UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
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x☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended SeptemberJune 30, 20192020
OR
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| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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| DARÉ BIOSCIENCE, INC. (Exact Name of Registrant as Specified in its Charter) | |
Delaware (State or Other Jurisdiction of Incorporation) | Commission File No. 001-36395 | 20-4139823 (IRS Employer Identification No.) |
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3655 Nobel Drive, Suite 260 San Diego, CA (Address of Principal Executive Offices) | (858) 926-7655 (Registrant’s telephone number, including area code) | 92122 (Zip Code) |
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| (Former name, former address and former fiscal year, if changed since last report) | | |
| Securities registered pursuant to Section 12(b) of the Act: | | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock | DARE | Nasdaq Capital Market |
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 for 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 o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company, or 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.
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| Large Accelerated Filer | | o | | Accelerated filer | o |
| Non-accelerated filer | | x | | Smaller reporting company | x |
Emerging growth company | | xo | | | |
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 pursuant to Section 13(a) of the Exchange Act. xo
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o☐ No x
As of NovemberAugust 11, 2019, 16,683,4112020, 31,552,412 shares of the Registrant’s Common Stock, par value $0.0001, were issued and outstanding.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, in particular “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations,” of Part I. Financial Information, and the information incorporated by reference herein contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this report, including statements regarding our strategy, future operations, future financial position, projected costs, prospects, plans and objectives of management, are forward-looking statements. Forward-looking statements, in some cases, can be identified by terms such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect,” “could,” “plan,” “potential,” “predict,” “seek,” “should,” “would,” “contemplate,” project,” “target,” “tend to,” or the negative version of these words and similar expressions.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including those factors described in Part II, Item 1A, “Risk Factors,” in this report, and elsewhere in this report. Given these uncertainties, you should not place undue reliance on any forward-looking statement. The following factors are among those that may cause such differences:
•Inability to continue as a going concern;
•Inability to raise additional capital, under favorable terms or at all;all, including as a result of the effects of the COVID-19 pandemic;
•Inability to successfully attract partners and enter into collaborations on acceptable terms;
Failure•A decision by Bayer HealthCare LLC to select discontinue its commercial interest in Ovaprene® and/or capitalize on the most scientifically, clinically or commercially promising or profitable indications or therapeutic areas forto terminate our product candidates due to limited financial resources;license agreement;
•Inability to timely develop, obtain regulatory approval for and commercialize our product candidates;
•Failure or delay in starting, conducting and completing clinical trials or obtaining United States Food and Drug Administration, or FDA, or foreign regulatory approval for our product candidates in a timely manner;manner, including as a result of matters beyond our control such as the effects related to geopolitical actions, natural disasters, or public health emergencies or pandemics, such as the COVID-19 pandemic;
•A change in the FDA’sFDA Center assigned primary oversight responsibility;responsibility for our combination product candidates;
•A change in regulatory requirements for our product candidates, including the development pathway pursuant to Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, or the FDA's 505(b)(2) pathway;
•Unsuccessful clinical trial outcomes stemming from clinical trial designs, failure to enroll a sufficient number of patients, higher than anticipated patient dropout rates, failure to meet established clinical endpoints, undesirable side effects and other safety concerns;
•Negative publicity concerning the safety and efficacy of our product candidates, or of product candidates being developed by others that share characteristics similar to our candidates;
•Inability to demonstrate sufficient efficacy of our product candidates;
•Failure to select or capitalize on the most scientifically, clinically or commercially promising or profitable indications or therapeutic areas for our product candidates due to limited financial resources;
•Loss of our licensed rights to develop and commercialize a product candidate as a result of the termination of the underlying licensing agreement;
•Monetary obligations and other requirements in connection with our exclusive, in-license agreements covering the patents and related intellectual property related to our product candidates;
•Developments by our competitors that make our product candidates less competitive or obsolete;
•Dependence on third parties to conduct nonclinical studies and clinical trials and to manufactureof our product candidates;
•Dependence on third parties to supply and manufacture clinical suppliestrial materials and, raw materials, drugsif any of our candidates are approved, commercial product, including components of our products as well as the finished product, in accordance with current good manufacturing practices and in the quantities needed;
•Interruptions in, or the complete shutdown of, the operations of third parties on which we rely, including clinical sites, manufacturers, suppliers, and other materials requiredvendors, from matters beyond their control, such as the effects related to produce a finished productgeopolitical actions, natural disasters, or public health emergencies or pandemics, such as the COVID-19 pandemic, and our lack of recourse against such third parties if their inability to produceperform is excused under the quantities needed;terms of our agreements with such parties;
•Failure of our product candidates, if approved, to gain market acceptance or obtain adequate coverage for third party reimbursement;
•A reduction in demand for contraceptives caused by an elimination of current requirements that health insurance plans cover and reimburse certain FDA-cleared or approved contraceptive products without cost sharing;
Lack of precedent•Uncertainty as to help assess whether health insurance plans will cover our product candidates;candidates even if we successfully develop and obtain regulatory approval for them;
The•Unfavorable or inadequate reimbursement environment relating torates for our product candidates atset by the time we obtain regulatory approval,United States government and other third-party payers even if ever;they become covered products under health insurance plans;
•Difficulty in introducing branded products in a market made up of generic products;
•Inability to adequately protect or enforce our, or our licensor’s, intellectual property rights;
•Lack of patent protection for the active ingredients in certain of our product candidates which could expose those product candidates to competition from other formulations using the same active ingredients;
•Higher risk of failure associated with product candidates in pre-clinical stages of development that may lead investors to assign them little to no value and make these assets difficult to fund;
•Disputes or other developments concerning our intellectual property rights;
•Actual and anticipated fluctuations in our quarterly or annual operating results;
•Price and volume fluctuations in the stock market, and in our stock in particular, which could subject us to securities class-action litigation;
•Failure to maintain the listing of the Company’sour common stock on the Nasdaq Capital Market or another nationally recognized exchange;
•Litigation or public concern about the safety of our potential products;
•Strict government regulations on our business, including various fraud and abuse laws, including, without limitation, the U.S. federal Anti-Kickback Statute, the U.S. federal False Claims Act and the U.S. Foreign Corrupt Practices Act;
•Regulations governing the production or marketing of our product candidates;
•Loss of, or inability to attract, key personnel; and
•Increased costs as a result of operating as a public company, and substantial time devoted by our management to compliance initiatives and corporate governance practices.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
The discussion regarding our contemplated acquisition of Microchips Biotech, Inc. discussed in this report also contains forward looking statements, including without limitation, statements relating to the completion of the acquisition, the expected timing thereof, Microchips’ anticipated cash at closing and after payment of its transaction-related expenses, and our expectations as to when and how much contingent consideration may become payable. Actual results could differ materially from those anticipated as a result of various factors, including: (1) Microchips may be unable to obtain the stockholder approval required for completion of the transaction; (2) other conditions to the closing of the transaction may not be satisfied; (3) the transaction may involve unexpected costs, liabilities or delays; (4) our business or stock price may suffer as a result of uncertainty surrounding the transaction; (5) the outcome of any legal proceedings related to the transaction; (6) we may be adversely affected by other economic, business, and/or competitive factors; (7) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; (8) risks that the transaction disrupts current plans and operations as a result of the transaction; and (9) other risks to consummation of the transaction, including the risk that the transaction will not be completed.
All forward-looking statements in this report are current only as of the date of this report. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any statement is made or to reflect the occurrence of unanticipated events, except as required by law.
TABLE OF CONTENTS
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| Item 1. | | |
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| Item 2. | | |
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| Item 3. | | |
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| Item 4. | | |
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| Item 1. | | |
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| Item 1A. | | |
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| Item 2. | | |
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| Item 3. | | |
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| Item 4. | | |
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Item 5. | | |
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Item 6. | | |
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PART I.Item 5. | FINANCIAL INFORMATION | |
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| Item 6. | | |
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PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Daré Bioscience, Inc. and Subsidiaries
Consolidated Balance Sheets
| | | | September 30,
2019 | | December 31,
2018 | | June 30,
2020 | | December 31,
2019 |
| | (unaudited) | | | | (unaudited) | | |
| Assets | | | | Assets | |
| Current assets | | | | Current assets | |
| Cash and cash equivalents | $ | 2,435,120 |
| | $ | 6,805,889 |
| Cash and cash equivalents | $ | 5,346,872 | | | $ | 4,780,107 | |
| Other receivables | 37,839 |
| | 31,037 |
| Other receivables | 177,133 | | | 555,210 | |
| Prepaid expenses | 770,506 |
| | 403,097 |
| Prepaid expenses | 2,252,860 | | | 1,108,615 | |
| | Total current assets | 3,243,465 |
| | 7,240,023 |
| Total current assets | 7,776,865 | | | 6,443,932 | |
| Property and equipment, net | 5,905 |
| | 9,396 |
| Property and equipment, net | 54,849 | | | 63,531 | |
| | Other non-current assets | 632,648 |
| | 577,968 |
| Other non-current assets | 738,656 | | | 935,325 | |
| Total assets | $ | 3,882,018 |
| | $ | 7,827,387 |
| Total assets | $ | 8,570,370 | | | $ | 7,442,788 | |
| Liabilities and stockholders’ equity | | | | Liabilities and stockholders’ equity | | | |
| Current liabilities | | | | Current liabilities | |
| Accounts payable | $ | 352,243 |
| | $ | 459,705 |
| Accounts payable | $ | 1,714,082 | | | $ | 1,083,183 | |
| Accrued expenses | 1,536,587 |
| | 631,351 |
| Accrued expenses | 1,640,752 | | | 2,098,653 | |
| Deferred grant funding | | Deferred grant funding | 1,944,781 | | | 2,019,674 | |
| Note payable | | Note payable | 367,285 | | | — | |
| Current portion of lease liabilities | | Current portion of lease liabilities | 416,945 | | | 410,896 | |
| Total current liabilities | 1,888,830 |
| | 1,091,056 |
| Total current liabilities | 6,083,845 | | | 5,612,406 | |
| Other liabilities | 183,196 |
| | 9,711 |
| |
| Deferred license revenue | | Deferred license revenue | 1,000,000 | | | — | |
| Contingent consideration | | Contingent consideration | 1,000,000 | | | 1,000,000 | |
| Lease liabilities long-term | | Lease liabilities long-term | 175,270 | | | 389,556 | |
| Total liabilities | 2,072,026 |
| | 1,100,767 |
| Total liabilities | 8,259,115 | | | 7,001,962 | |
| Commitments and contingencies (Note 8) |
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| Commitments and contingencies (Note 8) | | | |
| Stockholders' equity | | | | Stockholders' equity | |
| Preferred stock, $0.01 par value, 5,000,000 shares authorized; None issued and outstanding | — |
| | — |
| |
| Common stock, $0.0001 par value; 120,000,000 shares authorized; 16,683,411 and 11,422,161 shares issued and outstanding, respectively | 1,668 |
| | 1,143 |
| |
| Preferred stock, $0.01 par value, 5,000,000 shares authorized; NaN issued and outstanding | | Preferred stock, $0.01 par value, 5,000,000 shares authorized; NaN issued and outstanding | — | | | — | |
| Common stock, $0.0001 par value; 120,000,000 shares authorized; 28,524,004 and 19,683,401 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | | Common stock, $0.0001 par value; 120,000,000 shares authorized; 28,524,004 and 19,683,401 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | 2,852 | | | 1,968 | |
| Accumulated other comprehensive loss | (112,402 | ) | | (96,728 | ) | Accumulated other comprehensive loss | (113,479) | | | (102,625) | |
| Additional paid-in capital | 42,077,455 |
| | 35,791,972 |
| Additional paid-in capital | 55,821,534 | | | 44,564,674 | |
| Accumulated deficit | (40,156,729 | ) | | (28,969,767 | ) | Accumulated deficit | (55,399,652) | | | (44,023,191) | |
| Total stockholders' equity | 1,809,992 |
| | 6,726,620 |
| Total stockholders' equity | 311,255 | | | 440,826 | |
| Total liabilities and stockholders' equity | $ | 3,882,018 |
| | $ | 7,827,387 |
| Total liabilities and stockholders' equity | $ | 8,570,370 | | | $ | 7,442,788 | |
See accompanying notes to interim consolidated financial statements.
Daré Bioscience, Inc. andSubsidiaries
ConsolidatedStatementsofOperationsandComprehensiveLoss
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | | | Six months ended June 30, | | |
| 2020 | | 2019 | | 2020 | | 2019 |
| Operating expenses | | | | | | | |
| General and administrative | $ | 1,557,548 | | | $ | 1,307,379 | | | $ | 3,419,313 | | | $ | 2,584,559 | |
| Research and development expenses | 5,547,450 | | | 2,512,572 | | | 7,927,254 | | | 4,205,963 | |
| License expenses | 20,833 | | | 162,500 | | | 33,333 | | | 275,000 | |
| Total operating expenses | 7,125,831 | | | 3,982,451 | | | 11,379,900 | | | 7,065,522 | |
| Loss from operations | (7,125,831) | | | (3,982,451) | | | (11,379,900) | | | (7,065,522) | |
| Other income | 1,618 | | | 30,001 | | | 3,439 | | | 61,232 | |
| Net loss | $ | (7,124,213) | | | $ | (3,952,450) | | | $ | (11,376,461) | | | $ | (7,004,290) | |
| Deemed dividend from trigger of down round provision feature | $ | — | | | $ | (789,594) | | | $ | — | | | $ | (789,594) | |
| Net loss to common shareholders | $ | (7,124,213) | | | $ | (4,742,044) | | | $ | (11,376,461) | | | $ | (7,793,884) | |
| Foreign currency translation adjustments | $ | 12,090 | | | $ | (7,917) | | | $ | (10,854) | | | $ | (296) | |
| Comprehensive loss | $ | (7,112,123) | | | $ | (4,749,961) | | | $ | (11,387,315) | | | $ | (7,794,180) | |
| Loss per common share - basic and diluted | $ | (0.27) | | | $ | (0.29) | | | $ | (0.45) | | | $ | (0.57) | |
| Weighted average number of common shares outstanding: | | | | | | | |
| Basic and diluted | 26,710,750 | | | 16,105,252 | | | 25,255,073 | | | 13,776,643 | |
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| | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, |
| | 2019 | | 2018 | | 2019 | | 2018 |
| Operating expenses | | | | | | | |
| General and administrative | $ | 1,318,986 |
| | $ | 1,175,049 |
| | $ | 3,903,545 |
| | $ | 3,635,413 |
|
| Research and development expenses | 1,966,230 |
| | 1,446,548 |
| | 6,172,192 |
| | 4,750,823 |
|
| License expenses | 133,333 |
| | — |
| | 408,333 |
| | 350,000 |
|
| Impairment of goodwill | — |
| | — |
| | — |
| | 5,187,519 |
|
| Total operating expenses | 3,418,549 |
| | 2,621,597 |
| | 10,484,070 |
| | 13,923,755 |
|
| Loss from operations | (3,418,549 | ) | | (2,621,597 | ) | | (10,484,070 | ) | | (13,923,755 | ) |
| Other income | 25,471 |
| | 47,122 |
| | 86,703 |
| | 101,492 |
|
| Net loss | $ | (3,393,078 | ) | | $ | (2,574,475 | ) | | $ | (10,397,367 | ) | | $ | (13,822,263 | ) |
| Deemed dividend from trigger of down round provision feature | — |
| | — |
| | (789,594 | ) | | — |
|
| Net loss to common shareholders | $ | (3,393,078 | ) | | $ | (2,574,475 | ) | | $ | (11,186,961 | ) | | $ | (13,822,263 | ) |
| Foreign currency translation adjustments | $ | (15,378 | ) | | $ | (18,721 | ) | | $ | (15,674 | ) | | $ | (59,952 | ) |
| Comprehensive loss | $ | (3,408,456 | ) | | $ | (2,593,196 | ) | | $ | (11,202,635 | ) | | $ | (13,882,215 | ) |
| Loss per common share - basic and diluted | $ | (0.20 | ) | | $ | (0.23 | ) | | $ | (0.76 | ) | | $ | (1.32 | ) |
| Weighted average number of common shares outstanding: | | | | | | | |
| Basic and diluted | 16,683,411 |
| | 11,422,161 |
| | 14,756,213 |
| | 10,499,982 |
|
See accompanying notes to interim consolidated financial statements.
Daré Bioscience, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity
(Unaudited)
| | | Three Months Ended September 30, 2019 | |
| | | | | | Additional | | Accumulated
other | | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common stock | | paid-in | | comprehensive | | Accumulated | | stockholders' | | Additional | | Accumulated
other | | Total |
| | Shares | | Amount | | capital | | loss | | deficit | | equity | | Common stock | | | paid-in | | comprehensive | | Accumulated | | stockholders' |
| Balance at June 30, 2019 | 16,683,411 |
| | $ | 1,668 |
| | $ | 41,942,062 |
| | $ | (97,024 | ) | | $ | (36,763,651 | ) | | $ | 5,083,055 |
| |
| | | Shares | | Amount | | capital | | loss | | deficit | | equity |
| Balance at December 31, 2019 | | Balance at December 31, 2019 | 19,683,401 | | | $ | 1,968 | | | $ | 44,564,674 | | | $ | (102,625) | | | $ | (44,023,191) | | | $ | 440,826 | |
| Stock-based compensation | — |
| | — |
| | 135,393 |
| | — |
| | — |
| | 135,393 |
| Stock-based compensation | — | | | — | | | 160,841 | | | — | | | — | | | 160,841 | |
| Issuance of common stock | | Issuance of common stock | 3,308,003 | | | 331 | | | 5,222,356 | | | — | | | — | | | 5,222,687 | |
| Issuance of common stock from the exercise of warrants | | Issuance of common stock from the exercise of warrants | 1,699,000 | | | 170 | | | 1,664,850 | | | — | | | — | | | 1,665,020 | |
| Stock options exercised | | Stock options exercised | 10,149 | | | 1 | | | — | | | — | | | — | | | 1 | |
| Net loss | — |
| | — |
| | — |
| | — |
| | (3,393,078 | ) | | (3,393,078 | ) | Net loss | — | | | — | | | — | | | — | | | (4,252,248) | | | (4,252,248) | |
| Foreign currency translation adjustments | — |
| | — |
| | — |
| | (15,378 | ) | | — |
| | (15,378 | ) | Foreign currency translation adjustments | — | | | — | | | — | | | (22,944) | | | — | | | (22,944) | |
| Balance at September 30, 2019 | 16,683,411 |
| | $ | 1,668 |
| | $ | 42,077,455 |
| | $ | (112,402 | ) | | $ | (40,156,729 | ) | | $ | 1,809,992 |
| |
| Balance at March 31, 2020 | | Balance at March 31, 2020 | 24,700,553 | | | $ | 2,470 | | | $ | 51,612,721 | | | $ | (125,569) | | | $ | (48,275,439) | | | $ | 3,214,183 | |
| Stock-based compensation | | Stock-based compensation | — | | | — | | | 186,859 | | | — | | | — | | | 186,859 | |
| Issuance of common stock | | Issuance of common stock | 3,823,451 | | | 382 | | | 4,021,954 | | | — | | | — | | | 4,022,336 | |
| Net loss | | Net loss | — | | | — | | | — | | | — | | | (7,124,213) | | | (7,124,213) | |
| Foreign currency translation adjustments | | Foreign currency translation adjustments | — | | | — | | | — | | | 12,090 | | | — | | | 12,090 | |
| Balance at June 30, 2020 | | Balance at June 30, 2020 | 28,524,004 | | | $ | 2,852 | | | $ | 55,821,534 | | | $ | (113,479) | | | $ | (55,399,652) | | | $ | 311,255 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2019 | |
| | | | | | Additional | | Accumulated
other | | | | Total | | Additional | | Accumulated
other | | Total |
| | Common stock | | paid-in | | comprehensive | | Accumulated | | stockholders' | | Common stock | | | paid-in | | comprehensive | | Accumulated | | stockholders' |
| | Shares | | Amount | | capital | | loss | | deficit | | equity | | Shares | | Amount | | capital | | loss | | deficit | | equity |
| Balance at December 31, 2018 | 11,422,161 |
| | $ | 1,143 |
| | $ | 35,791,972 |
| | $ | (96,728 | ) | | $ | (28,969,767 | ) | | $ | 6,726,620 |
| Balance at December 31, 2018 | 11,422,161 | | | $ | 1,143 | | | $ | 35,791,972 | | | $ | (96,728) | | | $ | (28,969,767) | | | $ | 6,726,620 | |
| Stock-based compensation | — |
| | — |
| | 344,712 |
| | — |
| | — |
| | 344,712 |
| Stock-based compensation | — | | | — | | | 97,968 | | | — | | | — | | | 97,968 | |
| Net loss | | Net loss | — | | | — | | | — | | | — | | | (3,051,840) | | | (3,051,840) | |
| Foreign currency translation adjustments | | Foreign currency translation adjustments | — | | | — | | | — | | | 7,621 | | | — | | | 7,621 | |
| Balance at March 31, 2019 | | Balance at March 31, 2019 | 11,422,161 | | | $ | 1,143 | | | $ | 35,889,940 | | | $ | (89,107) | | | $ | (32,021,607) | | | $ | 3,780,369 | |
| Stock-based compensation | | Stock-based compensation | — | | | — | | | 111,351 | | | — | | | — | | | 111,351 | |
| Issuance of common stock via public offering, net | 5,261,250 |
| | 525 |
| | 5,151,177 |
| | — |
| | — |
| | 5,151,702 |
| Issuance of common stock via public offering, net | 5,261,250 | | | 525 | | | 5,151,177 | | | — | | | — | | | 5,151,702 | |
| Deemed dividend from trigger of down round provision | — |
| | — |
| | 789,594 |
| | — |
| | (789,594 | ) | | — |
| Deemed dividend from trigger of down round provision | — | | | — | | | 789,594 | | | — | | | (789,594) | | | — | |
| Net loss | — |
| | — |
| | — |
| | — |
| | (10,397,367 | ) | | (10,397,367 | ) | Net loss | — | | | — | | | — | | | — | | | (3,952,450) | | | (3,952,450) | |
| Foreign currency translation adjustments | — |
| | — |
| | — |
| | (15,674 | ) | | — |
| | (15,674 | ) | Foreign currency translation adjustments | — | | | — | | | — | | | (7,917) | | | — | | | (7,917) | |
| Balance at September 30, 2019 | 16,683,411 |
| | $ | 1,668 |
| | $ | 42,077,455 |
| | $ | (112,402 | ) | | $ | (40,156,729 | ) | | $ | 1,809,992 |
| |
| Balance at June 30, 2019 | | Balance at June 30, 2019 | 16,683,411 | | | $ | 1,668 | | | $ | 41,942,062 | | | $ | (97,024) | | | $ | (36,763,651) | | | $ | 5,083,055 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
See accompanying notes to interim consolidated financial statements.
Daré Bioscience, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2018 |
| | | | | | Additional | | Accumulated
other | | | | Total |
| | Common stock | | paid-in | | comprehensive | | Accumulated | | stockholders' |
| | Shares | | Amount | | capital | | loss | | deficit | | equity |
| Balance at June 30, 2018 | 11,422,161 |
| | $ | 1,142 |
| | $ | 35,754,872 |
| | $ | (59,311 | ) | | $ | (23,478,740 | ) | | $ | 12,217,963 |
|
| Public offering costs | — |
| | — |
| | (77,737 | ) | | — |
| | — |
| | (77,737 | ) |
| Public offering costs | — |
| | — |
| | (3,464 | ) | | — |
| | — |
| | (3,464 | ) |
| Stock-based compensation | — |
| | — |
| | 39,991 |
| | — |
| | — |
| | 39,991 |
|
| Net loss | — |
| | — |
| | — |
| | — |
| | (2,574,475 | ) | | (2,574,475 | ) |
| Foreign currency translation adjustments | — |
| | — |
| | — |
| | (18,721 | ) | | — |
| | (18,721 | ) |
| Balance at September 30, 2018 | 11,422,161 |
| | $ | 1,142 |
| | $ | 35,713,662 |
| | $ | (78,032 | ) | | $ | (26,053,215 | ) | | $ | 9,583,557 |
|
| | | | | | | | | | | | |
| Nine Months Ended September 30, 2018 |
| | | | | | Additional | | Accumulated
other | | | | Total |
| | Common stock | | paid-in | | comprehensive | | Accumulated | | stockholders' |
| | Shares | | Amount | | capital | | loss | | deficit | | equity |
| Balance at December 31, 2017 | 6,047,161 |
| | $ | 605 |
| | $ | 25,541,210 |
| | $ | (18,080 | ) | | $ | (12,230,952 | ) | | $ | 13,292,783 |
|
| Issuance of common stock | 375,000 |
| | 37 |
| | 736,698 |
| | — |
| | — |
| | 736,735 |
|
| Net proceeds from issuance of common stock and warrants | 5,000,000 |
| | 500 |
| | 9,377,216 |
| | — |
| | — |
| | 9,377,716 |
|
| Stock-based compensation | — |
| | — |
| | 58,538 |
| | — |
| | — |
| | 58,538 |
|
| Net loss | — |
| | — |
| | — |
| | — |
| | (13,822,263 | ) | | (13,822,263 | ) |
| Foreign currency translation adjustments | — |
| | — |
| | — |
| | (59,952 | ) | | — |
| | (59,952 | ) |
| Balance at September 30, 2018 | 11,422,161 |
| | $ | 1,142 |
| | $ | 35,713,662 |
| | $ | (78,032 | ) | | $ | (26,053,215 | ) | | $ | 9,583,557 |
|
| | | | | | | | | | | | |
See accompanying notes to interim consolidated financial statements.
Daré Bioscience, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
| | | | Nine months ended September 30, | | Six months ended June 30, | |
| | 2019 | | 2018 | | 2020 | | 2019 |
| Operating activities: | | | | Operating activities: | | | |
| Net loss | $ | (10,397,367 | ) | | $ | (13,822,263 | ) | Net loss | $ | (11,376,461) | | | $ | (7,004,290) | |
| Non-cash adjustments reconciling net loss to operating cash flows: | | | | Non-cash adjustments reconciling net loss to operating cash flows: | |
| Depreciation | 3,491 |
| | 1,263 |
| Depreciation | 23,929 | | | 2,315 | |
| Stock-based compensation | 344,712 |
| | 58,538 |
| Stock-based compensation | 347,700 | | | 209,319 | |
| Non-cash lease expenses | 10,549 |
| | — |
| |
| Acquired in-process research and development | — |
| | 507,000 |
| |
| Impairment of goodwill | — |
| | 5,187,519 |
| |
| Non-cash operating lease cost | | Non-cash operating lease cost | (90,080) | | | 838 | |
| | Changes in operating assets and liabilities: | | | | Changes in operating assets and liabilities: | |
| Other receivables | (6,802 | ) | | 203,928 |
| Other receivables | 378,077 | | | (461,982) | |
| Prepaid expenses | (367,409 | ) | | (238,378 | ) | Prepaid expenses | (1,144,246) | | | (34,861) | |
| Other current assets | — |
| | 193,495 |
| |
| | Other non-current assets | 138,719 |
| | 105,692 |
| Other non-current assets | 78,513 | | | 79,063 | |
| Accounts payable | (107,463 | ) | | (39,803 | ) | Accounts payable | 630,899 | | | 172,413 | |
| | Accrued expenses | 905,236 |
| | 276,062 |
| Accrued expenses | (457,901) | | | 710,459 | |
| Other liabilities | (30,463 | ) | | 8,900 |
| |
| Deferred grant funding | | Deferred grant funding | (74,894) | | | — | |
| Deferred license revenue | | Deferred license revenue | 1,000,000 | | | — | |
| Net cash used in operating activities | (9,506,797 | ) | | (7,558,047 | ) | Net cash used in operating activities | (10,684,464) | | | (6,326,726) | |
| Investing activities: | | | | Investing activities: | | | |
| Purchases of property and equipment | — |
| | (11,836 | ) | Purchases of property and equipment | (15,246) | | | — | |
| Acquisition of Pear Tree and Hydra asset | — |
| | (507,000 | ) | |
| Net cash used in investing activities | — |
| | (518,836 | ) | Net cash used in investing activities | (15,246) | | | — | |
| Financing activities: | | | | Financing activities: | | | |
| Net proceeds from issuance of common stock and warrants | 5,151,702 |
| | 10,114,452 |
| |
| Net proceeds from issuance of common stock | | Net proceeds from issuance of common stock | 9,245,023 | | | 5,151,702 | |
| | Proceeds from the exercise of common stock warrants | | Proceeds from the exercise of common stock warrants | 1,665,020 | | | — | |
| Proceeds from the exercise of stock options | | Proceeds from the exercise of stock options | 1 | | | — | |
| Proceeds from issuance of note payable | | Proceeds from issuance of note payable | 367,285 | | | — | |
| Net cash provided by financing activities | 5,151,702 |
| | 10,114,452 |
| Net cash provided by financing activities | 11,277,329 | | | 5,151,702 | |
| Effect of exchange rate changes on cash and cash equivalents | (15,674 | ) | | (59,952 | ) | Effect of exchange rate changes on cash and cash equivalents | (10,854) | | | (296) | |
| Net change in cash and cash equivalents | (4,370,769 | ) | | 1,977,617 |
| Net change in cash and cash equivalents | 566,765 | | | (1,175,320) | |
| Cash and cash equivalents, beginning of period | 6,805,889 |
| | 7,559,846 |
| Cash and cash equivalents, beginning of period | 4,780,107 | | | 6,805,889 | |
| Cash and cash equivalents, end of period | $ | 2,435,120 |
| | $ | 9,537,463 |
| Cash and cash equivalents, end of period | $ | 5,346,872 | | | $ | 5,630,569 | |
| Supplemental disclosure of non-cash operating and financing activities: | | | | Supplemental disclosure of non-cash operating and financing activities: | | | |
| Operating right-of-use assets obtained in exchange for new operating lease liabilities | $ | 231,698 |
| | — |
| Operating right-of-use assets obtained in exchange for new operating lease liabilities | $ | — | | | $ | 231,698 | |
| Deemed dividend from trigger of down round provision | $ | 789,594 |
| | — |
| |
| Deemed dividend from trigger of down round provision feature | | Deemed dividend from trigger of down round provision feature | $ | — | | | 789,594 | |
| | | | | |
See accompanying notes to interim consolidated financial statements.
Daré Bioscience, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
| |
1. | ORGANIZATION AND DESCRIPTION OF THE BUSINESS |
1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS
Daré Bioscience, Inc. is a clinical-stage biopharmaceutical company committed to the acceleration of innovative products for women’s health. Daré Bioscience, Inc. and its wholly owned subsidiaries operate in one1 segment. In this report, the “Company” refers collectively to Daré Bioscience, Inc. and its wholly owned subsidiaries, unless otherwise stated or the context otherwise requires.
The Company is driven by a mission to identify, acquire and develop a diverse portfolio of differentiated therapies that expand treatment options, improve outcomes and facilitate convenience for women, primarily in the areas of contraception, fertility, and sexual and vaginal health. The Company's business strategy is to in-license or otherwise acquire the rights to differentiated product candidates in the Company's areas of focus, some of which have existing clinical proof-of-concept data, and to take those candidates through advanced stages of clinical development, and then out-license thesethe products to companies with sales and distribution capabilities in women's health to leverage their commercial capabilities.
Since July 2017, the Company has assembled a portfolio of clinical-stage and pre-clinical-stage candidates. While the Company will continue to assess opportunities to expand its portfolio, its current focus is on advancing its existing product candidates addressing unmet needsthrough mid- and late-stages of clinical development or approval. The Company's global commercialization and development strategy involves partnering with pharmaceutical companies and regional distributors with established marketing and sales capabilities in women’s health. women's health, including through co-development and promotion agreements, once the Company has advanced a candidate through mid- to late-stage clinical development.
The Company’sCompany's portfolio includes three product candidates in advanced clinical development and three Phase 1-ready candidates:development:
DARE-BV1,•DARE-BV1, a novel thermosetting bioadhesive hydrogel formulated with clindamycin phosphate 2% to be administered in a single vaginally delivered application, as a first line treatment for bacterial vaginosis, or BV;vaginosis;
•Ovaprene®, a hormone-free, monthly vaginal contraceptive; and
•Sildenafil Cream 3.6%, 3.6%, a proprietary cream formulation of sildenafil for topical administration to the vulva and vagina for treatment of female sexual arousal disorder,disorder.
The Company's portfolio also includes three product candidates in Phase 1 clinical development or FSAD;that the Company believes are Phase 1-ready:
DARE-HRT1,•DARE-HRT1, a combination bio-identical estradiol and progesterone intravaginal ring for the treatment of menopausal symptoms, including vasomotor symptoms, (VMS) as part of a hormone replacement therapy, or HRT, following menopause;
DARE-VVA1, a vaginally delivered formulation of tamoxifen to treat vulvar vaginal atrophy, or VVA, in patients with hormone-receptor positive breast cancer; and
DARE-FRT1,•DARE-FRT1, an intravaginal ring containing bio-identical progesterone for the prevention of preterm birth and for fertility support as part of an in vitro fertilization treatment plan.plan; and
•DARE-VVA1, a vaginally delivered formulation of tamoxifen to treat vulvar vaginal atrophy, or VVA, in patients with hormone- receptor positive breast cancer.
The Company's portfolio also includes these pre-clinical stage product candidates:
•DARE-LARC1, a combination product designed to provide long-acting, reversible contraception comprising an implantable, user-controlled wireless drug delivery system and levonorgestrel;
•ORB-204 and ORB-214, injectable formulations of etonogestrel designed to provide contraception over 6-month and 12-month formulations of injectable etonogestrel for contraception;periods, respectively; and
•DARE-RH1, a novel approach to non-hormonalnon-hormonal contraception for both men and women by targeting the CatSper ion channel.
In addition, on November 10, 2019, the Company entered into a definitive agreement to acquire Microchips Biotech, Inc., or Microchips, a privately-held company developing a proprietary, microchip-based, implantable drug delivery system designed to store and precisely deliver hundreds of therapeutic doses over months and years, with potential utilization in multiple therapeutic indications, including women's contraception. The implant is intended to be operated by the patient to deliver medication on demand or on a pre-determined schedule that can be activated or deactivated wirelessly, as required. Microchips' lead product candidate is a pre-clinical stage contraceptive application of the technology, which, if successful, could provide women with unparalleled control over the management of their fertility. Utilizing the active pharmaceutical ingredient levonorgestrel, the device is intended to deliver all the benefits of a traditional long-acting, reversible contraceptive product and provide precise dosing and extended implant duration
with the ability to wirelessly control the duration of ovulatory suppression based on individual user needs. See Note 11, "Subsequent Events," herein.channel.
The Company’s primary operations have consisted of, and are expected to continue to consist of, product research and development and advancing its portfolio of product candidates through clinical development and regulatory approval. We expectThe Company expects that the majority of ourits development expenses over the next two yearsin 2020 and 2021 will support the advancement of DARE-BV1, Ovaprene, and Sildenafil Cream, 3.6%.
To date, the Company has not obtained any regulatory approvals for any of its product candidates, commercialized any of its product candidates or generated any product revenue. The Company is subject to several risks common to clinical-stage biopharmaceutical companies, including dependence on key individuals, competition from other companies, the need to develop commercially viable products in a timely and cost-effective manner, and the need to obtain adequate additional capital to fund the development of product candidates. The Company is also subject to several risks common to other companies in the industry, including rapid technology change, regulatory approval of products, uncertainty of market acceptance of products, competition from substitute products and from larger companies, with recognized brands, greater capital resources and higher levels of dedicated staff, and compliance with government regulations, protection of proprietary technology, dependence on third parties, and product liability.
The Company has prepared its interim consolidated financial statements on a going concern basis, which assumes that the Company will realize its assets and satisfy its liabilities in the normal course of business. However, as of September 30, 2019, the Company had an accumulated deficit of approximately $40.2 million and cash and cash equivalents of approximately $2.4 million. The Company also had negative cash flowhas a history of losses from operations, of approximately $9.5 million during the nine months ended September 30, 2019. The Company expects negative cash flows from its operations will continue for the foreseeable future, and expects that its net losses will continue for at least the next several years as it develops its existing product candidates and seeks to acquire, license or develop additional product candidates. These circumstances raise substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty of the Company's ability to continue as a going concern.
Based on the Company's current operating plan estimates,As of June 30, 2020, the Company will not have sufficienthad an accumulated deficit of approximately $55.4 million and cash to satisfy its working capital needs and other liquidity requirements over at least the next 12 months from the datecash equivalents of issuance of these interim consolidated financial statements unless the Company raises additional capital or substantially curtails its operations.approximately $5.3 million. The Company needs to raise additional capital in the near term in order to continue to fund itsalso had negative cash flow from operations and to successfully execute its current operating plan, including to continue the planned development of DARE-BV1, Ovaprene, and Sildenafil Cream, 3.6%. The Company currently anticipates that it will receive approximately $5.7 million of additional working capital if the acquisition of Microchips closes as anticipated, but these funds will not be sufficient to support the current operating plan over the next 12 months, and there can be no assurance that the Microchips acquisition will close as anticipated.
Potential sources of capital include, but are not limited to, the sale of equity or equity-linked securities, monies awarded under grants, cash payments received in connection with corporate partnerships or collaborations on certain of the Company's portfolio assets, and business combinations with companies with current cash balances or committed sources of future payments or expense reimbursement. There is no guarantee that the Company will be able to raise capital on a timely basis, under attractive terms, or at all.
In April of 2019, the Company completed a sale of common stock raising net proceeds of approximately $5.2 million. See Note 6, "Stockholders' Equity," herein.$10.7 million during the six months ended June 30, 2020.
The Company is focused primarily on the development and commercialization of innovative products in women’s health. The Company will continue to incur significant research and development and other expenses related to these activities. If the clinical trials for any of the Company’s product candidates fail to produce successful results such that those product candidates do not advance in clinical development, then the Company’s business and prospects may suffer. Even if the product candidates advance in clinical development, they may fail to gain regulatory approval. Even if the product candidates are approved, they may fail to achieve market acceptance, and the Company may never become profitable. Even if the Company becomes profitable, it may not sustain profitability.
Based on the Company's current operating plan estimates, the Company does not have sufficient cash to satisfy its working capital needs and other liquidity requirements over at least the next 12 months from the date of issuance of the accompanying consolidated financial statements. The Company needs to raise substantial additional capital to continue to fund its operations and to successfully execute its current operating plan, including to continue the planned development of DARE-BV1, Ovaprene, and Sildenafil Cream, 3.6%.
The Company is currently evaluating a variety of capital raising options, including equity and debt financings, government or other grant funding, collaborations and strategic alliances or other similar types of arrangements to cover its operating
expenses, including the development of its product candidates and any future product candidates it may license or otherwise acquire. The amount and timing of the Company's capital needs have been and will continue to depend highly on many factors, including the product development programs the Company chooses to pursue and the pace and results of its clinical development efforts. If the Company raises capital through collaborations, strategic alliances or other similar types of arrangements, it may have to relinquish, on terms that are not favorable to the Company, rights to some of its technologies or product candidates it would otherwise seek to develop or commercialize. There can be no assuranceassurances that capital will be available when needed or that, if available, it will be obtained on terms favorable to the Company and its stockholders. Additionally, equity or debt financings may have a dilutive effect on the holdings of the Company's existing stockholders. If the Company cannot raise capital when needed, on favorable terms or at all, the Company will not be able to continue development of its product candidates, will need to reevaluate its planned operations and may need to delay, scale back or eliminate some or all of its development programs, reduce expenses, file for bankruptcy, reorganize, merge with another entity, or cease operations. If the Company becomes unable to continue as a going concern, the Company may have to liquidate its assets, and might realize significantly less than the values at which they are carried on its consolidated financial statements, and stockholders may lose all or part of their investment in the Company's common stock. The interim consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The effect of the COVID-19 pandemic and efforts to reduce its spread remain a rapidly evolving and uncertain risk to the Company's business, operating results, financial condition and stock price. In large part, the extent to which COVID-19 affects the Company will depend on future developments that are beyond its knowledge or control, including, but not limited to, the duration and severity of the pandemic, governmental and individual organization actions and policies implemented to reduce transmission of the disease or facilitate development of or access to therapies to treat or vaccinations to protect against the disease, governmental actions and policies to assist economic recovery, and the speed with which and degree to which normal economic and operating conditions resume. The pandemic may increase the anticipated aggregate costs for the development of the Company's product candidates and may adversely impact the anticipated timelines for the development of the Company's product candidates by, among other things, causing disruptions in the supply chain for clinical supplies, delays in the timing and pace of subject enrollment in clinical trials and lower than anticipated subject enrollment and completion rates, delays in the review and approval of the Company's regulatory submissions by regulatory agencies with respect to the Company's product candidates, and other unforeseen disruptions. The economic impact of the COVID-19 pandemic and the uncertainty and volatility in the capital markets it has caused and may continue to cause may negatively impact investor sentiment and the availability and cost of capital, and may adversely impact the Company's ability to raise capital when needed or on terms favorable to the Company and its stockholders to fund its development programs and operations. The Company does not yet know the full extent of potential delays or impacts on its business, clinical trial activities, ability to access capital or on healthcare systems or the global economy as a whole. However, these effects could have a material adverse impact on the Company's business and financial condition.
| |
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant accounting policies are described in Note 1 to the interim consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018,2019, filed with the Securities and Exchange Commission, or SEC on April 1, 2019.March 27, 2020. Since the date of those consolidated financial statements, there have been no material changes to the Company’s significant accounting policies, except for the accounting policies related to revenue recognition as described below.
Basis of Presentation
The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, as defined by the Financial Accounting Standards Board, or FASB, for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In management’s opinion, the accompanying interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results of the interim periods presented.
Interim financial results are not necessarily indicative of results anticipated for any other interim period or for the full year. The accompanying interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
2019.
Leases
The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use, or ROU, lease assets, current portion of lease obligations, and long-term lease obligations on the Company's consolidated balance sheets.
ROU lease assets represent the Company's right to use an underlying asset for the lease term and lease obligations represent the Company's obligation to make lease payments arising from the lease. Operating ROU lease assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term. If the lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The ROU lease asset also includes any lease payments made and excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease and the related payments are only included in the lease liability when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. (See Note 7, Leased Properties.)
Fair Value Measurements
GAAP defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three-level hierarchy of valuation techniques established to measure fair value is defined as follows:
•Level 1: inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
•Level 2: inputs other than levelLevel 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets or liabilities.
•Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Cash and cash equivalents of $2.4 million and $6.8 million are measured at
The following tables present the classification within the fair value hierarchy of financial assets and liabilities that are remeasured on a recurring basis as of SeptemberJune 30, 20192020 and December 31, 2018, respectively, and are classified within Level 1 of the fair value hierarchy. Other receivables are2019. There were no financial assets with carrying valuesor liabilities that approximate fair value due to the short-term naturewere remeasured using a quoted price in active markets for identical assets (Level 2) as of these assets. Accounts payable and accrued expenses and other liabilities are financial liabilitiesJune 30, 2020.
| | | | | | | | | | | | | | | | | | | | | | | |
| Fair Value Measurements | | | | | | |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Balance at June 30, 2020 | | | | | | | |
| Current assets: | | | | | | | |
| Cash and cash equivalents | $ | 5,346,872 | | | $ | — | | | $ | — | | | $ | 5,346,872 | |
| Other non-current liabilities: | | | | | | | |
| Contingent consideration | $ | — | | | $ | — | | | $ | 1,000,000 | | | $ | 1,000,000 | |
| Balance at December 31, 2019 | | | | | | | |
| Current assets: | | | | | | | |
| Cash and cash equivalents | $ | 4,780,107 | | | $ | — | | | $ | — | | | $ | 4,780,107 | |
| Other non-current liabilities: | | | | | | | |
| Contingent consideration | $ | — | | | $ | — | | | $ | 1,000,000 | | | $ | 1,000,000 | |
Revenue Recognition
The Company recognizes revenue is accordance with carrying values that approximate fair value due to the short-term nature of these liabilities.
Recently Adopted Accounting Standards
In May 2014, FASB issued Accounting Standards Update, Codification, or ASU, 2014-09, ASC, Topic 606, Revenue from Contracts with Customers, which impactsapplies to all contracts with customers, except for contracts that are within the wayscope of other standards, such as leases, insurance, collaboration arrangements and financial instruments.
The Company recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies its performance obligations. At contract inception, the Company assesses the goods or services agreed upon within each contract and assess whether each good or service is distinct and determine those that areperformance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
In a contract with multiple performance obligations, the Company develops estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation, which determines how the transaction price is allocated among the performance obligations. The estimation of the stand-alone selling price(s) may include estimates regarding forecasted revenues or costs, development timelines, discount rates, and probabilities of technical and regulatory success. The Company evaluates each performance obligation to determine if it can be satisfied at a point in time or over time. Any change made to estimated progress towards completion of a performance obligation and, therefore, revenue recognized will be recorded as a change in estimate. In addition, variable consideration must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.
License Fees. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in a contract, the Company recognizes revenues from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. To date, the Company has not recognized any license fee revenue resulting from any of its collaborative arrangements.
Royalties. For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and for which the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some entities recognizeor all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of its collaborative arrangements.
Bayer License. In January 2020, the Company entered into a license agreement with Bayer HealthCare LLC, or Bayer, regarding the further development and commercialization of Ovaprene in the U.S. Upon execution of the agreement, the Company received a $1.0 million upfront non-refundable license fee payment from Bayer. Bayer, in its sole discretion, has the right to make the license effective by paying the Company an additional $20.0 million. The Company concluded that there was one significant performance obligation related to the $1.0 million upfront payment: a distinct license to commercialize Ovaprene effective upon the receipt of the $20.0 million fee. The $1.0 million upfront payment will be recorded as license revenue at the earlier of (1) the point in time the Company receives the $20.0 million fee, the license is transferred to Bayer and Bayer is able to use and benefit from the license and (2) the termination of the agreement. As of June 30, 2020, neither of the foregoing had occurred. The $1.0 million payment is recorded as deferred revenue in the Company's consolidated balance sheet at June 30, 2020.
The Company will also be entitled to receive (a) milestone payments totaling up to $310.0 million related to the commercial sales of Ovaprene, if all such milestones are achieved, (b) tiered royalties starting in the low double digits based on annual net sales of Ovaprene during a calendar year, subject to customary royalty reductions and offsets, and (c) a percentage of sublicense revenue.
Potential future payments for certain typesvariable consideration, such as commercial milestones, will be recognized when it is probable that, if recorded, a significant reversal will not take place. Potential future royalty payments will be recorded as revenue when the associated sales occur. (See Note 3, License and Collaboration Agreements.)
3. LICENSE AND COLLABORATION AGREEMENTS
Out-License Agreements
Bayer HealthCare License Agreement
On January 10, 2020, the Company entered into a license agreement with Bayer HealthCare LLC, or Bayer, regarding the further development and commercialization of transactions.Ovaprene in the U.S. Under the agreement, the Company received a $1.0 million upfront non-refundable license fee payment from Bayer. If Bayer pays an additional $20.0 million to the Company after Bayer receives and reviews the results of the pivotal clinical trial of Ovaprene, which payment Bayer may elect to make in its sole discretion, the license grant to Bayer to develop and commercialize Ovaprene for human contraception in the U.S. becomes effective.
Milestone & Royalty Payments. The new standard became effective beginningCompany would also be entitled to receive (a) a milestone payment in 2018the low double-digit millions upon the first commercial sale of Ovaprene in the U.S. and escalating milestone payments based on annual net sales of Ovaprene during a calendar year, totaling up to $310.0 million if all such milestones, including the first commercial sale, are achieved, (b) tiered royalties starting in the low double digits based on annual net sales of Ovaprene during a calendar year, subject to customary royalty reductions and offsets, and (c) a percentage of sublicense revenue.
Efforts. The Company will be responsible for public companies. Becausethe pivotal trial for Ovaprene and for its development and regulatory activities and has product supply obligations. Bayer will support the Company in development and regulatory activities by providing up to two full-time equivalents with expertise in clinical, regulatory, preclinical, commercial, CMC and product supply matters in an advisory capacity. After payment of the $20.0 million fee, Bayer will be responsible for the commercialization of Ovaprene for human contraception in the U.S.
Term. The initial term of the agreement, which is subject to automatic renewal terms, continues until the later of (a) the expiration of any valid claim covering the manufacture, use, sale or import of Ovaprene in the U.S.; or (b) 15 years from the first commercial sale of Ovaprene in the U.S. In addition to customary termination rights for both parties, Bayer may terminate the agreement at any time on 90 days' notice and the agreement will automatically terminate if the Company does not currently have any contractsreceive the $20.0 million fee if and when due.
In-License Agreements
Hammock/MilanaPharm Assignment and License Agreement
In December 2018, the Company entered into (a) an Assignment Agreement with customers,Hammock Pharmaceuticals, Inc., or the Company’s adoptionAssignment Agreement, and (b) a First Amendment to License Agreement with TriLogic Pharma, LLC and MilanaPharm LLC, or the License Amendment. Both agreements relate to the exclusive license agreement among Hammock, TriLogic and MilanaPharm dated as of this accounting standard did not impactJanuary 9, 2017, or the Company’s interim consolidated financial statements.
In February 2016, FASB issued ASU 2016-02, Leases (Topic 842), which sets outMilanaPharm License Agreement. Under the principlesAssignment Agreement and the MilanaPharm License Agreement, as amended by the License Amendment, the Company acquired an exclusive, worldwide license to develop and commercialize products for the recognition, measurement, presentationdiagnosis, treatment and disclosureprevention of leases for both partieshuman diseases or conditions in or through any intravaginal or urological applications. The licensed intellectual property relates to the hydrogel drug delivery platform of TriLogic and MilanaPharm known as TRI-726. In DARE-BV1, this proprietary technology is formulated with clindamycin, an antibiotic with FDA approval to treat certain bacterial infections, including bacterial vaginosis. In December 2019, the Company entered into amendments to each of the License Amendment and Assignment Agreement.
The following is a summary of other terms of the License Amendment, as amended:
License Fees. The Company paid MilanaPharm: (1) $25,000 in connection with the execution of the License Amendment; (2) $100,000 on December 5, 2019; and (3) $110,000 on January 31, 2020.
Milestone Payments. The Company will pay to MilanaPharm (1) up to $300,000 in the aggregate upon achievement of certain clinical and regulatory development milestones, $50,000 of which was paid during the second quarter of 2020, and (2) up to $1.75 million in the aggregate upon achieving certain commercial sales milestones.
Foreign Sublicense Income. The Company will pay MilanaPharm a low double-digit percentage of all income received by the Company or its affiliates in connection with any sublicense granted to a contract (i.e.third party for use outside of the United States, subject to certain exclusions.
Royalty Payments. After the commercial launch of licensed products and processes and during the royalty term, the Company will pay MilanaPharm high single-digit to low double-digit royalties based on annual worldwide net sales of licensed products and processes in accordance with the agreement.
Efforts. The Company must use commercially reasonable efforts and resources to (1) develop and commercialize at least one licensed product or process in the United States and at least one licensed product or process in Canada, the United Kingdom, France, Germany, Italy or Spain, and (2) continue to commercialize that product or process following the first commercial sale of a licensed product or process in the applicable jurisdiction.
Term. Unless earlier terminated, the license term continues until (1) on a licensed product-by-product (or process-by-process basis) and country-by-country basis, the date of expiration of the royalty term with respect to such licensed product (or process) in such country, and (2) the expiration of all applicable royalty terms under the MilanaPharm License Agreement with respect to all licensed products and processes in all countries. Upon expiration of the term with respect to any licensed product or process in a country (but not upon earlier termination of the MilanaPharm License Agreement), lesseesthe licenses granted to the Company under the MilanaPharm License Agreement will convert automatically to an exclusive, fully paid-up, royalty-free, perpetual, non-terminable and lessors)irrevocable right and license under the licensed intellectual property.
In addition to customary termination rights in favor of all parties, MilanaPharm may terminate the license solely with respect to a licensed product or process in a country if, after having launched such product or process in such country, the Company or its affiliates or sublicensees, (1) discontinue the sale of such product or process in such country and MilanaPharm notifies the Company of such termination within 60 days of having first been notified by the Company of such discontinuation, or (2) (A) discontinue all commercially reasonable marketing efforts to sell, and discontinue all sales of, such product or process in such country for nine months or more, (B) fail to resume such commercially reasonable marketing efforts within 120 days of having been notified of such failure by MilanaPharm, (C) fail to reasonably demonstrate a strategic justification for the discontinuation and failure to resume to MilanaPharm, and (D) MilanaPharm gives 90 days’ notice to the Company.
The following is a summary of other terms of the Assignment Agreement, as amended:
Assignment; Technology Transfer. Hammock assigned and transferred to the Company all of its right, title and interest in and to the MilanaPharm License Agreement and agreed to cooperate to transfer to the Company all of the data, materials and the licensed technology in its possession pursuant to a technology transfer plan to be agreed upon by the parties, with a goal for the Company to independently practice the licensed intellectual property as soon as commercially practical in order to develop and commercialize the licensed products and processes.
Fees. The new standard requires lesseesCompany paid Hammock: (1) $250,000 in connection with the execution of the Assignment Agreement; (2) $125,000 on December 5, 2019; and (3) $137,500 on January 31, 2020.
Milestone Payments. The Company will pay Hammock up to apply$1.1 million in the aggregate upon achievement of certain clinical and regulatory development milestones.
Term. The Assignment Agreement will terminate upon the later of (1) completion of the parties' technology transfer plan, and (2) payment to Hammock of the last of the milestone payments.
ADVA-Tec License Agreement
In March 2017, the Company entered into a dual approach classifying leases as either finance or operating leaseslicense agreement with ADVA-Tec, Inc., under which the Company was granted the exclusive right to develop and commercialize Ovaprene for human contraceptive use worldwide. The Company must use commercially reasonable efforts to develop and commercialize Ovaprene.
Milestone Payments. The Company will pay to ADVA-Tec: (1) up to $14.6 million in the aggregate based on the principleachievement of whether or notspecified development and regulatory milestones; and (2) up to $20.0 million in the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognizedaggregate based on an effective interest methodthe achievement of certain worldwide net sales milestones.
Royalty Payments. After the commercial launch of Ovaprene, the Company will pay to ADVA-Tec royalties based on aggregate annual net sales of Ovaprene in specified regions, at a royalty rate that will vary between 1% and 10% and will increase based on various net sales thresholds.
Term. Unless earlier terminated, the license continues on a country-by-country basis until the later of the life of the licensed patents or final commercial sale of Ovaprene. In addition to customary termination rights for both parties: (A) the Company may terminate the agreement with or without cause in whole or on a straight-linecountry-by-country basis overupon 60 days prior written notice; and (B) ADVA-Tec may terminate the termagreement if (1) the Company develops or commercializes any non-hormonal ring-based vaginal contraceptive device competitive to Ovaprene or (2) if the Company fails to meet agreed upon efforts to commercialize Ovaprene.
SST License and Collaboration Agreement
In February 2018, the Company entered into a license and collaboration agreement with Strategic Science & Technologies-D, LLC and Strategic Science & Technologies, LLC, referred to collectively as SST, under which the Company received an exclusive, royalty-bearing, sublicensable license to develop and commercialize, in all countries and geographic territories of the lease. A lessee is also required to record a right-of-use asset and a lease liabilityworld, for all leases with a termindications for women related to female sexual dysfunction and/or female reproductive health, the Licensed Product, which is defined as SST’s proprietary topical formulation of greater than 12 months regardlesssildenafil cream as it existed as of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The new standard is effective for public companies for fiscal years beginning after December 15, 2018, with early adoption permitted. ASU 2016-02 became effective for the Company on January 1, 2019 and was adopted using a modified retrospective approach and the effective date is as of the initial application. Consequently, financial information was not updated,agreement, or any other topically applied pharmaceutical product containing sildenafil or a salt thereof as a pharmaceutically active ingredient, alone or with other active ingredients, but specifically excluding any product containing ibuprofen or any salt derivative of ibuprofen.
The following is a summary of other terms of this license and the disclosures required under ASU 2016-02 are not provided for dates and periods prior to January 1, 2019. ASU 2016-02 provides a number of optional practical expedients andcollaboration agreement:
accounting policy elections.Invention Ownership. The Company electedretains rights to inventions made by its employees, SST retains rights to inventions made by its employees, and each party will own a 50% undivided interest in all joint inventions.
Joint Development Committee. The parties will collaborate through a joint development committee that will determine the packagestrategic objectives for, and generally oversee, the development efforts of practical expedients requiring no reassessment of whether any expired or existing contracts are or contain leases,both parties under the lease classification of any expired or existing leases, or initial direct costs for any existing leases.agreement.
Development. The Company recorded approximately $232,000 right-of-use assetsmust use commercially reasonable efforts to develop the Licensed Products in the Field of Use in accordance with a development plan in the agreement, and $241,000 lease liabilitiesto commercialize the Licensed Products in the Field of Use. The Company is responsible for all reasonable internal and external costs and expenses incurred by SST in its performance of the development activities it must perform under the agreement.
Royalty Payments. SST will be eligible to receive tiered royalties based on percentages of annual net sales of Licensed Products in the single digits to the mid double digits, subject to customary royalty reductions and offsets, and a percentage of sublicense revenue.
Milestone Payments. SST will be eligible to receive payments (1) ranging from $0.5 million to $18.0 million in the aggregate on achieving certain clinical and regulatory milestones in the U.S. and worldwide, and (2) between $10.0 million to $100.0 million in the aggregate upon achieving certain commercial sales milestones. If the Company enters into strategic development or distribution partnerships related to its lease of office spacethe Licensed Products, additional milestone payments would be due to SST.
Catalent JNP License Agreement
In April 2018, the Company entered into an exclusive license agreement with Catalent JNP, Inc. (formerly known as Juniper Pharmaceuticals, Inc., and which the Company refers to as Catalent), under which Catalent granted the Company (a) an exclusive, royalty-bearing worldwide license under certain patent rights, either owned by or exclusively licensed to Catalent, to make, have made, use, have used, sell, have sold, import and have imported products and processes; and (b) a non-exclusive, royalty-bearing worldwide license to use certain technological information owned by Catalent to make, have made, use, have used, sell, have sold, import and have imported products and processes. The Company is entitled to sublicense the rights granted to it under this agreement.
Upfront Fee. The Company paid a $250,000 non-creditable upfront license fee to Catalent in connection with the execution of the adoptionagreement.
Annual Maintenance Fee. The Company will pay an annual license maintenance fee to Catalent on each anniversary of the date of the agreement, the amount of which will be $50,000 for the first two years and $100,000 thereafter, and which will be creditable against royalties and other payments due to Catalent in the consolidated balance sheets. There are no changessame calendar year but may not be carried forward to any other year.
Milestone Payments. The Company must make potential future development and sales milestone payments of (1) up to $13.5 million in the statementaggregate upon achieving certain clinical and regulatory milestones, and (2) up to $30.3 million in the aggregate upon achieving certain commercial sales milestones for each product or process covered by the licenses granted under the agreement.
Royalty Payments. During the royalty term, the Company will pay Catalent mid-single-digit to low double-digit royalties based on worldwide net sales of operationsproducts and processes covered by the licenses granted under the agreement. In lieu of such royalty payments, the Company will pay Catalent a low double-digit percentage of all sublicense income the Company receives for the sublicense of rights under the agreement to a third party.
Orbis Development and Option Agreement
In March 2018, the Company entered into an exclusive development and option agreement with Orbis Biosciences, or cash flowsOrbis, for the development of long-acting injectable etonogestrel contraceptive with 6- and 12-month durations (ORB-204 and ORB-214, respectively). Under this agreement, the Company paid Orbis $300,000 to conduct the first stage of development work as a resultfollows: $150,000 upon signing the agreement; $75,000 at the 50% completion point, not later than 6 months following the date the agreement was signed (which the Company paid in September 2018); and $75,000 upon delivery by Orbis of the adoption.6-month batch, not later than 11 months following the date the agreement was signed (which the Company paid in January 2019).
In January 2017, FASB issued ASU 2017-01, Business Combinations (Topic 805): ClarifyingUpon Orbis successfully completing the Definitionfirst stage of a Business, which intendeddevelopment work and achieving the predetermined target milestones for that stage, the Company will have 90 days to clarifyinstruct Orbis whether to commence the definitionsecond stage of a businessdevelopment work. Should the Company execute its option to proceed with the objective of adding guidancesecond stage, it will have to assist entities with evaluating whether transactions should be accountedprovide additional funding to Orbis for as acquisitions (or disposals) of assets or businesses. The standard became effectivesuch activities.
Pre-clinical studies for the Company on January 1, 2018.6- and 12-month formulations have been completed, including establishing pharmacokinetics and pharmacodynamics profiles. The Company’s early adoption of this standard did not have a material impact oncollaboration with Orbis will continue to advance the Company’s consolidated financial statements.
In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements relating to the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of income is required to be filed. This final rule was effective November 5, 2018. In accordanceprogram through formulation optimization with the new rule,goal of achieving sustained release over the target time period.
The agreement provides the Company addedwith an option to enter into a Consolidated Statement of Stockholders' Equity in this reportlicense agreement for ORB-204 and elected to present a reconciliation in a single statement that shows the changes in stockholders' equity for each interim period, as well as each comparable period.ORB-214 should development efforts be successful.
Cerulean/Private Daré Stock Purchase TransactionMicrochips Acquisition
In July 2017,November 2019, the Company completed its business combination with Daré Bioscience Operations,acquisition of Microchips Biotech, Inc., a privately held Delaware corporation, or Private Daré, in which Private Daré stockholders sold their shares toMicrochips. On the Company in exchange for newly issued sharesclosing date of the Company’s common stock, and as a result, Private Darémerger, Microchips became a wholly owned subsidiary of the Company. The Company acquired Microchips to secure the rights to develop an implantable, user-controlled, long-acting reversible contraception method, now known as DARE-LARC1. The Company agreed to use commercially reasonable efforts to achieve specified development and the Private Daré stockholders became majority stockholders of the Company. In connection with the closing of that transaction, the Company changed its name from “Cerulean Pharma Inc.” to “Daré Bioscience, Inc.” In this report, that transaction is referred to as the Cerulean/Private Daré stock purchase transaction and “Cerulean” refers to Cerulean Pharma Inc. before that transaction closed.
The Cerulean/Private Daré stock purchase transaction was accounted for as a reverse merger under the acquisition method of accounting whereby Private Daré was considered to have acquired Cerulean for financial reporting purposes. Pursuant to business combination accounting, the Company applied the acquisition method, which requires the assets acquired and liabilities assumed be recorded at fair value with limited exceptions. The excess of the purchase price over the assets acquired and liabilities assumed represents goodwill. The goodwill was primarily attributableregulatory objectives relating to the cash and cash equivalents at closing of the transaction of approximately $9.9 million and the impact of the unamortized fair value of stock options grantedimplantable contraceptive product in development by Cerulean that were outstanding immediately before the transaction closed of approximately $3.7 million.
The Company tests its goodwill for impairment at least annually as of December 31st and between annual tests if it becomes aware of an event or change in circumstance that would indicate the carrying value may be impaired. The Company tests goodwill for impairment at the entity level because it operates on the basis of a single reporting unit. A goodwill impairment is the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. When impaired, the carrying value of goodwill is written down to fair value. Any excess of the reporting unit goodwill carrying value over the fair value is recognized as impairment loss.Microchips.
The Company assessed goodwill at March 31, 2018, determined there wasissued an impairmentaggregate of 2,999,990 shares of its common stock to the holders of shares of Microchips' capital stock outstanding immediately prior to the effective time of the merger.
The Company also agreed to pay the following contingent consideration to the former Microchips stockholders: (a) up to $46.5 million contingent upon the achievement of specified funding, product development and recognized an impairment chargeregulatory milestones; (b) up to $55.0 million contingent upon the achievement of approximately $5.2 millionspecified amounts of aggregate net sales of products incorporating the intellectual property acquired by the Company in the interim consolidated statementmerger; (c) tiered royalty payments ranging from low single-digit to low double-digit percentages of operationsannual net sales of such products, subject to customary provisions permitting royalty reductions and comprehensive loss foroffset; and (d) a percentage of sublicense revenue related to such products. The Company agreed to use commercially reasonable efforts to achieve specified development and regulatory objectives relating to DARE-LARC1. The Company expects approximately $1.0 million of the three months ended March 31, 2018. As of March 31, 2018, the goodwill carrying value on the Company’s consolidated balance sheet was written offcontingent consideration payments to become payable in its entirety.late 2021.
Pear Tree MergerAcquisition
On April 30,In May 2018, the Company entered into an Agreement and Plancompleted its acquisition of Merger, or the PT Merger Agreement, with Pear Tree Pharmaceuticals, Inc., or Pear Tree, Daré Merger Sub, Inc., a wholly owned subsidiary of the Company, or Merger Sub, and two individuals in their respective capacities as Pear Tree stockholders’ representatives. The transactions contemplated by the PT Merger Agreement closed on May 16, 2018, and as a result, Pear Tree became
the Company’s wholly owned subsidiary.Tree. The Company acquired Pear Tree to secure the rights to develop DARE-VVA1, a proprietary vaginal formulation of tamoxifen, now known as DARE-VVA1, as a potential treatment for vulvar and vaginal atrophy.
Milestone Payments. The Company determined thatmust make contingent payments to the acquisition of Pear Tree shouldformer stockholders and their representatives, or the Holders, that are based on achieving certain clinical, regulatory and commercial milestones, which may be accounted for as an asset acquisition instead of a business combination because substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, and therefore, the asset is not considered a business. Transaction costs of approximately $452,000 associated with the merger were includedpaid, in the Company’s research and development expense.sole discretion, in cash or shares of the Company’s common stock.
Under the PT Merger Agreement, certain former and continuing Pear Tree service providers and former holders of Pear Tree’s capital stock, or theRoyalty Payments. The Holders werewill be eligible to receive, a $75,000 payment due on the one-year anniversary of the closing of the merger and are eligiblesubject to receivecertain offsets, tiered royalties, subject toincluding customary provisions permitting royalty reductions and offset, based on percentages of annual net sales of certain products subject to license agreements the Company assumed and a percentage of sublicense revenue.
4. ACQUISITION
In November 2019, the Company acquired Microchips Biotech, Inc., or Microchips, via a merger transaction in which a wholly owned subsidiary of the Company, formed for purposes of this transaction, merged with and into Microchips, and Microchips survived as the Company’s wholly owned subsidiary. Microchips is developing a proprietary, implantable drug delivery system designed to store and precisely deliver numerous therapeutic doses over months and years on a schedule determined by the user and controlled via wireless remote. Microchips’ lead product candidate is a pre-clinical stage contraceptive application of that technology that utilizes levonorgestrel, now known as DARE-LARC1.
The Company must also make contingent paymentsissued an aggregate of 2,999,990 shares of its common stock to the Holders based on achieving certain clinical, regulatory and commercial milestones, which may be paid, in the Company’s sole discretion, in cash orholders of shares of Microchips' capital stock outstanding immediately prior to the Company’s common stock.
In accordance with the terms of the PT Merger Agreement, because the Negative Consideration Amount (as defined below) exceeded the Positive Consideration Amount (as defined below), at theeffective time of the closingmerger. The transaction was valued at $2.4 million, based on the fair value of the merger,2,999,990 shares issued of $0.79 per share, which was the excess amount (approximately $132,000) offsetclosing price per share of the $75,000 payment dueCompany's common stock on the one-year anniversarydate of the closing of the merger and the balance will offset future payments otherwise due under the PT Merger Agreement to the Holders. Positive Consideration Amount means the sum of $75,000, and theclosing. The shares were issued in exchange for Microchips’ cash and cash equivalents held by Pear Tree at closing, and Negative Consideration Amount means the sum of (i) certain Pear Tree indebtedness$6.1 million, less net liabilities of $3.5 million and transaction expenses, (ii) transaction expensescosts of $202,000, which was allocated based on the relative fair value of the stockholders’ representatives,assets acquired and (iii)liabilities assumed.
The Company also agreed to pay (1) contingent consideration based upon the achievement of specified funding, product development and regulatory milestones, and upon the achievement of specified amounts of aggregate net sales of products incorporating the intellectual property the Company acquired in the merger, (2) tiered royalty payments ranging from low single-digit to low double-digit percentages of annual net sales of such products, and (3) a percentage of sublicense revenue related to such products. The Company recorded $1.0 million in contingent consideration associated with milestone payments expected to become payable under Pear Tree’s management incentive plan.in late 2021.
The Company determined the transaction was accounted for as an asset acquisition as there were no outputs or substantive processes in existence as of the acquisition date. Transaction costs of approximately $202,000 associated with the merger were included in the Company’s research and development expense in the fourth quarter of 2019. | |
5. | STOCK-BASED COMPENSATION |
5. STOCK-BASED COMPENSATION
The 2015 Employee, Director and Consultant Equity Incentive Plan
Prior toIn connection with the Cerulean/business combination transaction in July 2017 between the Company and Daré Bioscience Operations, Inc., a privately held Delaware corporation, or Private Daré stock purchase transaction,, the Company assumed the Private Daré maintained the 2015 Employee, Director and Consultant Equity Incentive Plan, or the 2015 Private Daré Plan. Upon closing of the Cerulean/Private Daré stock purchase transaction, the Company assumed the 2015 Private Daré Plan and each then outstanding award granted thereunder, which consisted of options and restricted stock. Based on the exchange ratio for the Cerulean/Private Daré stock purchasebusiness combination transaction and after giving effect to the reverse stock split effected in connection with the closing of that transaction, the outstanding options and restricted stock awards granted under the 2015 Private Daré Plan were replaced with options to purchase 10,149 shares of the Company’s common stock with a correspondingly adjusted exercise price all of which were outstanding as of September 30, 2019, and 223,295 shares of the Company’s common stock. ThoseAll of the options are fully vested and expire in December 2025.
that were assumed were exercised as of June 30, 2020. No further awards may be granted under the 2015 Private Daré Plan following the closing of the Cerulean/Private Daré stock purchasebusiness combination transaction.
2014 Employee Stock Purchase Plan
The Company’s 2014 Employee Stock Purchase Plan, or the ESPP, became effective in April 2014, but no offering period has been initiated thereunder since January 2017 and there was no0 stock-based compensation related to the ESPP for the ninesix months ended SeptemberJune 30, 20192020 or SeptemberJune 30, 2018.2019.
Amended and Restated 2014 Stock Incentive Plan
The Company maintains the Amended and Restated 2014 Plan, or the Amended 2014 Plan.Plan, which provides for the grant of options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to employees, officers and directors, and consultants and advisors. There were 2,046,885 shares of common stock authorized for issuance under the Amended 2014 Plan when it was approved by the Company's stockholders in July 2018. The number of authorized shares increases annually on the first day of each fiscal year until, and including, the fiscal year ending December 31, 2024 by the least of (i) 2,000,000, (ii) 4% of the number of outstanding shares of common stock on such date, or (iii) an amount determined by the Company’s board of directors. On January 1, 2019,2020, the number of authorized shares increased by 456,886787,336 to 2,503,771,1,411,481, which increase represented 4% of the number of outstanding shares of common stock on such date.
Summary of Stock Option Activity
The table below summarizes stock option activity under the Amended 2014 Plan, and related information for the ninesix months ended SeptemberJune 30, 2019.2020. The exercise price of all options granted during the ninesix months ended SeptemberJune 30, 20192020 was equal to the market value of the Company’s common stock on the date of the grant. As of SeptemberJune 30, 2019,2020, unamortized stock-based compensation expense of $1,212,766$1,674,495 will be amortized over a weighted average period of 2.672.6 years. At SeptemberJune 30, 2019, 688,9452020, 524,481 shares of common stock were reserved for future issuanceawards granted under the Amended 2014 Plan.
|
| | | | | | |
| | Number of Shares | | Weighted Average Exercise Price |
| Outstanding at December 31, 2018 (1) | 1,635,790 |
| | $ | 11.08 |
|
| Granted | 698,000 |
| | 0.79 |
|
| Exercised | — |
| | — |
|
| Canceled/forfeited | (508,745 | ) | | 32.24 |
|
| Expired | (70 | ) | | 59.48 |
|
| Outstanding at September 30, 2019 (unaudited) (1) | 1,824,975 |
| | $ | 1.25 |
|
| Exercisable at September 30, 2019 (unaudited) | 412,471 |
| | $ | 2.23 |
|
(1)Includes 10,149 shares subject to options granted under the 2015 Private Daré Plan assumed in connection with the Cerulean/Private Daré stock purchase transaction. | | | | | | | | | | | |
| Number of Shares | | Weighted Average
Exercise Price |
| Outstanding at December 31, 2019 | 1,889,775 | | | $ | 1.21 | |
| Granted | 887,000 | | | 1.05 | |
| Exercised | (10,149) | | | 0.01 | |
| Canceled/forfeited | — | | | — | |
| Expired | — | | | — | |
| Outstanding at June 30, 2020 | 2,766,626 | | | $ | 1.16 | |
| Exercisable at June 30, 2020 | 806,763 | | | $ | 1.58 | |
Compensation Expense
Total stock-based compensation expense related to stock options granted to employees and directors recognized in the consolidated statement of operations is as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | Six Months Ended June 30, | | |
| | 2020 | | 2019 | | 2020 | | 2019 |
| Research and development | $ | 59,713 | | | $ | 26,996 | | | $ | 106,093 | | | $ | 51,699 | |
| General and administrative | $ | 127,146 | | | $ | 84,355 | | | $ | 241,607 | | | $ | 157,620 | |
| Total | $ | 186,859 | | | $ | 111,351 | | | $ | 347,700 | | | $ | 209,319 | |
|
| | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | Nine Months Ended
September 30, |
| | 2019 | | 2018 | 2019 | | 2018 |
| Research and development | $ | 27,081 |
| | $ | 5,494 |
| $ | 78,780 |
| | $ | 5,994 |
|
| General and administrative | 108,312 |
| | 34,497 |
| 265,932 |
| | 52,544 |
|
| Total | $ | 135,393 |
| | $ | 39,991 |
| $ | 344,712 |
| | $ | 58,538 |
|
The assumptions used in the Black-Scholes option-pricing model for stock options granted to employees and to directors in respect of board services during the ninethree and six months ended SeptemberJune 30, 20192020 are as follows:
| | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2020 | | Six Months Ended June 30, 2020 |
| Expected life in years | | 10.0 | | 10.0 |
| Risk-free interest rate | | 0.68% | | 0.82% |
| Expected volatility | | 118% | | 120% |
| Forfeiture rate | | 0.0% | | 0.0% |
| Dividend yield | | 0.0% | | 0.0% |
| Weighted-average fair value of options granted | | $0.97 | | $1.00 |
6. STOCKHOLDERS’ EQUITY
|
| | | | |
| | | Three Months Ended
September 30, 2019 | | Nine Months Ended
September 30, 2019 |
| Expected life in years | | 10.0 | | 10.0 |
| Risk-free interest rate | | 2.58% | | 2.58% |
| Expected volatility | | 121% | | 121% |
| Forfeiture rate | | 0.0% | | 0.0% |
| Dividend yield | | 0.0% | | 0.0% |
| Weighted-average fair value of options granted | | $0.75 | | $0.75 |
ATM Sales Agreement
In January 2018, the Company entered into a common stock sales agreement under which the Company may sell up to an aggregateshares of $10 million in gross proceeds through the sale of shares ofits common stock from time to time in “at-the-market” equity offerings (as defined in Rule 415 promulgated under the Securities Act of 1933, as amended). The Company will pay a commission of up to 3% of the gross proceeds of any common stock sold under this agreement plus certain legal expenses. ThisThe common stock sales agreement was amended in August 2018 to refer to the Company’s shelf registration statement on Form S-3 (File No. 333-227019) that was filed to replace the Company’s shelf registration statement on Form S-3 (File No. 333-206396) that expired on August 28, 2018.
The Company sold no shares under this agreement during eitherDuring the three or ninesix months ended SeptemberJune 30, 2019 or the three months ended September 30, 2018. During the nine months ended September 30, 2018,2020, the Company sold an aggregate of 375,0005,963,580 shares under the common stock under thissales agreement for gross proceeds of approximately $1.1$8.4 million and incurred issuance costsoffering expenses of $237,403.approximately $338,000. The Company did not sell any shares under this agreement during the six months ended June 30, 2019.
February 2018April 2019 Underwritten Public Offering
In April 2019, the Company closed an underwritten public offering of 4,575,000 shares of its common stock at a public offering price of $1.10 per share. The Company granted the underwriters a 30-day over-allotment option to purchase up to an additional 686,250 shares which was exercised in full on April 12, 2019. Including the over-allotment shares, the Company issued a total of 5,261,250 shares in the underwritten public offering and received gross proceeds of approximately $5.8 million and net proceeds of approximately $5.2 million after deducting underwriting discounts and offering expenses.
Equity Line
On April 22, 2020, the Company entered into a purchase agreement, or the Purchase Agreement, and a registration rights agreement with Lincoln Park Capital Fund, LLC, or Lincoln Park. Under the terms and subject to the conditions of the Purchase Agreement, the Company has the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase up to $15.0 million of the Company’s common stock. Such sales of common stock by the Company may occur from time to time, at the Company’s sole discretion, subject to certain limitations, until May 19, 2023. On April 22, 2020, in accordance with the Purchase Agreement, the Company issued 285,714 shares of its common stock, or the Commitment Shares, to Lincoln Park in consideration for its commitment to purchase shares under the Purchase Agreement. The Company filed a registration statement on Form S-1 (File No. 333-237954) to register the resale by Lincoln Park of up to 7.5 million shares of the Company's common stock issued or issuable to Lincoln Park under the Purchase Agreement, including the Commitment Shares, and such registration statement was declared effective by the SEC on May 12, 2020.
The Company incurred legal, accounting, and other fees related to the Purchase Agreement of approximately $374,000. These costs are amortized and expensed as shares are sold under the Purchase Agreement and as of June 30, 2020 there was $351,000 of unamortized costs. During the six months ended June 30, 2020, the Company sold, and Lincoln Park purchased, 882,000 shares under the Purchase Agreement for gross proceeds of approximately $911,000 and incurred offering expenses of approximately $23,000.
Common Stock Warrants
In February 2018, the Company closed an underwritten public offering of 5.0 million shares of its common stock andin connection with which the Company issued to the investors in that offering warrants to purchase up to 3.5 million shares of its common stock. Each share of common stock was sold with a warrant to purchase up to 0.70 of a share of the Company’s common stock. The Company granted the underwriter a 30-day over-allotment option to purchase up to an additional 750,000 shares of common stock and/or warrants to purchase up to 525,000 shares of common stock. The underwriter exercised the option with respect to warrants to purchase 220,500 shares of common stock. The Company received gross proceeds of $10.3 million, including the proceeds from the sale of the warrants upon exercise of the underwriter’s over-allotment option, and net proceeds of approximately $9.4 million.
Common Stock Warrants
The warrants issued in the February 2018 underwritten offeringthat initially had an exercise price of $3.00 per share andare exercisable through February 2023.The warrants include a price-based anti-dilution provision, which provides that, subject to certain limited exceptions, the exercise price of the warrants will be reduced each time the Company issues or sells (or is deemed to issue or sell) securities for a net consideration per share less than a price equal to the exercise price of those warrants in effect immediately prior to such issuance or sale. In addition, subject to certain exceptions, if the Company issues, sells or enters into any agreement to issue or sell securities at a price which varies or may vary with the market price of the shares of the Company’s common stock, the warrant holders have the right to substitute such variable price for the exercise price of the warrant then in effect. These warrants are exercisable only for cash, unless a registration statement covering the shares issued upon exercise of the warrants is not effective, in which case the warrants may be exercised on a cashless basis. A registration statement covering the shares issued upon exercise of the warrants is currently effective. The Company estimated the fair value of the warrants as of February 15, 2018 to be approximately $3.0 million which has been recorded in equity as of the grant date. The Company early adopted ASU 2017-11 as of January 1, 2018 and recorded the fair value of the warrants as equity.
OnIn April 11, 2019, in accordance with the price-based anti-dilution provision of these warrants anddiscussed above, as a result of the sale of shares in the publicApril 2019 underwritten offering, that closed on that date and which is discussed below, the exercise price of these warrants was automatically reduced to $0.98 per share. For the nine months ended September 30, 2019 the Company recordedshare and $0.8 million was recorded to additional paid-in capital as a result of the triggering of the anti-dilution provisions.provision.
In addition toDuring the six months ended June 30, 2020, 1,699,000 warrants issued in the February 2018 underwritten offering, aswere exercised for gross proceeds of September 30, 2019, there are outstanding warrants to purchase 30,333 shares of the Company’s common stock, which are further described in the table below.
Noapproximately $1.7 million. NaN warrants were exercised during the ninesix months ended SeptemberJune 30, 2019 or 2018.2019. As of SeptemberJune 30, 2019,2020, the Company had the following warrants outstanding:
| | | | | | | | | | | | | | | | | |
Shares Underlying
Outstanding Warrants | | Exercise Price | | | Expiration Date |
| 2,906 | | $ | 120.40 | | 2021-12-01 |
| 3,737 | | $ | 120.40 | | 2021-12-06 |
| 6,500 | | $ | 10.00 | | 2026-04-04 |
| 2,021,500 | | $ | 0.98 | | 2023-02-15 |
| 2,034,643 | | | | | |
|
| | | | | |
Shares Underlying Outstanding Warrants | | Exercise Price | | Expiration Date |
| 2,906 | | $ | 120.40 | | December 1, 2021 |
| 3,737 | | $ | 120.40 | | December 6, 2021 |
| 17,190 | | $ | 60.50 | | January 8, 2020 |
| 6,500 | | $ | 10.00 | | April 4, 2026 |
| 3,720,500 | | $ | 0.98 | | February 15, 2023 |
| 3,750,833 | | | | | |
April 2019 Underwritten Public Offering
On April 11, 2019, the Company closed an underwritten public offering of 4,575,000 shares of its common stock at a public offering price of $1.10 per share. The Company granted the underwriters a 30-day over-allotment option to purchase up to an additional 686,250 shares which was exercised in full on April 12, 2019. Including the over-allotment shares, the Company issued a total of 5,261,250 shares in the underwritten public offering and received gross proceeds of approximately $5.8 million and net proceeds of approximately $5.2 million after deducting underwriting discounts and offering expenses.
Effective January 1, 2019, the Company adopted ASC 842, which requires recognition of a right-of-use asset and lease liability for all leases at the commencement date based on the present value of lease payments over the lease term. Additional qualitative and quantitative disclosures regarding the Company's leasing arrangements are also required. The Company adopted ASC 842 prospectively and elected the package of transition practical expedients that does not require reassessment of: (1) whether any existing or expired contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company has elected other available practical expedients to not separate lease and nonlease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of 12 months or less.
The Company's lease for its corporate headquarters (3,169 square feet of office space) commenced on July 1, 2018 has term of 37 months, and terminates on July 31, 2021. The Company has the option to extend the term of the lease for one year atyear.
Microchips, which the Company's discretion.Company acquired in November 2019, leases general office space in Lexington, Massachusetts and warehouse space in Billerica, Massachusetts. The gross monthlyLexington lease commenced on July 1, 2013 and terminates on September 30, 2021. The Billerica lease commenced on October 1, 2016 and terminates on March 31, 2022.
Under the terms of each lease, the Company pays base annual rent is $8,873, which increases approximately 4% per year, subject(subject to certain future adjustments. The base rent was abated during the second month of the lease. an annual fixed percentage increase), plus property taxes, and other normal and necessary expenses, such as utilities, repairs, and maintenance. The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. The lease doesleases do not require material variable lease payments, a residual value guaranteeguarantees or restrictive covenants. This is the Company’s only lease.
The lease doesleases do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease within a particular currency environment. The Company useduses an incremental borrowing rate of 7% as of January 1, 2019 for the operating leaseleases that commenced prior to that date.January 2019. The depreciable lives of operating lease assetsleases and leasehold improvements are limited by the expected lease term.
At June 30, 2019,2020, the Company recorded a rightreported operating lease ROU assets of use asset of $173,274approximately $370,000 in other non-current assets, and $92,242$417,000 and $90,954,$175,000, respectively, in current and non-current other liabilities on the consolidated balance sheet.
As of September 30, 2019, future minimum lease payments for the Company's corporate headquarters are:
|
| | | |
| Years ending December 31: | |
| Remainder of 2019 | $ | 27,665 |
|
| 2020 | 112,943 |
|
| 2021 | 67,595 |
|
| Total future minimum lease payments | 208,203 |
|
| Less: Difference between future minimum lease payments and discounted operating lease liabilities | 25,007 |
|
| Total operating lease liabilities | $ | 183,196 |
|
OperatingTotal operating lease costs were $27,038approximately $76,000 and $81,115$27,000 for the three and nine months ended SeptemberJune 30, 2020 and June 30, 2019, respectively, and $152,000 and $54,000 for the six months ended June 30, 2020 and June 30, 2019, respectively. Operating lease costs consist of monthly lease payments expense, common area maintenance and other repair and maintenance costs and are included in general and administrative expenses in the condensed consolidated statement of operations.
Cash paid for amounts included in the measurement of operating lease liabilities was $27,665were approximately $110,000 and $80,905$27,000 for the three and nine months ended SeptemberJune 30, 2020 and June 30, 2019, respectively, and these$238,000 and $53,000 for the six months ended June 30, 2020 and June 30, 2019, respectively. These amounts are included in operating activities in the condensed consolidated statements of cash flows. Further, at June 30, 2020, operating leases had a weighted average remaining lease term of 1.36 years.
| |
8. | COMMITMENTS AND CONTINGENCIES |
License and Research AgreementsAs of June 30, 2020, future minimum payments under the Company's operating leases are approximately:
ADVA-Tec License Agreement | | | | | |
| |
| Remainder of 2020 | $ | 224,000 | |
| 2021 | 363,000 | |
| 2022 | 42,000 | |
| Total future minimum lease payments | 629,000 | |
| Less: Difference between future minimum lease payments and discounted operating lease liabilities | 37,000 | |
| Total operating lease liabilities | $ | 592,000 | |
8. COMMITMENTS AND CONTINGENCIES
Contingent Consideration
In March 2017,connection with the acquisition of Microchips, the Company entered intoagreed to pay contingent consideration based upon the achievement of specified funding, product development and regulatory milestones. The Company recorded $1.0 million in contingent consideration liability associated with milestone payments expected to become payable in late 2021 in its consolidated balance sheet at June 30, 2020.
Note Payable
In April 2020, due to the economic uncertainty resulting from the impact of the COVID-19 pandemic on the Company's operations and to support its ongoing operations and retain all employees, the Company applied for a license agreement,loan under the Paycheck Protection Program, or the ADVA-Tec License Agreement, with ADVA-Tec, Inc., or ADVA-Tec, under which the Company was granted the exclusive right to develop and commercialize Ovaprene for human contraceptive use worldwide. ADVA-Tec and its affiliates own issued patents or patent applications covering Ovaprene and control proprietary trade secrets covering the manufacture of Ovaprene. AsPPP, of the dateCoronavirus Aid, Relief, and Economic Security Act, or CARES Act, administered by the U.S. Small Business Administration. The Company received a loan of this report, this patent portfolio includes nine issued U.S. patentsapproximately $367,000. The loan matures in April 2022, bears interest at a rate of 1.00% per annum, is payable in equal monthly payments commencing in November 2020 through maturity and one pending U.S. patent application, and 59 granted patents and four pending patent applications in other major markets, all of which are exclusively licensedmay be prepaid at any time prior to the Company for the human contraceptive use of Ovaprene as a human contraceptive device.maturity with no prepayment penalties. Under the terms of the ADVA-Tec Agreement,PPP, subject to specified limitations, the loan prinicpal and accrued interest may be forgiven if the proceeds are used in accordance with the CARES Act. The Company intends to apply for forgiveness of the entire loan. However, there can be no assurance that the Company will obtain forgiveness of the loan in whole or in part. The Company recorded a note payable plus accrued interest for the loan in the amount of approximately $368,000 in its consolidated balance sheet at June 30, 2020.
9. GRANT AWARD
Eunice Kennedy Shriver National Institute of Child Health and Human Development
Since 2018, the Company has a right of first refusal to license these patents and patent applications for additional indications.
The following is a summary of other terms of the ADVA-Tec License Agreement:
Research and Development.ADVA-Tec will conduct certain research and development work as necessary to allow the Company to seek a Premarket Approval, or PMA, from the United States Food and Drug Administration, or the FDA, and will supply the Company with its requirements of Ovaprenereceived grant funding for clinical and commercial use on commercially reasonable terms. The Company must use commercially reasonable efforts to develop and commercialize Ovaprene, and must meet certain minimum spending amounts per year, such amounts totaling $5.0 million in the aggregate over the first three years, to cover such activities until a final PMA is filed, or until the first commercial sale of Ovaprene, whichever occurs first.
Milestone Payments.The Company will pay ADVA-Tec: (1) up to $14.6 million in the aggregate based on the achievement of specified development and regulatory milestones; and (2) up to $20 million in the aggregate based on the achievement of certain worldwide net sales milestones. The development and regulatory milestones include: the completion of a successful postcoital clinical study, which is required before the Company can commence a Phase 3 pivotal human clinical trial; approval by the FDA to commence such Phase 3 pivotal human clinical trial; successful completion of such Phase 3 pivotal human clinical trial; the FDA’s acceptance of a PMA filing for Ovaprene; the FDA’s approval of the PMA for Ovaprene; obtaining Conformité Européenne Marking of Ovaprene in at least three designated European countries; obtaining regulatory approval in at least three designated European countries; and obtaining regulatory approval in Japan. Because these milestone payments depend upon the successful progress of the Company’s product development programs, the Company cannot estimate with certainty when these payments will occur, if ever.
For products currently in development, future potential milestone payments based on product development are approximately $14.6 million as of September 30, 2019. Future potential milestone payments related to commercialization totaled $20 million at September 30, 2019. The Company is unable to estimate with certainty the
timing on when these milestone payments will occur as these payments depend on the Company's product development programs.
Royalty Payments.After the commercial launch of Ovaprene, the Company will pay to ADVA-Tec royalties based on aggregate annual net sales of Ovaprene in specified regions, at a royalty rate that will vary between 1% and 10% and will increase based on various net sales thresholds. The Company is unable to estimate with certainty the timing on when these royalty payments will occur as these payments depend on the Company's product development programs.
Termination Rights.Unless earlier terminated, the license the Company received under the ADVA-Tec License Agreement continues on a country-by-country basis until the later of the life of the licensed patents or the Company's last commercial sale of Ovaprene. In addition to customary termination rights for both parties: (A) the Company may terminate the agreement with or without cause in whole or on a country-by-country basis upon 60 days prior written notice; and (B) ADVA-Tec may terminate the agreement if the Company develops or commercializes any non-hormonal ring-based vaginal contraceptive device competitive to Ovaprene or if the Company fails to: (1) in certain limited circumstances, commercialize Ovaprene in certain designated countries within three years of the first commercial sale of Ovaprene, (2) satisfy the annual spending obligation described above, (3) use commercially reasonable efforts to complete all necessary pre-clinical and clinical studies required to support and submit a PMA, (4) conduct clinical trials as set forth in the development plan that is agreed by the Company and ADVA-Tec, and as may be modified by a joint research committee, unless such failure is caused by events outside of the Company’s reasonable control, or (5) enroll a patient in the first non-significant risk medical device study or clinical trial as allowed by an institutional review board within six months of the production and release of Ovaprene, unless such failure is caused by events outside of its reasonable control.
SST License and Collaboration Agreement
In February 2018, the Company entered into a license and collaboration agreement, or the SST License Agreement, with Strategic Science & Technologies-D, LLC and Strategic Science & Technologies, LLC, referred to collectively as SST. The SST License Agreement provides the Company with an exclusive, royalty-bearing, sublicensable license to develop and commercialize, in all countries and geographic territories of the world, for all indications for women related to female sexual dysfunction and/or female reproductive health, including treatment of female sexual arousal disorder, or the Field of Use, SST’s topical formulation of Sildenafil Cream, 3.6% as it exists as of the effective date of the SST License Agreement, or any other topically applied pharmaceutical product containing sildenafil or a salt thereof as a pharmaceutically active ingredient, alone or with other active ingredients, but specifically excluding any product containing ibuprofen or any salt derivative of ibuprofen, or the Licensed Products.
The following is a summary of other terms of the SST License Agreement:
Invention Ownership.The Company retains rights to inventions made by its employees, SST retains rights to inventions made by its employees, and each party shall own a 50% undivided interest in all joint inventions.
Joint Development Committee. The parties will collaborate through a joint development committee that will determine the strategic objectives for, and generally oversee, the development efforts of both parties under the SST License Agreement.
Development.The Company must use commercially reasonable efforts to develop the Licensed Products in the Field of Use in accordance with a development plan in the SST License Agreement, and to commercialize the Licensed Products in the Field of Use. The Company is responsible for all reasonable internal and external costs and expenses incurred by SST in its performance of the development activities it must perform under the SST License Agreement.
Royalty Payments.SST will be eligible to receive (1) tiered royalties based on percentages of annual net sales of Licensed Products in the single digits to the mid double digits, subject to customary royalty reductions and offsets, and (2) a percentage of sublicense revenue.
Milestone Payments.SST will be eligible to receive payments (1) ranging from $0.5 million to $18.0 million in the aggregate on achieving certain clinical and regulatory milestones in the U.S. and worldwide, and (2) between $10.0 million and $100 million in the aggregate upon achieving certain commercial sales milestones. If the Company enters into strategic development or distribution partnerships related to the Licensed Products, additional milestone payments would be due to SST.
License Term.The Company’s license received under the SST License Agreement continues on a country-by-country basis until the later of 10 years from the date of the first commercial sale of such Licensed Product or the expiration of the last valid claim of patent rights covering the Licensed Product in the Field of Use. Upon expiration
(but not termination) of the SST License Agreement in a particular country, the Company will have a fully paid-up license under the licensed intellectual property to develop and commercialize the applicable Licensed Products in the applicable country on a non-exclusive basis.
Termination.In addition to customary termination rights for both parties: (1) prior to receipt of approval by a regulatory authority necessary for commercialization of a Licensed Product in the corresponding jurisdiction, including New Drug Application Approval, or NDA Approval, the Company may terminate the SST License Agreement without cause upon 90 days prior written notice to SST; (2) following receipt of approval by a regulatory authority necessary for commercialization of a Licensed Product in the corresponding jurisdiction, including NDA Approval, the Company may terminate the SST License Agreement without cause upon 180 days prior written notice; and (3) SST may terminate the SST License Agreement with respect to the applicable Licensed Product(s) in the applicable country(ies) upon 30 days’ notice to the Company if the Company fails to use commercially reasonable efforts to perform development activities in substantial accordance with the development plan and does not cure such failure within 60 days of receipt of SST’s notice thereof.
Orbis Development and Option Agreement
In March 2018, the Company entered into an exclusive development and option agreement, or the Orbis Agreement, with Orbis Biosciences, or Orbis, for the development of long-acting injectable etonogestrel contraceptive with 6- and 12-month durations (ORB-204 and ORB-214, respectively). Under the Orbis Agreement, the Company paid Orbis $300,000 to conduct the first stage of development work, Stage 1, as follows: $150,000 upon signing the Orbis Agreement, $75,000 at the 50% completion point, not later than 6 months following the date the Orbis Agreement was signed (which the Company paid in September 2018), and $75,000 upon delivery by Orbis of the 6-month batch, not later than 11 months following the date the Orbis Agreement was signed (which the Company paid in January 2019). Upon Orbis successfully completing Stage 1 of the development program and achieving the predetermined target milestones for Stage 1, the Company will have 90 days to instruct Orbis whether to commence the second stage of development work, Stage 2. Should the Company execute its option to proceed to Stage 2, it will have to provide additional funding to Orbis for such activities.
Pre-clinical studies for the 6- and 12-month formulations have been completed, including establishing pharmacokinetics and pharmacodynamics profiles. The collaboration with Orbis will continue to advance the program through formulation optimization with the goal of achieving sustained release over the target time period.
The Orbis Agreement provides the Company with an option to enter into a license agreement for ORB-204 and ORB-214 should development efforts be successful.
Juniper Pharmaceuticals - License Agreement
In April 2018, the Company entered into an Exclusive License Agreement, or the Juniper License Agreement, with Juniper Pharmaceuticals, Inc., or Juniper, under which Juniper granted the Company (a) an exclusive, royalty-bearing worldwide license under certain patent rights, either owned by or exclusively licensed to Juniper, to make, have made, use, have used, sell, have sold, import and have imported products and processes; and (b) a non-exclusive, royalty-bearing worldwide license to use certain technological information owned by Juniper to make, have made, use, have used, sell, have sold, import and have imported products and processes. The Company is entitled to sublicense the rights granted to it under the Juniper License Agreement.
The following is a summary of certain terms of the Juniper License Agreement:
Upfront Fee.The Company paid a $250,000 non-creditable upfront license fee to Juniper in connection with the execution of the Juniper License Agreement.
Annual Maintenance Fee. The Company will pay an annual license maintenance fee to Juniper on each anniversary of the date of the Juniper License Agreement, the amount of which will be $50,000 for the first two years and $100,000 thereafter, and which will be creditable against royalties and other payments due to Juniper in the same calendar year but may not be carried forward to any other year.
Milestone Payments.The Company must make potential future development and sales milestone payments of (1) up to $13.5 million in the aggregate upon achieving certain clinical and regulatory milestones, and (2) up to $30.3 million in the aggregate upon achieving certain commercial sales milestones for each product or process covered by the licenses granted under the Juniper License Agreement.
Royalty Payments. During the royalty term, the Company will pay Juniper mid-single-digit to low double-digit royalties based on worldwide net sales of products and processes covered by the licenses granted under the JuniperLicenseAgreement. In lieu of such royalty payments, the Company will pay Juniper a low double-digit percentage of
all sublicense income the Company receives for the sublicense of rights under the Juniper License Agreement to a third party. The royalty term, which is determined on a country-by-country basis and product-by-product basis (or process-by-process basis), begins with the first commercial sale of a product or process in a country and terminates on the latest of (1) the expiration date of the last valid claim within the licensed patent rights with respect to such product or process in such country, (2) 10 years following the first commercial sale of such product or process in such country, and (3) when one or more generic products for such product or process are commercially available in such country, except that if there is no such generic product by the 10th year following the first commercial sale in such country, then the royalty term will terminate on the 10-year anniversary of the first commercial sale in such country.
Efforts. The Company must use commercially reasonable efforts to develop and make at least one product or process available to the public, which efforts include achieving specific diligence requirements by specific dates specified in the Juniper License Agreement.
Term. Unless earlier terminated, the term of the Juniper License Agreement will continue on a country-by-country basis until the later of (1) the expiration date of the last valid claim within such country, or (2) 10 years from the date of first commercial sale of a product or process in such country. Upon expiration (but not early termination) of the Juniper License Agreement, the licenses granted thereunder will convert automatically to fully-paid irrevocable licenses. Juniper may terminate the Juniper License Agreement (1) upon 30 days’ notice for the Company’s uncured breach of any payment obligation under the Juniper License Agreement, (2) if the Company fails to maintain required insurance, (3) immediately upon the Company’s insolvency or the making of an assignment for the benefit of the Company’s creditors or if a bankruptcy petition is filed for or against the Company, which petition is not dismissed within 90 days, or (4) upon 60 days’ notice for any uncured material breach by the Company of any of its other obligations under the Juniper License Agreement. The Company may terminate the Juniper License Agreement on a country-by-country basis for any reason by giving 180 days’ notice (or 90 days’ notice if such termination occurs prior to receipt of marketing approval in the United States). If Juniper terminates the Juniper License Agreement for the reason described in clause (4) above or if the Company terminates the Juniper License Agreement, Juniper will have full access including the right to use and reference all product data generated during the term of the Juniper License Agreement that is owned by the Company.
Pear Tree Acquisition
The Company may be required to make certain royalty and milestone payments under the PT Merger Agreement (see Note 4).
Hammock/MilanaPharm Assignment and License Agreement
On December 5, 2018, the Company entered into (a) an Assignment Agreement with Hammock Pharmaceuticals, Inc., or the Assignment Agreement, and (b) a First Amendment to License Agreement with TriLogic Pharma, LLC and MilanaPharm LLC, or the License Amendment. Both agreements relate to the Exclusive License Agreement among Hammock, TriLogic and MilanaPharm dated as of January 9, 2017, or the MilanaPharm License Agreement. Under the Assignment Agreement and the MilanaPharm License Agreement, as amended by the License Amendment, the Company acquired an exclusive, worldwide license under certain intellectual property to, among other things, develop and commercialize products for the diagnosis, treatment and prevention of human diseases or conditions in or through any intravaginal or urological applications. The licensed intellectual property relates to the hydrogel drug delivery platform of TriLogic and MilanaPharm known as TRI-726. In DARE-BV1, this proprietary technology is formulated with clindamycin, an antibiotic used to treat certain bacterial infections, including BV, and has been engineered to produce a dual release pattern after vaginal application, providing maximum duration of exposure to clindamycin at the site of infection.
The following is a summary of other terms of the License Amendment:
License Fees. The Company paid $25,000 to MilanaPharm in connection with the execution of the License Amendment and must pay $200,000 to MilanaPharm (in the Company's discretion, either in cash or with shares of the Company's common stock) within 15 days of the first to occur of December 5, 2019 or the closing of an equity financing in which the Company raises aggregate proceeds of at least $10.0 million.
Milestone Payments. The Company will pay to MilanaPharm (1) up to $300,000 in the aggregate upon achievement of certain development milestones; and (2) up to $1.75 million in the aggregate upon achieving certain commercial sales milestones.
Foreign Sublicense Income. The Company will pay MilanaPharm a low double-digit percentage of all income received by the Company or its affiliates in connection with any sublicense granted to a third party for use outside of the United States, subject to certain exclusions.
Royalty Payments. During the royalty term, the Company will pay MilanaPharm high single-digit to low double-digit royalties based on annual worldwide net sales of licensed products and processes. The royalty term, which is determined on a country-by-country basis and licensed product-by-product basis (or process-by-process basis), begins with the first commercial sale of a licensed product or process in a country and terminates on the latest of (a) the expiration date of the last valid claim of the licensed patent rights that cover the method of use of such product or process in such country, or (b) 10 years following the first commercial sale of such product or process in such country. Royalty payments are subject to reduction in certain circumstances, including as a result of generic competition, patent prosecution expenses incurred by the Company, or payments to third parties for rights or know-how that are required for the Company to exercise the licenses granted to it under the MilanaPharm License Agreement or that are strategically important or could add value to a licensed product or process in a manner expected to materially generate or increase sales.
Efforts. The Company must use commercially reasonable efforts and resources to (1) develop and commercialize at least one licensed product or process in the United States and at least one licensed product or process in at least one of Canada, the United Kingdom, France, Germany, Italy or Spain, and (2) continue to commercialize that product or process following the first commercial sale of a licensed product or process in the applicable jurisdiction.
Term. Unless earlier terminated, the term of the MilanaPharm License Agreement will continue until (1) on a licensed product-by-product (or process-by-process basis) and country-by-country basis, the date of expiration of the royalty term with respect to such licensed product in such country, and (2) the expiration of all applicable royalty terms under the MilanaPharm License Agreement with respect to all licensed products and processes in all countries. Upon expiration of the term with respect to any licensed product or process in a country (but not upon earlier termination of the MilanaPharm License Agreement), the licenses granted to the Company under the MilanaPharm License Agreement will convert automatically to an exclusive, fully paid-up, royalty-free, perpetual, non-terminable and irrevocable right and license under the licensed intellectual property.
In addition to customary termination rights for all parties, MilanaPharm may terminate the license granted to the Company solely with respect to a licensed product or process in a country if, after having launched such product or process in such country, (1) the Company, or its affiliates or sublicensees, discontinue the sale of such product or process in such country and MilanaPharm notifies the Company of such termination within 60 days of having first been notified by the Company of such discontinuation, or (2) the Company, or its affiliates or sublicensees, (A) discontinues all commercially reasonable marketing efforts to sell, and discontinues all sales of, such product or process in such country for nine months or more, (B) fails to resume such commercially reasonable marketing efforts within 120 days of having been notified of such failure by MilanaPharm, (C) fails to reasonably demonstrate a strategic justification for the discontinuation and failure to resume to MilanaPharm, and (D) MilanaPharm gives 90 days’ notice to the Company.
The following is a summary of other terms of the Assignment Agreement with Hammock:
Assignment; Technology Transfer. Hammock assigned and transferred to the Company all of its right, title and interest in and to the MilanaPharm License Agreement and agreed to cooperate to transfer to the Company all of the data, materials and the licensed technology in its possession pursuant to a technology transfer plan to be agreed upon by the parties, with a goal for the Company to independently practice the licensed intellectual property as soon as commercially practical in order to develop and commercialize the licensed products and processes.
Fees. The Company paid $250,000 to Hammock in connection with the execution of the Assignment Agreement and must pay $250,000 to Hammock (in the Company's discretion either in cash or with shares of the Company's common stock) within 15 days of the first to occur of December 5, 2019 or the closing of an equity financing in which the Company raises aggregate proceeds of at least $10.0 million.
Milestone Payments. The Company will pay Hammock up to $1.1 million in the aggregate upon achievement of certain clinical and regulatory development milestones.
Term. The Assignment Agreement will terminate upon the later of (1) completion of the parties’ technology transfer plan, and (2) payment to Hammock of the last of the payments described above, including the milestone payments.
In April 2018, the Company received a Notice of Award for the first $224,665 of the anticipated $1.9 million in grant fundingsupporting Ovaprene from the Eunice Kennedy Shriver National Institute of Child Health and Human Development, a division of the National Institutes of Health, or the NIH. Through year-end 2019, the Company received award payments from the NIH totaling $1.2 million. In April 2020, the Company received a final notice of award for approximately $731,000 of the total $1.9 million in grant funding for clinical development efforts supporting Ovaprene from the NIH. The NIH issued this final notice of award after reviewing data from the completed postcoital test (or PCT) clinical trial and commercialization plans of Ovaprene, which satisfied specified requirements set out in the award notice.
The NIH issues notices of awards to the Company for a specified amount, and the Company must incur and track expenses eligible for reimbursement under the award and submit a detailed accounting of such expenses to receive payment. TheIf the Company received all
$224,665 ofreceives payments under the award, the amounts of such payments under this Notice of Award. Such payments were applied to clinical development efforts supporting Ovaprene and wereare recognized in the statement of operations as a reduction to research and development activities as the related costs wereare incurred to meet those obligations over the period.
On March 11,The Company recorded credits to research and development expense for costs related to the NIH award of approximately $167,000 and $295,000 for the three months ended June 30, 2020 and June 30, 2019, respectively and $459,000 and $456,000 for the Company received a second Notice of Award for an additional $982,851 of the anticipated $1.9 million in grant funding from the Eunice Kennedy Shriver National Institute of Child Healthsix months ended June 30, 2020 and Human Development. The second award followed the NIH's review of an interim data analysis and other results of the first phase of the research supporting Ovaprene. Award payments under this second notice of award ($886,667 received through September 30, 2019) are being applied to clinical development efforts supporting Ovaprene. At SeptemberJune 30, 2019, respectively. At June 30, 2020, the Company recorded a receivable of $32,888approximately $167,000 for expenses incurred through such date that it believes are eligible for reimbursement under this secondthe final notice of award.award received in April 2020.
Bill & Melinda Gates Foundation
The remaining portionCompany's wholly-owned subsidiary, Microchips, has a grant agreement with the Bill & Melinda Gates Foundation, or the Foundation, relating to the development of the award underpre-clinical stage contraceptive candidate, DARE-LARC1. Expenses eligible for grant funding must be incurred, tracked and reported to the Foundation. Microchips received grant $730,722, is contingent upon, among other matters, assessment that the resultsfunding payments of the ongoing Ovaprene study satisfy specified requirements set outapproximately $2.9 million and $1.6 million in July 2019 and June 2020, respectively. At June 30, 2020, grant funding payments associated with research and development expenses for DARE-LARC1 not yet incurred totaled approximately $1.9 million and are recorded as deferred grant funding liability in the award notice, and the availability of funds.Company's consolidated balance sheet.
10. NET LOSS PER SHARE
The Company computes basic net loss per share using the weighted average number of common shares outstanding during the period. Diluted net income per share is based upon the weighted average number of common shares and potentially dilutive securities (common share equivalents) outstanding during the period. Common share equivalents outstanding, determined using the treasury stock method, are comprised of shares that may be issued under outstanding options and warrants to purchase shares of the Company’s common stock. Common share equivalents are excluded from the diluted net loss per share calculation if their effect is anti-dilutive.
The following potentially dilutive outstanding securities were excluded from diluted net loss per common share for the period indicated because of their anti-dilutive effect:
| | | | | | | | | | | | | | |
| Potentially dilutive securities | | Three Months Ended
June 30, | | |
| | | 2020 | | 2019 |
| Stock options | | 2,766,626 | | | 2,190,360 | |
| Warrants | | 2,034,643 | | | 3,750,833 | |
| Total | | 4,801,269 | | | 5,941,193 | |
|
| | | | | | | | | | | | |
| Potentially dilutive securities | | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | | 2019 | | 2018 | | 2019 | | 2018 |
| Stock options | | 1,824,975 |
| | 1,605,790 |
| | 1,824,975 |
| | 1,605,790 |
|
| Warrants | | 3,750,833 |
| | 3,750,833 |
| | 3,750,833 |
| | 3,750,833 |
|
| Total | | 5,575,808 |
| | 5,356,623 |
| | 5,575,808 |
| | 5,356,623 |
|
On November 10, 2019,
February 2018 Warrant Exercise Price Reduced
As discussed in Note 6 above, the Company entered into an Agreement and Plan of Merger, or the Microchips Merger Agreement, with, among others, Microchips Biotech, Inc., or Microchips, pursuant to which, if the transactions contemplated thereby are consummated, the Company will acquire Microchips via a reverse triangular merger in which Microchips will become a wholly owned subsidiary of the Company. The merger is expected to close on or before November 22, 2019.
The following is a summary of certain material terms of the Microchips Merger Agreement.
At the closing of the merger, the Company will issue an aggregate of 3,000,000 shares of its common stock to the holders of shares of Microchips’ capital stock outstanding immediately prior to the effective time of the merger (other than holders of dissenting shares, if any), or the Effective Time Holders. Such shares are in consideration of Microchips' cash and cash equivalents, less liabilities, at closing. Microchips' cash and cash equivalents at closing are anticipated to total approximately $6.9 million, and approximately $5.7 million after payment of transaction-related expenses.
The Company also agreed to pay the following contingent consideration to the Effective Time Holders, in consideration of all of the other assets of Microchips: (1) up to $46.5 million contingent upon the achievement of specified funding, product development and regulatory milestones, up to $2.3 million of which the Company may elect to pay in shares of its common stock, subject to approval of the Company's stockholders to the extent necessary to comply with Nasdaq Listing Rule 5635; (2) up to $55.0 million contingent upon the achievement of specified amounts of aggregate net sales of products incorporating the intellectual property acquiredwarrants issued by the Company in February 2018 include price-based anti-dilution provisions. On July 10, 2020, in accordance with the merger; (3) tiered royalty payments ranginganti-dilution provision in the warrants, the exercise price of warrants to purchase an aggregate of 2,021,500 shares of common stock was reduced from low single-digit$0.98 to low double-digit percentages$0.96 per share.
Exercise of annualFebruary 2018 Warrants
In July 2020, warrants to purchase an aggregate of 126,000 shares of common stock were exercised at an exercise price of $0.96 per share resulting in gross proceeds to the Company of approximately $121,000 and reducing the number of February 2018 warrants outstanding to 1,895,500.
ATM Sales
Between July 1, 2020 and August 11, 2020, the Company sold an aggregate of 1,902,408 shares of common stock in "at-the-market" equity offerings and received aggregate net salesproceeds of such products, subjectapproximately $2.3 million.
Equity Line
Between July 1, 2020 and August 11, 2020 the Company sold an aggregate of 1,000,000 shares of common stock to customary provisions permitting royalty reductions and offset; and (4) a percentage of sublicense
revenue related to such products. The Company expects that less than $1.3 million of the contingent consideration may become payable through 2021.
The Company agreed to register the shares issuableLincoln Park under the Microchips MergerPurchase Agreement for resale by the Effective Time Holders under the Securities Act of 1933, as amended.
The Microchips Merger Agreement may be terminated under specified circumstances, including by mutual consent of the parties, by the Company if Microchips experiences a material adverse effect, by either party if representations and warranties of the other party are not true or if the other party has failed to perform any covenant, or if the transactions contemplated by the Microchips Merger Agreement have not been consummated by November 22, 2019 (which date may be extended by mutual written consent of the parties).
The Microchips acquisition, if consummated, will be concentrated primarily to one group of similar identifiable assets and thus, for accounting purposes, the Company concluded that the acquired assets will not meet the accounting definition of a business. Transaction costsreceived aggregate net proceeds of approximately $300,000 associated with the merger will be included as a component of research and development expense for the year ended December 31, 2019.$1.1 million.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of financial condition and results of operations should be read in conjunction with our interim consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q and our audited financial statements and notes thereto for the year ended December 31, 20182019 included in our Annual Report on Form 10-K for the year ended December 31, 2018,2019, or our 20182019 10-K, filed with the Securities and Exchange Commission, or SEC, on April 1, 2019.March 27, 2020. Past operating results are not necessarily indicative of results that may occur in future periods.
The following discussion includes forward-looking statements. See “CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS,” above. Forward-looking statements are not guarantees of future performance and our actual results may differ materially from those currently anticipated and from historical results depending upon a variety of factors, including, but not limited to, those discussed in Part I, Item 1A. Risk Factors inof our 20182019 10-K, and in our subsequent filings with the SEC, including any discussed in Part II, Item 1A of this report under the heading “Risk Factors,” which are incorporated herein by reference.
In this report, “we,” “us,” “our,” “Daré” or the “Company” refer collectively to Daré Bioscience, Inc. and its wholly owned subsidiaries, unless otherwise stated or the context otherwise requires. All information presented in this report is based on our fiscal year. Unless otherwise stated, references to particular years, quarters, months or periods refer to our fiscal years ending December 31 and the associated quarters, months and periods of those fiscal years.
Daré Bioscience® is a registered trademark of Daré Bioscience, Inc. Ovaprene® is a registered trademark licensed to Daré Bioscience, Inc. All other trademarks, service marks or trade names appearing in this report are the property of their respective owners. Use or display by us of other parties’ trademarks, service marks or trade names is not intended to and does not imply a relationship with, or endorsements or sponsorship of, us by the trademark, service mark or trade name owners.
Business Overview
We are a clinical-stage biopharmaceutical company committed to the acceleration of innovative products for women’s health. We are driven by a mission to identify, acquire and develop a diverse portfolio of differentiated therapies that expand treatment options, improve outcomes and facilitate convenience for women, primarily in the areas of contraception, fertility, and sexual and vaginal health. Our business strategy is to in-license or otherwise acquire the rights to differentiated product candidates in our areas of focus, some of which have existing clinical proof-of-concept data, and to take those candidates through advanced stages of clinical development, and then out-license thesethe products to companies with sales and distribution capabilities in women's health to leverage their commercial capabilities. We and our wholly owned subsidiaries operate in one business segment.
Since July 2017, we have assembled a portfolio of clinical-stage and pre-clinical stagepre-clinical-stage candidates. While we will continue to assess opportunities to expand our portfolio, our current focus is on advancing our existing product candidates addressing unmet needsthrough mid- and late stages of clinical development or approval. Our global commercialization and development strategy involves partnering with pharmaceutical companies and regional distributors with established marketing and sales capabilities in women's health. health, including through co-development and promotion agreements, once we have advanced a candidate through mid- to late-stage clinical development.
Our portfolio includes three product candidates in advanced clinical development and three Phase 1-ready candidates:development:
•DARE-BV1, a novel thermosetting bioadhesive hydrogel formulated with clindamycin phosphate 2% to be administered in a single vaginally delivered application, as a first line treatment for bacterial vaginosis, or BV;
Ovaprene®•Ovaprene, a hormone-free, monthly vaginal contraceptive; and
•Sildenafil Cream, 3.6%, a proprietary cream formulation of sildenafil for topical administration to the vulva and vagina for treatment of female sexual arousal disorder, or FSAD;FSAD.
Our portfolio also includes three product candidates in Phase 1 clinical development or that we believe are Phase 1-ready:
•DARE-HRT1, a combination bio-identical estradiol and progesterone intravaginal ring for the treatment of menopausal symptoms, including vasomotor symptoms, (VMS) as part of a hormone replacement therapy, or HRT, following menopause;
DARE-VVA1, a vaginally delivered formulation of tamoxifen to treat vulvar vaginal atrophy, or VVA, in patients with hormone-receptor positive breast cancer; and
•DARE-FRT1, an intravaginal ring containing bio-identical progesterone for the prevention of preterm birth and for fertility support as part of an in vitro fertilization treatment plan.
plan; andOur•DARE-VVA1, a vaginally delivered formulation of tamoxifen to treat vulvar vaginal atrophy, or VVA, in patients with hormone- receptor positive breast cancer.
In addition, our portfolio also includes these pre-clinical stage product candidates:
•DARE-LARC1, a combination product designed to provide long-acting, reversible contraception comprising an implantable, user-controlled wireless drug delivery system and levonorgestrel;
•ORB-204 and ORB-214, injectable formulations of etonogestrel designed to provide contraception over 6-month and 12-month formulations of injectable etonogestrel for contraception;periods, respectively; and
•DARE-RH1, a novel approach to non-hormonalnon-hormonal contraception for both men and women by targeting the CatSper ion channel.
In addition, as discussed further below, on November 10, 2019, we entered into a merger agreement with Microchips Biotech, Inc., a privately-held company developing a proprietary, microchip-based, implantable drug delivery system designed to store and precisely deliver hundreds of therapeutic doses over months and years, with potential utilization in multiple therapeutic indications, including women's contraception. The implant is intended to be operated by the patient to deliver medication on demand or on a pre-determined schedule that can be activated or deactivated wirelessly, as required. Microchips' lead product candidate is a pre-clinical stage contraceptive application of the technology, which, if successful, could provide women with unparalleled control over the management of their fertility. Utilizing the active pharmaceutical ingredient levonorgestrel, the device is intended to deliver all the benefits of a traditional long-acting, reversible contraceptive product and provide precise dosing and extended implant duration with the ability to wirelessly control the duration of ovulatory suppression based on individual user needs.channel.
Our primary operations have consisted of, and are expected to continue to consist of, product research and development and advancing our portfolio of product candidates through clinical development and regulatory approval. We expect that the majority of our development expenses over the next two yearsin 2020 and 2021 will support the advancement of DARE-BV1, Ovaprene and Sildenafil Cream, 3.6%.
To date, we have not obtained any regulatory approvals for any of our product candidates, commercialized any of our product candidates or generated any product revenue. We are subject to several risks common to clinical-stage biopharmaceutical companies, including dependence on key individuals, competition from other companies, the need to develop commercially viable products in a timely and cost-effective manner, and the need to obtain adequate additional capital to fund the development of product candidates. We are also subject to several risks common to other companies in the industry, including rapid technology change, regulatory approval of products, uncertainty of market acceptance of products, competition from substitute products and larger companies, compliance with government regulations, protection of proprietary technology, dependence on third parties, and product liability.
In addition, the COVID-19 pandemic continues to rapidly evolve. We do not yet know the full extent of its potential effects on our business, including the anticipated aggregate costs for development of our product candidates, on our anticipated timelines for the development of our product candidates, or on the supply chain for our clinical supplies. However, these effects could have a material adverse impact on our business and financial condition. See the risk factor titled, The novel coronavirus (COVID-19) pandemic and efforts to reduce its spread could negatively impact our business, including by increasing the cost and timelines for our clinical development programs, in Part II, Item 1A. Risk Factors of this report.
Clinical Stage Product Candidates
The following provides a brief overview of the clinical stage product candidates on whichDARE-BV1
In June 2020, we are primarily focusing our development efforts at this time.
DARE-BV1
DARE-BV1 is a novel thermosetting bioadhesive hydrogel formulated with 2% clindamycin, an antibiotic used to treat certain bacterial infections, including BV. DARE-BV1 is designed to be administered in a convenient, single vaginally delivered application. The bioadhesive properties of DARE-BV1 are believed to prolong the duration of exposure of clindamycin relative to currently marketed creams potentially improving the rate of clinical effectiveness compared to existing FDA-approved therapies. Current FDA-approved therapies for BV have clinical cure rates ranging from 37-68%. In an investigator initiated proof-of-concept study that enrolled 30 women, DARE-BV1 demonstrated an 86% clinical cure rate in evaluable subjects (n=26) at the test-of-cure visit (Day 7-14) after one administration. We plan to utilize the FDA's 505(b)(2) pathway to obtain marketing approval of DARE-BV1 for BV in the U.S.
In August 2019, the FDA granted DARE-BV1 Qualified Infectious Disease Product (QIDP) designation for the treatment of BV in women. QIPD designation is available under Title VIII of the FDA Safety and Innovation Act, titled General Antibiotic Incentive Now (GAIN), which creates incentives for the development of antibacterial and antifungal drug products that treat serious or life-threatening infections. The primary incentive is a five-year exclusivity extension added to any exclusivity for which a QIDP qualifies upon FDA approval. Additionally, DARE BV-1's QIDP designation makes it eligible for Fast Track designation and Priority Review.
We are currently working on regulatory and start-up activities that are necessary to commencecommenced a Phase 3, multicenter, randomized, double-blind, placebo-controlled study in the U.S. of DARE-BV1 (clindamycin phosphate vaginal gel, 2%) for the treatment of BV, or the DARE-BV1-001 study, andDARE-BVFREE (DARE-BV1-001) study.We expect to initiate the study in early 2020. We plan to enroll approximately 219240 postmenarchal women, ages 12 and above, at approximately 2040 sites in the United States. The primary efficacy endpoint of the study will beis clinical cure of BV at the evaluation visit to occur 21 to 30 days after enrollment in the study, or the Day 21-30 visit, with clinical cure defined as meeting three criteria (derived from the Amsel criteria): resolution of abnormal vaginal discharge
associated with BV as confirmed by the investigator; a negative 10% potassium hydroxide (KOH) “whiff test”"whiff test"; and the presence of clue cells at less than 20% of total epithelial cells in a saline wet mount. BasedIf the study's rate of enrollment occurs as we currently expect, then we anticipate having topline data from this study by year-end 2020. If the DARE-BVFREE clinical study is successfully completed on our pre-investigational new drug (IND) communications with the FDA, in parallel with the DARE-BV1-001 study and to support the new drug application, or NDA, for DARE-BV1, we will conduct nonclinical studies of certain excipients in DARE-BV1 and the clinical formulation of DARE-BV1, including reproductive toxicology studies. If DARE-BV1-001 and the nonclinical studies are successful,anticipated timeline, we expect to be in a position to file ana new drug application, or NDA, with the FDA in late 2020 or early 2021.
We anticipate that the aggregate costs of DARE-BV1-001,the DARE-BV1 program through NDA filing, including the DARE-BV1FREE study, planned nonclinical studies, manufacturing activities for the program through filing of the NDA, and the NDA filing, will be less than $9.0approximately $10.0 million.
To provide additional data and support DARE-BV1’s value proposition, we also plan to conduct an extension study of DARE-BV1-001, or the DARE-BV1-002 study. DARE-BV1-002 is expected to enroll up to approximately 219 subjects who complete DARE-BV1-001. In DARE-BV1-002, subjects will receive no additional treatment and will be evaluated 30 and 60 days following enrollment in DARE-BV1-002 to evaluate the duration of response (sustained clinical cure) of DARE-BV1 as compared to treatment with metronidazole vaginal gel, which is the treatment that subjects in DARE-BV1-001 will receive if their BV symptoms are not otherwise resolved. We anticipate that the cost of DARE-BV1-002 will be less than $2.0 million.
Ovaprene
Ovaprene is a novel hormone-free monthly vaginal contraceptive for pregnancy prevention, designed to offer both the convenience of once-a-month use and "typical use" effectiveness in the same range as traditional hormonal contraceptive methods (pills, patches, vaginal rings). If approved, Ovaprene may represent a new category of birth control. Ovaprene does not contain hormones and is designed to be worn conveniently over multiple weeks (i.e. one menstrual cycle) similar to other vaginal ring contraceptive products, including Merck's NuvaRing®.
Ovaprene is a combination product and, following a request for designation process, the FDA designated Center for Devices and Radiological Health, or CDRH, as the lead FDA program center for premarket review and product regulation. CDRH has determined that a PMA will be required to market Ovaprene in the U.S.
On November 12, 2019, we announced positive topline results of our postcoital test, or PCT, clinical trial of Ovaprene. We designed the PCT clinical trial to assess general safety and effectiveness in preventing progressively motile sperm from reaching the cervical canal following intercourse and acceptability of the product to the patient. The study evaluated 23 women over the course of five menstrual cycles, with each woman assessed over approximately 21 visits. Each woman’s cervical mucus was measured at several points during the study, including a baseline measurement at menstrual cycle 1 that excluded the use of any product. Subsequent cycles and visits included the use of a diaphragm during intercourse (menstrual cycle 2) and Ovaprene (menstrual cycles 3, 4 and 5). The primary endpoint of the study was to evaluate changes from baseline in PCT results due to device use, as represented by the proportion of women and cycles with an average of fewer than five progressively motile sperm (PMS) per high power field (HPF) in midcycle cervical mucus collected two to three hours after intercourse with Ovaprene in place.
The PCT clinical study met its primary endpoint— Ovaprene prevented the requisite number of sperm from reaching the cervix across all women and all cycles evaluated. Specifically, in 100% of women and cycles, an average of less than five PMS per HPF were present in the midcycle cervical mucus collected two to three hours after intercourse with Ovaprene in place. To calculate the average number of PMS, PMS were counted across each of nine HPFs and averaged. Women enrolled in the study who completed at least one Ovaprene PCT (N=26) had a mean of 27.21 PMS/HPF in their baseline cycle, a mean of 0.22 PMS/HPF in their diaphragm cycle, which was anticipated based on published studies, and a mean of 0.48 PMS/HPF in their Ovaprene PCT cycles, with a median of zero PMS. No serious or severe adverse events were reported or observed.
PCT clinical trials have been used as a surrogate marker for contraceptive effectiveness. Infertility research suggests that higher rates of pregnancy are associated with PMS per HPF of from greater than one to greater than 20 sperm, and less than five PMS per HPF is considered indicative of contraceptive effectiveness.
Based on the positive results of our PCTpostcoital test (PCT) clinical trial of Ovaprene, topline data from which was announced in November 2019, and with the support of Bayer under the commercial license agreement we currently intendexecuted in January 2020, we are conducting activities to filesupport submission of an Investigational Device Exemption (IDE)application, or IDE, to the FDA for a pivotal clinical study of Ovaprene. We are designing that study to evaluate the safety and efficacy of Ovaprene to prevent pregnancy when used over a period of 12 months by approximately 250 women and will seek to confirm alignment with the FDA duringon the first half of 2020, and, pending FDA review and clearancestudy's design prior to commencement. We are conducting development activities prior to commencement of the IDE, to initiate aplanned pivotal contraceptive effectiveness and safety study of Ovaprene inthat we believe will continue to advance this program and enable us to report topline data for the second half of 2020.pivotal clinical study by year-end 2022. If successful, we expect that studythe study's data to support a premarket approval, or PMA, submission to the FDA, as well as marketing approvals of Ovaprene in the United States, Europe and other countries worldwide.
Sildenafil Cream, 3.6%
Sildenafil Cream, 3.6%, which incorporates sildenafil, the same active ingredient is in the male erectile dysfunction drug Viagra®, if approved, could be the first FDA-approved FSAD treatment optionPhase 2b clinical development for women. FSAD is a condition characterized primarily by a persistent or recurrent inability to attain or maintain sufficient genital arousal during sexual activity, frequently resulting in distress or interpersonal difficulty. As with erectile dysfunction in men, FSAD in women is associated with insufficient blood flow to the genitalia. Sildenafil Cream, 3.6% is designed to increase genital blood flow and provide improvements in the female genital arousal response, while avoiding systemic side effects observed with oral formulations of sildenafil.
We plan to leverage the existing data and established safety profile of sildenafil and the Viagra® brand to utilize the FDA’s 505(b)(2) pathway to obtain marketing approval of Sildenafil Cream, 3.6% in the U.S. During the third quarter of 2018,FSAD. In December 2019, we had a Type C meetingannounced that, we reached alignment with the FDA regardingon the design of our Phase 2b clinical trial, for Sildenafil Cream, 3.6% andincluding the overall development program for this product candidate. Based on the FDA guidance we received from that meeting, we conducted a non-interventional study intended to support the content validity of specific patient reported outcome, or PRO, measures for subsequent clinical studiesinstruments to be used to screen eligible patients with FSAD and to measure achievement of the primary efficacy endpoints, namely improvement in localized genital sensations of arousal and reduction in the distress that women with FSAD experience. The Phase 2b trial is designed to evaluate Sildenafil Cream, 3.6%. The PRO content validity study, which was completed compared to placebo cream over 12 weeks of dosing following both a non-drug and placebo run-in period. In light of disruptions resulting from the COVID-19 pandemic, we are evaluating the optimal time to commence enrollment in the third quarter of 2019, was designed to identify and document the genital arousal symptoms that will be assessed in our Phase 2b trial in which subjects will use Sildenafil Cream, 3.6% and placebo cream in their home setting, as well as our Phase 3 studies, and to demonstrate that those symptoms are the most important and relevant to our target population and are also acceptable endpoints for the FDA. The timing of initiation of the Phase 2b clinical trial will be influenced by additional FDA guidance, which we expect to receive prior to the end of 2019. In anticipation of that FDA guidance, we are conducting start-up activitiessupport projected topline data for the Phase 2b trial. In addition, we have performed, and will continue to perform, additional clinical and non-clinical work that might be valuable or required to support the overall program.trial by year-end 2021.
DARE-HRT1
DARE-HRT1 is an intravaginal ring, or IVR, containing bio-identical estradiol and bio-identical progesterone to treat the vasomotor symptoms (VMS) associated with menopause as part ofIn July 2020, our wholly-owned Australian subsidiary commenced a hormone replacement therapy regimen. There are currently no FDA-approved IVRs that deliver bio-identical progesterone in combination with bio-identical estradiol. The IVR technology used in DARE-HRT1 was developed by Dr. Robert Langer from the Massachusetts Institute of Technology and Dr. William Crowley from Massachusetts General Hospital and Harvard Medical School. We plan to utilize the FDA's 505(b)(2) pathway to obtain marketing approvalPhase 1 open-label, three-arm, parallel group clinical study of DARE-HRT1 in the U.S. We intend to initiate a Phase 1 clinical studyAustralia to evaluate the pharmacokinetics, or PK, and safety of DARE-HRT1 in approximately 30 healthy, post-menopausal women, at specialty women's health sites in Australia. The primary objective of the study is to describe the PK parameters of two different dose combinations (estradiol 80 µg/progesterone 4 mg IVR and estradiol 160 µg/progesterone 8 mg IVR) over 28 days. Secondary endpoints of the study include assessing the safety and tolerability of DARE-HRT1 and comparing the exposure of estradiol, estrone, and progesterone of DARE-HRT1 over 28 days against a daily combination of oral estrogen (Estrofem®) and oral progesterone (Prometrium®). If the study's rate of enrollment occurs as we currently expect, then we anticipate having topline data from this study in the first quarterhalf of 20202021. We anticipate that the aggregate costs of the DARE-HRT1 Phase 1 clinical study will be approximately $2.5 million. Currently, Australia's research and development tax incentive, or R&DTI, gives 43.5% of every dollar spent by eligible companies on eligible R&D activities back to report topline resultsthose companies in 2020. DARE-HRT1 hasa cash payment. At the potentialconclusion of the Phase 1 study, Daré’s subsidiary intends to apply for the maximum refundable cash credit then available under the Australian R&DTI program for eligible study costs incurred.
Our currently anticipated timelines and aggregate costs for the development of our product candidates could be delayed and could increase as a first-in-category product.result of the COVID-19 pandemic. See the risk factor titled, The novel coronavirus (COVID-19) pandemic and efforts to reduce its spread could negatively impact our business, including by increasing the cost and timelines for our clinical development programs, in Part II, Item 1A. Risk Factors of this report.
Recent Events
Underwritten Public OfferingEquity Line
On April 11, 2019,22, 2020, we closed an underwritten public offeringentered into a purchase agreement, or the Purchase Agreement, and a registration rights agreement with Lincoln Park Capital Fund, LLC, or Lincoln Park. Under the terms and subject to the conditions of 4,575,000the Purchase Agreement, we may sell to Lincoln Park up to $15.0 million in shares of our common stock. Such sales of our common stock may occur from time to time, at our sole discretion subject to certain limitations, until May 19, 2023. On April 22, 2020, in accordance with the Purchase Agreement, we issued 285,714 shares of our common stock, ator the Commitment Shares, to Lincoln Park in consideration for its commitment to purchase shares under the Purchase Agreement. We filed a publicregistration statement on Form S-1 (File No. 333-237954) to register the resale by Lincoln Park of up to 7.5 million shares of the Company’s common stock issued or issuable to Lincoln Park under the Purchase Agreement, including the Commitment Shares, and such registration statement was declared effective by the SEC on May 12, 2020.
The Company incurred legal, accounting, and other fees related to the Purchase Agreement of approximately $374,000. These costs are amortized and expensed as shares are sold under the Purchase Agreement and as of June 30, 2020 there was $351,000 of unamortized costs. During the three months ended June 30, 2020, we sold and Lincoln Park purchased 882,000 shares under the Purchase Agreement for gross proceeds of approximately $911,000 and incurred offering priceexpenses of $1.10 per share. We grantedapproximately $23,000.
Under the underwriters a 30-day over-allotment optionPurchase Agreement, on any business day until May 19, 2023, we may direct Lincoln Park to purchase up to an additional 686,250200,000 shares of our common stock, each, a Regular Purchase. We may increase the share amount we direct Lincoln Park to purchase under a Regular Purchase to up to 250,000 shares or up to 300,000 shares if the closing sale price of our common stock is not below $1.50 or $3.00, respectively, on the business day on which was exercisedwe initiate the purchase, subject to adjustment for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction as provided in fullthe Purchase Agreement. However, Lincoln Park’s maximum commitment in any single Regular Purchase may not exceed $1.0 million. The purchase price per share for each Regular Purchase will be the lower of (i) the lowest sale price of our common stock on April 12, 2019. Including the over-allotment shares,business day on which we issued a total of 5,261,250 shares,initiate the purchase and received gross proceeds of approximately $5.8 million and net proceeds of approximately $5.2 million after deducting underwriting discounts and offering expenses.
As a result(ii) the average of the three lowest closing sale prices of our common stock during the 10-business day period immediately preceding the business day on which we initiate the purchase. In addition to Regular Purchases, we may also direct Lincoln Park to purchase other amounts of common stock as accelerated purchases and as additional accelerated purchases, subject to limits specified in the Purchase Agreement, at a purchase price per share calculated as specified in the Purchase Agreement, but in no case lower than the minimum price per share we stipulate in our notice to Lincoln Park initiating these purchases.
Sales of shares of our common stock into Lincoln Park under the offering described above, per the termsPurchase Agreement will depend on a variety of the warrants we issued in February 2018, their exercise price was automatically reducedfactors to be determined by us from $3.00time to $0.98 per share on April 11, 2019. For additional information, see Note 6 to our unaudited interim consolidated financial statements contained in this report.
Merger Agreement with Microchips Biotech, Inc.
On November 10, 2019, we entered into an Agreement and Plan of Merger, or the Microchips Merger Agreement, with,time, including, among others, Microchips Biotech, Inc.,market conditions, the trading price of our common stock and our determination as to the appropriate sources of funding for our operations. The net proceeds we receive under the Purchase Agreement will depend on the frequency and prices at which we sell shares to Lincoln Park. We expect that any proceeds we receive from such sales will be used for working capital and general corporate purposes.
In addition, under applicable Nasdaq rules, we may not issue or Microchips, pursuantsell to which, ifLincoln Park under the transactions contemplated thereby are consummated, we will acquire Microchips via a reverse triangular merger, in which Microchips will become our wholly owned subsidiary. The following is a summary of certain material terms of the Microchips Merger Agreement.
At the closing of the merger, we will issue an aggregate of 3,000,000Purchase Agreement more than 4,941,089 shares of our common stock, which we refer to as the holders ofExchange Cap, unless (i) we obtain stockholder approval to issue shares of Microchips’ capital stock outstanding immediately prior to the effective timein excess of the merger (other than holders of dissenting shares, if any),Exchange Cap or (ii) the Effective Time Holders. Such shares are in consideration of Microchips' cash and cash equivalents, less liabilities, at closing. Microchips' cash and cash equivalents at closing are anticipated to total approximately $6.9 million, and approximately $5.7 million after payment of transaction-related expenses.
We agreed to pay the following contingent consideration to the Effective Time Holders in considerationaverage price of all of the other assets of Microchips: (1) up to $46.5 million contingent upon the achievement of specified funding, product development and regulatory milestones; up to $2.3 million of which we may elect to pay in sharesapplicable sales of our common stock to Lincoln Park under the Purchase Agreement equals or exceeds $1.0117 (which represents the closing sale price per share of our common stock on the day before we entered into the Purchase Agreement, plus an incremental amount). In addition, we may not sell shares to Lincoln Park under the Purchase Agreement if such sale would result in Lincoln Park beneficially owning more than 9.99% of our then outstanding shares of common stock.
COVID-19 Update
We closely monitor the COVID-19 pandemic and actions taken in the United States and other countries to contain and treat the disease and aid economic recovery, and we continue to assess the potential impact on our employees, operations, including our clinical trials, business strategy and financial condition and performance. In response to the spread of COVID-19, in March 2020 we implemented work-from-home and restricted travel policies and, subsequently, the governors of California and Massachusetts, where we have operations, issued statewide stay-at-home orders. While we have systems and technologies in place to enable our employees to work from home, productivity may be adversely impacted and challenge our ability to effectively manage and operate our business. In addition, many of our consultants, partners and vendors on which we rely heavily are subject to similar work and travel restrictions that may adversely impact their ability to perform contracted services in a timely manner or at all. In May 2020, we modified our work-from-home policy such that some of our personnel returned to working in our facilities for a portion or all of their working time. We expect to continue to modify our work-from-home and restricted travel policies as the COVID-19 pandemic and state and local stay-at-home orders evolve. The effect of the COVID-19 pandemic and its associated restrictions may increase the anticipated aggregate costs for the development of our product candidates and may adversely impact our anticipated timelines for the development of our product candidates by, among other things, causing disruptions in the supply chain for our clinical supplies, delays in the timing and pace of subject enrollment in our clinical trials and lower than anticipated subject enrollment and completion rates, delays in the review and approval of our regulatory submissions by the FDA and other agencies with respect to our product candidates, and other unforeseen disruptions. The economic impact of the COVID-19 pandemic and the uncertainty and volatility in the capital markets it has caused and may continue to cause may negatively impact investor sentiment and the availability and cost of capital, and may adversely impact our ability to raise capital when needed or on terms favorable to us and our stockholders to fund our development programs and our operations. We do not yet know the full extent necessaryof potential delays or impacts on our business, clinical trial activities, ability to comply with Nasdaq Listing Rule 5635; (2) up to $55.0 million contingent uponaccess capital or on healthcare systems or the achievement of specified amounts of aggregate net sales of products incorporating the intellectual property we acquired in the merger; (3) tiered royalty payments ranging from low single-digit to low double-digit percentages of annual net sales of such products, subject to customary provisions permitting royalty reductions and offset; and (4)global economy as a percentage of sublicense revenue related to such products. We expect that less than $1.3 million of the contingent consideration may become payable through 2021.
We agreed to register the shares issuable under the Microchips Merger Agreement for resale by the Effective Time Holders under the Securities Act of 1933, as amended.
The Microchips Merger Agreement may be terminated under specified circumstances, including by mutual consent of the parties, by us if Microchips experienceswhole. However, these effects could have a material adverse effect,impact on our business and financial condition. See the risk factor titled, The novel coronavirus (COVID-19) pandemic and efforts to reduce its spread could negatively impact our business, including by either party if representationsincreasing the cost and warrantiestimelines for our clinical development programs, in Part II, Item 1A. Risk Factors of the other party are not true or if the other party has failed to perform any covenant, or if the transactions contemplated by the Microchips Merger Agreement have not been consummated by November 22, 2019 (which date may be extended by mutual written consent of the parties).this report.
Financial Overview
We incurred a loss of approximately $10.4$11.4 million for the ninesix months ended SeptemberJune 30, 2019.2020. As of SeptemberJune 30, 2019,2020, we had (a) an accumulated deficit of approximately $40.2$55.4 million and (b) cash and cash equivalents of approximately $2.4$5.3 million. We also had negative cash flow from operations of approximately $9.5$10.7 million during the ninesix months ended SeptemberJune 30, 2019.2020. We will need to raise substantial additional capital to continue to fund our operations and to successfully execute our current operating plan, including the development of our current product candidates. The amount and timing of future funding will depend on many factors, including the pace and results of our clinical development efforts. If we do not raise capital as and when needed, we will not be able to continue development of our product candidates or we will be required to delay, scale back or eliminate some or all of our development programs or cease operations. For additional information regarding our ability to continue as a going concern, see Note 21 to our unaudited interim consolidated financial statements contained in this report and “Liquidity and Capital Resources and Financial Condition,” below.
Financial Operations Overview
Revenue
To date we have not generated any revenue and do not expect to generate any revenue for the foreseeable future.revenue. In the future, and if we are successful in advancing our product candidates through late stages of clinical development, we may generate revenue from product sales, license fees, milestone andpayments, research and development payments in connection with strategic partnerships, as well as royalties and royaltiescommercial milestones resulting from the salessale of products developed under licenses of intellectual property.products. Our ability to generate productsuch revenue will depend on the successful clinical development of our product candidates, receivingthe receipt of regulatory approvals to market such products and the eventual successful commercialization of product candidates. If we fail to complete the development of productsproduct candidates in a timely manner, or to receive regulatory approval for such product candidates, our ability to generate future revenue and our results of operations would be materially adversely affected.
Research and Development Expenses
Research and development expenses include research and development costs for our product candidates and transaction costs related to our acquisitions. We recognize all research and development expenses as they are incurred. Research and development expenses consist primarily of:
•expenses incurred under agreements with consultants and clinical trial sites that conduct research and development activities on our behalf;
•laboratory and vendor expenses related to the execution of nonclinical studies and clinical trials;
•contract manufacturing expenses, primarily for the production of clinical supplies;
•transaction costs related to the acquisitionacquisitions of companies, technologies and related intellectual property;property, and other assets; and
•internal costs that are associated with activities performed by our research and development organization and generally benefit multiple programs.
We expect research and development expenses to increase in the future as we continue to invest in the development of our clinical-stage product candidates and as any other potential product candidates we may develop are advanced into and through clinical trials in the pursuit of regulatory approvals. Such activities will require a significant increase in investment in regulatory support, clinical supplies, inventory build-up related costs, and the payment of success-based milestones.milestones to licensors. In addition, we continue to evaluate opportunities to acquire or in-license other product candidates and technologies, which may result in higher research and development expenses due to, among other factors, license fee and/or milestone payments.
Conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We may not obtain regulatory approval for any product candidate on a timely and cost-effective basis or at all. The probability of success of our product candidates may be affected by numerous factors, including clinical results and data, competition, intellectual property rights, manufacturing capability and commercial viability. As a result, we cannot accurately determine the duration and completion costs of development projects or when and to what extent we will generate revenue from the commercialization of any of our product candidates.
General and Administrative Expense
General and administrative expenses consist of personnel costs, facility expenses, expenses for outside professional services, including legal, audit and accounting services. Personnel costs consist of salaries, benefits and stock-based compensation. Facility expenses consist of rent and other related costs.
Critical Accounting Policies and Significant Judgments and Estimates
Management’s discussion and analysis of financial condition and results of operations is based on our interim consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. Preparing these financial statements requires usmanagement to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses.expenses, and related disclosures. On an ongoing basis, we evaluate these estimates and judgments. We base our estimates on historical experience and on various assumptions we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially from these estimates. For a description of critical accounting policies that affect our significant judgments and estimates used in the preparation of our unaudited consolidated interim financial statements, refer to Item 7 in Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 1 to our financial statements contained in our 20182019 10-K, and Note 32 to our unaudited interim consolidated financial statements contained in this report.
Results of Operations
Comparison of Three Months Ended SeptemberJune 30, 20192020 and 20182019 (Unaudited)
The following table summarizes our results for the periods indicated, together with the changes in those items in dollars:
| | | | Three Months Ended September 30, | | Dollar | | Three Months Ended June 30, | | | Dollar |
| | 2019 | | 2018 | | Change | | 2020 | | 2019 | | Change |
| Operating expenses: | | | | | | Operating expenses: | | | | | |
| General and administrative expense | $ | 1,318,986 |
| | $ | 1,175,049 |
| | $ | 143,937 |
| |
| Research and development expenses | 1,966,230 |
| | 1,446,548 |
| | 519,682 |
| |
| License expenses | 133,333 |
| | — |
| | 133,333 |
| |
| General and administrative | | General and administrative | $ | 1,557,548 | | | $ | 1,307,379 | | | $ | 250,169 | |
| Research and development | | Research and development | 5,547,450 | | | 2,512,572 | | | 3,034,878 | |
| License fees | | License fees | 20,833 | | | 162,500 | | | (141,667) | |
| Total operating expenses | 3,418,549 |
| | 2,621,597 |
| | 796,952 |
| Total operating expenses | 7,125,831 | | | 3,982,451 | | | 3,143,380 | |
| Loss from operations | (3,418,549 | ) | | (2,621,597 | ) | | (796,952 | ) | Loss from operations | (7,125,831) | | | (3,982,451) | | | (3,143,380) | |
| Other income | 25,471 |
| | 47,122 |
| | (21,651 | ) | Other income | 1,618 | | | 30,001 | | | (28,383) | |
| Net loss | (3,393,078 | ) | | (2,574,475 | ) | | (818,603 | ) | Net loss | $ | (7,124,213) | | | $ | (3,952,450) | | | $ | (3,171,763) | |
| Deemed dividend from trigger of down round provision feature | — |
| | — |
| | — |
| Deemed dividend from trigger of down round provision feature | $ | — | | | $ | (789,594) | | | 789,594 | |
| Net loss to common shareholders | (3,393,078 | ) | | (2,574,475 | ) | | (818,603 | ) | Net loss to common shareholders | $ | (7,124,213) | | | $ | (4,742,044) | | | $ | (2,382,169) | |
| Other comprehensive loss: | | | | |
|
| Other comprehensive loss: | | | |
| Foreign currency translation adjustments | (15,378 | ) | | (18,721 | ) | | 3,343 |
| Foreign currency translation adjustments | 12,090 | | | (7,917) | | | 20,007 | |
| Comprehensive loss | $ | (3,408,456 | ) | | $ | (2,593,196 | ) | | $ | (815,260 | ) | Comprehensive loss | $ | (7,112,123) | | | $ | (4,749,961) | | | $ | (2,362,162) | |
Revenues
We did not recognize any revenues for either of the three months ended SeptemberJune 30, 20192020 or 2018.2019.
General and administrative expenses
The increase of $143,937$250,169 in general and administrative expenses for the three months ended SeptemberJune 30, 20192020 as compared to the three months ended SeptemberJune 30, 20182019 was primarily attributable to (i) an increase in personnel costs of approximately $67,000 reflecting$111,000, (ii) an increase in rent and facilities expenses of approximately $66,000 due to the hiringaddition of additional employees which resultedtwo leases when we acquired Microchips in higher salary, benefitNovember 2019, and bonus expenses in the current period, and (ii)(iii) an increase in stock-based compensation expense of $73,815.approximately $43,000.
Research and development expenses
The increase of $519,682$3.0 million in research and development expenses for the three months ended SeptemberJune 30, 20192020 as compared to the three months ended SeptemberJune 30, 20182019 was primarily attributable to (i) an increase in costs related to development activities of approximately $777,000$3.6 million for DARE-BV1 and Ovaprene, including decreased grant funding recorded as a reduction to research and development expenses of approximately $290,000 related to a lesser extent DARE-VVA1,Ovaprene, (ii) an increase in costs related to pre-clinical development activities of approximately $719,000 for DARE-LARC1, which we acquired in November 2019, and (iii) an increase in personnel costs of approximately $149,000 reflecting the hiring of additional employees which resulted in higher salary, benefit and bonus expenses, and (iii) an increase in stock-based compensation expense of $21,587. Those$332,000. These increases were partially offset by, (x) a decrease in costs related to development activities of approximately $140,000 for Sildenafil Cream, 3.6%, DARE-HRT1, and DARE-FRT1, (y)(a) an increase in grant funding recorded as a reduction to research and development expenseexpenses of approximately $719,000 related to Ovaprene of approximately $231,000,preclinical expenses for DARE-LARC1, and (z)(b) a decrease in costs related to pre-clinical development activities of approximately $103,000.$737,000 for Sildenafil Cream, 3.6% and DARE-HRT1.
License expensesfees
The license expenses of $133,333 forFor the three months ended SeptemberJune 30, 2020 we accrued $20,833 of the $100,000 annual license maintenance fee payable in the second quarter of 2021 under our license agreement related to DARE-HRT1.
For the three months ended June 30, 2019 related to (i)we accrued $162,500 of license expenses comprised of the accrual$112,500 of deferred license fees due under the Assignment Agreement with Hammock Pharmaceuticals, Inc.our license agreement related to DARE-BV1 and the First Amendment to License Agreement with TriLogic Pharma, LLC and MilanaPharm LLC, and (ii) the accrual of the annual license maintenance fee due under the Juniper License Agreement. During the quarter, we accrued (x) $20,833 of the $50,000 annual license maintenance fee payable in the second quarter of 2020 under the Juniper License Agreement (y) $62,500 of the $250,000 ofour license fees payable under the Assignment Agreement and (z) $50,000 of the $200,000 of license fees payable under the First Amendmentagreement related to License Agreement. Both of these license fees are due in December 2019, and in our discretion, may be paid either in cash or with shares of our common stock.
There were no license expenses for the three months ended September 30, 2018.DARE-HRT1.
For further discussion of these license fees, see Note 83 to our unaudited interim consolidated financial statements contained in this report.
Other income
The decrease of $21,651$28,383 in other income for the three months ended SeptemberJune 30, 20192020 as compared to the three months ended SeptemberJune 30, 20182019 was primarily due to a decrease in interest earned on cash balances in the current period.
Comparison of NineSix Months Ended SeptemberJune 30, 20192020 and 20182019 (Unaudited)
The following table summarizes our results for the periods indicated, together with the changes in those items in dollars:
| | | | Nine Months Ended September 30, | | Dollar | | Six months ended June 30, | | | Dollar |
| | 2019 | | 2018 | | Change | | 2020 | | 2019 | | Change |
| Operating expenses: | | | | | | Operating expenses: | | | | | |
| General and administrative expense | $ | 3,903,545 |
| | $ | 3,635,413 |
| | $ | 268,132 |
| |
| Research and development expenses | 6,172,192 |
| | 4,750,823 |
| | $ | 1,421,369 |
| |
| License expenses | 408,333 |
| | 350,000 |
| | $ | 58,333 |
| |
| Impairment of goodwill | — |
| | 5,187,519 |
| | $ | (5,187,519 | ) | |
| General and administrative | | General and administrative | $ | 3,419,313 | | | $ | 2,584,559 | | | $ | 834,754 | |
| Research and development | | Research and development | 7,927,254 | | | 4,205,963 | | | 3,721,291 | |
| License fees | | License fees | 33,333 | | | 275,000 | | | (241,667) | |
| Total operating expenses | 10,484,070 |
| | 13,923,755 |
| | $ | (3,439,685 | ) | Total operating expenses | 11,379,900 | | | 7,065,522 | | | 4,314,378 | |
| Loss from operations | (10,484,070) |
| | (13,923,755) |
| | (3,439,685 | ) | Loss from operations | (11,379,900) | | | (7,065,522) | | | (4,314,378) | |
| Other income | 86,703 |
| | 101,492 |
| | $ | (14,789 | ) | Other income | 3,439 | | | 61,232 | | | (57,793) | |
| Net loss | (10,397,367) |
| | (13,822,263) |
| | $ | 3,424,896 |
| Net loss | (11,376,461) | | | (7,004,290) | | | (4,372,171) | |
| Deemed dividend from trigger of down round provision feature | (789,594 | ) | | — |
| | 789,594 |
| Deemed dividend from trigger of down round provision feature | — | | | (789,594) | | | 789,594 | |
| Net loss to common shareholders | (11,186,961 | ) | | (13,822,263 | ) | | (2,635,302 | ) | Net loss to common shareholders | (11,376,461) | | | (7,793,884) | | | (3,582,577) | |
| Other comprehensive loss: | | | | | | Other comprehensive loss: | | | |
| Foreign currency translation adjustments | (15,674) |
| | (59,952) |
| | $ | 44,278 |
| Foreign currency translation adjustments | (10,854) | | | (296) | | | (10,558) | |
| Comprehensive loss | $ | (11,202,635 | ) | | $ | (13,882,215 | ) | | $ | 2,679,580 |
| Comprehensive loss | $ | (11,387,315) | | | $ | (7,794,180) | | | $ | (3,593,135) | |
Revenues
We did not recognize any revenues for either of the ninesix months ended SeptemberJune 30, 20192020 or 2018.2019.
General and administrative expenses
The increase of $268,132$834,754 in general and administrative expenses for the ninesix months ended SeptemberJune 30, 20192020 as compared to the ninesix months ended SeptemberJune 30, 20182019 was primarily attributable to (i) an increase in expenses for professional services of approximately $322,000, (ii) an increase in personnel costs of approximately $409,000 reflecting$249,000, (iii) an increase in rent and facilities expenses of approximately $122,000 due to the hiringaddition of additional employees which resultedtwo leases when we acquired Microchips in higher salary, benefitNovember 2019, and bonus expenses in the current period, (ii)(iv) an increase in stock-based compensation expense of $213,388, and (iii) an increase in insurance costs of approximately $56,000. Those increases were partially offset by a decrease of approximately $436,000 in expenses for accounting, legal, and professional services.$84,000.
Research and development expenses
The increase of $1,421,369$3.7 million in research and development expenses for the ninesix months ended SeptemberJune 30, 20192020 as compared to the ninesix months ended SeptemberJune 30, 20182019 was primarily attributable to, (i) an increase in costs related to development activities of approximately $2,015,000$4.3 million for DARE-BV1 and Ovaprene, including decreased grant funding recorded as a reduction to research and Sildenafil Cream, 3.6%, DARE-HRT1development expenses of approximately $158,000 related to Ovaprene, (ii) an increase in costs related to pre-clinical development activities of approximately $1.6 million for DARE-LARC1, which we acquired in November 2019, and DARE-FRT1, (ii)(iii) an increase in personnel costs of approximately $755,000 due to increased salary, benefit and bonus expenses due to staff additions, and (iii) an increase in stock-based compensation expense of $72,786.$181,000. Those increases were partially offset by (x)(a) an increase in grant funding recorded as a reduction to research and development expenseexpenses of approximately $1.7 million related to Ovaprene of approximately $849,000, (y)preclinical expenses for DARE-LARC1, (b) a decrease in costs related to development activities of approximately $346,000$775,000 for DARE-VVA1, (z)Sildenafil Cream, 3.6% and DARE-HRT1, and (c) a decrease in costs related to pre-clinical development activities of approximately $188,000.$89,000.
License expensesfees
TheFor the six months ended June 30, 2020 we accrued $33,333 of the $100,000 license maintenance fee payable in the second quarter of 2021 under our license agreement related to DARE-HRT1.
For the six months ended June 30, 2019 we accrued $275,000 of license expenses comprised of $408,333 for the nine months ended September 30, 2019 related to (i) the accrual$225,000 of deferred license fees due under the Assignment Agreement with Hammock Pharmaceuticals, Inc.our license agreement related to DARE-BV1, and the First Amendment to License Agreement with TriLogic Pharma, LLC and MilanaPharm LLC; and (ii) the $50,000 annual license maintenance fee due under the Juniper License Agreement, paid in the second quarter of 2019, and the accrual of the annual license maintenance fee duepayable in the second quarter of 2020 under the Juniper License Agreement. During the nine months ended September 30, 2019, we accrued (x) $20,833 of the $50,000 annualour license maintenance fee due under the Juniper License Agreement, (y) $187,500 of the $250,000 of license fees payable under the Assignment Agreement and (z) $150,000 of the $200,000 of license fees payable under the First Amendment to License Agreement. Both of these license fees are due in December 2019, and in our discretion, may be paid either in cash or with shares of our common stock.
The license expenses of $350,000 for the nine months ended September 30, 2018 wasagreement related to the $250,000 non-creditable upfront license fee payment to Juniper in connection with the execution of the Juniper License Agreement and to the $100,000 in license fees paid to SST.DARE-HRT1.
For further discussion of these license fees, see Note 8 to our unaudited interim consolidated financial statements contained in this report.
Goodwill impairment expense
We incurred an impairment loss of $5,187,519 for the nine months ended September 30, 2018 due to our determination that the carrying amount of our goodwill exceeded its estimated fair value at September 30, 2018. For a discussion of our goodwill analysis, see Note 43 to our unaudited interim consolidated financial statements contained in this report.
Other income
The decrease of $14,789$57,793 in other income for the ninesix months ended SeptemberJune 30, 20192020 as compared to the ninesix months ended SeptemberJune 30, 20182019 was primarily due to a decrease in interest earned on cash balances in the current period.
Liquidity and Capital Resources and Financial Condition
Plan of Operations and Future Funding Requirements
We prepared the accompanying consolidated financial statements on a going concern basis, which assumes that we will realize our assets and satisfy our liabilities in the normal course of business. In addition, we have a history of losses from operations, we expect negative cash flows from our operations to continue for the foreseeable future, and we expect that our net losses will continue for at least the next several years as we develop our existing product candidates and seek to acquire, license or develop additional product candidates. We need to raise additional capital in the near term to fund our operations.
At September 30, 2019, our accumulated deficit was approximately $40.2 million, our cash and cash equivalents were approximately $2.4 million, our working capital was approximately $1.4 million, and we had incurred a net loss from operations of $10.5 million. We had negative cash flow from operations of approximately $9.5 million during the nine months ended September 30, 2019. We received gross proceeds of approximately $5.8 million, and net proceeds of approximately $5.2 million after deducting underwriting discounts and offering expenses, from our underwritten public offering that closed in April 2019. Considering our current cash resources, we do not believe our existing resources will be sufficient to fund planned operations through November 2020. For the foreseeable future, our ability to continue our operations will depend upon our ability to obtain additional capital. On November 11, 2019, we announced that we entered into a merger agreement to acquire Microchips. We expect the transaction to close on or before November 22, 2019, and if it does, we expect that Microchips cash and cash equivalents, after deducting change of control payments and other deal-related expenses, will be approximately $5.7 million at the time of closing. See "—Recent Events," above.
These circumstances raise substantial doubt about our ability to continue as a going concern. The accompanying interim consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and reclassification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty of our ability to remain a going concern.
PlanAt June 30, 2020, our accumulated deficit was approximately $55.4 million, our cash and cash equivalents were approximately $5.3 million, and our working capital was approximately $1.7 million. We incurred a loss from operations of Operationsapproximately $11.4 million, and Future Funding Requirementshad negative cash flow from operations of approximately $10.7 million during the six months ended June 30, 2020.
We may raise additional capital to fund our operations through the sale and issuance of additional shares of our common stock from time to time under the Purchase Agreement discussed above (see "—Recent Events—Equity Line," above) and in "at-the-market" equity offerings (as defined in Rule 415 promulgated under the Securities Act of 1933, as amended) under our common stock sales agreement with H.C. Wainwright & Co., LLC, or our ATM sales agreement. While we control the initiation of sales of our common stock under both the Purchase Agreement and the ATM sales agreement, our ability to sell stock is subject to limitations and restrictions on the timing and amount of such sales under both agreements, as well as under applicable securities laws and Nasdaq Stock Market rules. See the discussion of the Purchase Agreement above under "—Recent Events—Equity Line," the risk factor titled, Our ability to raise capital may be limited by laws and regulations in Part I, Item 1A. Risk Factors of our 2019 10-K, and the risk factor titled, The sale of our common stock through our ATM sales agreement or our Purchase Agreement may cause substantial dilution to our existing stockholders, and such sales, or the anticipation of such sales, may cause the price of our common stock to decline, in Part II, Item 1A. Risk Factors of this report.
In April 2020, due to the economic uncertainty resulting from the impact of the COVID-19 pandemic on our operations and to support our ongoing operations and retain all employees, we applied for a loan under the Paycheck Protection Program, or the PPP, of the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, administered by the U.S. Small Business Administration. We received a loan of approximately $367,000. The loan matures in April 2022, bears interest at a rate of 1.00% per annum, is payable in equal monthly payments commencing in November 2020 through maturity and may be prepaid at any time prior to maturity with no prepayment penalties. Under the terms of the PPP, subject to specified limitations, the loan principal and accrued interest may be forgiven if the proceeds are used in accordance with the CARES Act. We intend to apply for forgiveness of the entire loan, however, there can be no assurance that we will obtain forgiveness of the loan in whole or in part.
The cash used to fund our operations comes from a variety of sources. During the six months ended June 30, 2020, we received (1) a $1.0 million upfront non-refundable license fee payment under our license agreement with Bayer HealthCare, LLC, (2) approximately $8.1 million in net proceeds from sales of shares of our common stock under our ATM sales agreement; (3) approximately $1.7 million upon the exercise of warrants to purchase 1.7 million shares of our common stock; (4) approximately $1.6 million under an existing grant from the Bill & Melinda Gates Foundation that funded a portion of research and development expenses for DARE-LARC1; (5) approximately $888,000 in net proceeds from sales of shares of our common stock under the Purchase Agreement; (6) approximately $428,000 under an existing grant from the National Institutes of Health that funded a portion of the Ovaprene PCT clinical study costs; and (7) approximately $367,000 in loan proceeds under the PPP. Subsequent to June 30, 2020 and through August 11, 2020, we received (a) approximately $2.3 million in net proceeds from sales of shares of our common stock under our ATM sales agreement; (b) approximately $108,000 under the National Institutes of Health grant described above; (c) approximately $121,000 upon the exercise of warrants to purchase 126,000 shares of our common stock; and (d) approximately $1.1 million in net proceeds from sales of shares of our common stock under the Purchase Agreement.
Our primary uses of capital are, and we expect will continue to be, staff-related expenses, the cost of clinical trials and regulatory activities related to our product candidates, costs associated with contract manufacturing services and third-party clinical research and development services, payments due under license agreements upon the successful achievement of milestones of our product candidates, legal expenses, other regulatory expenses and general overhead costs.
We continue to expect our expenses to increase significantly during the restsecond half of 2020 as compared to the similar period of 2019 and significantly through 2020 as we continue the development of our product candidates, in particular as we conduct activities in preparation for and commence and conduct our planned Phase 3 clinical study ofwith a focus on DARE-BV1, Phase 2b clinical study of Sildenafil Cream, 3.6%, pivotal contraceptive effectiveness and safety study of Ovaprene, and a Phase 1 clinical study of DARE-HRT1, as discussed above.above, and as we incur license expenses associated therewith and as milestones associated therewith are achieved.
To date, we have not obtained any regulatory approvals for any of our product candidates, commercialized any of our product candidates or generated any product revenue, and we cannot anticipate if, and when we will generate any revenue. We have devoted significant resources to acquiring our portfolio of product candidates and to research and development activities for our product candidates. We must obtain regulatory approvals to sell any of our products in the future. We will need to generate sufficient safety and efficacy data on our product candidates for them to be attractive assets for potential strategic partners to license or for pharmaceutical companies to acquire, and for us to generate cash and other license fees related to such product candidates.
Based on our current operating plan estimates, we will not have sufficient cash to satisfy our working capital needs and other liquidity requirements over at least the next 12 months from the date of issuance of the accompanying interim consolidated financial statements unless we raise additional capital or significantly curtail our operations. We currently anticipate that we will receive approximately $5.7 million of additional working capital if the acquisition of Microchips closes as anticipated, but these funds will not be sufficient to support the current operating plan over the next 12 months, and there can be no assurance that the Microchips acquisition will close as anticipated.statements.
We will need to raise substantial additional capital to continue to fund our operations and to successfully execute our current operating plan, including the development of our current product candidates. We will continue to seek to raise capital through the sale of shares of our common stock under our ATM sales agreement and the Purchase Agreement, however, when we can effect such sales and the amount of shares we can sell under these agreements depends on a variety of factors to be determined by us from time to time, including, among others, market conditions, the trading price of our common stock and our determination as to the appropriate sources of funding for our operations. We are also currently evaluating a variety of capital raising options, including equity and debt financings, government or other grant funding, collaborations and strategic alliances or other similar types of arrangements to cover our operating expenses, including the development of our product candidates and any future product candidates we may license or otherwise acquire. The amount and timing of
our capital needs have been and will continue to depend highly on many factors, including the product development programs we choose to pursue and the pace and results of our clinical development efforts. If we raise capital through collaborations, strategic alliances or other similar types of arrangements, we may have to relinquish, on terms that are not favorable to us, rights to some of our technologies or product candidates we would otherwise seek to develop or commercialize.
There can be no assurance that capital will be available when needed or that, if available, it will be obtained on terms favorable to us and our stockholders.stockholders, and the uncertainty and volatility in the capital markets caused by the COVID-19 pandemic may negatively impact the availability and cost of capital and investor sentiment. In addition, equity or debt financings may have a dilutive effect on the holdings of our existing stockholders. If we cannot raise capital when needed, on favorable terms or at all, we will not be able to continue development of our product candidates, will need to reevaluate our planned operations and may need to delay, scale back or eliminate some or all of our development programs, reduce expenses file for bankruptcy, reorganize, merge with another entity, or cease operations. If we become unable to continue as a going concern, we may have to liquidate our assets, and might realize significantly less than the values at which they are carried on our financial statements, and stockholders may lose all or part of their investment in our common stock. See “ITEM 1A. RISK FACTORS—Risks Related to Our Business—We will need to raise additional capital to continue our operations,” in our 2018 10-K.
Cash Flows
The following table shows a summary of our cash flows for the periods indicated:
| | | | Nine Months Ended September 30, | | Six months ended June 30, | |
| | 2019 | | 2018 | | 2020 | | 2019 |
| Net cash used in operating activities | (9,506,797 | ) | | (7,558,047 | ) | Net cash used in operating activities | (10,684,464) | | | (6,326,726) | |
| Net cash used in investing activities | — |
| | (518,836 | ) | |
| Net cash provided by investing activities | | Net cash provided by investing activities | (15,246) | | | — | |
| Net cash provided by financing activities | 5,151,702 |
| | 10,114,452 |
| Net cash provided by financing activities | 11,277,329 | | | 5,151,702 | |
| Effect of exchange rate changes on cash and cash equivalents | (15,674 | ) | | (59,952 | ) | Effect of exchange rate changes on cash and cash equivalents | (10,854) | | | (296) | |
| Net increase (decrease) in cash | $ | (4,370,769 | ) | | $ | 1,977,617 |
| |
| Net increase (decrease) in cash and cash equivalents | | Net increase (decrease) in cash and cash equivalents | $ | 566,765 | | | $ | (1,175,320) | |
Net cash used in operating activities
Cash used in operating activities for the six months ended June 30, 2020 included the net loss of $11.4 million, decreased by non-cash stock-based compensation expense of approximately $348,000. Components providing operating cash were a $631,000 increase in accounts payable, an increase of $1.0 million in deferred license revenue, and a decrease in other receivables of $378,000. Components reducing operating cash were a $1.1 millionincrease in prepaid expenses, a $458,000 decrease in accrued expenses and a $75,000 decrease in deferred grant funding.
Cash used in operating activities for the ninesix months ended SeptemberJune 30, 2019 included the net loss of $10.4$7.0 million, decreased by non-cash stock-based compensation expense of $344,712. A $367,409 increase in prepaid expenses and a $107,463 decrease in accounts payable reduced$209,000. Major components reducing operating cash in this period. A $905,236period were a $462,000 increase in other receivables and a $35,000 increase in prepaid expense. Major components providing operating cash in this period were a $710,000 increase of accrued expenses, and a $138,719$172,000 increase in accounts payable, and a $79,000 increase in other non-current assets and deferred charges provided operating cash in this period.charges.
Cash used in operating activities for the nine months ended September 30, 2018 included the net loss of $13.8 million, decreased by non-cash impairment of goodwill of $5.2 million, acquired in-process research and development expense of approximately $507,000, and non-cash stock-based compensation expense of $58,538. A $236,259 increase of accounts payable and accrued expenses, a $203,928 decrease in other receivables, a $105,692 decrease in other non-current assets and deferred charges, and a $193,495 decrease in other current assets provided operating cash in this period. A $238,378 increase in prepaid expenses reduced operating cash in this period.
Net cash used in investing activities
No cash was provided by or used in investing activities for the nine months ended September 30, 2019.
Cash used in investing activities for the nine months ended September 30, 2018 consisted of approximately $452,000 of transaction costs associated with our acquisition of Pear Tree, $55,000 of costs associated with our acquisition of certain assets from Hydra, and $11,836 related to the purchase of property and equipment.
Net cash provided by financing activities
Cash provided by financing activities for the ninesix months ended SeptemberJune 30, 2020 consisted of approximately $8.1 million of net proceeds from the sales of an aggregate of 5,963,580 shares of our common stock in "at-the-market" offerings completed during the period, approximately $1.7 million received upon the exercise of warrants to purchase 1.7 million shares of our common stock, approximately $888,000 of net proceeds from the sales of an aggregate of 882,000 shares of common stock under the Purchase Agreement, and approximately $367,000 in loan proceeds under the PPP.
Cash provided by financing activities for the six months ended June 30, 2019 consisted of proceeds from the underwritten public offering completed in April 2019.
Net cash used in investing activities
Cash provided by financingused in investing activities for the ninesix months ended SeptemberJune 30, 2018 consisted of $10.1 million of proceeds from2020 was $15,246. No cash was provided by or used in investing activities for the underwritten public offering completed in February 2018 and sales under the common stock sales agreement completed in January and February 2018.six months ended June 30, 2019.
License and Royalty Agreements
We have to make various royalty and milestone payments under the product license and development agreements related to DARE-BV1, Ovaprene, and Sildenafil Cream, 3.6%, and under the other agreements related to our other clinical and preclinical candidates. For further discussion of these potential payments, see Note 83 to our unaudited interim consolidated financial statements contained in this report.
Other Contracts
We enter into contracts in the normal course of business with various third parties for research studies, clinical trials, testing and other services. These contracts generally provide for termination upon notice, and we do not believe that our non-cancelable obligations under these agreements are material.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Under SEC rules and regulations, as a smaller reporting company we are not required to provide the information required by this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and 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. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based onAt the conclusion of the quarterly period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures,procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) were effective as of SeptemberJune 30, 20192020 at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in various claims and legal proceedings. Regardless of outcome, litigation and other legal and administrative proceedings can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. There are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we are a party or of which any of our property is in the subject.
Item 1A. Risk Factors
An investment in shares of our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described in our 20182019 10-K, in addition to other information in this report, before investing in our common stock. The occurrence of any of these risks could have a material adverse effect on our business, financial condition, results of operations and growth prospects. In these circumstances, the market price of our common stock could decline, and you may lose all or part of your investment. There have been no material changes from the risk factors disclosed in Part I, Item 1A. Risk Factors in our 20182019 10-K other than as described below:
ThereThe novel coronavirus (COVID-19) pandemic and efforts to reduce its spread could negatively impact our business, including by increasing the cost and timelines for our clinical development programs.
The COVID-19 pandemic and efforts to reduce its spread remain a rapidly evolving and uncertain risk to our business, operating results, financial condition and stock price. In large part, the extent to which the pandemic affects us will depend on future developments that are beyond our knowledge or control, including, but not limited to, the duration and severity of the pandemic, governmental and individual organization actions and policies implemented to reduce transmission of the disease, and the speed with which and degree to which normal economic and operating conditions resume.
The longer the COVID-19 pandemic persists, the greater the potential for significant adverse impact to our business operations and those of the contract research organizations (CROs), contract manufacturing organizations (CMOs) and other third-party consultants and vendors on which we depend to, among other things, conduct our clinical and nonclinical studies, supply our clinical trial materials, and assist with regulatory affairs necessary to advance our programs. Employee and family member illness, increased childcare and elder care responsibilities, and quarantines, travel restrictions, prohibitions on non-essential gatherings, shelter-in-place orders and other similar directives and policies intended to reduce the spread of the disease, may reduce our productivity and that of the third parties on which we rely and may disrupt and delay many aspects of our business, including research and development activities and production and supply of clinical trial materials. As a result of resource constraints, third parties on which we rely may not meet their contractual obligations to us or may allocate constrained resources to projects other than ours, any of which could significantly increase the cost and timelines for our development programs. In addition, the increase in personnel working remotely, both ours and those of the third parties on which we rely, could increase our cybersecurity risk, create data accessibility concerns, and make us more susceptible to communication disruptions, any of which could significantly adversely impact our business operations or significantly delay necessary interactions with the FDA and other regulatory agencies, our CROs and CMOs, clinical trial sites, current and potential collaborators, and other third parties.
The COVID-19 pandemic could cause delays in current timelines for our planned clinical studies. As of the date of this report, we expect to commence and conduct our planned clinical studies such that we can report topline data for the Phase 3 study of DARE-BV1 in 2020, the Phase 1 study of DARE-HRT1 and the Phase 2b study of Sildenafil Cream, 3.6% in 2021, and the pivotal study of Ovaprene in 2022. However, the COVID-19 pandemic may adversely impact these expectations. For example, clinical site initiation and/or patient enrollment may be significantly delayed or suspended as a result of personnel and other resource constraints of healthcare providers, as well as adherence to governmental orders and internal policies intended to reduce the spread of COVID-19. In addition, we may experience lower than anticipated subject enrollment and completion rates, including because individuals may avoid medical settings, particularly for non-critical conditions, due to concerns of contracting COVID-19 or due to shelter-in-place and social distancing orders.
In addition, the COVID-19 pandemic has resulted in disruption and volatility in the global capital markets, and while the longer-term economic impact is difficult to assess and predict at this time, it could negatively impact our ability to access additional capital when needed or on terms favorable to us and our stockholders. We currently do not have adequate capital to complete all of our planned clinical studies on our current timelines. If we cannot raise capital when needed, on favorable terms or at all, we will not be able to continue development of our product candidates as currently planned or at all, will need to reevaluate our planned operations and may need to delay, scale back or eliminate some or all of our development programs, reduce expenses or cease operations, any of which could have a significant negative impact on our prospects and financial condition, as well as the trading price of our common stock.
Further, a key aspect of our business strategy is to seek collaborations with partners, such as large pharmaceutical companies, that are willing to conduct later-stage clinical trials and further develop and commercialize our product candidates. As a result of the COVID-19 pandemic, potential and current partners may experience operational disruptions and financial and other resource constraints and implement new strategic plans that delay or reduce their efforts in the women’s health in general or in our programs in particular, which could adversely affect our ability to enter into or maintain collaborations, strategic alliances or other similar types of arrangements and may result in or contribute to disruption and delays in later-stage clinical development and, if approved, commercial launch of our product candidates. We do not have, and do not currently plan to develop, the internal sales, marketing and distribution infrastructure necessary to independently market and sell our product candidates, if approved.
We have not developed a specific and comprehensive contingency plan designed to address the challenges and risks presented by the COVID-19 pandemic and, even if and when we do develop such a plan, there can be no assurance that wesuch plan will continuebe effective in mitigating the potential adverse effects on our business, financial condition and results of operations.
The extent to satisfywhich the listing requirementsCOVID-19 pandemic and efforts to reduce its spread impacts our business, financial condition and results of operations is uncertain and cannot be predicted with reasonable accuracy at this time and will depend on future developments that are also uncertain and cannot be predicted with reasonable accuracy at this time, including new information that may emerge concerning the degree to which COVID-19 is contagious and virulent, the effect of actions taken in the United States and other countries to contain and treat COVID-19, and further actions implemented to contain and treat the disease and its impact, among others.
The COVID-19 pandemic may also have the effect of heightening many of the Nasdaq Capital Market.other risks and uncertainties described the “Risk Factors” section of our 2019 10-K.
Our common stock is listed on the Nasdaq Capital Market. As previously reported, on June 21, 2019, we received a letter from the Listing Qualifications Department (the “Nasdaq Staff”)The sale of the Nasdaq Stock Market (“Nasdaq”) notifying us that, for the last 30 consecutive business days, the closing bid price for our common stock was belowthrough our ATM sales agreement or our Purchase Agreement may cause substantial dilution to our existing stockholders, and such sales, or the minimum $1.00 per share requirement for continued listing on The Nasdaq Capital Market as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”), and that we have until December 18, 2019 to regain compliance. We will regain compliance ifanticipation of such sales, may cause the closing bid price of our common stock is at least $1.00 for a minimum of 10 consecutive business days at anyto decline.
In January 2018, we entered into the ATM sales agreement , under which, from time between June 21, 2019 and December 18, 2019, unless the Nasdaq Staff exercises its discretion to extend such 10-day period. From June 21, 2019 through November 11, 2019, the closing bid price of our common stock has been less than $1.00.
If we have not regained compliance by December 18, 2019,time, we may be eligible for an additional 180-day compliance period. To qualify for this additional compliance period, we would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, other than the Minimum Bid Price Requirement, including having stockholders’ equity of at least $5 million. In addition, we would also be required to notify Nasdaq of our intent to cure the minimum bid price deficiency during the additional compliance period, which may include, if necessary, implementing a reverse stock split. Our stockholders' equity at September 30, 2019 was $1.8 million, and, as such, we will need to raise additional equity capital between now and December 18, 2019 to be eligible for the additional compliance period. If our stockholders' equity increases to at least $5.0 million after September 30, 2019 and before December 18, 2019, we understand that the Nasdaq Staff has discretion whether to consider such increase for purposes of determining our eligibility for the additional compliance period. Even if our acquisition of Microchips closes before December 18, 2019, we do not expect our pro forma stockholders' equity to increase to $5.0 million. If we are not granted the additional compliance period for any reason, the Nasdaq Staff will provide written notice to us that our common stock will be subject to delisting. If we are not granted the additional compliance period, we may, and would intend to, appeal the Nasdaq Staff’s delisting determination to a Nasdaq Hearing Panel.
There can be no assurance we will regain compliance with the Minimum Bid Price Requirement or continue to satisfy the other continued listing requirements of The Nasdaq Capital Market.For example, because our stockholders' equity at September 30, 2019 was $1.8 million, we expect that we may receive a separate letter of non-compliance from the Nasdaq Staff for not having stockholders’ equity of at least $2.5 million. The delisting of our common stock for whatever reason could, among other things, substantially impair our ability to raise additional capital; result in the loss of interest from institutional investors, the loss of confidence in our company by investors and employees, and in fewer financing, strategic and business development opportunities; and could result in potential breaches of agreements under which we made representations or covenants relating to our compliance with applicable listing requirements. Claims related to any such breaches, with or without merit, could result in costly litigation, significant liabilities and diversion of our management’s time and attention and could have a material adverse effect on our financial condition, business and results of operations. In addition, the delisting of our common stock for whatever reason may materially impair our stockholders’ ability to buyoffer and sell shares of our common stock and could have an adverse effect onstock. In April 2020, we entered into the Purchase Agreement with Lincoln Park. The purchase price for the shares we may sell under our Purchase Agreement will vary based the market price of and the efficiency of the trading market for, our common stock.
The pendencystock at the time we initiate a sale. Although we have the right to control whether we sell any shares, if at all, under these agreements, and we generally have the right to control the timing and amount of any such sales, we are subject to certain restrictions, including those that limit the number of shares we may sell. For example, based on our current public float, during any 12-month period, we may not sell securities under our shelf registration statement pursuant to General Instruction I.B.6 to Form S-3 having an aggregate market value of more than one-third of our agreement to acquire Microchips could adversely affect our business and the acquisition may not occur when anticipated or at all.
On November 10, 2019, we entered into the Microchips Merger Agreement, pursuant topublic float, which if the transactions contemplated thereby are consummated, we will acquire Microchips. We expect the acquisition to close on or before November 22, 2019. Between now and closing, the attention of our management and employees may be directed toward transaction-related considerations and may be diverted from the day-to-day operations of our business. We currently anticipate that we will receive approximately $5.7 million of additional working capital if the acquisition of Microchips closes as anticipated, which funds will help support our current operating plan. There can be no assurance that the Microchips acquisition will close as anticipated or at all, or that if it does close, thatlimits the amount of additional working capitalshares we will receive will be what we currently anticipate.can sell under the ATM sales agreement. In addition, with respect to the transactionPurchase Agreement, we may involve unexpected costs, liabilitiesnot sell shares to Lincoln Park in excess of the Exchange Cap (unless we obtain stockholder approval or delays,the average price per share of all sales to Lincoln Park equals or exceeds $1.0117) or if selling such shares would result in Lincoln Park beneficially owning more than 9.99% of our businessthen outstanding shares of common stock. Accordingly, we may not be able to utilize the ATM sales agreement or the Purchase Agreement to raise additional capital when, or in the amounts, we desire. However, to the extent we do sell shares of our common stock under these agreements, such sales may result in substantial dilution to our existing stockholders, and such sales, or the anticipation of such sales, may cause the trading price may suffer as a result of uncertainty surrounding the transaction, and the transaction may disrupt our current plans and operations.common stock to decline.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a)None.
(b)None.
(c)None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a) None.
(b) None.
Item 6. Exhibits
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Incorporated by Reference | | | | | | | | |
Exhibit Number | | Description of Exhibit | | Form | | File No. | | Filing Date | | Exhibit No. | | Filed Herewith |
| | | | | | | | | | | | |
| 3.1 | | | | 8-K | | 001-36395 | | 6/3/2020 | | 3.1 | | |
| | | | | | | | | | | | |
| 10.1 | | | | 8-K | | 001-36395 | | 4/22/2020 | | 10.1 | | |
| | | | | | | | | | | | |
| 10.2 | | | | 8-K | | 001-36395 | | 4/22/2020 | | 10.2 | | |
| | | | | | | | | | | | |
| 31.1 | | | | | | | | | | | | X |
| | | | | | | | | | | | |
| 31.2 | | | | | | | | | | | | X |
| | | | | | | | | | | | |
| 32.1 | | | | | | | | | | | | # |
| | | | | | | | | | | | |
| 32.2 | | | | | | | | | | | | # |
| | | | | | | | | | | | |
| 101.INS | | XBRL Instance Document | | | | | | | | | | X |
| | | | | | | | | | | | |
| 101.SCH | | XBRL Taxonomy Extension Schema Document | | | | | | | | | | X |
| | | | | | | | | | | | |
| 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document | | | | | | | | | | X |
| | | | | | | | | | | | |
| 101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document | | | | | | | | | | X |
| | | | | | | | | | | | |
| 101.LAB | | XBRL Taxonomy Extension Label Linkbase Document | | | | | | | | | | X |
| | | | | | | | | | | | |
| 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document | | | | | | | | | | X |
| | | | | | | | | | | | |
| * | | Management contract or compensatory plan or arrangement | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| + | | Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10). The omitted information is not material and would likely cause competitive harm to the Company if publicly disclosed. | | Incorporated by Reference | | | | | | | | |
Exhibit
Number
# | | Description of Exhibit | | Form | | File No. | | Filing Date | | Exhibit No. | | Filed Herewith |
| | | | | | | | | | | | |
10.1* | | | | | | | | | | | | X |
| | | | | | | | | | | | |
31.1 | | | | | | | | | | | | X |
| | | | | | | | | | | | |
31.2 | | any general incorporation language in such filing. | | | | | | | | | | X |
| | | | | | | | | | | | |
32.1 | | | | | | | | | | | | # |
| | | | | | | | | | | | |
32.2 | | | | | | | | | | | | # |
| | | | | | | | | | | | |
101.INS | | XBRL Instance Document | | | | | | | | | | X |
| | | | | | | | | | | | |
101.SCH | | XBRL Taxonomy Extension Schema Document | | | | | | | | | | X |
| | | | | | | | | | | | |
101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document | | | | | | | | | | X |
| | | | | | | | | | | | |
101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document | | | | | | | | | | X |
| | | | | | | | | | | | |
101.LAB | | XBRL Taxonomy Extension Label Linkbase Document | | | | | | | | | | X |
| | | | | | | | | | | | |
101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document | | | | | | | | | | X |
* Indicates a management contract or any compensatory plan, contract or arrangement.
# Furnished herewith. This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated herein by reference into any filing of the registrant whether made before or after the date hereof, regardless of any general incorporation in such filing.
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | Daré Bioscience, Inc. |
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| Date: August 12, 2020 | By: | Daré Bioscience, Inc. |
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Date: November 12, 2019 | By: | /s/ Sabrina Martucci Johnson |
| | Sabrina Martucci Johnson |
| | President and Chief Executive Officer |
| | (Principal Executive Officer) |
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Date: NovemberAugust 12, 20192020 | By: | /s/ Lisa Walters-Hoffert |
| | Lisa Walters-Hoffert |
| | Chief Financial Officer |
| | (Principal Financial and Accounting Officer) |
