Daré Bioscience(DARE) - 2022 Q2 - Quarterly Report

FORM 10-Q Filing Information Filing Details This Quarterly Report on Form 10-Q for June 30, 2022, is filed by DARÉ BIOSCIENCE, INC., a non-accelerated filer and smaller reporting company - The registrant is a non-accelerated filer and a smaller reporting company[2] Shares Outstanding and Par Value | Metric | Value | | :----- | :---- | | Shares Outstanding (as of Aug 8, 2022) | 84,820,858 | | Common Stock Par Value | $0.0001 | CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Forward-Looking Statements Disclaimer This report contains forward-looking statements, particularly in the MD&A, which involve substantial risks and uncertainties, and actual results may differ materially - The report contains forward-looking statements, especially in 'Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations,' which are subject to substantial risks and uncertainties[5] - Forward-looking statements are identifiable by terms such as 'believe,' 'may,' 'will,' 'estimate,' 'continue,' 'anticipate,' 'design,' 'intend,' 'expect,' 'could,' 'plan,' 'potential,' 'predict,' 'seek,' 'pursue,' 'should,' 'would,' 'contemplate,' 'project,' 'target,' 'tend to,' or their negative versions[5] Risk Factors Summary The company identifies numerous factors that could cause actual results to differ materially from forward-looking statements, including capital, development, regulatory, safety, supply, third-party, and market acceptance issues - Key risks include inability to raise additional capital, failure to complete product development and obtain regulatory approval, and challenges in demonstrating sufficient safety and efficacy of product candidates[6] - Other significant risks involve the timely supply of XACIATO and clinical trial supplies, performance of third-party collaborators, market acceptance of products, and coverage/reimbursement levels[6] - External factors such as macroeconomic conditions, geopolitical events, the COVID-19 pandemic, cyber-attacks, and intellectual property protection issues also pose risks[7] PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with detailed notes on company organization, accounting policies, and strategic agreements Condensed Consolidated Balance Sheets Total assets and stockholders' equity decreased from December 31, 2021, to June 30, 2022, primarily due to a reduction in cash and cash equivalents | Metric | June 30, 2022 (Unaudited) | December 31, 2021 | | :----------------------------- | :------------------------ | :------------------ | | Cash and cash equivalents | $32,070,612 | $51,674,087 | | Total current assets | $50,112,631 | $55,296,016 | | Total assets | $51,394,340 | $55,807,177 | | Total current liabilities | $16,536,936 | $16,052,856 | | Deferred grant funding | $8,751,385 | $10,542,983 | | Total liabilities | $18,360,881 | $17,052,856 | | Total stockholders' equity | $33,033,459 | $38,754,321 | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) For Q2 2022, the company reported a net income of $0.4 million, a significant improvement from a $9.2 million net loss in the prior year, driven by $10.0 million in license fee revenue | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | License fee revenue | $10,000,000 | $0 | $10,000,000 | $0 | | Total operating expenses | $9,615,678 | $9,162,926 | $18,016,128 | $16,856,460 | | Net income (loss) | $413,998 | $(9,162,751) | $(7,984,672) | $(16,486,395) | | Basic EPS | $0.00 | $(0.18) | $(0.10) | $(0.35) | | Diluted EPS | $0.00 | $(0.18) | $(0.10) | $(0.35) | - The company recognized $10.0 million in license fee revenue for the three and six months ended June 30, 2022, compared to none in the prior year periods[15] - Net income for Q2 2022 was $0.4 million, a significant improvement from a $9.2 million net loss in Q2 2021, primarily due to license fee revenue[15] Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from $38.8 million at December 31, 2021, to $33.0 million at June 30, 2022, primarily due to a net loss and foreign currency translation adjustments | Metric | December 31, 2021 | June 30, 2022 | | :--------------------------------- | :------------------ | :---------------- | | Common Shares Outstanding | 83,944,119 | 84,820,858 | | Common Stock Amount | $8,394 | $8,482 | | Additional Paid-in Capital | $149,027,802 | $151,436,543 | | Accumulated Other Comprehensive Loss | $(154,973) | $(299,992) | | Accumulated Deficit | $(110,126,902) | $(118,111,574) | | Total Stockholders' Equity | $38,754,321 | $33,033,459 | - Stockholders' equity decreased by approximately $5.7 million from December 31, 2021, to June 30, 2022, mainly due to net loss and foreign currency adjustments, partially offset by equity issuances[19] Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2022, net cash used in operating activities was $20.8 million, while net cash provided by financing activities significantly decreased to $1.3 million, resulting in a $19.6 million net decrease in cash | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(20,791,986) | $(20,168,469) | | Net cash used in investing activities | $(5,369) | $0 | | Net cash provided by financing activities | $1,338,899 | $24,626,464 | | Net change in cash and cash equivalents | $(19,603,475) | $4,442,274 | | Cash and cash equivalents, end of period | $32,070,612 | $9,111,741 | - Operating cash outflow increased slightly to $20.8 million in H1 2022, while financing cash inflow dropped significantly from $24.6 million in H1 2021 to $1.3 million in H1 2022[23] Notes to Condensed Consolidated Financial Statements (Unaudited) These notes provide detailed explanations of the company's business, significant accounting policies, strategic agreements, equity activities, stock-based compensation, lease obligations, commitments, grant funding, and subsequent events 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Daré Bioscience, Inc. is a biopharmaceutical company focused on women's health, developing innovative products in contraception, fertility, and vaginal/sexual health, with one FDA-approved product, XACIATO™ - Daré Bioscience is a biopharmaceutical company dedicated to women's health, with a focus on contraception, fertility, and vaginal/sexual health[26][27] - The company's FDA-approved product, XACIATO™ (clindamycin phosphate) vaginal gel, 2%, was approved in December 2021 for bacterial vaginosis[29] - In March 2022, Daré entered into a license agreement with Organon to commercialize XACIATO, which became effective on June 30, 2022, with a $10.0 million payment received in July 2022[29] 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This section outlines the basis of presentation for the unaudited condensed consolidated financial statements, emphasizing the going concern assumption despite a history of losses, and details fair value measurements and revenue recognition policies Basis of Presentation The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information, and do not include all disclosures required for complete annual financial statements - Financial statements are prepared under U.S. GAAP for interim reporting, omitting some annual disclosures[30] Going Concern The company's financial statements are prepared on a going concern basis, but a history of losses, expected negative cash flows, and insufficient cash for the next 12 months raise substantial doubt about its ability to continue as a going concern - The company has a history of losses and expects continued negative cash flows, raising substantial doubt about its ability to continue as a going concern[33] Financial Metrics (as of June 30, 2022) | Metric (as of June 30, 2022) | Amount | | :----------------------------- | :------------- | | Accumulated Deficit | $(118.1) million | | Cash and Cash Equivalents | $32.1 million | | Deferred Grant Funding Liability | $8.8 million | | Working Capital | $33.6 million | | Net Loss (Six Months Ended June 30, 2022) | $(8.0) million | | Negative Cash Flow from Operations (Six Months Ended June 30, 2022) | $(20.8) million | - The company does not have sufficient cash for its working capital needs over the next 12 months and will need to raise substantial additional capital[37] Fair Value Measurements The company uses a three-level hierarchy for fair value measurements, with cash equivalents primarily classified as Level 1, and no financial assets or liabilities were remeasured using Level 2 or Level 3 inputs as of June 30, 2022, or December 31, 2021 - Fair value measurements are categorized into a three-level hierarchy (Level 1, 2, 3) based on observability of inputs[41] Cash Equivalents Fair Value | Metric | June 30, 2022 | December 31, 2021 | | :----------------- | :------------ | :---------------- | | Cash equivalents (Level 1) | $30,901,701 | $49,666,064 | Revenue Recognition Revenue is recognized when promised goods or services are transferred to customers, with collaboration and licensing agreements typically including upfront license fees, development/regulatory/commercial milestone payments, and royalties - Revenue is recognized upon transfer of goods/services, with collaboration agreements including upfront fees, milestones, and royalties[45][47] - The company recognized $10.0 million in license fee revenue from the XACIATO license agreement, representing the payment due upon its effectiveness[48] - Sales-based royalties and milestones are recognized when related sales occur or when the performance obligation is satisfied[49] 3. STRATEGIC AGREEMENTS The company has entered into several strategic agreements for product commercialization and pipeline development, including exclusive licenses for XACIATO with Organon and Ovaprene with Bayer, as well as various in-license and acquisition agreements for its product candidates Strategic Agreements for Product Commercialization Daré has an exclusive worldwide license agreement with Organon for XACIATO, entitling Daré to a $10.0 million upfront payment, tiered double-digit royalties, and up to $182.5 million in milestone payments - Organon Exclusive License Agreement for XACIATO: $10.0 million upfront payment (received July 2022), tiered double-digit royalties, and up to $182.5 million in milestone payments[53][54][55] - Bayer HealthCare License Agreement for Ovaprene: $1.0 million upfront payment (deferred), potential $20.0 million Clinical Trial and Manufacturing Activities Fee to make license effective, and up to $310.0 million in milestones plus tiered royalties[62][63] Strategic Agreements for Pipeline Development The company has multiple agreements for pipeline development, including licenses for the TRI-726 hydrogel platform (XACIATO), Ovaprene, Sildenafil Cream, and patent rights from Catalent JNP, along with acquisitions of MBI and Pear Tree Pharmaceuticals - Hammock/MilanaPharm Assignment and License Agreement: Exclusive worldwide license for TRI-726 hydrogel platform (used in XACIATO), with license fees, milestone payments up to $500,000 per product, and high single-digit to low double-digit royalties[66][68] - ADVA-Tec License Agreement: Exclusive worldwide rights to develop and commercialize Ovaprene for human contraceptive use, with up to $14.6 million in development/regulatory milestones and up to $20.0 million in sales milestones, plus tiered royalties (1% to 10%)[71][73][74] - SST License and Collaboration Agreement: Exclusive license for Sildenafil Cream, 3.6% for female sexual dysfunction, with milestones up to $118.0 million (or $135.0 million with partnerships) and tiered royalties[77] - Catalent JNP License Agreement: Exclusive worldwide license for certain patent rights, with a $250,000 upfront fee, annual maintenance fees, up to $13.5 million in development/regulatory milestones, and up to $30.3 million in commercial sales milestones, plus mid-single-digit to low double-digit royalties[81][82] - MBI Acquisition: Acquired rights to DARE-LARC1, involving up to $46.5 million in development/regulatory milestones and up to $55.0 million in net sales milestones, plus tiered royalties[87][89] - Pear Tree Acquisition: Acquired rights to DARE-VVA1, involving contingent payments upon clinical, regulatory, and commercial milestones, and tiered royalties[90] 4. STOCKHOLDERS' EQUITY The company utilizes 'at-the-market' (ATM) equity offering programs to raise capital, selling approximately 0.8 million shares for $1.3 million gross proceeds in H1 2022, and has common stock warrants outstanding - During the six months ended June 30, 2022, the company sold approximately 0.8 million shares of common stock under its October 2021 ATM sales agreement for gross proceeds of approximately $1.3 million[93] - As of June 30, 2022, the company had 1,374,515 warrants outstanding with an exercise price of $0.96 and an expiration date of February 15, 2023[99] 5. STOCK-BASED COMPENSATION The company's stock incentive plans provide for various equity awards, with stock-based compensation expense for H1 2022 totaling $1.1 million, an increase from $0.8 million in the prior year, and $5.0 million in unamortized expense remaining - The 2022 Stock Incentive Plan, approved in June 2022, authorizes 10,117,305 shares for issuance, plus up to 6,144,682 shares from prior plans[103] Stock-Based Compensation Expense | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------------- | :------------------------------- | :------------------------------- | | Total Stock-Based Compensation | $1,069,930 | $771,389 | | Unamortized Stock-Based Compensation (as of June 30, 2022) | $5.0 million | N/A | Stock Option Activity (Six Months Ended June 30, 2022) | Stock Option Activity (Six Months Ended June 30, 2022) | Number of Shares | Weighted Average Exercise Price | | :------------------------------------- | :--------------- | :------------------------------ | | Outstanding at December 31, 2021 | 4,717,602 | $1.65 | | Granted | 2,125,692 | $1.54 | | Exercised | (125,699) | $0.96 | | Canceled/forfeited | (300,062) | $1.94 | | Outstanding at June 30, 2022 | 6,417,533 | $1.62 | | Exercisable at June 30, 2022 | 3,007,697 | $1.48 | 6. LEASED PROPERTIES The company leases corporate headquarters and office space for its subsidiary, with operating lease ROU assets and total operating lease liabilities both at $1.1 million as of June 30, 2022, and future minimum lease payments totaling $1.3 million - The company extended its corporate headquarters lease to August 31, 2024, and its subsidiary's office lease to December 31, 2025[109][110] Lease Metrics (as of June 30, 2022) | Metric (as of June 30, 2022) | Amount | | :----------------------------- | :------------- | | Operating Lease ROU Assets | $1.1 million | | Current Portion of Lease Liabilities | $324,000 | | Lease Liabilities Long-Term | $824,000 | | Total Operating Lease Liabilities | $1,148,000 | | Total Future Minimum Lease Payments | $1,288,000 | | Weighted Average Remaining Lease Term | 2.88 years | 7. COMMITMENTS AND CONTINGENCIES The company has a Cooperative Research and Development Agreement (CRADA) with NICHD for the Ovaprene Phase 3 study, committing $5.5 million, with $0.5 million remaining due in Q2 2023 - The company committed $5.5 million to NICHD for the Ovaprene Phase 3 study, with $5.0 million paid and $0.5 million due in Q2 2023[113] - Contingent consideration of $1.25 million for the MBI acquisition was satisfied in 2021 through common stock issuance and cash[114] - A Paycheck Protection Program (PPP) loan of $367,285 (plus accrued interest totaling $369,887) was fully forgiven by the SBA in January 2021[115] 8. GRANT AWARDS Daré Bioscience receives non-dilutive grant funding from NICHD for various product candidates and from the Bill & Melinda Gates Foundation for DARE-LARC1, with $11.45 million received under the 2021 DARE-LARC1 Grant Agreement and $8.8 million recorded as deferred grant funding liability - NICHD provides non-dilutive grant funding for Ovaprene, DARE-PTB1, DARE-LARC1, and ADARE-204/214 development[117] - For DARE-PTB1, $300,000 was awarded for Phase I, with potential for $2.0 million for Phase II[119] - The 2021 DARE-LARC1 Grant Agreement with the Bill & Melinda Gates Foundation provides up to $48.95 million for technology development and preclinical activities through November 2026[124] Grant Funding (as of June 30, 2022) | Grant Funding (as of June 30, 2022) | Amount | | :---------------------------------- | :------------- | | Total received under 2021 DARE-LARC1 Grant Agreement | $11.45 million | | Deferred Grant Funding Liability (2021 DARE-LARC1) | $8.8 million | 9. NET INCOME (LOSS) PER SHARE Basic and diluted net income (loss) per share are calculated using weighted average common shares outstanding, with potentially dilutive securities excluded from diluted EPS if their effect is anti-dilutive Potentially Dilutive Securities | Potentially Dilutive Securities | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :------------------------------ | :------------------------------- | :----------------------------- | | Stock options | 6,053,156 | 6,417,533 | | Warrants | 1,058,733 | 1,381,015 | | Total | 7,111,889 | 7,798,548 | - Potentially dilutive securities were excluded from diluted EPS calculations due to their anti-dilutive effect[125] 10. SUBSEQUENT EVENTS Subsequent to June 30, 2022, the company received the $10.0 million payment from Organon for the XACIATO license agreement and approximately $7.96 million from the DARE-LARC1 grant - In July 2022, the company received the $10.0 million payment for the XACIATO license agreement[126] - In July 2022, approximately $7.96 million was received from the Bill & Melinda Gates Foundation under the 2021 DARE-LARC1 Grant Agreement[128] - Stockholders approved an increase in authorized common stock from 120,000,000 to 240,000,000 shares in July 2022[129] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a comprehensive overview of the company's business strategy, product pipeline, recent developments, and a detailed analysis of its financial performance, liquidity, capital resources, and future funding requirements, highlighting the going concern risk Business Overview Daré Bioscience is a biopharmaceutical company focused on women's health, aiming to develop and commercialize differentiated therapies by in-licensing product candidates, advancing them through clinical development, and leveraging collaborations for commercialization - Daré Bioscience's mission is to identify, develop, and commercialize diverse therapies for women's health, focusing on contraception, fertility, and vaginal/sexual health[132] - The company's strategy involves in-licensing or acquiring product candidates, advancing them through mid-to-late stage clinical development, and establishing strategic collaborations for commercialization[132] - The portfolio includes FDA-approved XACIATO, clinical-stage Ovaprene and Sildenafil Cream, 3.6%, and several other candidates in Phase 1 or preclinical development[133][134][135][136][137] XACIATO Commercialization XACIATO, approved in December 2021, is expected to be commercially available in the U.S. in Q4 2022 through an exclusive license agreement with Organon, which includes a $10.0 million upfront payment and potential milestones up to $180.0 million - XACIATO is expected to launch commercially in the U.S. in the fourth quarter of 2022[139] - The exclusive license agreement with Organon includes a $10.0 million upfront payment (received July 2022), a $2.5 million milestone upon first commercial sale, up to $180.0 million in future milestones, and tiered double-digit royalties[139] - Daré is responsible for regulatory interactions and interim product supply at manufacturing cost plus a single-digit percentage markup until Organon assumes these responsibilities[141] Our Pipeline: Clinical-Stage Programs Ovaprene is undergoing an IDE pre-submission process with the FDA for a pivotal Phase 3 study, while the Sildenafil Cream, 3.6% Phase 2b RESPOND study is ongoing, and DARE-HRT1 and DARE-VVA1 are in Phase 1/2 clinical studies with topline data expected in Q4 2022 - Ovaprene: Initiated IDE review process with FDA for pivotal Phase 3 study; converted to pre-submission for collaborative discussion. Targeting investigator meeting in Q4 2022, expecting at least 200 subjects completing 12 months of use[142][144] - Sildenafil Cream, 3.6%: Ongoing Phase 2b RESPOND clinical study for FSAD. Interim analysis for sample size re-estimation anticipated in H2 2022[146] - DARE-HRT1: Phase 1/2 clinical study initiated in April 2022, evaluating PK in post-menopausal women. Topline data anticipated in Q4 2022[148] - DARE-VVA1: Phase 1/2 clinical study initiated in September 2021, evaluating safety, tolerability, PK, and PD in postmenopausal women with VVA. Topline data anticipated in Q4 2022[149] - DARE-FRT1, DARE-PTB1, ADARE-204, and ADARE-214: Currently in preclinical development, with no clinical development activities expected to commence in 2022[150][151] Recent Events In May 2022, Daré received a $249,000 NICHD grant for ADARE-204/214 end-user research, and post-June 30, 2022, the company received the $10.0 million XACIATO license payment and approximately $7.96 million from the DARE-LARC1 grant - Received a $249,000 NICHD grant in May 2022 for end-user research on ADARE-204 and ADARE-214[153] - Received the $10.0 million XACIATO license agreement payment in July 2022[154] - Received approximately $7.96 million from the Bill & Melinda Gates Foundation for the DARE-LARC1 grant in July 2022, bringing total funding under this agreement to approximately $19.41 million[156] Financial Overview The company generated $10.0 million in revenue from the XACIATO license agreement, with research and development expenses expected to increase significantly by approximately 45% in 2022, and general and administrative expenses projected to rise by approximately 25% - Generated $10.0 million in revenue from the XACIATO license agreement; future revenue expected from royalties, milestones, and product sales[157] - Research and development expenses are expected to increase significantly in 2022 (approx. 45% increase from 2021) due to continued development of product candidates, regulatory support, clinical supplies, and milestone payments[159][170] - General and administrative expenses are expected to increase by approximately 25% in 2022, primarily due to increased personnel, commercial-readiness activities for XACIATO, and general corporate overhead[168] Results of Operations For Q2 2022, the company reported a net income of $0.4 million, a substantial improvement from a $9.2 million net loss in Q2 2021, primarily due to $10.0 million in license fee revenue, while the H1 2022 net loss decreased by 52% to $8.0 million Comparison of Three Months Ended June 30, 2022 and 2021 (Unaudited) For Q2 2022, the company reported $10.0 million in license fee revenue, leading to a net income of $0.4 million, a significant turnaround from a $9.2 million net loss in Q2 2021, with general and administrative expenses increasing by 55% and research and development expenses decreasing by 7% | Metric | Q2 2022 | Q2 2021 | Change ($) | Change (%) | | :----------------------------- | :---------- | :---------- | :--------- | :--------- | | License fee revenue | $10,000,000 | $0 | $10,000,000 | 100% | | General and administrative | $2,792,894 | $1,797,637 | $995,257 | 55% | | Research and development | $6,797,784 | $7,340,289 | $(542,505) | (7)% | | Net income (loss) | $413,998 | $(9,162,751) | $9,576,749 | (105)% | | Comprehensive income (loss) | $278,129 | $(9,171,631) | $9,449,760 | (103)% | - The $10.0 million license fee revenue from the Organon agreement was the primary driver for the shift from net loss to net income in Q2 2022[167] - R&D expenses decreased due to the completion of the XACIATO Phase 3 trial, partially offset by increased costs for Sildenafil Cream, 3.6% and Ovaprene[170] Comparison of Six Months Ended June 30, 2022 and 2021 (Unaudited) For H1 2022, the company recognized $10.0 million in license fee revenue, reducing its net loss by 52% to $8.0 million compared to $16.5 million in H1 2021, with general and administrative expenses increasing by 43% and research and development expenses slightly decreasing by 4% | Metric | H1 2022 | H1 2021 | Change ($) | Change (%) | | :----------------------------- | :---------- | :---------- | :--------- | :--------- | | License fee revenue | $10,000,000 | $0 | $10,000,000 | 100% | | General and administrative | $5,362,881 | $3,737,965 | $1,624,916 | 43% | | Research and development | $12,603,247 | $13,068,495 | $(465,248) | (4)% | | Net loss | $(7,984,672) | $(16,486,395) | $8,501,723 | (52)% | | Comprehensive loss | $(8,129,691) | $(16,502,116) | $8,372,425 | (51)% | - The $10.0 million license fee revenue significantly reduced the net loss for the six-month period[175] - R&D expenses decreased primarily due to the completion of the XACIATO Phase 3 trial and reduced costs for earlier-stage programs, partially offset by increased spending on Sildenafil Cream 3.6% and Ovaprene[178] Liquidity and Capital Resources The company's history of losses and expected negative cash flows raise substantial doubt about its ability to continue as a going concern, with $32.1 million in cash as of June 30, 2022, but insufficient cash for the next 12 months, necessitating future funding through equity/debt financings, grants, and collaborations - The company's going concern status is in doubt due to a history of losses and anticipated negative cash flows[182] Financial Metrics (as of June 30, 2022) | Metric (as of June 30, 2022) | Amount | | :----------------------------- | :------------- | | Accumulated Deficit | $(118.1) million | | Cash and Cash Equivalents | $32.1 million | | Working Capital | $33.6 million | | Net Loss (Six Months Ended June 30, 2022) | $(8.0) million | | Negative Cash Flow from Operations (Six Months Ended June 30, 2022) | $(20.8) million | - The company does not have sufficient cash for its working capital needs over the next 12 months and plans to raise additional capital through equity/debt financings, grants, and collaborations[184] Plan of Operations and Future Funding Requirements The company expects primary capital uses to be staff, clinical trials, regulatory activities, contract manufacturing, milestone payments, and general overhead, anticipating significant increases in R&D expenses in 2022, and will seek substantial additional capital through various financing options - Primary capital uses include staff, clinical trials, regulatory activities, contract manufacturing, milestone payments, and general overhead[184] - R&D expenses are expected to increase significantly in 2022, with development and regulatory milestone payments under in-license agreements now estimated for 2023[184][170] - The company will pursue equity and debt financings, grant funding, and collaborations to cover operating expenses and new product acquisitions[184] Cash Flows For H1 2022, net cash used in operating activities was $20.8 million, primarily due to net loss, increased accounts receivable, and prepaid expenses, while net cash provided by financing activities was $1.3 million, significantly lower than $24.6 million in H1 2021 Cash Flow Activity | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(20,791,986) | $(20,168,469) | | Net cash used in investing activities | $(5,369) | $0 | | Net cash provided by financing activities | $1,338,899 | $24,626,464 | | Net increase (decrease) in cash and cash equivalents | $(19,603,475) | $4,442,274 | - Operating cash outflow in H1 2022 was driven by net loss, a $10.0 million increase in accounts receivable (XACIATO license), and increases in prepaid expenses and other receivables[188] - Financing cash inflow decreased significantly in H1 2022 to $1.3 million, primarily from common stock sales, compared to $24.6 million in H1 2021[191] License and Royalty Agreements The company is committed to making royalty and milestone payments under various license and development agreements for XACIATO, Ovaprene, Sildenafil Cream, 3.6%, and other clinical and preclinical candidates - The company has obligations for royalty and milestone payments under license and development agreements for XACIATO, Ovaprene, Sildenafil Cream, 3.6%, and other product candidates[192] Other Contracts The company enters into contracts for research studies, clinical trials, and other services, which generally allow for termination upon notice, and non-cancelable obligations are not considered material - Contracts for research, clinical trials, and other services are generally terminable upon notice, with non-cancelable obligations deemed immaterial[193] Off-Balance Sheet Arrangements The company did not have any off-balance sheet arrangements during the periods presented - The company had no off-balance sheet arrangements during the reported periods[195] PART II. OTHER INFORMATION Item 1. Legal Proceedings As of the filing date, the company is not a party to any material pending legal proceedings, nor is management aware of any contemplated governmental proceedings against it - No material pending legal proceedings or contemplated governmental proceedings against the company as of the filing date[202] Item 1A. Risk Factors An investment in the company's common stock involves a high degree of risk, with no material changes to the risk factors disclosed in the company's 2021 10-K - Investment in common stock involves high risk; no material changes to risk factors from the 2021 10-K[203] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[204] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities to report for the period - No defaults upon senior securities[205] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[206] Item 5. Other Information There is no other information to report under this item - No other information to report[207] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the Restated Certificate of Incorporation, the 2022 Stock Incentive Plan, certifications from officers, and XBRL taxonomy documents - Exhibits include the Restated Certificate of Incorporation, 2022 Stock Incentive Plan, officer certifications (31.1, 31.2, 32.1, 32.2), and XBRL documents[209][210][211] SIGNATURES The report is duly signed on behalf of Daré Bioscience, Inc. by Sabrina Martucci Johnson, President and Chief Executive Officer, and Lisa Walters-Hoffert, Chief Financial Officer, on August 9, 2022 - The report was signed by Sabrina Martucci Johnson (President and CEO) and Lisa Walters-Hoffert (CFO) on August 9, 2022[214]