of TLANDO.~~develop our other product candidates, including the ongoing LiFT Phase 2 clinical study with LPCN 1144.

In general, the cost of clinical trials may vary significantly over the life of a project as a result of uncertainties in clinical development, including, among others:

We have also incurred significant manufacturing costs to prepare launch supplies for TLANDO and ~~expect~~additional expenditures will be required to ~~incur additional manufacturing costs related to TLANDO.~~prepare for a commercial launch of TLANDO, should it be approved. However, ~~these~~future expenditures are subject to numerous uncertainties regarding timing and cost to completion, including, among others:

A change of outcome for any of these variables with respect to the development of TLANDO and our other product development candidates could mean a substantial change in the costs and timing associated with these efforts, will require us to raise additional capital, and may require us to reduce operations.

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 ~~1111,~~1144, TLANDO XR, LPCN 1148, 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 ~~1111,~~1144, TLANDO XR, LPCN 1148, LPCN 1107 or other 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 preclinical 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 are conducting on-going ~~research~~clinical and ~~development~~regulatory activities with ~~all three~~most of our product candidates. Additionally, we incur costs for our other research programs. The following table summarizes our research and development expenses:

We expect research and development expenses to increase in the future as we complete on-going clinical studies, including the LiFT Phase 2 clinical study with LPCN 1144, as we conduct future clinical studies, including when and if we ~~initiate~~conduct Phase 2 clinical studies with LPCN 1148 and Phase 3 clinical ~~trials for LPCN 1111~~studies with TLANDO XR and LPCN ~~1107.~~1107, and as we manufacture commercial supplies of TLANDO pre-approval. However, if we are unable to raise additional capital, we may need to reduce research and development expenses in order to extend our ability to continue as a going concern.

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

~~They~~General and administrative expenses also include expenses for the cost of preparing, filling and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related ~~claims.~~claims, including our on-going patent interference and patent infringement lawsuits against Clarus.

We expect that general and administrative expenses will increase ~~materially~~in the future as we incur additional legal fees in the on-going court cases with Clarus. Additional areas that may see increases as we mature as a public ~~company. These increases will likely~~company include legal and consulting fees, accounting and audit fees, director fees, increased directors’ and officers’ insurance premiums, fees for investor relations services and enhanced business and accounting systems, litigation costs, professional fees and other costs. ~~However, outside spend on~~If TLANDO is approved by the FDA, we expect we will incur significant additional expenses relating to the commercialization of TLANDO, including, among other things, expenses relating to building out sales and marketing ~~pre-commercialization activities will be consistent with spend during the three months ended September 30, 2017 until~~teams, manufacturing expenses, expenses relating to licensing TLANDO to third parties, and other expenses. However, if we receive clarity on the regulatory path forward for TLANDO. If the FDA approves TLANDO, we will increase our outside spend on pre-commercialization and commercialization activities substantially and will needare unable to raise additional capital, we may need to ~~fund these expenses.~~reduce general and administrative expenses in order to extend our ability to continue as a going concern. If we are unable to raise additional capital, we may be unable to effectively commercialize TLANDO after receiving FDA approval.

Other ~~income,~~expense (income), net consists primarily of interest income earned on our cash, cash equivalents and marketable investment ~~securities.~~

securities and interest expense incurred on our outstanding Loan and Security Agreement and losses (gains) on our warrant liability.

Comparison of the Three Months Ended September 30, ~~2017~~2020 and ~~2016~~2019

The following table summarizes our results of operations for the three months ended September 30, ~~2017~~2020 and ~~2016:~~2019:

We recognized no license revenue during the three months ended September 30, 2020 compared to $165,000 of license revenue during the three months ended September 30, 2019. License revenue in 2019 relates to royalty payments received from Spriaso, LLC (“Spriaso”) under a licensing agreement in the cough and cold field.

The increase in research and development expenses during the three months ended September 30, ~~2017~~2020 was primarily due to ana $280,000 increase in contract research organization and outside consulting and manufacturing costs ~~of $261,000 for TLANDO for~~related to the ~~conduct of the DV and DF~~LPCN 1144 LiFT Phase 2 clinical ~~studies and an~~study in NASH subjects, a $278,000 increase in ~~contract~~commercial manufacturing costs related to TLANDO, a $160,000 increase in personnel expense mainly due to stock compensation expense on performance based RSU’s and increased bonus expense, as well as increases in other R&D expenses of ~~$318,000 for TLANDO and LPCN 1107. This was offset by a decrease of $42,000 in travel and other allocated overhead costs.~~$56,000.

General and Administrative Expenses

The increase in general and administrative expenses during the three months ended September 30, ~~2017~~2020 was primarily due to ana $259,000 increase ~~of $664,000 for market research and pre-commercialization activities related to TLANDO and an increase of $768,000~~in legal costs associated with ~~severance benefits under an employee agreement~~the following activities: lawsuit filed against Clarus Therapeutics Inc. for patent infringement in April 2019, patent interference cases filed against Clarus and the on-going class action lawsuit defense. In addition, there was a $240,000 increase in personnel costs mainly due to stock compensation expense on performance based RSU’s and increased bonus expense, and a $6,000 increase in other general and administrative expenses. These increases were offset by a $28,000 decrease marketing expense and a $17,000 decrease in administrative travel expenses.

Interest and Investment Income

The decrease in interest and investment income during the three months ended September 30, 2020 was due to lower interest rates and lower average balances of marketable securities in 2020 compared to 2019.

Interest Expense

The decrease in interest expense during the three months ended September 30, 2020 was due to a ~~terminated employee which included salary~~decrease in interest expense on our Loan and ~~accelerated vesting of stock options and restricted stock units offset by $124,000 in decreased personnel costs~~Security Agreement with SVB, as a result of ~~the restructurings that took place~~lower principal balances and lower interest rates in ~~July 2016 and October 2016.~~2020 compared to 2019.

~~Other Income, Net~~Gain on Warrant Liability

We recorded a $140,000 gain on warrant liability during the three months ended September 30, 2020 related to the change in the fair value of outstanding common stock warrants issued in the November 2019 Offering. We did not record a similar change during the three months ended September 30, 2019 as there were no similar warrants outstanding during this period. The gain during the three months ended September 30, 2020 was mainly attributable to an decrease in the value of warrants exercised during the period offset by an increase in ~~other income, net, primarily reflects increased interest rates on average balances in cash, cash equivalents and marketable investment securities in 2017~~value of warrants outstanding as of September 30, 2020 as compared to ~~2016.~~June 30, 2020 due to an increase in our stock price. There were 769,000 common stock warrants exercised during the three months ended September 30, 2020. 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.

Comparison of the Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019

The following table summarizes our results of operations for the nine months ended September 30, ~~2017~~2020 and ~~2016:~~2019:

	Nine months ended September 30,									Nine months ended September 30,
	2017			2016			Variance			2020			2019			Variance
License revenue										$	-		$	(164,990	)	$	(164,990	)
Research and development expenses		9,237,169			6,747,673			2,489,496			7,268,599			5,627,383			1,641,216
General and administrative expenses		6,578,423			9,038,837			(2,460,414	)		5,925,991			3,989,645			1,936,346
Restructuring costs		-			385,233			(385,233	)
Other income, net		(165,018	)		(167,403	)		2,385
Interest and investment income											(72,729	)		(348,833	)		(276,104	)
Interest expense											305,485			611,864			(306,379	)
Loss on warrant liability											3,025,997			-			3,025,997
Income tax expense		700			700			-			200			200			-

Revenue

We recognized no license revenue during the nine months ended September 30, 2020 compared to $165,000 of license revenue during the nine months ended September 30, 2019. License revenue in 2019 relates to royalty payments received from Spriaso, LLC (“Spriaso”) under a licensing agreement in the cough and cold field.

Research and Development Expenses

The increase in research and development expenses induring the nine months ended September 30, ~~2017~~2020 was primarily due to ana $2.9 million increase in contract research organization and outside consulting and manufacturing costs ~~of $4.0 million for TLANDO for~~related to the ~~conduct of the DV~~LPCN 1144 LiFT Phase 2 clinical study in NASH subjects, a $430,000 increase in personnel expense mainly due to stock compensation expense on performance based RSU’s and ~~DF clinical studies~~increased bonus expense, and a $50,000 increase in other research and development expenses. These increases were offset by a $1.7 million decrease in ~~technical batch~~costs incurred in conjunction with TLANDO with the completion of the ABPM study in the first half of 2019, a $51,000 decrease in contract manufacturing costs for LPCN 1107, and a $46,000 decrease in costs for TLANDO ~~of $1.2 million, decreased personnel costs of $75,000, decreased outside services of $118,000, and reduced travel and other allocated overhead costs of $80,000.~~XR.

General and Administrative Expenses

The ~~decrease~~increase in general and administrative expenses during the nine months ended September 30, ~~2017~~2020 was primarily due to a ~~decrease of $1.4~~$1.9 million increase in legal costs associated with the with the following activities: lawsuit filed against Clarus for ~~business development, market research~~patent infringement in April 2019, interference cases filed against Clarus and ~~pre-commercialization activities related to TLANDO, a decrease of $719,000 for legal fees related to patent litigation,~~the on-going class action lawsuit defense and a ~~decrease of $314,000 in personnel costs. Personnel costs decreased as a result of the restructurings that took place in July 2016 and October 2016 by $1.1 million offset by an~~$228,000 increase in personnel ~~cost of $768,000 associated with severance benefits under an employee agreement~~costs mainly due to stock compensation expense on performance based RSU’s and increased bonus expense. These increases were offset by a ~~terminated employee which included salary~~$77,000 decrease in administrative travel expense, a $68,000 decrease in marketing expense and ~~accelerated vesting of stock options~~a $43,000 decrease in other general and ~~restricted stock units.~~administrative expenses.

~~Other~~Interest and Investment Income ~~Net~~

The decrease in ~~other~~interest and investment income ~~net, primarily reflects decreased interest earned on~~during the nine months ended September 30, 2020 was due to lower average balances of marketable securities and lower interest rates in ~~cash, cash equivalents~~2020 compared to 2019.

Interest Expense

The decrease in interest expense during the nine months ended September 30, 2020 was due to a decrease in interest expense on our Loan and ~~marketable investment securities~~Security Agreement with SVB, as a result of lower principal balances and lower interest rates in ~~2017~~2020 compared to 2019.

Loss on Warrant Liability

We recorded a $3.0 million loss on warrant liability during the nine months ended September 30, 2020 related to the change in the fair value of outstanding common stock warrants issued in the November 2019 Offering. We did not record a similar change during the nine months ended September 30, 2019 as there were no similar warrants outstanding during this period. The loss in 2020 was mainly attributable to an increase in the value of both warrants exercised during the period and warrants outstanding as of September 30, 2020 as compared to ~~2016.~~December 31, 2019 due to an increase in our stock price. There were 10,895,970 common stock warrants exercised during the nine months ended September 30, 2020. 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.

Liquidity and Capital Resources

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 ~~seek~~evaluate our options related to ~~advance our lead product candidate,~~ TLANDO should it receive approval and ~~further~~as we advance clinical development of LPCN ~~1111,~~1144, TLANDO XR, LPCN 1148, LPCN 1107 and ~~our~~any other ~~programs and~~product candidate, including continued research efforts.

As of September 30, ~~2017,~~2020, we had ~~$25.7~~$18.8 million of unrestricted cash, cash equivalents and marketable investment securities compared to ~~$26.8~~$14.1 million at December 31, ~~2016.~~2019. Additionally, as of September 30, 2020 and December 31, 2019 we had $5.0 million of restricted cash, which is required to be maintained as cash collateral under the SVB Loan and Security Agreement until TLANDO is approved by the FDA.

On April 21, 2020, we entered into a loan (the “Loan”) from Silicon Valley Bank (“SVB”) in the aggregate amount of $234,000, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The Loan, which was in the form of a note dated April 21, 2020 issued by us, matures on April 21, 2022 and bears interest at a rate of 1.0% per annum, payable monthly commencing on November 21, 2020. The Loan may be prepaid by us at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. We intend to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. We have submitted the application to have the PPP Loan forgiven and are waiting for approval from the Small Business Administration.

On February 27, 2020, we completed a registered direct offering of securities registered under an effective registration statement filed pursuant to the Securities Act of 1933, as amended (“February 2020 Offering”). The gross proceeds from the February 2020 Offering were approximately $6.0 million, before deducting placement agent fees and other offering expenses of approximately $347,000. In the February 2020 Offering, the Company sold 10,084,034 Class A Units, with each Class A Unit consisting of one share of common stock and a one-half of one common warrant to purchase one share of common stock, at a price of $0.595 per Class A Unit. The common stock warrants were immediately exercisable at an exercise price of $0.53 per share, subject to adjustment, and expire on February 27, 2025. By their terms, however, the common stock warrants cannot be exercised at any time that the common stock warrant holder would beneficially own, after such exercise, more than 4.99% (or, at the election of the holder, 9.99%) of the shares of common stock then outstanding after giving effect to such exercise.

As of September 30, 2020, 4,201,681 common warrants to purchase an equivalent number of shares of our common stock from the February 2020 Offering have been exercised resulting in proceeds to us of approximately $2.2 million.

On November 18, 2019, we completed a public offering of securities registered under an effective registration statement filed pursuant to the Securities Act of 1933, as amended (“November 2019 Offering”). The gross proceeds from the November 2019 Offering were approximately $6.0 million, before deducting placement agent fees and other offering expenses of $404,000. In the November 2019 Offering, the Company sold (i) 10,450,000 Class A Units, with each Class A Unit consisting of one share of common stock and a common warrant to purchase one share of common stock, and (ii) 1,550,000 Class B Units, with each Class B Unit consisting of one pre-funded warrant to purchase one share of common stock and one common warrant to purchase one share of common stock, at a price of $0.50 per Class A Unit and $0.4999 per Class B Unit. The pre-funded warrants, which were exercised for common stock in December 2019, were issued in lieu of common stock in order to ensure the purchaser did not exceed certain beneficial ownership limitations. The pre-funded warrants were immediately exercisable at an exercise price of $.0001 per share, subject to adjustment. Additionally, the common stock warrants were immediately exercisable at an exercise price of $0.50 per share, subject to adjustment, and expire on November 17, 2024. By their terms, however, neither the pre-funded warrants nor the common stock warrants can be exercised at any time that the pre-funded warrant holder or the common stock warrant holder would beneficially own, after such exercise, more than 4.99% (or, at the election of the holder, 9.99%) of the shares of common stock then outstanding after giving effect to such exercise.

As of September 30, 2020, 10,895,970 common warrants to purchase an equivalent number of shares of our common stock from the November 2019 Offering have been exercised resulting in proceeds to us of approximately $5.4 million.

On January 5, 2018, we entered into the Loan and Security Agreement with SVB pursuant to which SVB agreed to lend us $10.0 million. The principal borrowed under the Loan and Security Agreement bears interest at a rate equal to the Prime Rate, as reported in money rates section of The Wall Street Journal or any successor publication representing the rate of interest per annum then in effect, plus one percent per annum, which interest is payable monthly. Additionally on April 1, 2020, we and SVB entered into a Deferral Agreement. Under the Deferral Agreement, principal repayments are deferred by six months and we are only required to make monthly interest payments during the deferral period. The loan matures on June 1, 2022. Previously, we were only required to make monthly interest payments until December 31, 2018, following which we also made equal monthly payments of principal and interest until the signing of the Deferral Agreement. We will also be required to pay an additional final payment at maturity equal to $650,000 (the “Final Payment Charge”). At our option, we may prepay all amounts owed under the Loan and Security Agreement (including all accrued and unpaid interest and the Final Payment Charge). In connection with the Loan and Security Agreement, we granted to SVB a security interest in substantially all of our assets now owned or hereafter acquired, excluding intellectual property and certain other assets. In addition, as TLANDO was not approved by the FDA by May 31, 2018, we are required to maintain $5.0 million of cash collateral at SVB until such time as TLANDO is approved by the FDA. While any amounts are outstanding under the Loan and Security Agreement, we are subject to a number of affirmative and negative covenants, including covenants regarding dispositions of property, business combinations or acquisitions, incurrence of additional indebtedness and transactions with affiliates, among other customary covenants. The credit facility also includes events of default, the occurrence and continuation of which could cause interest to be charged at the rate that is otherwise applicable plus 5.0% and would provide SVB, as collateral agent, with the right to exercise remedies against us and the collateral securing the credit facility, including foreclosure against the property securing the credit facilities, including its cash. These events of default include, among other things, any failure by us to pay principal or interest due under the credit facility, a breach of certain covenants under the credit facility, the Company’s insolvency, a material adverse change, and one or more judgments against us in an amount greater than $100,000 individually or in the aggregate.

On March 6, 2017, we entered into the Sales Agreement with 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 ~~$20.0~~$25.0 million through Cantor as our sales ~~agent.~~agent which was subsequently increased on August 21, 2020 to $63.0 million. 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, 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.

The shares of our common stock to be sold under the Sales Agreement will be sold and issued pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-199093) (the “Existing Form S-3”), which was previously declared effective by the Securities and Exchange Commission, and the related prospectus and one or more prospectus supplements. Cantor ~~will use~~uses its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell these shares. We ~~will~~ 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.

~~On October 13, 2017, we filed a~~The shares of our common stock sold under the Sales Agreement are sold and issued pursuant to our Registration Statement on Form S-3 (File No. 333-220942) (the ~~“New Form~~“Form S-3”) ~~to replace the Existing Form S-3. The New Form S-3 has not yet been~~, which was previously declared effective by the Securities and Exchange ~~Commission. The New Form S-3, when effective, will register~~Commission, and the ~~sale of up to $150,000,000 of any combination of common stock, preferred stock, debt securities, warrants~~related prospectus and ~~units pursuant to a shelf registration statement. The New Form S-3 also contains a~~one or more prospectus pursuant to which we may sell, from time to time, shares of our common stock having an aggregate offering price of up to $25 million through Cantor as our sales agent, pursuant to the Sales Agreement that we currently have in place with Cantor. The other terms of the Sales Agreement that are described above will apply to the up to $25 million “at the market offering” anticipated to be made pursuant to the prospectus in the New Form S-3. Pursuant to Rule 415(a)(6) of the Securities Act of 1933, as amended, the offering of securities on the Existing Form S-3 will be deemed terminated as of the date of effectiveness of the New Form S-3. supplements.

We are not obligated to make any sales of our common stock under the Sales Agreement. The offering of our common stock pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement as permitted therein. We and Cantor may each terminate the Sales Agreement at any time upon ten days’ prior notice.

As of September 30, ~~2017,~~2020, we have sold ~~2,518,109~~9,465,535 shares of our common stock resulting in net proceeds of approximately ~~$10.6~~$23.2 million under the Sales Agreement which is net of ~~$260,000~~$872,000 in expenses consisting of commissions paid to Cantor in connection with these ~~sales.~~sales and other offering and accounting costs.

We believe that our existing capital resources, together with interest thereon, will be sufficient to meet our projected operating requirements through at least September 30, ~~2018. While we believe we have sufficient liquidity~~2021 which includes an on-going clinical study for LPCN 1144, compliance with regulatory requirements, and capital resources to fund our projected operating requirements through September 30, 2018, we will need to raise additional capital at some point, either before or after September 30, 2018, to support our operations, long-term research and development and commercialization of our product candidates if we receive approval of TLANDO from the FDA.on-going litigation activities. 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.~~expect if additional activities are performed by us including pre-commercial and commercial activities for TLANDO and new clinical studies for LPCN 1144, TLANDO XR, LPCN 1148 and LPCN 1107. While we believe we have sufficient liquidity and capital resources to fund our projected operating requirements through at least September 30, 2021, we will need to raise additional capital at some point through the equity or debt markets or through out-licensing activities, either before or after September 30, 2021, to support our operations, including, if FDA approval is received, potential commercialization activities for TLANDO. If we are unsuccessful in raising additional capital 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 ~~trials and pre-commercialization~~trial activities sooner than planned. ~~We may consume~~In addition, our capital resources may be consumed more rapidly if ~~the FDA approval~~we pursue additional clinical studies for LPCN 1144, TLANDO ~~is delayed or denied, or if we elect to pursue the build out of an internal sales force as part of our commercialization launch plan if our product candidates receive approval from the FDA.~~XR, LPCN 1148 and LPCN 1107. Conversely, our capital resources could last longer if we reduce expenses, ~~and~~reduce the number of activities currently contemplated under our operating ~~plan.~~plan or if we terminate or suspend on-going clinical studies or intellectual property litigation, or if we terminate or settle any on-going litigation activities.

~~We currently have no credit facility or committed sources of debt capital.~~ We can raise capital pursuant to the Sales Agreement in the ATM ~~Offering~~when not restricted due to terms of previous financings 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 and pre-commercialization 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:

	·	further clinical development requirements or other requirements of the FDA related to approval of TLANDO;

	·	the cost and timing of pre-commercialization and commercialization activities in support of TLANDO;

	·	the scope, rate of progress, results and cost of our clinical studies, preclinical testing and other related activities for all of our product candidates, including LPCN 1144, TLANDO XR, LPCN 1148 and LPCN 1107;

	·	the cost of manufacturing clinical supplies, and establishing commercial supplies, of our product candidates and any products that we may develop;

	·	the cost and timing of establishing sales, marketing and distribution capabilities, if any;

the terms and timing of any collaborative, licensing and other arrangements that we may establish;

~~further clinical development requirements, if any, or other requirements of the FDA related to approval of TLANDO;~~

~~the scope, rate of progress, results and cost of our clinical studies, preclinical testing and other related activities;~~

~~the scope of clinical and other work required to obtain approval of TLANDO and our other product candidates;~~

~~the cost of manufacturing clinical supplies, and establishing commercial supplies, of our product candidates and any products that we may develop;~~

~~the cost and timing of establishing sales, marketing and distribution capabilities;~~

~~the terms and timing of any collaborative, licensing and other arrangements that we may establish;~~

~~the number and characteristics of product candidates that we pursue;~~

~~the cost, timing and outcomes of regulatory approvals;~~

~~the timing, receipt and amount of sales, profit sharing or royalties, if any, from our potential products;~~

~~the cost of preparing, filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;~~

~~the extent to which we acquire or invest in businesses, products or technologies, although we currently have no commitments or agreements relating to any of these types of transactions; and~~

~~the extent to which we grow significantly in the number of employees or the scope of our operations.~~

	·	the number and characteristics of product candidates that we pursue;

	·	the cost, timing and outcomes of regulatory approvals;

	·	the timing, receipt and amount of sales, profit sharing or royalties, if any, from our potential products;

	·	the cost of preparing, filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

	·	the extent to which we acquire or invest in businesses, products or technologies, although we currently have no commitments or agreements relating to any of these types of transactions; and

the extent to which we grow significantly in the number of employees or the scope of our operations.

Funding may not be available to us on ~~acceptable~~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 ~~ATM Offering.~~ATM. 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 ATM, ~~Offering,~~ debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. These arrangements may not be available to us on favorable terms, or ~~available on terms favorable to us.~~at all. 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.

Sources and Uses of Cash

The following table provides a summary of our cash flows for the nine months ended September 30, ~~2017~~2020 and ~~2016:~~2019:

	Nine months ended September 30,						Nine Months Ended September 30,
	2017			2016			2020			2019
Cash used in operating activities	$	(12,405,063	)	$	(15,734,870	)	$	(11,619,069	)	$	(8,358,175	)
Cash provided by investing activities		4,935,310			399,601
Cash provided by (used in) investing activities								(1,515,297	)		2,440,822
Cash provided by financing activities		11,179,860			34,249			16,344,029			4,504,322

Net Cash Used in Operating Activities

During the nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, net cash used in operating activities was ~~$12.4~~$11.6 million and ~~$15.7~~$8.4 million, respectively.

Net cash used in operating activities during the nine months ~~ended~~ September 30, ~~2017~~2020 and ~~2016~~2019 was primarily attributable to cash outlays to support ~~on-going~~ongoing operations, including research and development expenses and general and administrative expenses. During ~~2017,~~2020, we were performing activities ~~required~~related to ~~resubmit~~the LPCN 1144 LiFT Phase 2 paired biopsy clinical study and the submission of the TLANDO ~~NDA, including conducting our DV study and DF~~NDA. During 2019, we were performing activities related to the ABPM study for ~~TLANDO. Additionally, we were conducting our preclinical toxicity~~TLANDO and the POC liver imaging study ~~with LPCN 1111 and we were drafting our protocol~~ for LPCN 1107 as well as conducting manufacturing scale-up activities for LPCN 1107. During 2016, we had our TLANDO NDA under review with the FDA, we were building out our commercial infrastructure and capabilities leading up to our PDUFA date of June 28, 2016 with TLANDO, we were analyzing data from a multi-dose PK study with LPCN 1107 and we were conducting a Phase 2b clinical study with LPCN 1111.1144.

Net Cash Provided by Investing Activities

During the nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, net cash used in investing activities was $1.5 million compared to net cash provided by ~~investing activities was $4.9~~of $2.4 million, ~~and $400,000,~~ respectively.

Net cash used in investing activities during the nine months ended September 30, 2020 was primarily the result of purchasing marketable investment securities, net, of $1.5 million. Net cash provided by investing activities during ~~2017 and 2016~~the nine months ended September 30, 2019 was primarily the result of utilizing marketable investment securities, net, of ~~$4.9~~$2.4 million ~~and $400,000, respectively,~~ to fund operations. There were no capital expenditures for the nine months ended September 30, ~~2017~~2020 and ~~capital expenditures for the nine months ended September 30, 2016 were $60,000.~~2019.

Net Cash Provided by Financing Activities

During the nine months ended September 30, ~~2017~~2020 and ~~2016~~2019 net cash provided by financing activities was ~~$11.2~~$16.3 million and ~~$34,000,~~$4.5 million, respectively.

Net cash provided by financing activities during ~~2017~~the nine months ended September 30, 2020 was attributable to the net proceeds from the sale of 10,084,034 shares of common stock pursuant to February 2020 Offering resulting in net proceeds of $5.7 million, to $7.7 million in proceeds from the exercise of warrants, $3.9 million in proceeds from the sale of 2,830,000 shares of common stock pursuant to the ATM and $234,000 in loan proceeds under the Payment Protection Program, offset by $1.1 million in debt principal repayments under the SVB Loan and Security Agreement.

Net cash provided by financing activities during the nine months ended September 30, 2019 was primarily attributable to the net proceeds from the sale of ~~2,518,109~~3,276,286 shares of common stock pursuant to the ATM ~~Offering~~ resulting in net proceeds of ~~$10.6~~$6.9 million, ~~as well as proceeds from~~offset by $2.5 million in debt principal repayments under the ~~exercise of stock options.~~

~~Net cash provided by financing activities during 2016 was primarily attributable to proceeds from the exercise of stock options.~~

~~Employee stock option exercises provided approximately $535,000~~SVB Loan and $34,000 of cash during the nine months ended September 30, 2017 and 2016, respectively. Proceeds from the exercise of employee stock options vary from period to period based upon, among other factors, fluctuations in the market price of our common stock relative to the exercise price of such options.Security Agreement.

Contractual Commitments and Contingencies

Long-Term Debt Obligations and Interest on Debt

On January 5, 2018, we entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Silicon Valley Bank (“SVB”) pursuant to which SVB agreed to lend us $10.0 million. The principal borrowed under the Loan and Security Agreement bears interest at a rate equal to the Prime Rate plus one percent per annum, which interest is payable monthly. The loan matures on June 1, 2022 and we are required to make equal monthly payments of principal and interest for the remaining term of the loan beginning on November 1, 2020 although there was a principal deferment period of six months beginning on April 1, 2020 due to COVID-19. We will also be required to pay an additional final payment equal to $650,000 (the “Final Payment Charge”) at maturity.

On April 21, 2020, we were granted a loan from SVB in the aggregate amount of $234,000, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The PPP loan, which was in the form of a Note dated April 21, 2020 issued by us, matures on April 21, 2022 and bears interest at a rate of 1.0% per annum, payable monthly commencing on November 21, 2020. The PPP loan may be prepaid by us at any time prior to maturity with no prepayment penalties. Funds from the PPP loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. We intend to use the entire loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the PPP loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. We have submitted the application to have the PPP Loan forgiven and are waiting for approval from the Small Business Administration.

Purchase Obligations

We enter into contracts and issue purchase orders in the normal course of business with clinical research organizations for clinical trials and clinical and commercial supply manufacturing and with vendors for preclinical research studies, research supplies and other services and products for operating purposes. These contracts generally provide for termination on notice and are cancellable obligations.

Operating Leases

In August 2004, we entered into an agreement to lease our facility in Salt Lake City, Utah consisting of office and laboratory space which serves as our corporate headquarters. On ~~May 6, 2014,~~February 24, 2020, we modified and extended the lease through February 28, 2018. Our remaining commitment through 2018 under this lease is $128,000. Additionally, on December 28, 2015, we entered into an agreement to lease office space in Lawrenceville, New Jersey which has an occupancy date of February 1, 2016 and an end date of January 31, 2018. Our remaining commitment through 2018 under this lease is $28,000.2021.

~~Other Contractual Obligations~~

We enter into contracts in the normal course of business with clinical research organizations for clinical trials and clinical supply manufacturing and with vendors for preclinical research studies, research supplies and other services and products for operating purposes. These contracts generally provide for termination on notice, and are cancellable obligations.

~~JOBS Act Accounting Election~~

We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards, and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Critical Accounting Policies and Significant Judgments and Estimates

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. 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. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no significant and material changes in our critical accounting policies during the ~~three and~~ nine months ended September 30, ~~2017,~~2020, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Significant Judgments and Estimates” in our Form 10-K filed March ~~6, 2017.~~13, 2020.

New Accounting Standards

Refer to Note 12, in “Notes to Unaudited Condensed Consolidated Financial Statements” for a discussion of accounting standards not yet adopted.

Off-Balance Sheet Arrangements

None.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, which include potential losses arising from adverse changes in market rates and prices, such as interest rates. We do not enter into derivatives or other financial instruments for trading or speculative purposes.

Interest Rate Risk.Our interest rate risk exposure results from our investment portfolio. Our primary objectives in managing our investment portfolio are to preserve principal, maintain proper liquidity to meet operating needs and maximize yields. The securities we hold in our investment portfolio are subject to interest rate risk. At any time, sharp changes in interest rates can affect the fair value of the investment portfolio and its interest earnings. After a review of our marketable investment securities, we believe that in the event of a hypothetical ~~one~~ten percent increase in interest rates, the resulting decrease in fair value of our marketable investment securities would be insignificant to the consolidated financial statements. In addition, in the event of a hypothetical one percent decrease in interest rates, the resulting increase in fair value of our marketable investment securities would be insignificant to the consolidated financial statements. Currently, we do not hedge these interest rate exposures. We have established policies and procedures to manage exposure to fluctuations in interest rates. We place our investments with high quality issuers and limit the amount of credit exposure to any one issuer and do not use derivative financial instruments in our investment portfolio. We invest in highly liquid, investment-grade securities and money market funds of various issues, types and maturities. These securities are classified as available-for-sale and, consequently, are recorded on the balance sheet at fair value with unrealized gains or losses reported as accumulated other comprehensive income as a separate component in stockholders' deficit unless a loss is deemed other than temporary, in which case the loss is recognized in earnings.

Additionally in January 2018, we entered into the Loan and Security Agreement with SVB for $10.0 million. A one percent increase in the prime rate would result in a $50,000 increase in interest expense, while a one percent decrease in the prime rate would result in a $56,000 decrease in interest expense.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain ~~“disclosure~~"disclosure controls and ~~procedures”~~procedures" within the meaning of Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Our disclosure controls and procedures, or Disclosure Controls, are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission's rules and forms. Our Disclosure Controls include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this Quarterly Report on Form 10-Q, we evaluated the effectiveness of the design and operation of our Disclosure Controls, which was done under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer. Based on the controls evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that ~~as of the date of their evaluation,~~ our Disclosure Controls were effective as of September 30, ~~2017.~~2020.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the most recent fiscal quarter covered by this report, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

On ~~May~~February 15, ~~2015,~~2019, a purported shareholder filed a shareholder derivative complaint in the Court of Chancery of the State of Delaware, John Wajda, derivatively on behalf of Lipocine Inc. v. Mahesh Patel, et al., against certain of our current and former officers and directors as well as the Company as a nominal defendant. The complaint asserts claims for alleged breaches of fiduciary duty and unjust enrichment arising out of our dissemination of purportedly false and misleading statements relating to the filing of the New Drug Application (“NDA”) for TLANDO. The relief sought in the complaint includes unspecified damages, changes to our corporate governance procedures, equitable and/or injunctive relief, restitution, and attorneys’ fees. On August 16, 2019, defendants filed a motion to dismiss the complaint. In response, the plaintiff’s filed an amended stockholder derivative complaint. Defendants’ motion to dismiss the amended complaint was filed on December 12, 2019; plaintiff’s response was filed on January 27, 2020 and defendants’ reply was filed on February 26, 2020. Oral arguments on the motion to dismiss were held on July 28, 2020. On July 30, 2020, the court entered an order dismissing the complaint in its entirety.

On April 2, 2019, we filed a lawsuit against Clarus in the United States District Court for the District of Delaware alleging that Clarus’s JATENZO® product infringes six of Lipocine’s issued U.S. patents: 9,034,858; 9,205,057; 9,480,690; 9,757,390; 6,569,463; and 6,923,988. Clarus has answered the complaint and asserted counterclaims of non-infringement and invalidity. We answered Clarus’s counterclaims on April 29, 2019. The Court held a scheduling conference on August 15, 2019, a claim construction hearing on February 11, 2020 and scheduled a five-day jury trial beginning on February 8, 2021. On February 11, 2020, we voluntarily dismissed allegations of patent ~~application with~~infringement for expired U.S. Patent Nos. 6,569,463 and 6,923,988 in an effort to streamline the ~~PTO,~~issues and ~~our application requested that~~associated costs for dispute. The parties are currently engaged in the ~~PTO declare an interference between our patent application~~fact discovery and the Clarus 428 Patent. Pursuant to Lipocine's request, on December 4, 2015, the Patent Trial and Appeal Board (“PTAB”) declared an interference between the Clarus 428 Patent and Lipocine's application to determine, as between Clarus and Lipocine, who was the first to invent the subject matterexpert testimony phase of the claimed invention. Lipocine was declared the Senior Party in the interference. On September 20, 2017 the PTAB issued a Decisions on Motions. The PTAB granted Lipocine’s motion to deny Clarus’ previously accorded priority date for the Clarus 428 Patent and denied Clarus’ motion for an earlier priority date based upon the filing of its provisional applications. Therefore, Clarus has a new priority date of April 16, 2014 for the Clarus 428 patent. The PTAB also granted Clarus’ motion to deny Lipocine’s accorded priority date. Therefore, Lipocine has an accorded priority date of May 15, 2015 on its application. As a consequence of this decision, the PTAB has redeclared the interference and named Clarus as the senior party and Lipocine as the junior party. All other motions were denied. A conference call with the PTAB was held on October 4, 2017 to discuss the next steps, including a priority schedule. After the conference call, the PTAB issued an order setting times in the priority phase. The order indicated that since Lipocine is the only party that filed a priority statement, only Lipocine shall be permitted to put on a priority case. The priority statement filed by Lipocine included a claimed date of invention well prior to Clarus’ accorded benefit date.lawsuit.

On ~~July 1, 2016,~~November 14, 2019, the Company and certain of its officers were named as defendants in a purported shareholder class action lawsuit, ~~David Lewis~~Solomon Abady v. Lipocine Inc., et al., ~~3:16-cv-04009-BRM-LHG,~~2:19-cv-00906-PMW, filed in the United States District Court for the District of New Jersey. This initial action was followed by additional lawsuits also filed in the District of New Jersey. On December 2, 2016, the court granted plaintiff’s motion to consolidate the various lawsuits and appointed Pomerantz LLP as lead counsel and Lipocine Investor Group as lead plaintiff. The court also stated that all filings shall bear the caption~~In re Lipocine Inc. Securities Litigation.~~ ~~On March 14, 2017, the court granted our motion to transfer the action to the United States~~ District Court for the District of Utah. On April 27, 2017, Plaintiff filed an Amended Complaint against the Company and certain of its officers and/or directors in the United States District Court for the District of Utah. This is a purported class action seeking relief for violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b5 promulgated thereunder. The ~~Amended Complaint~~complaint alleges that the defendants made false and/or misleading statements and/or failed to disclose that our filing of the NDA for TLANDO to the FDA contained deficiencies and as a result the defendants’ statements about our business and operations were false and misleading and/or lacked a reasonable basis in violation of federal securities laws. ~~Plaintiff~~The lawsuit seeks certification as a class action (for a purported class of purchasers of the Company’s securities from March 27, 2019 through November 8, 2019), compensatory damages ofin an unspecified amount, ~~pre-judgment and post-judgment interest, reasonable attorneys’ fees, expert fees,~~ and unspecified ~~other costs, as well as any further relief the court deems just and proper.~~equitable or injunctive relief. We have insurance that covers claims of this nature. The retention amount payable by us under our policy is $1.25 million. We filed a motion to dismiss this class action lawsuit on July 24, 2020. In response, the ~~Amended Complaint on June 12, 2017, in compliance with the scheduling order entered by the court on December 20, 2016. On July 27, 2017, the Plaintiff~~plaintiff’s filed their ~~opposition~~response to the motion to dismiss the class action lawsuit on September 22, 2020. Further, we intend to vigorously defend ourselves and ~~on August 28, 2017 we filed~~ our ~~reply~~current and former officers and directors against these allegations and have not recorded a liability related to this shareholder class action lawsuit as the Plaintiff’s opposition to the motion to dismiss. Oral arguments on the motion to dismiss were held on October 24, 2017, and the judge denied our motion to dismiss. We believe that the claims in the lawsuits are without merit and will defend against them vigorously. We maintain insurance for claimsoutcome is not probable nor can an estimate be made of this nature, which management believes is adequate. Moreover, we believe, based on information currently available, that the filing and ultimate outcome of the lawsuits will not have a material impact on our financial position, although we will have to pay up to the insurance retention amount in connection with the lawsuit.loss, if any.

ITEM 1A.

RISK FACTORS

In addition to the other information set forth in this Report, consider the risk factors discussed in Part 1, ~~“Item~~"Item 1A. Risk ~~Factors”~~Factors" in the Company's Annual Report filed on Form 10-K for the year ended December 31, ~~2016~~2019 filed with the SEC on March ~~6, 2017 and the~~13, 2020, risk factors discussed in ~~Part II, “Item 1A. Risk Factors”~~Item 1A of ~~our~~the Form 10-Q for the quarter ended March 31, ~~2017~~2020 filed with the SEC on May ~~8, 2017, “Item 1A. Risk Factors”~~7, 2020, risk factors discussed in Item 1A of ~~our~~the Form 10-Q for the quarter ended June 30, ~~2017~~2020 filed with the SEC on August ~~7, 2017,~~6, 2020 and the risk factors discussed in Item 1A of this Form 10-Q, which could materially affect our business, financial condition or future results. The risks described in the aforementioned report are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that it currently deems to be not material also may materially adversely affect the Company's business, financial condition and or operating results.

The following are the risk factors that have materially changed from our risk factors included in our Form 10-K for the year ended December 31, ~~2016~~2019 filed with the SEC on March ~~6, 2017,~~13, 2020, from our risk factors included in our Form 10-Q for the quarter ended March 31, ~~2017~~2020 filed with the SEC on May ~~8, 2017~~7, 2020 and from our risk factors included in our Form 10-Q for the quarter ended June 30, ~~2017~~2020 filed with the SEC on August ~~7, 2017:~~6, 2020:

~~RISKS RELATING TO OUR BUSINESS AND INDUSTRY~~Risks Relating to Our Business and Industry

~~We depend primarily on the success of~~Even if we obtain FDA approval for TLANDO, our ~~lead product candidate,~~ability to commercialize TLANDO ~~which is currently under FDA review, and which~~ may ~~not~~be limited.

Our ability to commercialize TLANDO, should it receive approval, ~~or be successfully commercialized.~~

is uncertain. Our ability to commercially launch TLANDO is ~~currently~~contingent upon numerous factors including FDA approval, the availability of commercial launch supplies, the impact of COVID-19, our ~~only product candidate that has completed Phase 3 clinical trials,~~financial resources, and our ~~business currently depends primarily on its successful development, regulatory approval~~ability to license TLANDO to a third party or build out a commercial sales and commercialization if approved. We have submitted an NDA to the FDA but have not submitted comparable applications to other regulatory authorities. We do not control whether or when we may receive approval of TLANDO from the FDA. However, we do have a PDUFA goal date of February 8, 2018. We are not permitted to market TLANDO in the United States until we receive approval of an NDA from the FDA, or in any foreign countries until we receive the requisite approval from such countries.

Although we have completed Phase 3 efficacy trials with TLANDO, approval from the FDA is not guaranteed. We resubmitted our NDA to the FDA in August 2017 based on the results of the DV study. The DV study confirmed the efficacy of TLANDO with a fixed dose regimen without need for dose adjustment. TLANDO was well tolerated upon 52-week exposure with no reports of drug related Serious Adverse Events (“SAEs”). The FDA accepted our NDA as a complete response to their CRL and assigned a PDUFA action goal date of February 8, 2018 for completion of the review. Additionally, the BRUDAC of the FDA plans to discuss the NDA for TLANDO on January 10, 2018. Previously on June 28, 2016, we received a CRL from the FDA on our original NDA submission. A CRL is a communication from the FDA that informs companies that an application cannot be approved in its present form. The CRL identified deficiencies related to the dosing algorithm for the label. Specifically, the proposed titration scheme for clinical practice was significantly different from the titration scheme used in the Phase 3 trial leading to discordance in titration decisions between the Phase 3 trial and real-world clinical practice. In response to the CRL, we met with the FDA in a Post Action meeting, and proposed a dosing regimen to the FDA based on analyses of existing data. The FDA noted that while the proposed dosing regimen might be acceptable, validation in a clinical trial would be needed prior to resubmission. Although there is no guarantee of FDA approval of TLANDO, we believe the results from the DV study confirm the validity of a fixed dose approach without the need for dose titration to orally administering TLANDO.marketing team/organization. If ~~the FDA denies or further delays approval of TLANDO, our business would be materially and adversely harmed. If the FDA does approve TLANDO, but~~ we are ~~unsuccessful in commercializing~~unable to launch TLANDO ~~our business will be materially and adversely harmed.~~

The FDA may also require the addition of labeling statements or other warnings or contraindications, require us to perform additional clinical trials or studies or provide additional information in order to secure approval. Any such requirement would increase our costs and delay approval and commercialization of TLANDO and would have a material adverse effect oncommercially at scale, our business and ~~financial condition and require~~operations will be adversely affected. As an alternative to launching TLANDO directly, we are exploring the possibility of licensing TLANDO to a third party, although no licensing agreement has been entered into by us yet. We are unable to ~~raise additional capital, which may not be available to us~~estimate whether or ~~available on terms favorable to us.~~

The FDA also plans to seek input from an expert panel in the form of an Advisory Committee (“AdCom”) meeting regarding TLANDO. The FDA or an AdCom may not agree with adequacy of clinical development conducted or clinical data presented. Particularly the FDA or an AdCom may be concerned with observed treatment emergent adverse reactions and/or with the risk associated with (associated with but not limited to) the following clinical endpoints for an oral T product; levels of various analytes observed including testosterone, DHT, TU, DHTU, Estradiol; Cmax secondary endpoint excursions; adequacy of long-term safety database; appropriateness and validation of laboratory assays; data collected and tests performed on clinical subjects including vitals such as blood pressure and relating laboratory parameters including levels of hemoglobin, PSA, hematocrit, prolactin, HDL, LDL, Cholesterol, TG, SHGB, alkaline phosphatase, etc.; discontinuation rates experienced in studies; concerns on laboratory normal ranges for our analyte analysis; restrictions on food or meal administered to subjects; and; data analysis and statistical approaches. If an Advisory Committee meeting is held by the FDA, the outcome of the meeting is not guaranteed to favor our product and may result in the receipt of a CRL to our NDA resubmission.

Even if TLANDO is approved, the FDA may limit the indications for which it may be used, include extensive warnings on the product labeling, or require costly ongoing requirements for post-marketing clinical studies including participation in a long-term TRT consortium cardiovascular study and surveillance or other risk management measures to monitor the safety or efficacy of TLANDO. Further, in the event that we seek regulatory approval of TLANDO outside the United States, such markets also have requirements for approval of drug candidates with which we must comply prior to marketing. Obtaining regulatory approval for marketing of TLANDO in one country does not ensurewhen we will be able to ~~obtain regulatory approval~~out-license TLANDO, should it be approved.

The ongoing outbreak of coronavirus around the world could adversely impact our business and operating results.

In December 2019, a novel strain of coronavirus, SARS-CoV-2, was reported to have surfaced in Wuhan, China. Since then, SARS-CoV-2, and the resulting disease COVID-19, has spread to multiple countries, including the United States and all of the primary markets where we conduct business. On March 10, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, and the U.S. government imposed travel restrictions on travel between the United States and Europe for a 30-day period. Further, on March 13, 2020, the President of the United States declared the COVID-19 pandemic a national emergency, invoking powers under the Stafford Act, the legislation that directs federal emergency disaster response. Almost all U.S. states and many local jurisdictions have issued, and others in the future may issue, "shelter-in-place" orders, quarantines, executive orders and similar government orders, restrictions and recommendations for their residents to control the spread of COVID-19. Such orders, restrictions and recommendations, and the perception that additional orders, restrictions or recommendations could occur, have resulted in widespread closures of businesses not deemed “essential,” work stoppages, slowdowns and delays, work-from-home policies, travel restrictions and cancellation of events, as well as record declines in stock prices, among other ~~countries but a failure or delay in obtaining regulatory approval in one country may have a negative effect~~effects.

The duration and extent of COVID-19's impact on ~~the regulatory process in other countries.~~

~~Any regulatory approval of TLANDO, once obtained,~~our business may be ~~withdrawn. Ultimately,~~difficult to assess or predict. The widespread pandemic has resulted, and may continue to result for an extended period, in significant disruption of global financial markets, reducing our ability to access capital, which would negatively affect our liquidity. Further, quarantines or government reaction or shutdowns for COVID-19 could disrupt our operations and harm our business, financial condition and results of operations. Our key personnel and other employees could also be affected by COVID-19, potentially reducing their availability, and an outbreak such as COVID-19 or the ~~failure~~procedures we take to ~~obtain and maintain regulatory approvals would prevent TLANDO from being marketed and would have a material adverse~~mitigate its effect on our ~~business.~~workforce could reduce the efficiency of our operations or prove insufficient. We may delay or reduce certain capital spending and certain projects until the travel and logistical impacts of COVID-19 are lifted, which will delay the completion of such projects.

In addition, the conduct of clinical trials and studies required to obtain regulatory approvals for our products have been and we expect may continue to be affected by the COVID-19 pandemic. As hospital resources are prioritized for the COVID-19 outbreak and quarantines impede patient movement or interrupt healthcare services, clinical studies may continue to be disrupted. If we are unable to successfully complete our clinical studies, our business and operating results will be harmed. Further, we believe that subject drop-out rates and the ~~FDA clarifies, modifies or restricts~~number of subjects that ultimately complete the ~~indicated population for T-replacement in the “class” label, the market for T-replacement products~~clinical study could be negatively impacted by COVID-19. Interruptions caused by COVID-19 may ~~shrink and~~also limit our ability to ~~sell and be reimbursed for TLANDO and LPCN 1111 could be materially adversely affected and~~collect data from clinical studies. If we are unable to complete or effectively collect data from clinical studies, our business ~~could~~and operating results will be harmed.

~~On September 17, 2014, the FDA held a T-class Advisory Committee meeting.~~ The ~~Advisory Committee discussed (i) the identification~~global outbreak of COVID-19 continues to rapidly evolve. The ultimate impact of the ~~appropriate patient population for whom T-replacement therapy should be indicated~~COVID-19 outbreak is highly uncertain and ~~(ii)~~subject to change. We do not yet know the full extent of potential ~~risk~~delays or impacts on our business or the global economy as a whole. However, these effects have harmed our business, financial condition and results of major adverse cardiovascular events, defined as non-fatal stroke, non-fatal myocardial infarction and cardiovascular death associated with T-replacement therapy. At the meeting, 20 of the 21 members of the Advisory Committee voted that the FDA should revise the currently indicated population for T-replacement therapy and recommended changing the label language to restrict the intended uses of the products, particularly in relation to age-related low testosterone. The Committee also supported adding language to the label to guide physicians in better diagnosis of eligible patients for treatment. On March 3, 2015, the FDA issued a safety announcement addressing the Advisory Committee’s recommendations.

~~The FDA's safety assessment recommended the following label modifications/restrictions~~operations in the ~~indicated population for T-replacement therapy:~~

~~limiting use of T-replacement products to men who have low testosterone caused by certain medical conditions;~~

prior to initiating use of T-replacement products, confirm diagnosis of hypogonadism by ensuring that serum testosterone has been measured in the morning on at least two separate days and that these concentrations are below the normal range;

~~adding cautionary language stating that the safety and efficacy of TRT products with age-related hypogonadism have not been established; and~~

~~adding cautionary language stating that some studies have shown an increased risk of myocardial infarction and stroke associated with use of T-replacement products.~~

~~The actual TRT label revisions have been finalized between the FDA~~near term and ~~sponsors with approved T-replacement therapy products. The revised labels are consistent with the FDA's recommendations on March 3, 2015.~~

Additionally, the FDA stated that they will require manufacturers of approved T-replacement products to conduct a well-designed clinical trial to more clearly address the question of whether an increased risk of heart attack or stroke exists among users of T-replacement products. The FDA encouraged manufacturers to work together on conducting a clinical trial, although the FDA will allow manufacturers to work separately if they so choose. The FDA did not address whether it would require sponsors without an approved T-replacement product to conduct a cardiovascular trial prior to being able to file an NDA. However, on March 19, 2015 we had a pre-NDA meeting with the FDA concerning our pivotal Phase 3 trial for TLANDO. Based on this meeting with the FDA, we do not expect to be required to conduct a heart attack and stroke risk study or any additional safety studies prior to approval of the NDA for TLANDO. If the FDA changes its position, however, and concludes that a cardiovascular trial is required prior to approving our NDA for TLANDO, such trial would require substantial financial resources, and would delay the regulatory process for TLANDO and our entry into the marketplace, all of which wouldcould have a continuing material ~~adverse~~ impact on our ~~business. Further, if TLANDO receives FDA approval, it is unclear what our post-approval obligations may be, if any, in relation to a heart attack~~operations, sales and stroke risk study. We may be required to contribute to an on-going industry-led heart attack and stroke risk study or to conduct our own long-term heart attack and stroke risk study, either of which would require substantial financial resources and would have a material adverse impact on our business. Regulatory actions related to T-replacement therapy have contributed to a contraction in the market for T-replacement products. If the market for T-replacement products continues to decline, for whatever reason, our business will be materially and adversely harmed.

~~If T-replacement therapies are found, or are perceived, to create health risks, our~~ ability to sell TLANDO and LPCN 1111 could be materially adversely affected and our business could be harmed. Even if our TLANDO and our LPCN 1111 are approved, physicians and patients may be deterred from prescribing and using T-replacement therapies, which could depress demand for TLANDO and LPCN 1111 and compromise our ability to successfully commercialize TLANDO and LPCN 1111.

Recent publications have suggested potential health risks associated with T-replacement therapy, such as increased cardiovascular disease risk, including increased risk of heart attack or stroke, fluid retention, sleep apnea, breast tenderness or enlargement, increased red blood cells, development of clinical prostate disease, including prostate cancer, and the suppression of sperm production. These potential health risks are described in various articles, including the following publications:

a 2014 publication in PLOS ONE, which found that, compared to the one year prior to beginning T-replacement therapy, the risk of heart attack doubled 90 days after the start of T deficiency treatment in older men regardless of their history of heart disease and was two to three times higher in men younger than 65 with a history of heart disease;

~~a 2013 publication in the~~~~Journal of the American Medical Association~~~~, which reported that hypogonadal men receiving T-replacement therapy developed a 30% increase in the risk of stroke, heart attack and death; and~~

~~a 2013 publication in BMC Medicine, which concluded that exogenous T increased the risk of cardiovascular-related events, particularly in trials not funded by the pharmaceutical industry.~~

Prompted by these events, the FDA announced on January 31, 2014 that it will investigate the risk of stroke, heart attack, and death in men taking FDA-approved testosterone products and that the FDA would hold a T-class Advisory Committee meeting on September 17, 2014 to discuss this topic further. The FDA has also asked health care professionals and patients to report side effects involving prescription testosterone products to the agency.

Following the FDA's announcement, the Endocrine Society, a professional medical organization, released a statement in February 2014 in support of further studies regarding the risks and benefits of FDA-approved T-replacement products for men with age-related T deficiency. Specifically, the Endocrine Society noted that large-scale randomized controlled trials are needed to determine the risks and benefits of T-replacement therapy in older men. In addition, the Endocrine Society recommended that patients should be informed of the potential cardiovascular risks in middle-aged and older men associated with T-replacement therapies. Also following the FDA's announcement, Public Citizen, a consumer advocacy organization, petitioned the FDA to add a “black box” warning about the increased risks of heart attacks and other cardiovascular dangers to the product labels of all T-replacement therapies. In addition, this petition urged the FDA to delay its decision date on approving Aveed, a long-acting T-injectable developed by Endo, which was subsequently approved by the FDA in March 2014. In July 2014, the FDA responded to the Public Citizen petition and denied the petition. Additionally, in June 2014 the FDA announced that it would require the manufacturers of testosterone drugs to update the warning label to include blood clots including deep vein thrombosis (“DVT”) and pulmonary embolism (“PE”).

At the T-class Advisory Committee meeting held on September 17, 2014, the Advisory Committee discussed (i) the identification of the appropriate patient population for whom T-replacement therapy should be indicated and (ii) the potential risk of major adverse cardiovascular events, defined as non-fatal stroke, non-fatal myocardial infarction and cardiovascular death associated with T-replacement therapy. At the meeting, 16 of the 21 members of the Advisory Committee voted that the FDA should require sponsors of testosterone products to conduct a post marketing study (e.g. observational study or controlled clinical trial) to further assess the potential cardiovascular risk. Further, 12 of these voted that such post marketing study be required only if the T-replacement therapy is also approved for age-related hypogonadism.

The Advisory Committee also held a meeting on September 18, 2014 to evaluate the safety and efficacy of Jatenzo, an oral TU submitted to the FDA by Clarus Therapeutics for the proposed indication of T-replacement therapy. 18 of the 21 members of the Advisory Committee voted that the overall benefit/risk profile of Jatenzo was not acceptable to support approval for T-replacement therapy. The Advisory Committee agreed that an oral TUcontinue as a ~~T-replacement therapy is promising and that it would be of great value to patients to have an oral treatment option, but they did not believe the current Jatenzo data supported approval.~~

On March 3, 2015, the FDA issued a safety announcement addressing the Advisory Committee’s recommendations and communicated its expectations related to label revisions and additional clinical requirements.

~~The FDA's safety assessment recommended the following label modifications/restrictions in the indicated population for T-replacement therapy:~~

~~limiting use of T-replacement products to men who have low testosterone caused by certain medical conditions;~~

~~adding cautionary language stating that the safety and efficacy of TRT products with age-related hypogonadism have not been established; and~~

~~adding cautionary language stating that some studies have shown an increased risk of myocardial infarction and stroke associated with use of T-replacement products.~~

Also on October 20, 2017, Antares Pharma, Inc. (“Antares”) announced that it had received a CRL from the FDA regarding its NDA for XYOSTED™ (testosterone enanthate) injection. The CRL indicated that the FDA cannot approve the XYOSTED NDA in its present form and identified two deficiencies related to clinical data. Based on findings in two clinical studies, the FDA is concerned XYOSTED could cause a clinically meaningful increase in blood pressure. Additionally, the CRL also raised a concern regarding the occurrence of depression and suicidality.

It is possible that the FDA's evaluation of this topic and further studies on the effects of T-replacement therapies could demonstrate the risk of major adverse cardiovascular events or other health risks or could impose additional requirements that could delay our approval for TLANDO. During our SOAR trial, we collected safety data for TLANDO and a control group, the leading approved T-gel product, but we did not compare safety data from TLANDO to a placebo control group or the control group. If, following its evaluation, the FDA concludes that men using FDA-approved T-replacement therapies face serious cardiovascular risks, it may take actions against T-replacement products generally, which could impact us adversely in a variety of ways, including that the FDA could:

~~require additional safety studies before approving TLANDO;~~

~~mandate that certain warnings or precautions be included in our product labeling;~~

~~require that our product carry a “black box warning”;~~

~~limit use of TLANDO and LPCN 1111 to certain populations, such as men without specified conditions;~~

~~direct us to submit a Risk Evaluation and Mitigation Strategy (“REMS”) as part of our NDA to help ensure that the benefits of our product outweigh the potential risks;~~

~~require that we conduct post-marketing studies, potentially including registry, epidemiology or cardiovascular outcomes studies; and~~

~~limit the prospects for regulatory approval and commercial success of our TLANDO and LPCN 1111.~~

Additionally, the FDA has scheduled an Advisory Committee meeting to evaluate the safety and efficacy of TLANDO as a T-replacement product on January 10, 2018. The outcome of such a meeting, including the overall risk and benefit profile of TLANDO or data adequacy, may be unfavorable for marketing approval of TLANDO.

Demonstrated T-replacement therapy safety risks, as well as negative publicity about the risks of hormone replacement therapy, including T-replacement, could hurt sales of and impair our ability to successfully commercialize TLANDO and LPCN 1111, if approved. On March 19, 2015, we had a pre-NDA meeting with the FDA concerning our pivotal Phase 3 trial for TLANDO. Based on this meeting with the FDA, we do not expect to be required to conduct a heart attack and stroke risk study or any additional safety studies prior to approval of the NDA for TLANDO. If the FDA changes its position, however, and concludes that a cardiovascular trial is required prior to approving our NDA for TLANDO, such trial would require substantial financial resources, would delay the regulatory process for TLANDO and our entry into the marketplace, all of which would have a material adverse impact on our business.

~~RISKS RELATING TO OUR FINANCIAL POSITION AND CAPITAL REQUIREMENTS~~going concern.

We may have ~~incurred significant operating losses in most years since our inception,~~to dedicate resources to the defense and ~~anticipate that we will incur continued losses for the foreseeable future.~~resolution of litigation.

WeSecurities legislation in the United States makes it relatively easy for stockholders to sue. This can lead to frivolous law suits which take substantial time, money, resources and attention or force us to settle such claims rather than seek adequate judicial remedy or dismissal of such claims. Historically, securities class action litigation has often been brought against a company following a decline in the market price of its securities. Biotechnology and pharmaceutical companies, including the Company, have ~~focused a~~experienced significant ~~portion~~stock price volatility in recent years, increasing the risk of such litigation. As we defend the class action lawsuits or future patent infringement actions should they be filed, or if we are required to defend additional actions brought by other shareholders, we may be required to pay substantial litigation costs and managerial attention and financial resources may be diverted from business operations even if the outcome is in our ~~efforts and~~favor. In addition, while our insurance carrier may cover the costs of settling claims, the Company’s capital resources ~~on developing TLANDO. We have funded~~are critical to its continued operations, and the payment of litigation settlements and associated legal fees diverts these capital resources away from our operations, to date through proceeds from sales of common stock, preferred stock and convertible debt and from license and milestone revenues and research revenue from license and collaboration agreements with corporate partners. Weeven if such amounts do not have incurred losses in most years since our inception. As of September 30, 2017, we had an accumulated deficit of $121.1 million. Substantially all of our operating losses resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. These losses, combined with expected future losses, have had and will continue to have an adverse effecta material impact on our stockholders’ equity and working capital. We expect our research and development expenses to significantly increase in connection with any clinical trials we initiate associated with TLANDO, LPCN 1111 and LPCN 1107. In addition, if we obtain marketing approval for TLANDO, we will incur significant sales, marketing and commercialization expenses. As a result, we expect to continue to incur significant operating losses for the foreseeable future as we advance our lead product candidate, TLANDO, and further clinical development of LPCN 1111, LPCN 1107 and our other programs and continued research efforts. Because of the numerous risks and uncertainties associated with developing pharmaceutical products, we are unable to predict the extent of any future losses or when we will become profitable, if at all.financial statements.

Defendants intend to vigorously defend themselves against these allegations, but doing so may result in substantial litigation costs and managerial attention and financial resources may be diverted from business operations even if outcome is in favor of our current and former officers and directors and the Company.

On April 2, 2019, we filed a lawsuit against Clarus in the United States District Court in Delaware alleging that Clarus’s JATENZO® product infringes six of Lipocine’s issued U.S. patents: 9,034,858; 9,205,057; 9,480,690; 9,757,390; 6,569,463; and 6,923,988. Clarus has answered the complaint and asserted counterclaims of non-infringement and invalidity. We answered Clarus’s counterclaims on April 29, 2019. The Court held a scheduling conference on August 15, 2019 and a claim construction hearing on February 11, 2020 and scheduled a five-day jury trial beginning on February 8, 2021. On February 11, 2020, we also voluntarily dismissed allegations of patent infringement for expired U.S. Patent Nos. 6,569,463 and 6,923,988 in an effort to streamline the issues and associated costs for dispute. The parties are currently engaged in the fact discovery and expert witness phase of the lawsuit.

Risks Related to Ownership of Our Common Stock

The value of our warrants outstanding from the November 2019 Offering is subject to potentially material increases and decreases based on fluctuations in the price of our common stock.

In November 2019, we completed a public offering of common stock and warrants to purchase common stock (the “November 2019 Offering”). Gross proceeds from the November 2019 Offering were approximately $6.0 million. In the November 2019 Offering, the Company sold (i) 10,450,000 Class A Units, with each Class A Unit consisting of one share of common stock and a common stock warrant to purchase one share of common stock, and (ii) 1,550,000 Class B Units, with each Class B Unit consisting of one pre-funded warrant to purchase one share of a common stock and one common stock warrant to purchase one share of common stock at a price of $0.50 per Class A Unit and $0.4999 per Class B Unit. The pre-funded warrants were issued in lieu of common stock in order to ensure the purchaser did not exceed certain beneficial ownership limitations. The pre-funded warrants were immediately exercisable at an exercise price of $.0001 per share, subject to adjustment. Additionally, the common stock warrants were immediately exercisable at an exercise price of $0.50 per share and expire on November 17, 2024.

We account for the common stock warrants as a derivative instrument, and changes in the fair value of the warrants are included under other income (expense) in the Company’s statements of operations for each reporting period. At September 30, 2020, the aggregate fair value of the warrant liability included in the Company’s consolidated balance sheet was $1.3 million. We use the Black-Scholes option pricing model to determine the fair value of the warrants. As a result, the option-pricing model requires the input of several assumptions, including the stock price volatility, share price and risk-free interest rate. Changes in these assumptions can materially affect the fair value estimate. While the liability may only result from a change of control at that point in time, we ultimately may incur amounts significantly different than the carrying value.

Our management and directors will be able to exert influence over our affairs.

As of September 30, ~~2017,~~2020, our executive officers and directors beneficially owned approximately ~~10.1%~~5.5% of our common stock. These stockholders, if they act together, may be able to influence our management and affairs and all matters requiring stockholder approval, including significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control and might affect the market price of our common stock.

~~RISKS RELATING TO OUR INTELLECTUAL PROPERTY~~

WeOur common stock is thinly traded, may ~~incur substantial costs as a result of litigation or other proceedings relating~~continue to ~~patent~~be thinly traded in the future, and ~~other intellectual property rights, and we~~our stockholders may be unable to ~~protect our rights~~sell at or near asking prices or at all if they need to ~~our products and technology.~~sell their shares.

IfCurrently, we ~~or our collaborators choose to go to court to stop~~have a ~~third party from using the inventions claimed~~low volume of daily trades in our ~~owned~~common stock on NASDAQ. For example, the average daily trading volume in our common stock on NASDAQ during the third quarter of 2020 was approximately 4.2 million shares per day. Our stockholders may be unable to sell their common stock at or ~~licensed patents, that third party~~near their asking prices or at all, which may ~~ask a court~~result in substantial losses to rule that the patents are invalid and should not be enforced against that third party. These lawsuits are expensive and would consume time and other resources, including financial resources, even if we were successful in stopping the infringement of these patents. In addition, there is a risk that a court will decide that these patents are not valid or not enforceable and that we do not have the right to stop others from using the inventions.our stockholders.

There is also the risk that, even if the validity of these patents is not challenged or is upheld, the court will refuse to stop the third party on the ground that such third-party’s activities do not infringe onThe market for our owned or licensed patents. In addition, the U.S. Supreme Court has recently changed some standards relating to the granting of patents and assessing the validity of patents. As a consequence, issued patentscommon stock may be ~~found~~characterized by significant price volatility when compared to ~~contain invalid claims according to~~seasoned issuers, and we expect that our share price will be more volatile than a seasoned issuer for the ~~newly revised standards. Some of~~indefinite future. As noted above, our ~~owned or licensed patents~~common stock may be ~~subject to challenge and subsequent invalidation~~ sporadically and/or significant narrowing of claim scope in a reexamination or other proceeding before the U.S. Patent and Trademark Office (“PTO”), or during litigation, under the revised criteria which make it more difficult to obtain or maintain patents.

While our in-licensed patents and applications are not currently used in our product candidates, should we develop other product candidates that are covered by this intellectual property, we will rely on our licensor to file and prosecute patent applications and maintain patents and otherwise protect the intellectual property we license from them. Our licensor has retained the first right, but not the obligation to initiate an infringement proceeding against a third-party infringer of the intellectual property licensed to us, and enforcement of our in-licensed patents or defense of any claims asserting the invalidity or unenforceability of these patents would also be subject to the control or cooperation of our licensor. It is possible that our licensor’s defense activities may be less vigorous than had we conducted the defense ourselves.

We also license our patent portfolio, including U.S. and foreign patents and patent applications that cover our TLANDO and our other product candidates, to third parties for their respective products and product candidates. Under our agreements with our licensees, we have the right, but not the obligation, to enforce our current and future licensed patents against infringers of our licensees. In certain cases, our licensees may have primary enforcement rights and we have the obligation to cooperate. In the event of an enforcement action against infringers of our licensees, our licensees might not have the interest or resources to successfully preserve the patents, the infringers may countersue, and as a result our patents may be found invalid or unenforceable or of a narrower scope of coverage, and leave us with no patent protection for TLANDO and our other product candidates.

In addition, on May 15, 2015 we filed a patent application with the PTO, and our application requests that the PTO declare an interference between our patent application and Clarus Therapeutics’ (“Clarus”) U.S. Patent No. 8,828,428 (“the Clarus 428 Patent”). Pursuant to Lipocine's request, on December 4, 2015, the Patent Trial and Appeal Board (“PTAB”) declared an interference between the Clarus 428 Patent and Lipocine's application to determine, as between Clarus and Lipocine, who was the first to invent the subject matter of the claimed invention. Lipocine was declared the senior party in the interference. On September 20, 2017 the PTAB issued a Motions Decision based on each party’s motions in the interference case. The PTAB granted Lipocine’s motion to deny Clarus’ previously accorded priority date for the Clarus 428 Patent. Therefore, Clarus has a new priority date of April 16, 2014 for the Clarus 428 patent. The PTAB also granted Clarus’ motion to deny Lipocine’s accorded priority date. Therefore, Lipocine has an accorded priority date of May 15, 2015 on its application.thinly traded. As a consequence of this ~~decision,~~lack of liquidity, the ~~PTAB has redeclared~~trading of relatively small quantities of shares by our stockholders may disproportionately influence the ~~interference and named Clarus as~~price of those shares in either direction. The price for our shares could, for example, decline significantly in the ~~senior party and Lipocine as the junior party. All other motions were denied. A conference call with the PTAB was held on October 4, 2017 to discuss the next steps, including priority schedule. As~~event that a ~~result~~large number of the conference call, the PTAB has issued an order setting priority times. The order indicated that since Lipocine is the only party that filed a priority statement, only Lipocine shall be permitted to put on a priority case. The priority statement filed by Lipocine included a priority date prior to Clarus’ accorded benefit date. Interference proceedings may fail and could require us to cease using the related technology or to attempt to license rights to it from the prevailing party; our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms, if any license is offered at all. Even if we are successful in such interference, it may result in substantial costs to us and distraction to our management.

~~This interference proceeding will consume a portion~~shares of our ~~capital resources. Moreover, we may be subject~~common stock are sold on the market without commensurate demand, as compared to a third-party pre-issuance submission of prior art to the PTO, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our owned or licensed patent rights or the patent rights of others. Anseasoned issuer that could better absorb those sales without adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our owned or licensed patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third party patent rights. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates and impair our ability to raise needed capital.impact on its share price.

If we are required to defend patent infringement actions brought by other third parties, or if we sue to protect our own patent rights or otherwise to protect our proprietary information and to prevent its disclosure, we may be required to pay substantial litigation costs and managerial attention and financial resources may be diverted from business operations even if the outcome is in our favor.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

None.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

~~See the Exhibit Index immediately following the signature page of this report.~~

~~SIGNATURES~~

~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.~~

	~~Lipocine Inc.~~
	~~(Registrant)~~

~~Dated: November 8, 2017~~	~~/s/ Mahesh V. Patel~~
	~~Mahesh V. Patel, President and Chief~~ ~~Executive Officer~~ ~~(Principal Executive Officer)~~

~~Dated: November 8, 2017~~	~~/s/ Morgan R. Brown~~
	~~Morgan R. Brown, Executive Vice President~~ ~~and Chief Financial Officer~~ ~~(Principal Financial and Accounting Officer)~~

INDEX TO EXHIBITS

Exhibit		Incorporation By Reference
Number	Exhibit Description	Form	SEC File No.	Exhibit	Filing Date
31.1*
~~31.1~~^*	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

~~31.2~~^*	~~Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

~~32.1~~^*	~~Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350 (1)~~

~~32.2~~^*	~~Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350 (1)~~

~~101.INS~~^31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350 (1)

32.2*	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350 (1)

101.INS*	XBRL Instance Document

~~101.SCH~~^101.SCH	XBRL Taxonomy Extension Schema Document

~~101.CAL~~^101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

~~101.DEF~~^101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

~~101.LAB~~^101.LAB	XBRL Taxonomy Extension Labels Linkbase Document

~~101.PRE~~^101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

^*	Filed herewith

(1)	This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

39SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware		99-0370688
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

675 Arapeen Drive, Suite 202, Salt Lake City, Utah		84108
(Address of Principal Executive Offices)		(Zip Code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	LPCN	The NASDAQ Stock Market LLC

Large accelerated filer	¨
Accelerated filer	x¨
Non-accelerated filer	¨x
Smaller reporting company	¨x
Emerging growth company	x¨

			Page

PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements ~~(unaudited)~~	3

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1822

Item 3.	Quantitative and Qualitative Disclosures About Market Risks	3040

Item 4.	Controls and Procedures	3040

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	3141

Item 1A.	Risk Factors	3142

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3744

Item 3.	Defaults Upon Senior Securities	3744

Item 4.	Mine Safety Disclosures	3744

Item 5.	Other Information	3744

Item 6.	Exhibits	3745

	September 30,			December 31,			September 30,			December 31,
	2017			2016			2020			2019
Assets
Current assets:
Cash and cash equivalents	$	9,270,823		$	5,560,716		$	12,938,186		$	9,728,523
Restricted cash								5,000,000			5,000,000
Marketable investment securities		16,408,750			21,279,570			5,861,797			4,340,041
Accrued interest income		9,256			38,943			11,216			16,522
Prepaid and other current assets		453,446			329,548			915,575			545,887

Total current assets		26,142,275			27,208,777			24,726,774			19,630,973

Property and equipment, net of accumulated depreciation of $1,113,988 and $1,092,710, respectively		82,162			103,440
Property and equipment, net of accumulated depreciation of $1,142,540 and $1,140,143, respectively								1,157			3,554
Other assets		30,753			30,753			23,753			23,753

Total assets	$	26,255,190		$	27,342,970		$	24,751,684		$	19,658,280

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	803,819		$	245,915		$	1,047,729		$	1,182,241
Accrued expenses		1,680,315			1,080,254			1,534,495			449,303
Debt - current portion								3,206,290			3,333,333
Total current liabilities		2,484,134			1,326,169			5,788,514			4,964,877

Debt - non-current portion								3,151,010			3,814,407
Warrant liability								1,303,859			4,591,200
Total liabilities		2,484,134			1,326,169			10,243,383			13,370,484

Commitments and contingencies (notes 5, 7, 8 and 10)

Stockholders' equity:
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized; zero issued and outstanding		-			-			-			-
Common stock, par value $0.0001 per share, 100,000,000 shares authorized; 21,185,817 and 18,462,325 issued and 21,180,107 and 18,456,615 outstanding		2,119			1,846
Common stock, par value $0.0001 per share, 100,000,000 shares authorized; 65,691,860 and 37,655,175 issued and 65,686,150 and 37,649,465 outstanding								6,569			3,766
Additional paid-in capital		144,878,419			131,481,123			182,062,701			157,391,969
Treasury stock at cost, 5,710 shares		(40,712	)		(40,712	)		(40,712	)		(40,712	)
Accumulated other comprehensive loss		(533	)		(8,493	)
Accumulated other comprehensive gain (loss)								475			(38	)
Accumulated deficit		(121,068,237	)		(105,416,963	)		(167,520,732	)		(151,067,189	)

Total stockholders' equity		23,771,056			26,016,801			14,508,301			6,287,796

Total liabilities and stockholders' equity	$	26,255,190		$	27,342,970		$	24,751,684		$	19,658,280

	Three Months Ending September 30,						Nine Months Ending September 30,
	2017			2016			2017			2016

Operating expenses:
Research and development	$	2,046,533		$	1,506,581		$	9,237,169		$	6,747,673
General and administrative		2,719,526			1,394,406			6,578,423			9,038,837
Restructuring costs		-			385,233			-			385,233
Total operating expenses		4,766,059			3,286,220			15,815,592			16,171,743

Operating loss		(4,766,059	)		(3,286,220	)		(15,815,592	)		(16,171,743	)

Other income, net		65,811			50,735			165,018			167,403

Loss before income tax expense		(4,700,248	)		(3,235,485	)		(15,650,574	)		(16,004,340	)

Income tax expense		-			-			(700	)		(700	)

Net loss	$	(4,700,248	)	$	(3,235,485	)	$	(15,651,274	)	$	(16,005,040	)

Basic loss per share attributable to common stock	$	(0.22	)	$	(0.18	)	$	(0.80	)	$	(0.88	)

Weighted average common shares outstanding, basic		20,890,580			18,252,681			19,666,131			18,252,092

Diluted loss per share attributable to common stock	$	(0.22	)	$	(0.18	)	$	(0.80	)	$	(0.88	)

Weighted average common shares outstanding, diluted		20,890,580			18,252,681			19,666,131			18,252,092

Comprehensive loss:
Net loss	$	(4,700,248	)	$	(3,235,485	)	$	(15,651,274	)	$	(16,005,040	)
Net unrealized gain (loss) on available-for-sale securities		79			(5,824	)		7,960			33,022

Comprehensive loss	$	(4,700,169	)	$	(3,241,309	)	$	(15,643,314	)	$	(15,972,018	)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Revenues:
License revenue	$	-		$	164,990		$	-		$	164,990
Total revenues		-			164,990			-			164,990

Operating expenses:
Research and development	$	2,487,861		$	1,713,417		$	7,268,599		$	5,627,383
General and administrative		1,887,195			1,427,261			5,925,991			3,989,645
Total operating expenses		4,375,056			3,140,678			13,194,590			9,617,028

Operating loss		(4,375,056	)		(2,975,688	)		(13,194,590	)		(9,452,038	)

Other income (expense):
Interest and investment income		5,614			98,988			72,729			348,833
Interest expense		(84,293	)		(183,500	)		(305,485	)		(611,864	)
Gain (loss) on warrant liability		140,477			-			(3,025,997	)		-
Total other expense, net		61,798			(84,512	)		(3,258,753	)		(263,031	)
Loss before income tax expense		(4,313,258	)		(3,060,200	)		(16,453,343	)		(9,715,069	)

Income tax expense		-			-			(200	)		(200	)
Net loss	$	(4,313,258	)	$	(3,060,200	)	$	(16,453,543	)	$	(9,715,269	)

Basic loss per share attributable to common stock	$	(0.07	)	$	(0.12	)	$	(0.32	)	$	(0.40	)
Weighted average common shares outstanding, basic		64,833,714			24,911,908			52,030,431			24,301,045

Diluted loss per share attributable to common stock	$	(0.07	)	$	(0.12	)	$	(0.32	)	$	(0.40	)
Weighted average common shares outstanding, diluted		64,833,714			24,911,908			52,030,431			24,301,045

Comprehensive loss:
Net loss	$	(4,313,258	)	$	(3,060,200	)	$	(16,453,543	)	$	(9,715,269	)
Net unrealized gain (loss) on available-for-sale securities		579			(2,656	)		513			1,224

Comprehensive loss	$	(4,312,679	)	$	(3,062,856	)	$	(16,453,030	)	$	(9,714,045	)

	Common Stock				Treasury Stock					Additional		Accumulated Other						Total
	Number of Shares		Amount		Number of Shares		Amount			Paid-In Capital		Comprehensive Gain (Loss)			Accumulated Deficit			Stockholders' Equity
Balances at June 30, 2019		24,723,990	$	2,473		5,710	$	(40,712	)	$	154,600,442	$	2,917		$	(144,714,914	)	$	9,850,206

Net loss		-		-		-		-			-		-			(3,060,200	)		(3,060,200	)

Unrealized net loss on marketable investment securities		-		-		-		-			-		(2,656	)		-			(2,656	)

Stock-based compensation		-		-		-		-			58,113		-			-			58,113

Common stock sold through ATM offering		283,782		28		-		-			603,649		-			-			603,677

Option exercises		20,000		2		-		-			56,198		-			-			56,200

Balances at September 30, 2019		25,027,772	$	2,503		5,710	$	(40,712	)	$	155,318,402	$	261		$	(147,775,114	)	$	7,505,340

September 30, 2017	Amortized Cost		Gross unrealized holding gains		Gross unrealized holding losses			Aggregate fair value

Government bonds and notes	$	4,741,024	$	334	$	(485	)	$	4,740,873
Corporate bonds and commercial paper		11,668,259		310		(692	)		11,667,877

	$	16,409,283	$	644	$	(1,177	)	$	16,408,750

September 30, 2020	Amortized Cost		Gross unrealized holding gains		Gross unrealized holding losses		Aggregate fair value
Government treasury bills	$	1,999,426	$	274	$	-	$	1,999,700
Corporate bonds, notes and commercial paper		3,861,896		201		-		3,862,097
	$	5,861,322	$	475	$	-	$	5,861,797

December 31, 2016	Amortized Cost		Gross unrealized holding gains		Gross unrealized holding losses			Aggregate fair value

Government notes	$	7,473,273	$	-	$	(2,219	)	$	7,471,054
Corporate bonds, notes and commercial paper		13,814,790		-		(6,274	)		13,808,516

	$	21,288,063	$	-	$	(8,493	)	$	21,279,570

December 31, 2019	Amortized Cost		Gross unrealized holding gains		Gross unrealized holding losses			Aggregate fair value
Corporate bonds, notes and commercial paper		4,340,079		-		(38	)		4,340,041
	$	4,340,079	$	-	$	(38	)	$	4,340,041

	September 30,		Fair value measurements at reporting date using
	2017		Level 1 inputs		Level 2 inputs		Level 3 inputs

Assets:
Cash equivalents - money market funds, commercial paper, and government notes	$	4,973,808	$	2,176,105	$	2,797,703	$	-
	��
Government bonds and notes		4,740,873		4,740,873		-		-

Corporate bonds and commercial paper		11,667,877		-		11,667,877		-

	$	21,382,558	$	6,916,978	$	14,465,580	$	-

Years Ending December 31,	Amount (in thousands)
2020	$	556
2021		3,333
2022		1,667
Thereafter		—
	$	5,556

	September 30, 2020
Cash and cash equivalents	$	12,938,186
Restricted cash		5,000,000
Cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	17,938,186

	(7)	Contractual Agreements

	September 30,
	2017
Accrued restructuring charges payable at December 31, 2016	$	239,573
Restructuring expenses in 2017		-
Restructuring payments in 2017		(216,404	)
Accrued restructuring charges payable at September 30, 2017	$	23,169

	Operating
	leases
Year ending December 31:
2017		97,346
2018		58,903

2020			$	82,596
2021				55,064
Total minimum lease payments	$	156,249	$	137,660

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016		Three Months Ended September 30,				Nine Months Ended September 30,
									2020		2019		2020		2019
Research and development	$	196,869	$	147,769	$	620,881	$	477,068	$	150,435	$	27,072	$	484,876	$	313,247
General and administrative		742,411		260,954		1,596,828		1,405,924		201,188		31,041		653,718		468,143
Restructuring costs		-		51,266		-		51,266
									$	351,623	$	58,113	$	1,138,594	$	781,390
	$	939,280	$	459,989	$	2,217,709	$	1,934,258

	2020			2019
Expected term		5.81 years			5.67 years
Risk-free interest rate		1.33	%		1.82	%
Expected dividend yield		—			—
Expected volatility		99.52	%		80.38	%

	Outstanding stock options					Outstanding stock options
	Number of shares			Weighted average exercise price		Number of shares			Weighted average exercise price
Balance at December 31, 2016		2,225,850		$	6.12
Balance at December 31, 2019						2,310,485		$	4.81
Options granted		50,000			3.83	739,000			0.54
Options exercised		(190,383	)		2.81	-			-
Options forfeited		-			-	(37,444	)		0.94
Options cancelled		(17,500	)		13.84	(53,556	)		6.32
Balance at September 30, 2017		2,067,967			6.31
Balance at September 30, 2020						2,958,485			3.77

Options exercisable at September 30, 2017		1,501,446			6.36
Options exercisable at September 30, 2020						2,070,073			5.04

Options outstanding	Options outstanding							Options exercisable								Options outstanding							Options exercisable
Number outstanding	Number outstanding	Weighted average remaining contractual life (Years)		Weighted average exercise price		Aggregate intrinsic value		Number exerciseable		Weighted average remaining contractual life (Years)		Weighted average exercise price		Aggregate intrinsic value			Weighted average remaining contractual life (Years)		Weighted average exercise price		Aggregate intrinsic value		Number exerciseable		Weighted average remaining contractual life (Years)		Weighted average exercise price		Aggregate intrinsic value

	2,067,967		6.42	$	6.31	$	867,905		1,501,446		5.46	$	6.36	$	735,625
2,958,485																		6.26	$	3.77	$	627,210		2,070,073		5.02	$	5.04	$	9,084

					Number of unvested restricted stock units
Balance at December 31, 2019						661,307
~~Balance at December 31, 2016~~Granted						-
~~Granted~~	~~287,000~~
Vested	~~(15,000~~	)
~~Cancelled~~	-		(25,000	)
Forfeited						(30,625	)
Balance at September 30, ~~2017~~2020	~~272,000~~					605,682

	September 30, 2020			December 31, 2019
Expected life in years		4.13			4.88
Risk-free interest rate		0.22	%		1.69	%
Dividend yield		—			—
Volatility		103.45	%		225.93	%
Stock price	$	1.41		$	0.39

	Common Stock Warrants			Weighted Average Exercise Price
Outstanding at December 31, 2019		12,000,000		$	0.50
Issued		5,042,017			0.53
Exercised		(15,097,651	)		0.51
Expired		-			-
Cancelled		-			-
Forfeited		-			-
Balance at September 30, 2020		1,944,366		$	0.51

Warrants outstanding
Number exercisable	Weighted average remaining contractual life (Years)		Weighted average exercise price		Aggregate intrinsic value
1,944,366	4.25	$	0.51	$	1,744,163

~~Product Candidate~~	~~Indication~~	~~Status~~	~~Next Expected Milestone(s)~~
~~Men’s Health~~

~~TLANDO~~	~~Testosterone Replacement~~	~~NDA Filed~~	~~Advisory Committee meeting (January 10, 2018)~~ ~~PDUFA goal date (February 8, 2018)~~

~~LPCN 1111~~	~~Testosterone Replacement~~	~~Phase 2~~	~~Meeting with FDA (1Q 2018)~~

~~Women’s Health~~

~~LPCN 1107~~	~~Prevention of Preterm Birth~~	~~Phase 2~~	~~CMC: process characterization and scale-up completed (Dec 2017)~~

Baseline Parameters			Mean (SD)
Age (years)			53.8 (10.2)
BMI (kg/m2)			33.1 (5.8)
24h SBP (mm Hg)			127 (16)
24h DBP (mm Hg)			79 (6)

Parameter		Mean Change, mm Hg (95% CI)
24-hour SBP		3.82 (1.69, 5.96)
24-hour DBP		1.20 (0.31, 2.08)

Baseline Liver Fat %	Mean Liver Fat % at	Relative Reductions at EOS		Responder Rate** at
Category, n	Baseline	Mean %	Median %	EOS, %
At least 10%, n=8	20.5	40	39	75
At least 8%, n=10	18.3	42	42	80
At least 5%, n=21	12.1	33	41	71


	Lipocine Inc.
	(Registrant)

Dated: November 10, 2020	/s/ Mahesh V. Patel
	Mahesh V. Patel, President and Chief Executive Officer (Principal Executive Officer)

Dated: November 10, 2020	/s/ Morgan R. Brown
	Morgan R. Brown, Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)