Daré Bioscience(DARE) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION The financial information section provides an overview of the company's unaudited financial statements, management's discussion, market risk disclosures, and internal controls Item 1. Condensed Consolidated Financial Statements (Unaudited) The unaudited financial statements for the period ended September 30, 2021, show a significant increase in cash and total assets, driven by financing activities, shifting the company to positive equity despite rising operating expenses and a wider net loss, highlighting a 'going concern' uncertainty Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity as of September 30, 2021, compared to December 31, 2020 Balance Sheet Summary (Unaudited) | Metric | Sep 30, 2021 (USD) | Dec 31, 2020 (USD) | | :--- | :--- | :--- | | Cash and cash equivalents | $45,570,781 | $4,669,467 | | Total current assets | $48,243,154 | $6,983,912 | | Total assets | $48,811,476 | $7,550,712 | | Total current liabilities | $15,907,086 | $7,660,601 | | Total liabilities | $16,922,885 | $8,702,445 | | Total stockholders' equity (deficit) | $31,888,591 | ($1,151,733) | Condensed Consolidated Statements of Operations This section outlines the company's revenues and expenses over specific periods, leading to the reported net loss Statement of Operations Summary (Unaudited) | Metric | Three Months Ended Sep 30, 2021 (USD) | Three Months Ended Sep 30, 2020 (USD) | Nine Months Ended Sep 30, 2021 (USD) | Nine Months Ended Sep 30, 2020 (USD) | | :--- | :--- | :--- | :--- | :--- | | General and administrative | $2,211,334 | $1,353,069 | $5,949,299 | $4,772,382 | | Research and development | $10,432,603 | $6,203,753 | $23,501,098 | $14,131,007 | | Total operating expenses | $12,668,937 | $7,581,822 | $29,525,397 | $18,961,722 | | Net loss | ($12,667,429) | ($7,582,808) | ($29,153,824) | ($18,959,268) | | Loss per common share | ($0.18) | ($0.24) | ($0.45) | ($0.69) | Condensed Consolidated Statements of Cash Flows This section details the cash inflows and outflows from operating, investing, and financing activities for the specified periods Cash Flow Summary for Nine Months Ended Sep 30 (Unaudited) | Metric | 2021 (USD) | 2020 (USD) | | :--- | :--- | :--- | | Net cash used in operating activities | ($18,848,138) | ($16,041,176) | | Net cash used in investing activities | ($14,524) | ($15,246) | | Net cash provided by financing activities | $59,842,978 | $16,675,911 | | Net change in cash and cash equivalents | $40,901,314 | $609,307 | Notes to Condensed Consolidated Financial Statements The notes detail the company's business focus on women's health, its product pipeline, and significant accounting policies, highlighting a 'Going Concern' uncertainty and providing extensive details on license agreements, equity financing, and grant funding - The company is a clinical-stage biopharmaceutical firm focused on women's health, with three product candidates in advanced clinical development: DARE-BV1, Ovaprene®, and Sildenafil Cream, 3.6%[29][31] - There is substantial doubt about the company's ability to continue as a going concern due to a history of operating losses and the need to raise substantial additional capital to fund its operating plan for the next 12 months[37][43] - The company received a $1.0 million upfront payment from Bayer for the Ovaprene license agreement, with the license becoming effective if Bayer pays an additional $20.0 million, which could also trigger up to $310.0 million in commercial milestone payments[63][64] - In June 2021, the company was awarded up to $48.95 million from the Bill & Melinda Gates Foundation to support the development of DARE-LARC1, receiving an initial payment of $11.45 million in July 2021[123] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on advancing its women's health portfolio, highlighting the submission of the DARE-BV1 NDA to the FDA, which was granted Priority Review, detailing a significant year-over-year increase in operating expenses, primarily R&D costs, and reiterating the 'going concern' risk due to insufficient cash, with capital primarily raised through ATM equity offerings Business Overview and Clinical Stage Product Candidates This section provides an overview of the company's strategic focus and the progress of its key clinical-stage product candidates - The company submitted a New Drug Application (NDA) for DARE-BV1 to the FDA in June 2021, which was accepted, granted Priority Review, and set a PDUFA target action date of December 7, 2021[140] - A pivotal Phase 3 clinical study of Ovaprene is planned to commence in 2022, supported by a Cooperative Research and Development Agreement (CRADA) with the Eunice Kennedy Shriver National Institute of Child Health and Human Development (NICHD)[144] - The Phase 2b RESPOND clinical trial of Sildenafil Cream, 3.6% is ongoing, but the pace of enrollment has been slower than initially expected, potentially increasing the study's timeline and overall cost[146] Results of Operations This section analyzes the company's financial performance, focusing on the changes in operating expenses over the reported periods Comparison of Operating Expenses (Unaudited) | Expense Category | Three Months Ended Sep 30, 2021 (USD) | Three Months Ended Sep 30, 2020 (USD) | Nine Months Ended Sep 30, 2021 (USD) | Nine Months Ended Sep 30, 2020 (USD) | | :--- | :--- | :--- | :--- | :--- | | General & administrative | $2,211,334 | $1,353,069 | $5,949,299 | $4,772,382 | | Research & development | $10,432,603 | $6,203,753 | $23,501,098 | $14,131,007 | - The increase in R&D expenses for the three and nine months ended Sep 30, 2021 was primarily driven by costs for the Sildenafil Cream 3.6% Phase 2b trial and activities for Ovaprene, partially offset by decreased costs for DARE-BV1 following the completion of its Phase 3 trial in late 2020[173][180] - The increase in G&A expenses was mainly due to higher professional services, commercial-readiness activities, personnel costs, and stock-based compensation[170][179] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term financial obligations and its strategies for funding operations - Management states that based on the current operating plan, the company does not have sufficient cash to satisfy its working capital needs for at least the next 12 months[189] - The company needs to raise substantial additional capital to continue funding operations and executing its development plan, primarily relying on sales of common stock through ATM offerings[190] - During the nine months ended September 30, 2021, the company received approximately $59.8 million in net cash from financing activities, predominantly from sales of common stock[189][192][196] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Daré Bioscience is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide disclosures about market risk[202] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of September 30, 2021, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[204] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[205] PART II. OTHER INFORMATION This section covers other important information including legal proceedings, updated risk factors, unregistered equity sales, and a list of exhibits Item 1. Legal Proceedings The company reports that as of the filing date, there are no material pending legal proceedings to which it is a party - There are no material pending legal proceedings involving the company[207] Item 1A. Risk Factors This section updates and emphasizes key business risks, including potential FDA non-approval for DARE-BV1, lack of a finalized commercialization strategy, heavy reliance on NICHD for the Ovaprene trial, and ongoing impacts of the COVID-19 pandemic - A primary risk is that the FDA could issue a Complete Response Letter (CRL) for the DARE-BV1 NDA, indicating non-approval in its current form, which could significantly delay marketing, increase costs, and negatively affect the company's stock price and ability to raise capital[209][210] - The company has not finalized its commercial strategy for DARE-BV1 and lacks internal capabilities for marketing and sales, creating risk around a timely and successful product launch if approved[213][214] - The COVID-19 pandemic continues to pose a risk by potentially delaying clinical trials, disrupting supply chains for clinical materials, and negatively impacting the company's ability to access capital[218][222] - The company is highly dependent on NICHD for the pivotal Phase 3 trial of Ovaprene under the CRADA, where termination of this agreement or failure by NICHD to perform could significantly delay the program[216][235] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds On September 1, 2021, the company issued approximately 700,000 shares of its common stock to former stockholders of Microchips Biotech, Inc. (MBI) as partial payment for milestone achievements related to the 2019 merger agreement, issued in a private placement exempt from registration - In September 2021, the company issued ~700,000 shares of common stock to former MBI stockholders to satisfy milestone payments from the 2019 acquisition[251] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, which include an amendment to a license agreement, the Cooperative Research and Development Agreement (CRADA) with NICHD, officer certifications required by the Sarbanes-Oxley Act, and XBRL data files - Key exhibits filed include the CRADA with NICHD for the Ovaprene Phase 3 study and an amendment to the license agreement with TriLogic Pharma and MilanaPharm[257]