The Company’s primary operations have consisted of, and are expected to continue to consist primarily of, product research and development and advancingactivities to advance its portfolio of product candidates through clinical development and regulatory approval. The Company expects that the majority of its development expenses in 2020 and 2021 will supporthas focused on the advancement of DARE-BV1, Ovaprene, and Sildenafil Cream, 3.6%., and plans to continue to focus its resources on these product candidates for the remainder of 2021 and in 2022. In the first quarter of 2021, the Company also had significant research and development expenses for its DARE-LARC1 program, substantially all of which were supported by a grant from the Bill & Melinda Gates Foundation.
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 larger companies, compliance with government regulations, protection of proprietary technology, dependence on third parties, and product liability.
The effect of the COVID-19 pandemic and efforts to reduce the spread of COVID-19 remain an evolving and uncertain risk to the Company's business, operating results, financial condition and stock price. Global vaccination efforts to control the pandemic have been underway for the past several months and the number of vaccinated adults in the U.S. is encouraging. However, uncertainty remains regarding the extent, availability and length of time to vaccinate a meaningful portion of the population, as well as the degree of efficacy of such vaccination efforts on the trajectory of the pandemic, including in light of the multiple variants of the virus that causes COVID-19 circulating globally and within the U.S. Challenges to vaccination efforts and other causes of virus spread may require local, state, federal and foreign governments to reimpose restrictions and/or shutdowns in various geographies. To date, neither government-imposed restrictions or other governmental actions nor the Company's remote working arrangements or those of its third-party service providers and contract manufacturers have materially affected the Company's ability to operate its business, and the Company has been able to advance its portfolio of product candidates in meaningful ways during the pandemic, including by commencing and completing a Phase 3 clinical trial of DARE-BV1 during 2020. However, the effects of the pandemic could have a material adverse impact on the Company's business, operating results and financial condition, including, without limitation, by adversely impacting the Company's ability to raise capital when needed or on terms favorable or acceptable to the Company, and by increasing the anticipated aggregate costs and timelines for the development and marketing approval of the Company's product candidates. Continued uncertainty regarding the duration and impact of the pandemic on the U.S. and global economies, workplace environments and capital markets, preclude any prediction as to the ultimate effect of the pandemic on the Company's business. For example, as it relates to the cost and timelines for the Company's ongoing and planned clinical trials, a spike in hospitalizations in the U.S. due to COVID-19 could cause healthcare industry resources to be diverted from participating in research and development activities for investigational products unrelated to the COVID-19 pandemic or other life threatening diseases and conditions, which could delay the commencement and/or completion of clinical trials for product candidates such as Sildenafil Cream, 3.6% and Ovaprene. Conversely, continued re-opening of the U.S. and global economies may delay enrollment in clinical trials for Sildenafil Cream, 3.6% and Ovaprene as individuals gain more freedom to travel and participate in other activities that have not been available to them since the beginning of the pandemic and may be less inclined to participate in or complete studies that require multiple clinic visits. See also the risk factor titled, The COVID-19 pandemic and efforts to reduce the spread of COVID-19 could negatively impact our business, including by increasing the cost and timelines for our clinical development programs, in Part I, ITEM 1A, Risk Factors of the Company's annual report on Form 10-K for the year ended December 31, 2020, or the 2020 10-K, filed with the Securities and Exchange Commission, or SEC, on March 30, 2021.
Going Concern
The Company has prepared its interimcondensed 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. The Company has a history of losses from operations, expects negative cash flows from its operations willto continue for the foreseeable future, and expects that its net losses will continue for at least the next several years as it develops and seeks to bring to market its existing product candidates and seeks to potentially acquire, license orand develop additional product candidates. These circumstances raise substantial doubt about the Company's ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classificationreclassification 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.
As of March 31, 2020,2021, the Company had an accumulated deficit of approximately $48.3$78.8 million, and cash and cash equivalents of approximately $5.0$7.7 million, and working capital of approximately $3.5 million. TheFor the three months ended March 31, 2021, the Company alsoincurred a net loss of $7.3 million and had negative cash flow from operations of approximately $6.6 million during the three months ended March 31, 2020.$8.4 million.
The Company’s primary uses of capital are, and the Company is focused primarily on the development and commercialization of innovative products in women’s health. The Companyexpects will continue to incur significantbe, staff-related expenses, the cost of clinical trials, preclinical work and regulatory activities related to its product candidates, costs associated with contract manufacturing services and third-party clinical research and development services, payments due under license agreements and other expenses related to these activities. Ifits merger agreement with Microchips Biotech, Inc., or Microchips, upon the clinical trials for anysuccessful achievement of milestones of the Company’s product candidates, faillegal expenses, other regulatory expenses and general overhead costs. The Company’s future funding requirements could also include significant costs related to produce successful results such that thosecommercialization of its product candidates, do not advanceif approved, depending on the type and nature of commercial partnerships or other arrangements the Company establishes.
The Company expects its expenses, and in clinicalparticular its research and development then the Company’s businessexpenses, to increase significantly in 2021 compared to 2020 as it continues to develop and prospects may suffer. Even if theseek to bring to market its product candidates, advance in clinical development, they may fail to gainwith a focus on its later stage candidates DARE-BV1, Ovaprene and Sildenafil Cream, 3.6%.
To date, the Company has not obtained any regulatory approval. Even if theapprovals for any of its product candidates, are approved, they may fail to achieve market acceptance,commercialized any of its product candidates or generated any revenue, and the Company may never become profitable. Evencannot anticipate if or when it will generate any revenue. The Company has devoted significant resources to acquiring its portfolio of product candidates and to research and development activities for its product candidates. The Company must obtain regulatory approvals to market and sell any of its products in the future. The Company will need to generate sufficient safety and efficacy data on its product candidates for them to receive regulatory approvals and to be attractive assets for potential strategic partners to license or for pharmaceutical companies to acquire, and for the Company becomes profitable, it may not sustain profitability.to generate cash and other license fees related to such product candidates.
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 condensed 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%.
its product candidates. 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 orand 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 assurances 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,stockholders, particularly in light of the effects that the COVID-19 pandemic has recently had on the capital markets and investor sentiment. In addition, equity or debt financings may have a dilutive effect on the holdings of the Company's existing stockholders.stockholders, and debt financings may subject the Company to restrictive covenants, operational restrictions and security interests in our assets. 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 condensed consolidated financial statements, and stockholders may lose all or part of their investment in the Company's common stock. The condensed 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, 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 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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The Company’s significant accounting policies are described in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission, or SEC on March 27, 2020.2020 10-K. 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.policies.
Basis of Presentation
The accompanying interimunaudited condensed consolidated financial statements have been prepared in accordance with generally accepted 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 with 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 interimcondensed 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 interimcondensed 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, 2019.2020 10-K.
Leases
The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use, or ROU, leaseother non-current assets, current portion of lease obligations,liabilities, and long-term lease obligationsliabilities long-term on the Company's condensed 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 assetassets 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 7,6, Leased Properties.)
Fair Value Measurementsof Financial Instruments
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 Level 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.
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 March 31, 20202021 and December 31, 2019.2020. There were no financial assets or liabilities that were remeasured using a quoted price in active markets for identical assets (Level 2) as of March 31, 2021 or December 31, 2020.
| | | | | | | | | | | | | | | | | | | | | | | |
| Fair Value Measurements |
| Level 1 | | Level 2 | | Level 3 | | Total |
Balance at March 31, 2021 | | | | | | | |
Current assets: | | | | | | | |
Cash equivalents (1) | $ | 6,206,377 | | | $ | 0 | | | $ | 0 | | | $ | 6,206,377 | |
Current liabilities: | | | | | | | |
Current portion of contingent consideration (2) | $ | 0 | | | $ | 0 | | | $ | 1,000,000 | | | $ | 1,000,000 | |
Balance at December 31, 2020 | | | | | | | |
Current assets: | | | | | | | |
Cash equivalents (1) | $ | 2,823,099 | | | $ | 0 | | | $ | 0 | | | $ | 2,823,099 | |
Other non-current liabilities: | | | | | | | |
Current portion of contingent consideration (2) | $ | 0 | | | $ | 0 | | | $ | 1,000,000 | | | $ | 1,000,000 | |
|
| | | | | | | | | | | | | | | |
| Fair Value Measurements |
| Level 1 | | Level 2 | | Level 3 | | Total |
Balance at March 31, 2020 | | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | $ | 5,047,325 |
| | $ | — |
| | $ | — |
| | $ | 5,047,325 |
|
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 |
|
(1) Represents the cash held in money market funds.(2)Represents the estimated fair value of the contingent consideration potentially payable by the Company related to its acquisition of Microchips, as described in Note 3.
Revenue Recognition
The Company recognizes revenue is accordance with Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers, which applies to all contracts with customers, except for contracts that are within the scope 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 or 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, referred to as the “Clinical Trial and Manufacturing Activities Fee.” Such license would be exclusive with regardmillion. The Company concluded that there was 1 significant performance obligation related to the commercialization$1.0 million upfront payment: a distinct license to commercialize Ovaprene effective upon the receipt of Ovaprene for human contraceptionthe $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 March 31, 2021, neither of the foregoing had occurred. The $1.0 million payment is recorded as long-term deferred license revenue in the U.S.Company's condensed consolidated balance sheet at March 31, 2021 and co-exclusive with the Company with regard to development.December 31, 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, and (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.
The Company concluded that there was one significant performance obligation under the Bayer license agreement related to the $1.0 million upfront non-refundable license fee payment: a distinct license to commercialize Ovaprene effective upon the receipt of the Clinical Trial and Manufacturing Activities Fee. The $1.0 million upfront non-refundable license fee payment will be recorded as license revenue at the point in time the Company receives the Clinical Trial and Manufacturing Activities Fee, the license is transferred to Bayer and Bayer is able to use and benefit from the license or if the agreement is terminated by Bayer. As of March 31, 2020, neither of the foregoing had occurred. The $1.0 million upfront non-refundable license fee payment is recorded as deferred revenue in the Company's consolidated balance sheet at March 31, 2020.
Potential future payments for variable 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
In January 2020, the Company entered into a license agreement with Bayer, regarding the further development and Collaborationcommercialization of 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 Company will be entitled to receive (a) a milestone payment in the 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 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 is responsible for the pivotal trial for Ovaprene and for its development and regulatory activities and has product supply obligations. Bayer is supporting 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 receive 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 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 agreementExclusive 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 certainfor the treatment of 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.vaginosis. In December 2019, the Company entered into amendments to each of the Assignment Agreement and License Amendment and Assignment Agreement.Amendment.
The following is a summary of other terms of the License Amendment, as amended:
License Fees. The Company A total of $235,000 in license fees were payable, and were paid to, MilanaPharm: (1) $25,000 in connection with the execution of the License Amendment; (2) $100,000 on December 5,in 2019; and (3) $110,000 on January 31,in 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;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 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 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 accordanceprocesses. 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 agreement.first commercial sale of a licensed product or process in a country and terminates on the latest of (1) 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 (2) 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 required for us 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 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), the licenses granted to usthe 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 in favor offor 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 (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) the Company or its affiliates or sublicensees (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 CompanyA total of $512,500 in fees were payable, and were paid, to Hammock: (1) $250,000 in connection with the execution of the Assignment Agreement; (2) $125,000 on December 5,in 2019; and (3) $137,500 on January 31,in 2020.
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 milestone payments.
ADVA-Tec License Agreement
In March 2017, the Company entered into a license 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.Ovaprene and must meet certain minimum spending amounts per year, and $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 to 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 $20.0 million in the aggregate based on the 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 country-by-country basis upon 60 days prior written notice; and (B) ADVA-Tec may terminate the agreement 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 toto: (1) in certain limited circumstances, commercialize Ovaprene.
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 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, or the Clinical Trial and Manufacturing Activities Fee, after Bayer receives and reviews the resultscertain designated countries within three years 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. Such license would be exclusive with regard to commercialization and co-exclusive with the Company with regard to development.
Milestone & Royalty Payments. The Company would also be entitled to receive (a) a milestone payment in the low double-digit millions upon the first commercial sale of OvapreneOvaprene; (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 U.S.development plan to which the Company and escalating milestone payments based on annual net salesADVA-Tec agree, 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, during a calendar year, totaling up to $310.0 million if allunless 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 the 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 activitiesfailure is caused 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 paymentevents outside of the Clinical Trial and Manufacturing Activities 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 receive the Clinical Trial and Manufacturing Activities Fee if and when due.Company’s reasonable control.
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 world, for all indications for women related to female sexual dysfunction and/or female reproductive health, including the Licensed Product, which is defined astreatment of female sexual arousal disorder, or the Field of Use, SST’s topical formulation of Sildenafil Cream, 3.6% as it existed as of the effective date of the 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.ibuprofen, or the Licensed Products.
The following is a summary of other terms of this license and collaboration 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 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 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 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 the Licensed Products, additional milestone payments would be due to SST.
Term. The Company’s license 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 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 NDA approval, the Company may terminate the agreement without cause upon 90 days prior written notice; (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 agreement without cause upon 180 days prior written notice; and (3) SST may terminate the agreement with respect to the applicable Licensed Product(s) in the applicable country(ies) upon 30 days’ notice if the Company fails to use commercially reasonable efforts to perform development activities in substantial accordance with the development plan and do not cure such failure within 60 days of receipt of SST's notice thereof.
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 CompanyCompany: (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 agreement.
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 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 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 products 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.
Pear Tree AcquisitionEfforts. 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 agreement.
Term. Unless earlier terminated, the term of the 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 agreement, the licenses granted thereunder will convert automatically to fully-paid irrevocable licenses. Catalent may terminate the agreement (1) upon 30 days’ notice for the Company’s uncured breach of any payment obligation under the 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 the Company’s other obligations under the agreement. The Company may terminate the 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 Catalent terminates the agreement for the reason described in clause (4) above or if the Company terminates the agreement, Catalent will have full access including the right to use and reference all product data generated during the term of the agreement that is owned by the Company.
Adare Development and Option Agreement
In MayMarch 2018, the Company completed its acquisitionentered into an exclusive development and option agreement with Adare Pharmaceuticals (formerly known as Orbis Biosciences, and which the Company refers to as Adare), for the development of Pear Tree Pharmaceuticals, Inc., or Pear Tree. Thelong-acting injectable etonogestrel contraceptive with 6- and 12-month durations (ORB-204 and ORB-214, respectively). Under this agreement, the Company acquired Pear Treepaid Adare $300,000 to secureconduct the rights to develop DARE-VVA1, a proprietary vaginal formulationfirst stage of tamoxifen,development work, Stage 1, as a potential treatment for vulvar and vaginal atrophy.
Milestone Payments. Thefollows: $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 must make contingent payments to the Pear Tree former stockholders and their representatives, or the Holders, that are based on achieving certain clinical, regulatory and commercial milestones, which may be paid in the Company’s sole discretion, in cash or shares2018); and $75,000 upon delivery by Adare of the Company’s common stock.
Royalty Payments. The Holders will be eligible to receive, subject to certain offsets, tiered royalties, including customary provisions permitting royalty reductions and offset, based on percentages of annual net sales of certain products subject to license agreements6-month batch, not later than 11 months following the date the agreement was signed (which the Company assumedpaid in 2019).
Upon Adare successfully completing the first stage of development work and achieving the predetermined target milestones for that stage, the Company will have 90 days to instruct Adare whether to commence the second stage of development work. Should the Company execute its option to proceed with the second stage, it will have to provide additional funding to Adare 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 Adare will continue to advance the program through formulation optimization with the goal of achieving sustained release over the target time period.
The agreement provides the Company with an option to enter into a percentage of sublicense revenue.license agreement for ORB-204 and ORB-214 should development efforts be successful.
Acquired Products
Microchips Acquisition
In November 2019, the Company completed its acquisition of Microchips Biotech, Inc., oracquired Microchips. On the closing date of the merger, 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 that utilizes levonorgestrel. The Company agreed to use commercially reasonable efforts to achieve specified development and regulatory objectives relating to the implantable contraceptive product in development by Microchips.method, now known as DARE-LARC1.
The Company issued an aggregate 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 transaction was valued at $2.4 million, based on the fair value of the 2,999,990 shares issued at $0.79 per share, which was the closing price per share of the Company's common stock on the date of closing. The shares were issued in exchange for Microchips’ cash and cash equivalents of $6.1 million, less net liabilities of $3.5 million and transaction costs of $202,000, which was allocated based on the relative fair value of the assets acquired and liabilities assumed.
Milestone and Royalty Payments.
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 regulatory milestones; (b) up to $55.0 million contingent upon the achievement of specified amounts of aggregate net sales of products incorporating the intellectual property acquired by the Company in the merger; (c) 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 (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 the implantable contraceptive product in development by Microchips. The Company expects approximately $1.0 million of the contingent consideration payments to become payable through 2021.
Orbis Development and Option Agreement
In March 2018, the Company entered into an exclusive development and option 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 this agreement, the Company paid Orbis $300,000 to conduct the first stage of development work, Stage 1, as follows: $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 6-month batch, not later than 11 months following the date the 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 agreement provides the Company with an option to enter into a license agreement for ORB-204 and ORB-214 should development efforts be successful.
Microchips Acquisition
In November 2019, the Company acquired Microchips Biotech, Inc., or Microchips, via a merger transaction in which a wholly owned subsidiary 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, microchip-based, 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.
The Company issued an aggregate 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 transaction was valued
at $2.4 million, based on the fair value of the 2,999,990 shares issued of $0.79 per share, which was the closing price per share of the Company's common stock on the date of closing. The shares were issued in exchange for Microchips’ cash and cash equivalents of $6.1 million, less net liabilities of $3.5 million and transaction costs of $202,000, which was allocated based on the relative fair value of the assets acquired and 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.DARE-LARC1. The Company recorded $1.0 million in contingent consideration associated with milestone payments expectedit expects to become payable through 2021.in the first half of 2021, and if and when they become due and payable, the Company may pay the milestones in cash, shares of the Company's common stock or with some combination of both.
Pear Tree Acquisition
In May 2018, the Company completed its acquisition of Pear Tree Pharmaceuticals, Inc., or Pear Tree. The Company determinedacquired Pear Tree to secure the transaction was accountedrights to develop a proprietary vaginal formulation of tamoxifen, now known as DARE-VVA1, as a potential treatment for as an asset acquisition as there were no outputsvulvar and vaginal atrophy.
Milestone Payments. The Company must make contingent payments to the Pear Tree former stockholders and their representatives, or substantive processes in existence as of the acquisition date. Transaction costs of approximately $202,000 associated with the merger were includedHolders, that are based on achieving certain clinical, regulatory and commercial milestones, which may be paid, in the Company’s research and development expensesole discretion, in the fourth quarter of 2019.
| |
5. | STOCK-BASED COMPENSATION |
The 2015 Employee, Director and Consultant Equity Incentive Plan
In connection with the business combination transaction in July 2017 between the Company and Daré Bioscience Operations, Inc., a privately held Delaware corporation,cash or Private Daré, the Company assumed the Private Daré 2015 Employee, Director and Consultant Equity Incentive Plan, or 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 business 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 withstock.
Royalty Payments. The Holders will be eligible to receive, subject to certain offsets, tiered royalties, including 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 correspondingly adjusted exercise price and 223,295 sharespercentage of the Company’s common stock. All of the options that were assumed were exercised as of March 31, 2020. No awards may be granted under the 2015 Private Daré Plan following the closing of the business combination transaction.sublicense revenue.
4. STOCK-BASED COMPENSATION
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 there2017. There was no0 stock-based compensation related to the ESPP for the three months ended March 31, 20202021 or March 31, 2019.2020.
Amended and Restated 2014 Stock Incentive Plan
The Company maintains the Amended and Restated 2014 Plan, or the Amended 2014 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, 2020,2021, the number of authorized shares increased by 787,3361,663,850 to 1,411,481,2,168,366, 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 three months ended March 31, 2020.2021. The exercise price of all options granted during the three months ended March 31, 20202021 was equal to the market value of the Company’s common stock on the date of grant. As of March 31, 2020,2021, unamortized stock-based compensation expense of $1,686,903$4,651,245 will be amortized over a weighted average period of 2.93.41 years. At March 31, 2020, 704,4812021, 643,666 shares of common stock were reserved for future awards granted under the Amended 2014 Plan.
| | | | | | | Number of Shares | | Weighted Average Exercise Price |
| Number of Shares | | Weighted Average Exercise Price | |
Outstanding at December 31, 2019 | 1,889,775 |
| | $ | 1.21 |
| |
Outstanding at December 31, 2020 | | Outstanding at December 31, 2020 | 2,786,591 | | | $ | 1.16 | |
Granted | 707,000 |
| | 1.06 |
| Granted | 1,524,700 | | | 2.59 | |
Exercised | (10,149 | ) | | 0.01 |
| Exercised | 0 | | | 0 | |
Canceled/forfeited | — |
| | — |
| Canceled/forfeited | 0 | | | 0 | |
Expired | — |
| | — |
| Expired | 0 | | | 0 | |
Outstanding at March 31, 2020 | 2,586,626 |
| | $ | 1.17 |
| |
Exercisable at March 31, 2020 | 568,118 |
| | $ | 1.86 |
| |
Outstanding at March 31, 2021 | | Outstanding at March 31, 2021 | 4,311,291 | | | $ | 1.67 | |
Exercisable at March 31, 2021 | | Exercisable at March 31, 2021 | 1,395,046 | | | $ | 1.41 | |
Compensation Expense
Total stock-based compensation expense related to stock options granted to employees and directors recognized in the condensed consolidated statementstatements of operations is as follows:
| | | Three Months Ended March 31, | | Three Months Ended March 31, | |
| 2020 | | 2019 | | 2021 | | 2020 | |
Research and development | $ | 46,380 |
| | $ | 24,703 |
| Research and development | $ | 115,625 | | | $ | 46,380 | | |
General and administrative | 114,461 |
| | 73,265 |
| General and administrative | $ | 250,286 | | | $ | 114,461 | | |
Total | $ | 160,841 |
| | $ | 97,968 |
| Total | $ | 365,911 | | | $ | 160,841 | | |
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 three months ended March 31, 20202021 are as follows: