UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2019~~2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to



	DARÉ BIOSCIENCE, INC. (Exact Name of Registrant as Specified in its Charter)
Delaware (State or Other Jurisdiction of Incorporation)	Commission File No. 001-36395	20-4139823 (IRS Employer Identification No.)

3655 Nobel Drive, Suite 260 San Diego, CA (Address of Principal Executive Offices)	(858) 926-7655 (Registrant’s telephone number, including area code)	92122 (Zip Code)

(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	DARE	Nasdaq Capital Market

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

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



Large Accelerated Filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
Emerging growth company	xo

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

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

~~Securities registered pursuant to Section 12(b) of the Act:~~



~~Title of each class~~	~~Trading Symbol(s)~~	~~Name of each exchange on which registered~~
~~Common Stock~~	~~DARE~~	~~Nasdaq Capital Market~~

As of May ~~13, 2019, 16,683,411~~12, 2020, 26,646,191 shares of the Registrant’s Common Stock, par value $0.0001, were issued and outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, in particular “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations,” of Part I. Financial Information, and the information incorporated by reference herein contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this report, including statements regarding our strategy, future operations, future financial position, projected costs, prospects, plans and objectives of management, are forward-looking statements. Forward-looking statements, in some cases, can be identified by terms such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect,” “could,” “plan,” “potential,” “predict,” “seek,” “should,” “would,” “contemplate,” project,” “target,” “tend to,” or the negative version of these words and similar expressions.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including those factors described in Part II, Item 1A, “Risk Factors,” in this report, and elsewhere in this report. Given these uncertainties, you should not place undue reliance on any forward-looking statement. The following factors are among those that may cause such differences:

Inability to continue as a going concern;

Inability to raise additional capital, under favorable terms or at ~~all;~~all, including as a result of the effects of the COVID-19 pandemic;

Inability to successfully attract partners and enter into collaborations on acceptable terms;

A decision by Bayer HealthCare LLC to discontinue its commercial interest in Ovaprene® and/or to terminate our license agreement;

Failure to select or capitalize on the most scientifically, clinically or commercially promising or profitable indications or therapeutic areas for our product candidates due to limited financial resources;

Inability to develop and commercialize our product candidates;

Failure or delay in starting, conducting and completing clinical trials or obtaining United States Food and Drug Administration, or FDA, or foreign regulatory approval for our product candidates in a timely ~~manner;~~manner, including as a result of matters beyond our control such as the effects related to geopolitical actions, natural disasters, or public health emergencies or pandemics, such as the COVID-19 pandemic;

A change in the ~~FDA’s~~FDA Center assigned primary oversight ~~responsibility;~~responsibility for our combination product candidates;

A change in regulatory requirements for our product candidates, including the development pathway pursuant to Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, or the FDA's 505(b)(2) pathway;

Unsuccessful clinical trial outcomes stemming from clinical trial designs, failure to enroll a sufficient number of patients, higher than anticipated patient dropout rates, failure to meet established clinical endpoints, undesirable side effects and other safety concerns;

Negative publicity concerning the safety and efficacy of our product candidates, or of product candidates being developed by others that share characteristics similar to our candidates;

Inability to demonstrate sufficient efficacy of our product candidates;

Loss of our licensed rights to develop and commercialize a product candidate as a result of the termination of the underlying licensing agreement;

Monetary obligations and other requirements in connection with our exclusive, in-license agreements covering the patents and related intellectual property related to our product candidates;

Developments by our competitors that make our product candidates less competitive or obsolete;

Dependence on third parties to conduct nonclinical studies and clinical trials ~~and to manufacture~~of our product candidates;

Dependence on third parties to supply and manufacture clinical ~~supplies~~trial materials and, ~~raw materials, drugs~~if any of our candidates are approved, commercial product, including components of our products as well as the finished product, in accordance with current good manufacturing practices and in the quantities needed;

Interruptions in, or the complete shutdown of, the operations of third parties on which we rely, including clinical sites, manufacturers, suppliers, and other ~~materials required~~vendors, from matters beyond their control, such as the effects related to ~~produce a finished product~~geopolitical actions, natural disasters, or public health emergencies or pandemics, such as the COVID-19 pandemic, and our lack of recourse against such third parties if their inability to ~~produce~~perform is excused under the ~~quantities needed;~~terms of our agreements with such parties;

Failure of our product candidates, if approved, to gain market acceptance or obtain adequate coverage for third party reimbursement;

A reduction in demand for contraceptives caused by an elimination of current requirements that health insurance plans cover and reimburse certain FDA-cleared or approved contraceptive products without cost sharing;

~~Lack of precedent~~Uncertainty as to ~~help assess~~ whether health insurance plans will cover our product ~~candidates;~~candidates even if we successfully develop and obtain regulatory approval for them;

~~The~~Unfavorable or inadequate reimbursement ~~environment relating to~~rates for our product candidates atset by the ~~time we obtain regulatory approval,~~United States government and other third-party payers even if ~~ever;~~they become covered products under health insurance plans;

Difficulty in introducing branded products in a market made up of generic products;

Inability to adequately protect or enforce our, or our licensor’s, intellectual property rights;

Lack of patent protection for the active ingredients in certain of our product candidates which could expose those product candidates to competition from other formulations using the same active ingredients;

Higher risk of failure associated with product candidates in pre-clinical stages of development that may lead investors to assign them little to no value and make these assets difficult to fund;

Disputes or other developments concerning our intellectual property rights;

Actual and anticipated fluctuations in our quarterly or annual operating results;

Price and volume fluctuations in the stock market, and in our stock in particular, which could subject us to securities class-action litigation;

Failure to maintain the listing of the Company’s common stock on the Nasdaq Capital Market or another nationally recognized exchange;

Litigation or public concern about the safety of our potential products;

Strict government regulations on our business, including various fraud and abuse laws, including, without limitation, the U.S. federal Anti-Kickback Statute, the U.S. federal False Claims Act and the U.S. Foreign Corrupt Practices Act;

Regulations governing the production or marketing of our product candidates;

Loss of, or inability to attract, key personnel; and

Increased costs as a result of operating as a public company, and substantial time devoted by our management to compliance initiatives and corporate governance practices.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

All forward-looking statements in this report are current only as of the date of this report. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any statement is made or to reflect the occurrence of unanticipated events, except as required by law.

TABLE OF CONTENTS



		Page
PART I. FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (Unaudited)	1

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2120

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2930

Item 4.	Controls and Procedures	2930

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3031

Item 1A.	Risk Factors	3031

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3033

Item 3.	Defaults Upon Senior Securities	3033

Item 4.	Mine Safety Disclosures	3033

Item 5.	Other Information	3033

Item 6.	Exhibits	3134

	SIGNATURES	3236


PART I.	FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)

Daré Bioscience, Inc. and Subsidiaries

Consolidated Balance Sheets


	March 31, 2019			December 31, 2018			March 31, 2020				December 31, 2019
	(unaudited)						(unaudited)
Assets
Current assets
Cash and cash equivalents	$	3,505,026		$	6,805,889		$	5,047,325			$	4,780,107
Other receivables	166,713			31,037			429,722				555,210
Prepaid expenses	588,524			403,097			3,844,764				1,108,615
Total current assets	4,260,263			7,240,023			9,321,811				6,443,932
Property and equipment, net	8,245			9,396			51,582				63,531
Other non-current assets	751,347			577,968			840,572				935,325
Total assets	$	5,019,855		$	7,827,387		$	10,213,965			$	7,442,788
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	325,618		$	459,705		$	1,531,497			$	1,083,183
Accrued expenses	690,829			631,351			1,690,626				2,098,653
Deferred grant funding							1,089,064				2,019,674
Current portion of lease liabilities							404,395				410,896
Total current liabilities	1,016,447			1,091,056			4,715,582				5,612,406
Other liabilities	223,039			9,711
Deferred license revenue							1,000,000				—
Contingent consideration							1,000,000				1,000,000
Lease liabilities long-term							284,200				389,556
Total liabilities	1,239,486			1,100,767			6,999,782				7,001,962
Commitments and contingencies (Note 8)										—
Stockholders' equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized; None issued and outstanding	—			—			—				—
Common stock, $0.0001 par value; 120,000,000 shares authorized; 11,422,161 shares issued and outstanding each period	1,143			1,143
Common stock, $0.0001 par value; 120,000,000 shares authorized; 24,700,553 and 19,683,401 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively							2,470				1,968
Accumulated other comprehensive loss	(89,107		)	(96,728		)	(125,569		)		(102,625		)
Additional paid-in capital	35,889,940			35,791,972			51,612,721				44,564,674
Accumulated deficit	(32,021,607		)	(28,969,767		)	(48,275,439		)		(44,023,191		)
Total stockholders' equity	3,780,369			6,726,620			3,214,183				440,826
Total liabilities and stockholders' equity	$	5,019,855		$	7,827,387		$	10,213,965			$	7,442,788

See accompanying notes to interim consolidated financial statements.


	Three months ended March 31,						Three months ended March 31,
	2019			2018			2020			2019
Operating expenses
General and administrative	$	1,277,180		$	1,303,189		$	1,861,765		$	1,277,180
Research and development expenses	1,693,391			1,086,653
License expenses	112,500			100,000
Impairment of goodwill	—			5,187,519
Research and development							2,379,804			1,693,391
License fees							12,500			112,500
Total operating expenses	3,083,071			7,677,361			4,254,069			3,083,071
Loss from operations	(3,083,071		)	(7,677,361		)	(4,254,069		)	(3,083,071		)
Other income	31,231			11,744			1,821			31,231
Net loss	$	(3,051,840	)	$	(7,665,617	)	$	(4,252,248	)	$	(3,051,840	)
Foreign currency translation adjustments	$	7,621		$	(13,746	)	$	(22,944	)	$	7,621
Comprehensive loss	$	(3,044,219	)	$	(7,679,363	)	$	(4,275,192	)	$	(3,044,219	)
Loss per common share - basic and diluted	$	(0.27	)	$	(0.88	)	$	(0.18	)	$	(0.27	)
Weighted average number of common shares outstanding:
Basic and diluted	11,422,161			8,684,550			23,799,396			11,422,161

See accompanying notes to interim consolidated financial statements.

Daré Bioscience, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

See accompanying notes to interim consolidated financial statements.

Daré Bioscience, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

See accompanying notes to interim consolidated financial statements.

Daré Bioscience, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Daré Bioscience, Inc. is a clinical-stage biopharmaceutical company committed to the ~~advancement~~acceleration of innovative products for women’s health. Daré Bioscience, Inc. and its wholly owned subsidiaries operate in one segment. In this report, the “Company” refers collectively to Daré Bioscience, Inc. and its wholly owned subsidiaries, unless otherwise stated or the context otherwise requires.

The Company is driven by a mission to identify, develop and bring to market a diverse portfolio of ~~differentiated~~novel therapies that expand treatment options, improve outcomes and facilitate convenience for women, primarily in the areas of contraception, vaginal health, sexual health and fertility. The Company's business strategy is to ~~license~~in-license or otherwise acquire the rights to differentiated product candidates in ~~women's health,~~the Company's areas of focus, some of which have existing clinical proof-of-concept data, and to advance those candidates through clinical development and regulatory approval alone or in collaboration with strategic partners.

~~The~~Since July 2017, the Company has assembled a portfolio of clinical-stage and pre-clinical-stage candidates. While the Company will continue to assess opportunities to expand its portfolio, its current focus is on advancing its existing product candidates ~~addressing unmet needs~~through mid- and late-stages of clinical development or approval. The Company's global commercialization and development strategy involves partnering with pharmaceutical companies and regional distributors with established marketing and sales capabilities in ~~women’s health.~~ women's health, including through co-development and promotion agreements, once the Company has advanced a candidate through mid- to late-stage clinical development.

The ~~Company’s~~Company's portfolio includes ~~these four clinical-stage candidates:~~three product candidates in advanced clinical development:

DARE-BV1, a ~~unique~~novel thermosetting bioadhesive hydrogel ~~formulation of~~formulated with clindamycin phosphate 2% to ~~treat~~be administered in a single vaginally delivered application, as a first line treatment for bacterial vaginosis, or BV;

~~Sildenafil Cream, 3.6%~~Ovaprene®, a ~~novel~~hormone-free, monthly vaginal contraceptive;

Sildenafil Cream, 3.6%, a proprietary cream formulation of sildenafil for topical administration to ~~treat~~the vulva and vagina for treatment of female sexual arousal disorder, or FSAD; ~~and~~

~~DARE-HRT1,~~The Company's portfolio also includes three product candidates that it believes are Phase 1-ready:

DARE-HRT1, a combination bio-identical estradiol and progesterone intravaginal ring for the treatment of vasomotor symptoms (VMS) as part of a hormone replacement therapy, or HRT, following ~~menopause.~~menopause;

~~DARE-VVA1,~~DARE-VVA1, a vaginally delivered formulation of tamoxifen to treat vulvar vaginal atrophy, or VVA, in patients with ~~hormone-receptor~~hormone- receptor positive breast cancer; and

~~DARE-FRT1,~~DARE-FRT1, an intravaginal ring containing bio-identical progesterone for the prevention of preterm birth and for fertility support as part of an in vitro fertilization treatment plan ~~fertilization, or IVF, treatment plan;~~.

The Company's portfolio also includes these pre-clinical stage product candidates:

ORB-204 and ORB-214, 6-month and 12-month formulations of injectable etonogestrel for contraception; and

DARE-RH1, a novel approach to non-hormonal contraception for both men and women by targeting the ~~treatment of overactive bladder.~~CatSper ion channel.

The Company’s primary operations have consisted of, and are expected to continue to consist of, product research and development and advancing its portfolio of product candidates through clinical development and regulatory approval. The Company expects that the majority of its development expenses in 2020 and 2021 will support the advancement of DARE-BV1, Ovaprene, and Sildenafil Cream, 3.6%.

To date, the Company has not obtained any regulatory approvals for any of its product candidates, commercialized any of its product candidates or generated any product revenue. The Company is subject to several risks common to clinical-stage biopharmaceutical companies, including dependence on key individuals, competition from other companies, the need to develop commercially viable products in a timely and cost-effective manner, and the need to obtain adequate additional capital to fund the development of product candidates. The Company is also subject to several risks common to other companies in the industry, including rapid technology change, regulatory approval of products, uncertainty of market acceptance of products, competition from substitute products and larger

companies, compliance with government regulations, protection of proprietary technology, dependence on third parties, and product liability.

The Company has prepared its interim consolidated financial statements on a going concern basis, which assumes that the Company will realize its assets and satisfy its liabilities in the normal course of business. However, as of March 31, 2019, the Company had an accumulated deficit of approximately $32.0 million and had cash and cash equivalents of approximately $3.5 million. The Company also had negative cash flow from operations of approximately $3.3 million during the three months ended March 31, 2019.

In March of 2019, the Company announced that it received a Notice of Award for an additional $982,851 of the anticipated $1.9 million from the Eunice Kennedy Shriver National Institute of Child Health and Human Development, or the NIH Grant, which will be applied to the clinical development efforts supporting Ovaprene. As of March 31, 2019, the Company recorded a receivable in the amount of $161,007 for expenses eligible for reimbursement under the NIH Grant that were incurred through March 31, 2019. See Note 9, "Grant Award," herein. In April of 2019, the Company completed a sale of common stock raising net proceeds of approximately $5.2 million. See Note 11, "Subsequent Events," herein. The Company still needs to raise additional capital to continue to fund its operations and to successfully execute its current operating plan, including the development of its current product candidates.

The Company has a history of losses from operations, expects negative cash flows from its operations will continue for the foreseeable future, and expects that its net losses will continue for at least the next several years as it develops its existing product candidates and seeks to acquire, license or develop additional product candidates. These circumstances raise substantial doubt about the Company's ability to continue as a going concern. The accompanying ~~consolidated~~ financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty of the Company's ability to continue as a going concern.

As of March 31, 2020, the Company had an accumulated deficit of approximately $48.3 million and cash and cash equivalents of approximately $5.0 million. The Company also had negative cash flow from operations of approximately $6.6 million during the three months ended March 31, 2020.

The Company is focused primarily on the development and commercialization of innovative products in women’s health. The Company will continue to incur significant research and development and other expenses related to these activities. If the clinical trials for any of the Company’s product candidates fail to produce successful results such that those product candidates do not advance in clinical development, then the Company’s business and prospects may suffer. Even if the product candidates advance in clinical development, they may fail to gain regulatory approval. Even if the product candidates are approved, they may fail to achieve market acceptance, and the Company may never become profitable. Even if the Company becomes profitable, it may not sustain profitability.

Based on the Company's current operating plan estimates, the Company does not have sufficient cash to satisfy its working capital needs and other liquidity requirements over at least the next 12 months from the date of issuance of the accompanying financial statements. The Company ~~believes that~~needs to raise substantial additional capital to continue to fund its operations and to successfully execute its current ~~available current cash resources will be sufficient to fund planned operations into the first quarter of 2020. For the foreseeable future, the Company's ability~~operating plan, including to continue ~~its operations will depend on its ability to obtain additional capital.~~the planned development of DARE-BV1, Ovaprene, and Sildenafil Cream, 3.6%.

The Company is currently evaluating a variety of capital raising options, including financings, government or other grant funding, collaborations and strategic alliances or other similar types of arrangements to cover its operating expenses, including the development of its product candidates and any future product candidates it may license or otherwise acquire. The amount and timing of the Company's capital needs have been and will continue to depend highly on many factors, including the product development programs the Company chooses to pursue and the pace and results of its clinical development efforts. If the Company raises capital through collaborations, strategic alliances or other similar types of arrangements, it may have to relinquish, on terms that are not favorable to the Company, rights to some of its technologies or product candidates it would otherwise seek to develop or commercialize. There can be no ~~assurance~~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, equity or debt financings may have a dilutive effect on the holdings of the Company's existing stockholders. If the Company cannot raise capital when needed, on favorable terms or at all, the Company will not be able to continue development of its product candidates, will need to reevaluate its planned operations and may need to delay, scale back or eliminate some or all of its development programs, reduce expenses, file for bankruptcy, reorganize, merge with another entity, or cease operations. If the Company becomes unable to continue as a going concern, the Company may have to liquidate its assets, and might realize significantly

less than the values at which they are carried on its consolidated financial statements, and stockholders may lose all or part of their investment in the Company's common stock. The ~~interim~~ consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The effect of the COVID-19 pandemic and efforts to reduce its spread remain a rapidly evolving and uncertain risk to the Company's business, operating results, financial condition and stock price. In large part, the extent to which COVID-19 affects the Company will depend on future developments that are beyond its knowledge or control, including, but not limited to, the duration and severity of the pandemic, governmental and individual organization actions and policies implemented to reduce transmission of the disease, 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.


3.2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies are described in Note 1 to the ~~interim~~ consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the Securities and Exchange Commission, or SEC on ~~April 1, 2019.~~March 27, 2020. Since the date of those consolidated financial statements, there have been no material changes to the Company’s significant accounting policies, except for the accounting policies related to revenue recognition as described below.

Basis of Presentation

The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, as defined by the Financial Accounting Standards Board, or FASB, for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In management’s opinion, the accompanying interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results of the interim periods presented.

Interim financial results are not necessarily indicative of results anticipated for any other interim period or for the full year. The accompanying interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use, or ROU, lease assets, current portion of lease obligations, and long-term lease obligations on the Company's balance sheets.

ROU lease assets represent the Company's right to use an underlying asset for the lease term and lease obligations represent the Company's obligation to make lease payments arising from the lease. Operating ROU lease assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term. If the lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The ROU lease asset also includes any lease payments made and excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease and the related payments are only included in the lease liability when

it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. (See Note 7, Leased Properties.)

Fair Value Measurements

GAAP defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three-level hierarchy of valuation techniques established to measure fair value is defined as follows:

Level 1: inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2: inputs other than ~~level~~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.

~~Cash~~

The following tables present the classification within the fair value hierarchy of financial assets and ~~cash equivalents of $3.5 million and $6.8 million measured at fair value~~liabilities that are remeasured on a recurring basis as of March 31, ~~2019~~2020 and December 31, ~~2018, respectively, are classified within Level 1 of the fair value hierarchy. Other receivables are~~2019. There were no financial assets ~~with carrying values~~or liabilities that ~~approximate fair value due to the short-term nature~~were remeasured using a quoted price in active markets for identical assets (Level 2) as of ~~these assets. Accounts payable and accrued expenses and other liabilities are financial liabilities~~March 31, 2020.



	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

Revenue Recognition

The Company recognizes revenue is accordance with ~~carrying values that approximate fair value due to the short-term nature of these liabilities.~~

~~Recently Adopted~~ Accounting Standards

~~In May 2014, FASB issued Accounting Standards Update,~~ Codification, or ~~ASU, 2014-09,~~ASC, Topic 606, Revenue from Contracts with Customers, which ~~impacts~~applies to all contracts with customers, except for contracts that are within the ~~way~~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 ~~some entities recognize~~it expects to be entitled in exchange for those goods or services. To determine revenue recognition for ~~certain types of transactions. The new standard became effective beginning in 2018 for public companies. Because the Company does not currently have any~~ contracts with customers, the ~~Company’s adoption~~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 ~~this accounting standard did not impact~~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 ~~interim consolidated financial statements.~~

~~In February 2016, FASB issued ASU 2016-02,~~ ~~Leases (Topic 842), which sets out~~intellectual property is determined to be distinct from the ~~principles for the recognition, measurement, presentation and disclosure of leases for both parties to~~other performance obligations identified in a contract, ~~(i.e., lessees~~the Company recognizes revenues from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and ~~lessors). The new standard requires lessees~~the customer is able to ~~apply a dual approach classifying leases as either finance or operating leases based on~~use and benefit from the ~~principle~~license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of ~~whether or not~~ the ~~lease is effectively a financed purchase by the lessee. This classification will~~combined performance obligation to determine whether ~~lease expense~~the combined performance obligation is ~~recognized based on an effective interest~~satisfied over time or at a point in time and, if over time, the appropriate method ~~or on a straight-line basis over the term~~ of ~~the lease. A lessee is also required to record a right-of-use asset and a lease liability~~measuring progress for ~~all leases with a term~~purposes of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The new standard is effective for public companies for fiscal years beginning after December 15, 2018, with early adoption permitted. ASU 2016-02 became effective for the Company on January 1, 2019 and was adopted using a modified retrospective approach and the effective date is as of the initial application. Consequently, financial information was not updated, and the disclosures required under ASU 2016-02 are not provided for dates and periods prior to January 1, 2019. ASU 2016-02 provides a number of optional practical expedients and accounting policy elections.recognizing revenue from non-refundable, upfront fees. The Company ~~elected~~evaluates the ~~package~~measure of ~~practical expedients requiring no reassessment~~progress each reporting period and, if necessary, adjusts the measure of whether any expired or existing contracts are or contain leases, the lease classification of any expired or existing leases, or initial direct costs for any existing leases. The Company recorded approximately $232,000 right-of-use assetsperformance and ~~$241,000 lease liabilities~~ related ~~to its lease of office space as of the adoption~~revenue recognition. To date, ~~in the consolidated balance sheets. There are no changes to the statement of operations or cash flows as a result of the adoption.~~

~~In January 2017, FASB issued ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~, which intended to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard became effective for the Company on January 1, 2018. The Company’s early adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

~~In July 2017, FASB issued ASU 2017-11,~~ Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): (I) Accounting for Certain Financial Instruments with Down Round Features, (II) Replacement for the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. This update was issued to provide additional clarity related to accounting for certain financial instruments that have characteristics of both liabilities and equity. In particular, this update addresses freestanding and embedded financial instruments with down round features and whether they should be treated as a liability or equity instrument. Part II simply replaces the indefinite deferral for certain mandatorily redeemable non-controlling interests and mandatorily redeemable financial instruments of nonpublic entities contained within the Accounting Standards Committee Topic 480 with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has early adopted ASU 2017-11. As a result, 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 ~~fair value~~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 ~~warrants containing down round features that were issued~~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 ~~underwritten offering in February 2018 (see Note 6) as liabilities.~~

~~In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532,~~ ~~Disclosure Update and Simplification,~~ amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements relating to the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliationU.S. Upon execution of the ~~beginning balance to the ending balance of each period for which a statement of income is required to be filed. This final rule was effective November 5, 2018. In accordance with the new rule,~~agreement, the Company ~~added~~received a ~~Consolidated Statement of Stockholders' Equity~~$1.0 million upfront non-refundable license fee payment from Bayer. Bayer, in ~~this report and elected~~its sole discretion, has the right to ~~present a reconciliation in a single statement that shows~~make the ~~changes in stockholders' equity for each interim period, as well as each comparable period.~~


4.	~~ACQUISITIONS~~

~~Cerulean/Private Daré Stock Purchase Transaction~~

~~On July 19, 2017,~~license effective by paying the Company completed its business combination with Daré Bioscience Operations, Inc., a privately held Delaware corporation, or Private Daré, in accordance with the terms of the Stock Purchase Agreement dated as of March 19, 2017, or the Daré Stock Purchase Agreement, by and among the Company, Private Daré and the holders of capital stock and securities convertible into capital stock of Private Daré named therein, or the Private Daré Stockholders. Pursuant to the Daré Stock Purchase Agreement, each Private Daré Stockholder sold their shares of capital stock in Private Daré to the Company in exchange for newly issued shares of the Company’s common stock, and as a result, Private Daré became a wholly owned subsidiary of the Company and the Private Daré Stockholders became majority stockholders of the Company. In connection with the closing of that transaction, the Company changed its name from “Cerulean Pharma Inc.” to “Daré Bioscience, Inc.” In this report, that transaction isan additional $20.0 million, referred to as the ~~Cerulean/Private Daré stock purchase transaction~~“Clinical Trial and ~~“Cerulean” refers~~Manufacturing Activities Fee.” Such license would be exclusive with regard to ~~Cerulean Pharma Inc. before that transaction closed.~~the commercialization of Ovaprene for human contraception in the U.S. and co-exclusive with the Company with regard to development.

The ~~Cerulean/Private Daré stock purchase transaction~~Company will also be entitled to receive (a) milestone payments totaling up to $310.0 million related to the commercial sales of Ovaprene, if all such milestones are achieved, (b) tiered royalties starting in the low double digits based on annual net sales of Ovaprene during a calendar year, subject to customary royalty reductions and offsets, and (c) a percentage of sublicense revenue.

The Company concluded that there was ~~accounted for as a reverse merger~~one significant performance obligation under the acquisition method of accounting whereby Private Daré was considered to have acquired Cerulean for financial reporting purposes because immediately upon completion of the transaction, Private Daré stockholders held a majority of the voting interest of the combined company. Pursuant to business combination accounting, the Company applied the acquisition method, which requires the assets acquired and liabilities assumed be recorded at fair value with limited exceptions. The excess of the purchase price over the assets acquired and liabilities assumed represents goodwill. The goodwill is primarily attributableBayer license agreement related to the ~~cash and cash equivalents at closing of the transaction of approximately $9.9~~$1.0 million and the impact of the unamortized fair value of stock options granted by Cerulean that were outstanding immediately before the transaction closed of approximately $3.7 million. The unamortized fair value of such stock options relatesupfront non-refundable license fee payment: a distinct license to ~~an option modification approved on March 19, 2017 that provided for an acceleration of vesting of such options upon a change in control event. Such modification became~~commercialize Ovaprene effective upon the ~~closing~~receipt of the ~~Cerulean/Private Daré stock purchase transaction. Hence, the unamortized fair value of such stock options is deemed to~~Clinical Trial and Manufacturing Activities Fee. The $1.0 million upfront non-refundable license fee payment will be part of total purchase consideration and goodwill. Transaction costs associated with the Cerulean/Private Daré stock purchase transaction of $0.96 million are included in general and administrative expense. The total purchase price consideration of approximately $24.3 million represents the fair value of the shares of Cerulean stock issued in connection with the Cerulean/Private Daré stock purchase transaction and the unamortized fair value of the stock options described above, which was allocatedrecorded as ~~follows:~~

Purchase Consideration (in thousands)
Fair value of shares issued $ 20,625
Unamortized fair value of Cerulean options 3,654
Fair value of total consideration $ 24,279
Assets acquired and liabilities assumed
Cash and cash equivalents $ 9,918
Prepaid expense and other current assets 1,915
Accounts payable (233 )
Total assets acquired and liabilities assumed 11,600
Goodwill $ 12,679

The final allocation of the purchase price depended on finalizing the valuation of the fair value of assets acquired and liabilities assumed. The Company retrospectively recorded purchase price adjustmentslicense revenue at the ~~acquisition date~~point in time the Company receives the Clinical Trial and Manufacturing Activities Fee, the license is transferred to ~~increase current liabilities~~Bayer and ~~current assets~~Bayer is able to use and benefit from the license or if the agreement is terminated by ~~$23,609 and $225,778, respectively, which reduced the original goodwill amount of $12.9 million by $202,169.~~

The Company tests its goodwill for impairment at least annually as of December 31 and between annual tests if it becomes aware of an event or change in circumstance that would indicate the carrying value may be impaired. The Company tests goodwill for impairment at the entity level because it operates on the basis of a single reporting unit. A goodwill impairment is the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. When impaired, the carrying value of goodwill is written down to fair value. Any excess of the reporting unit goodwill carrying value over the fair value is recognized as impairment loss.

~~The Company assessed goodwill at December 31, 2017. The Company determined there was an impairment and recognized an impairment charge of approximately $7.5 million in the consolidated statement of~~

operations and comprehensive loss for the year ended December 31, 2017 and reduced the goodwill carrying value from approximately $12.7 million to $5.2 million on its consolidated balance sheet as of December 31, 2017.

The Company assessed goodwill at March 31, 2018, determined there was an impairment and recognized an impairment charge of approximately $5.2 million in the interim consolidated statement of operations and comprehensive loss for the three months ended March 31, 2018.Bayer. As of March 31, ~~2018,~~2020, neither of the ~~goodwill carrying value on~~foregoing had occurred. The $1.0 million upfront non-refundable license fee payment is recorded as deferred revenue in the ~~Company’s~~Company's consolidated balance sheet ~~was written off in its entirety.~~at March 31, 2020.

~~Pear Tree Merger~~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.)

~~On April 30,~~

3. License and Collaboration Agreements

Hammock/MilanaPharm Assignment and License Agreement

In December 2018, the Company entered into (a) an ~~Agreement and Plan of Merger, the Merger~~Assignment Agreement with ~~Pear Tree~~Hammock Pharmaceuticals, Inc., or ~~Pear Tree, Daré Merger Sub, Inc.,~~the Assignment Agreement, and (b) a ~~wholly-owned subsidiary~~First Amendment to License Agreement with TriLogic Pharma, LLC and MilanaPharm LLC, or the License Amendment. Both agreements relate to the exclusive license agreement among Hammock, TriLogic and MilanaPharm dated as of January 9, 2017, or the MilanaPharm License Agreement. Under the Assignment Agreement and the MilanaPharm License Agreement, as amended by the License Amendment, the

Company acquired an exclusive, worldwide license to develop and commercialize products for the diagnosis, treatment and prevention of human diseases or conditions in or through any intravaginal or urological applications. The licensed intellectual property relates to the hydrogel drug delivery platform of TriLogic and MilanaPharm known as TRI-726. In DARE-BV1, this proprietary technology is formulated with clindamycin, an antibiotic used to treat certain bacterial infections, including BV, and has been engineered to produce a dual release pattern after vaginal application, providing maximum duration of exposure to clindamycin at the site of infection. In December 2019, the Company entered into amendments to each of the ~~Company, or Merger Sub,~~License Amendment and two individuals in their respective capacities as Pear Tree stockholders’ representatives. The transactions contemplated by the Merger Agreement closed on May 16, 2018, and as a result, Pear Tree became the Company’s wholly owned subsidiary. The Company acquired Pear Tree to secure the rights to develop DARE-VVA1, a proprietary vaginal formulation of tamoxifen, as a potential treatment for vulvar and vaginal atrophy.Assignment Agreement.

The ~~Company determined that the acquisition~~following is a summary of Pear Tree should be accounted for as an asset acquisition instead of a business combination because substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, and therefore, the asset is not considered a business. Transaction costs of approximately $452,000 associated with the merger are included in the Company’s research and development expense.

~~In accordance with the~~other terms of the Merger Agreement, because the Negative Consideration Amount (as defined below) exceeded the Positive Consideration Amount (as defined below), at the time of the closing of the merger, the excess amount (approximately $132,000) will be offset against future payments otherwise due under the Merger Agreement to certain former and continuing Pear Tree service providers and former holders of Pear Tree’s capital stock, or the Holders, including the potential $75,000 payment due on the one-year anniversary of the closing of the merger. Positive Consideration Amount means the sum of $75,000, and the cash and cash equivalents held by Pear Tree at closing, and Negative Consideration Amount means the sum of (i) certain Pear Tree indebtedness and transaction expenses, (ii) transaction expenses of the stockholders’ representatives, and (iii) amounts payable under Pear Tree’s management incentive plan.License Amendment, as amended:

Under the Merger Agreement, 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 percentage of sublicense revenue.License Fees. The Company ~~must also make contingent payments to 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 shares of the Company’s common stock.~~


5.	~~STOCK-BASED COMPENSATION~~

~~The 2015 Employee, Director and Consultant Equity Incentive Plan~~

Prior to the Cerulean/Private Daré stock purchase transaction, the 2015 Employee, Director and Consultant Equity Incentive Plan of Private Daré, or the 2015 Private Daré Plan, governed the issuance of equity awards to Private Daré employees, officers, non-employee directors and consultants. Options granted under the 2015 Private Daré Plan have terms of ten years from the date of grant unless earlier terminated and generally vest over a three-year period. Upon closing of the Cerulean/Private Daré stock purchase transaction, the Company assumed the 2015 Private Daré Plan and each outstanding option to acquire Private Daré stock that was not exercised prior to the closing. Options to purchase 50,000 shares of Private Daré stock were assumed. Such options were assumed on the same terms as were applicable to them under the 2015 Private Daré Plan and became an option to purchase such number of shares of the Company’s common stock equal to the number of Private Daré shares subject to such option multiplied by the exchange ratio specified in the Daré Stock Purchase Agreement, at a correspondingly adjusted exercise price. Based on the exchange ratio and after giving effect to the reverse stock split effectedMilanaPharm: (1) $25,000 in connection with the ~~closing~~execution of the ~~Cerulean/Private Daré stock purchase transaction, such options were replaced~~License Amendment; (2) $100,000 on December 5, 2019; and (3) $110,000 on January 31, 2020.

Milestone Payments. The Company will pay to MilanaPharm (1) up to $300,000 in the aggregate upon achievement of certain clinical and regulatory development milestones; 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 ~~options~~any sublicense granted to ~~purchase 10,149 shares~~a third party for use outside of the ~~Company’s common stock,~~United States, subject to certain exclusions.

Royalty Payments. After the commercial launch of licensed products and processes and during the royalty term, the Company will pay MilanaPharm high single-digit to low double-digit royalties based on annual worldwide net sales of licensed products and processes in accordance with the agreement.

Efforts. The Company must use commercially reasonable efforts and resources to (1) develop and commercialize at least one licensed product or process in the United States and at least one licensed product or process in Canada, the United Kingdom, France, Germany, Italy or Spain, and (2) continue to commercialize that product or process following the first commercial sale of a licensed product or process in the applicable jurisdiction.

Term. Unless earlier terminated, the license term continues until (1) on a licensed product-by-product (or process-by-process basis) and country-by-country basis, the date of expiration of the royalty term with respect to such licensed product (or process) in such country, and (2) the expiration of all applicable royalty terms under the MilanaPharm License Agreement with respect to all licensed products and processes in all countries. Upon expiration of the term with respect to any licensed product or process in a country (but not upon earlier termination of the MilanaPharm License Agreement), the licenses granted to us 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 of all parties, MilanaPharm may terminate the license solely with respect to a licensed product or process in a country if, after having launched such product or process in such country, the Company or its affiliates or sublicensees, (1) discontinue the sale of such product or process in such country and MilanaPharm notifies the Company of such termination within 60 days of having first been notified by the Company of such discontinuation, or (2) (A) discontinue all commercially reasonable marketing efforts to sell, and discontinue all sales of, such product or process in such country for nine months or more, (B) fail to resume such commercially reasonable marketing efforts within 120 days of having been notified of such failure by MilanaPharm, (C) fail to reasonably demonstrate a strategic justification for the discontinuation and failure to resume to MilanaPharm, and (D) MilanaPharm gives 90 days’ notice to the Company.

The following is a summary of other terms of the Assignment Agreement, as amended:

Assignment; Technology Transfer. Hammock assigned and transferred to the Company all of ~~which were outstanding as of March 31, 2019.~~

~~Private Daré issued 900,000~~its right, title and ~~200,000 shares of fully vested restricted stock~~interest in and to ~~non-employees under~~ the ~~2015 Private Daré Plan during 2015~~MilanaPharm License Agreement and ~~2016, respectively. In connection with~~agreed to cooperate to transfer to the ~~closing~~Company all of the ~~Cerulean/Private Daré stock purchase transaction,~~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 ~~assumed these shares~~to independently practice the licensed intellectual property as soon as commercially practical in order to develop and ~~replaced them with 223,295 restricted shares of~~commercialize the ~~Company’s common stock (after giving effect to the reverse stock split effected~~licensed products and processes.

Fees. The Company paid Hammock: (1) $250,000 in connection with the ~~closing~~execution of the ~~Cerulean/Private Daré stock purchase transaction).~~Assignment Agreement; (2) $125,000 on December 5, 2019; and (3) $137,500 on January 31, 2020.

Milestone Payments. The Company will pay Hammock up to $1.1 million in the aggregate upon achievement of certain clinical and regulatory development milestones.

~~No further awards may be granted under~~Term. The Assignment Agreement will terminate upon the ~~2015 Private Daré Plan following the closing~~later of (1) completion of the ~~Cerulean/Private Daré stock purchase transaction.~~

~~2014 Employee Stock Purchase Plan~~

~~In March 2014, the Company’s board of directors adopted,~~parties' technology transfer plan, and ~~its stockholders approved the 2014 Employee Stock Purchase Plan, or the ESPP, which became effective in April 2014. The ESPP permits eligible employees~~(2) payment to ~~enroll in a six-month offering period whereby participants may purchase shares~~Hammock of the ~~Company’s common stock, through payroll deductions, at a price equal to 85%~~last of the closing price of the common stock on the first day of the offering period or on the last day of the offering period, whichever is lower. Purchase dates under the ESPP occur on or about June 30 and December 31 each year. The Company’s board of directors decided not to initiate a new offering period beginning January 1, 2017 and no offering period has been initiated since then. There was no stock-based compensation related to the ESPP for the three months ended March 31, 2019 or March 31, 2018.

~~Amended and Restated 2014 Stock Incentive Plan~~

The Company maintains the Amended and Restated 2014 Plan, or the Amended 2014 Plan, which was approved by the Company’s stockholders on July 10, 2018. The Amended 2014 Plan was an amendment and restatement of the Company’s 2014 Stock Incentive Plan, or the 2014 Plan.

When adopted, there were 2,046,885 shares of common stock authorized for issuance under the Amended 2014 Plan. The number of authorized shares increases annually on the first day of each fiscal year until, and including, the fiscal year ending December 31, 2024 by the least of (i) 2,000,000, (ii) 4% of the number of outstanding shares of common stock on such date, or (iii) an amount determined by the Company’s board of directors. On January 1, 2019, the number of authorized shares increased by 456,886 to 2,503,771, which increase represented 4% of the number of outstanding shares of common stock on such date.

In March 2017, the Company’s board of directors approved two modifications to outstanding stock options granted under the 2014 Plan to participants providing services to the Company as of that date. One modification extended the exercise period of such stock options to two years after such participant’s termination date, unless the exercise period absent such modification would be longer. The other modification provided for accelerated vesting of such stock options upon a change in control event. These modifications resulted in unamortized fair value expense of approximately $3.7 million and was recorded as part of the total consideration in the Cerulean/Private Daré stock purchase transaction (see Note 4). The two modifications resulted in certain options remaining outstanding that would have otherwise expired.

At March 31, 2019, 323,560 shares of common stock were reserved for future issuance under the Amended 2014 Plan, and options to purchase 2,190,360 shares of the Company’s common stock granted under the Amended 2014 Plan were outstanding.

~~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, 2019. The exercise price of all options granted during the three months ended March 31, 2019 was equal to the market value of the Company’s common stock on the date of the grant. As of March 31, 2019, unamortized stock-based compensation expense of $1,343,624 will be amortized over a weighted average period of 3.3 years.

Number of Shares
Weighted Average
Exercise Price
Outstanding at December 31, 2018 (1) 1,635,790
$ 11.08
Granted 563,000
0.76
Exercised —
—
Canceled/forfeited (8,360 ) 17.81
Expired (70 ) 59.48
Outstanding at March 31, 2019 (unaudited) (1) 2,190,360
$ 8.40
Exercisable at March 31, 2019 (unaudited) 650,151
$ 25.97

~~(1)Includes 10,149 shares subject to options granted under the 2015 Private Daré Plan assumed in connection with the Cerulean/Private Daré stock purchase transaction.~~milestone payments.

~~Compensation Expense~~

~~Total stock-based compensation expense related to stock options granted to employees and directors recognized in the consolidated statement of operations is as follows:~~

Three Months Ended
March 31,
2019 2018
Research and development $ 24,703
$ —
General and administrative 73,265
9,124
Total $ 97,968
$ 9,124

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, 2019 are as follows:



		~~Three Months Ended~~ ~~March 31, 2019~~
~~Expected life in years~~		~~10.0~~
~~Risk-free interest rate~~		~~2.70%~~
~~Expected volatility~~		~~120%~~
~~Forfeiture rate~~		~~0.0%~~
~~Dividend yield~~		~~0.0%~~
~~Weighted-average fair value of options granted~~		~~$0.72~~

~~Restricted Stock After the Cerulean/Private Daré Stock Purchase Transaction~~

The 3.14 million shares of common stock issued in connection with the Cerulean/Private Daré stock purchase transaction to the Private Daré stockholders were not registered with the SEC and may only be sold if registered under the Securities Act of 1933, as amended, or pursuant to an exemption from the registration requirements thereunder. The shares held by non-affiliates became eligible for sale ~~under Rule 144 beginning~~ ~~six months after the closing of the Cerulean/Private Daré stock purchase transaction~~.


6.	~~STOCKHOLDERS’ EQUITY~~

~~ATM Sales Agreement~~

In January 2018, the Company entered into a common stock sales agreement under which the Company may sell up to an aggregate of $10 million in gross proceeds through the sale of shares of common stock from time to time in “at-the-market” equity offerings (as defined in Rule 415 promulgated under the Securities Act of 1933, as amended), including in sales made directly on the Nasdaq Capital Market, or Nasdaq, to or through a market maker or, subject to the Company's prior approval, in negotiated transactions. The Company agreed to pay a commission of up to 3% of the gross proceeds of any common stock sold under this agreement plus certain legal expenses. The common stock sales agreement was amended in August 2018 to refer to the Company’s shelf registration statement on Form S-3 (File No. 333-227019) that was filed to replace the Company’s shelf registration statement on Form S-3 (File No. 333-206396) that expired on August 28, 2018.

During the three months ended March 31, 2019, the Company issued and sold no shares under the common stock sales agreement. During the three months ended March 31, 2018, the Company generated gross proceeds of approximately $1.1 million and incurred issuance costs of $237,403 under this agreement on sales of an aggregate of 375,000 shares of the Company's common stock.

~~Underwritten Public Offering~~

In February 2018, the Company closed an underwritten public offering of 5.0 million shares of its common stock and warrants to purchase up to 3.5 million shares of its common stock. Each share of common stock was sold with a warrant to purchase up to 0.70 of a share of the Company’s common stock. The Company granted the underwriter a 30-day over-allotment option to purchase up to an additional 750,000 shares of common stock and/or warrants to purchase up to 525,000 shares of common stock. The underwriter exercised the option with respect

to warrants to purchase 220,500 shares of common stock. The Company received gross proceeds of $10.3 million, including the proceeds from the sale of the warrants upon exercise of the underwriter’s over-allotment option, and net proceeds of approximately $9.4 million.

~~Common Stock Warrants~~

~~The warrants issued in the February 2018 underwritten offering have an exercise price of $3.00 per share andare exercisable immediately and for five years from issuance.~~The warrants include a price-based anti-dilution provision, which provides that, subject to certain limited exceptions, the exercise price of the warrants will be adjusted downward if the Company issues or sells (or is deemed to issue or sell) securities at a price that is less than the exercise price in effect immediately prior to such issuance or sale (or deemed issuance or sale). In that case, the exercise price of the warrants will be adjusted to equal the price at which the new securities are issued or sold (or are deemed to have been issued or sold). In addition, subject to certain exceptions, if the Company issues, sells or enters into any agreement to issue or sell securities at a price which varies or may vary with the market price of the shares of the Company’s common stock, the warrant holders have the right to substitute such variable price for the exercise price of the warrant then in effect. The warrants are exercisable only for cash, unless a registration statement covering the shares issued upon exercise of the warrants is not effective, in which case the warrants may be exercised on a cashless basis. A registration statement covering the shares issued upon exercise of the warrants is currently effective.

The exercise price of these warrants was automatically reduced to $0.98 per share in connection with the initial closing of the Company's underwritten public offering in April 2019. See Note 11, "Subsequent Events," herein.

The Company estimated the fair value of the warrants as of February 15, 2018 to be approximately $3.0 million which has been recorded in equity as of the grant date. The Company early adopted ASU 2017-11 and as a result has recorded the fair value of the warrants as equity (see Note 3).

~~No warrants were exercised during the three months ended March 31, 2019 or 2018. As of March 31, 2019, the Company had these warrants outstanding:~~

Shares Underlying
Outstanding Warrants
Exercise Price Expiration Date
2,906 $ 120.40
December 1, 2021
3,737 $ 120.40
December 6, 2021
17,190 $ 60.50
January 8, 2020
6,500 $ 10.00
April 4, 2026
3,720,500 $ 3.00
February 15, 2023
3,750,833


7.	~~LEASED PROPERTIES~~

Effective January 1, 2019, the Company adopted ASC 842, which requires recognition of a right-of-use asset and lease liability for all leases at the commencement date based on the present value of lease payments over the lease term. Additional qualitative and quantitative disclosures regarding the Company's leasing arrangements are also required. The Company adopted ASC 842 prospectively and elected the package of transition practical expedients that does not require reassessment of: (1) whether any existing or expired contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company has elected other available practical expedients to not separate lease and nonlease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of 12 months or less.

The Company has one lease for its corporate headquarters that commenced on July 1, 2018 for 3,169 square feet of office space. The term of the lease is 37 months and terminates on July 31, 2021. The Company has the option to extend the term of the lease for one year at the Company's discretion. The gross monthly base rent is $8,873, which will increase approximately 4% per year, subject to certain future adjustments. The base rent was abated during the second month of the lease. The Company evaluates renewal options at lease inception and on an ongoing basis, and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. The lease does not require material variable lease payments, a residual value guarantee or restrictive covenants.

The lease does not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an

estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease within a particular currency environment. The Company used an incremental borrowing rate of 7% as of January 1, 2019 for the operating lease that commenced prior to that date. The depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term.

As of March 31, 2019, the Company recorded a right of use asset of $212,909 within its other non-current assets and $83,751 and $139,288, respectively within current and non-current other liabilities on its consolidated balance sheet.

~~As of March 31, 2019, future minimum lease payments for the Company's corporate headquarters are:~~

Years ending December 31:
Remainder of 2019 $ 81,950
2020 112,943
2021 67,595
Total future minimum lease payments 262,488
Less: Difference between future minimum lease payments and discounted operating lease liabilities 39,449
Total operating lease liabilities $ 223,039

Operating lease costs were $27,038 for the three months ended March 31, 2019. Operating lease costs are included in general and administrative expenses in the condensed consolidated statement of operations.

Cash paid for amounts included in the measurement of operating lease liabilities were $26,620 for the three months ended March 31, 2019, and this amount is included in operating activities in the condensed consolidated statements of cash flows.


8.	~~COMMITMENTS AND CONTINGENCIES~~

~~License and Research Agreements~~

ADVA-Tec License Agreement

In March 2017, the Company entered into a license agreement ~~or the ADVA-Tec License Agreement,~~ with ADVA-Tec, Inc., ~~or ADVA-Tec,~~ under which the Company was granted the exclusive right to develop and commercialize Ovaprene for human contraceptive use worldwide. ADVA-Tec and its affiliates own issued patents or patent applications covering Ovaprene and control proprietary trade secrets covering the manufacture of Ovaprene. As of the date of this report, this patent portfolio includes nine issued U.S. patents and one pending U.S. patent application, and 59 granted patents and four pending patent applications in other major markets, all of which are exclusively licensed to the Company for the human contraceptive use of Ovaprene as a human contraceptive device. The license continues on a country-by-country basis until the later of the life of the licensed patents or the Company’s last commercial sale of Ovaprene. Under the terms of the ADVA-Tec Agreement, the Company has a right of first refusal to license these patents and patent applications for additional indications.

~~The following is a summary of other terms of the ADVA-Tec License Agreement:~~

~~Research and Development.~~ADVA-Tec will conduct certain research and development work as necessary to allow the Company to seek a Premarket Approval, or PMA, from the United States Food and Drug Administration, or the FDA, and will supply the Company with its requirements of Ovaprene for clinical and commercial use on commercially reasonable terms. The Company must use commercially reasonable efforts to develop and commercialize Ovaprene, and must meet certain minimum spending amounts per year, such amounts totaling $5.0 million in the aggregate over the first three years, to cover such activities until a final PMA is filed, or until the first commercial sale of Ovaprene, whichever occurs first.Ovaprene.

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~~$20.0 million in the aggregate based on the achievement of certain worldwide net sales milestones. The development and regulatory milestones include: the completion of a successful postcoital clinical study, which is required before the Company can commence a Phase 3 pivotal human clinical trial; approval by the FDA to commence such Phase 3 pivotal human clinical trial; successful completion of such Phase 3 pivotal human clinical trial; the FDA’s acceptance of a PMA filing for Ovaprene;

the FDA’s approval of the PMA for Ovaprene; obtaining Conformité Européenne Marking of Ovaprene in at least three designated European countries; obtaining regulatory approval in at least three designated European countries; and obtaining regulatory approval in Japan. Because these milestone payments depend upon the successful progress of the Company’s product development programs, the Company cannot estimate with certainty when these payments will occur, if ever.

Royalty ~~Payments.~~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.

~~Termination Rights.~~Term. Unless earlier terminated, the license ~~the Company received under the ADVA-Tec License Agreement~~ continues on a country-by-country basis until the later of the life of the licensed patents or ~~the Company's last~~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: (1)~~to meet agreed upon efforts to 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 ~~certain limited circumstances,~~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 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 ~~certain designated countries within three years of~~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 Ovaprene (2) satisfy the annual spending obligation described above, (3) use commercially reasonable efforts to complete all necessary pre-clinical and clinical studies required to support and submit a PMA, (4) conduct clinical trials as set forth in the ~~development plan that is agreed by the Company~~U.S. and ADVA-Tec, and as may be modified by a joint research committee, unless such failure is caused by events outside of the Company’s reasonable control, or (5) enroll a patient in the first non-significant risk medical device study or clinical trial as allowed by an institutional review board within six months of the production and release of Ovaprene, unless such failure is caused by events outside of its reasonable control.

~~For products currently in development, future potential~~escalating milestone payments based on ~~product development~~annual net sales of Ovaprene during a calendar year, totaling up to $310.0 million if all such milestones, including the first commercial sale, are ~~approximately $14.6 million as~~achieved, (b) tiered royalties starting in the low double digits based on annual net sales of ~~March 31, 2019. Future potential milestone payments related~~Ovaprene during a calendar year, subject to ~~commercialization totaled $20 million at March 31, 2019. There are 1-10% royalties required under the license agreement.~~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 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 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 ~~unable~~subject to ~~estimate with certainty~~automatic renewal terms, continues until the ~~timing~~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 ~~these milestone payments will occur as these payments are dependent upon the Company's product development programs.~~due.

SST License and Collaboration Agreement

In February 2018, the Company entered into a license and collaboration agreement ~~or the SST License Agreement,~~ with Strategic Science & Technologies-D, LLC and Strategic Science & Technologies, LLC, referred to collectively as ~~SST. The~~ SST, ~~License Agreement provides~~under which the Company ~~with~~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 treatment of female sexual arousal disorder, or~~ the ~~Field of Use,~~Licensed Product, which is defined as SST’s topical formulation of Sildenafil Cream, 3.6% as it ~~exists~~existed as of the effective date of the ~~SST License Agreement,~~agreement, or any other topically applied pharmaceutical product containing

sildenafil or a salt thereof as a pharmaceutically active ingredient, alone or with other active ingredients, but specifically excluding any product containing ibuprofen or any salt derivative of ~~ibuprofen, or the Licensed Products.~~ibuprofen.

The following is a summary of other terms of ~~the SST License Agreement:~~this license and collaboration agreement:

Invention Ownership.~~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.~~Development~~ ~~Committee~~. The parties will collaborate through a joint development committee that will determine the strategic objectives for, and generally oversee, the development efforts of both parties under the ~~SST License Agreement.~~agreement.

~~Development~~Development..The Company must use commercially reasonable efforts to develop the Licensed Products in the Field of Use in accordance with a development plan in the ~~SST License Agreement,~~agreement, and to commercialize the Licensed Products in the Field of Use. The Company is responsible for all reasonable internal and external costs and expenses incurred by SST in its performance of the development activities it must perform under the ~~SST License Agreement.~~agreement.

Royalty Payments.~~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~~$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.

Catalent JNP License Agreement

In April 2018, the Company entered into an exclusive license agreement with Catalent JNP, Inc. (formerly known as Juniper Pharmaceuticals, Inc., and which the Company refers to as Catalent), under which Catalent granted the Company (a) an exclusive, royalty-bearing worldwide license under certain patent rights, either owned by or exclusively licensed to Catalent, to make, have made, use, have used, sell, have sold, import and have imported products and processes; and (b) a non-exclusive, royalty-bearing worldwide license to use certain technological information owned by Catalent to make, have made, use, have used, sell, have sold, import and have imported products and processes. The Company is entitled to sublicense the rights granted to it under this agreement.

~~License Term.~~Upfront Fee.The ~~Company’s~~Company paid a $250,000 non-creditable upfront license ~~received under~~fee to Catalent in connection with the ~~SST License Agreement continues~~execution of the agreement.

Annual Maintenance Fee. The Company will pay an annual license maintenance fee to Catalent on ~~a country-by-country basis until the later~~each anniversary of ~~10 years from~~ the date of the agreement, the amount of which will be $50,000 for the first ~~commercial sale of such Licensed Product or the expiration of the last valid claim of patent rights covering the Licensed Product~~two years and $100,000 thereafter, and which will be creditable against royalties and other payments due to Catalent in the ~~Field~~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 ~~Use. Upon expiration (but not termination) of~~(1) up to $13.5 million in the ~~SST License Agreement~~aggregate upon achieving certain clinical and regulatory milestones, and (2) up to $30.3 million in ~~a particular country,~~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 ~~have a fully paid-up license~~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 ~~licensed intellectual property~~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 Acquisition

In May 2018, the Company completed its acquisition of Pear Tree Pharmaceuticals, Inc., or Pear Tree. The Company acquired Pear Tree to secure the rights to develop DARE-VVA1, a proprietary vaginal formulation of tamoxifen, as a potential treatment for vulvar and ~~commercialize~~vaginal atrophy.

Milestone Payments. The Company must make contingent payments to the ~~applicable Licensed Products~~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 ~~applicable country~~Company’s sole discretion, in cash or shares 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 ~~a non-exclusive basis.~~

~~Termination.In addition~~percentages of annual net sales of certain products subject to customary termination rights for both parties: (1) prior to receipt of approval by a regulatory authority necessary for commercialization of a Licensed Product in the corresponding jurisdiction, including New Drug Application Approval, or NDA Approval,license agreements the Company ~~may terminate the SST License Agreement without cause upon 90 days prior written notice to SST; (2) following receipt~~assumed and a percentage of ~~approval by a regulatory authority necessary for commercialization of a Licensed Product in the corresponding jurisdiction, including NDA Approval,~~sublicense revenue.

Microchips Acquisition

In November 2019, the Company ~~may terminate~~completed its acquisition of Microchips Biotech, Inc., or Microchips. On the ~~SST License Agreement without cause upon 180 days prior written notice; and (3) SST may terminate~~closing date of the ~~SST License Agreement with respect~~merger, Microchips became a wholly owned subsidiary of the Company. The Company acquired Microchips to secure the ~~applicable Licensed Product(s) in the applicable country(ies) upon 30 days’ notice~~rights to ~~the~~develop user-controlled, long-acting reversible contraception that utilizes levonorgestrel. The Company ~~if the Company fails~~agreed to use commercially reasonable efforts to ~~perform~~achieve specified development ~~activities~~and regulatory objectives relating to the implantable contraceptive product in ~~substantial accordance with~~development by Microchips.

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.

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 ~~plan~~ and ~~does not cure~~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 ~~failure within 60 days~~products, subject to customary provisions permitting royalty reductions and offset; and (d) a percentage of ~~receipt~~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 ~~SST’s notice thereof.~~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 ~~or the Orbis Agreement,~~ with Orbis Biosciences, or Orbis, for the development of long-acting injectable etonogestrel contraceptive with 6- and 12-month durations (ORB-204 and ORB-214, respectively). Under ~~the Orbis Agreement,~~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 ~~Orbis Agreement,~~agreement, $75,000 at the 50% completion point, not later than 6 months following the date the ~~Orbis Agreement~~agreement was signed (which the Company paid in September 2018), and $75,000 upon delivery by Orbis of the 6-month batch, not later than 11 months following the date the ~~Orbis Agreement~~agreement was signed (which the Company paid in January 2019).

Upon Orbis successfully completing Stage 1 of the development program and achieving the predetermined target milestones for Stage 1, the Company will have 90 days to instruct Orbis whether to commence the second stage of development work, Stage 2. Should the Company execute its option to proceed to Stage 2, it will have to provide additional funding to Orbis for such activities.

Pre-clinical studies for the 6- and 12-month formulations have been completed, including establishing pharmacokinetics and pharmacodynamics profiles. The collaboration with Orbis will continue to advance the program through formulation optimization with the goal of achieving sustained release over the target time period.

The ~~Orbis Agreement~~agreement provides the Company with an option to enter into a license agreement for ORB-204 and ORB-214 should development efforts be successful.

~~Juniper Pharmaceuticals - License~~


4.	ACQUISITIONS

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. The Company recorded $1.0 million in contingent consideration associated with milestone payments expected to become payable through 2021.

The Company determined the transaction was accounted for as an asset acquisition as there were no outputs or substantive processes in existence as of the acquisition date. Transaction costs of approximately $202,000 associated with the merger were included in the Company’s research and development expense in the fourth quarter of 2019.


5.	STOCK-BASED COMPENSATION

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, 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 with a correspondingly adjusted exercise price and 223,295 shares 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.

2014 Employee Stock Purchase Plan

The Company’s 2014 Employee Stock Purchase Plan, or the ESPP, became effective in April 2014, but no offering period has been initiated thereunder since January 2017 and there was no stock-based compensation related to the ESPP for the three months ended March 31, 2020 or March 31, 2019.

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, the number of authorized shares increased by 787,336 to 1,411,481, which increase represented 4% of the number of outstanding shares of common stock on such date.

Summary of Stock Option Activity

The table below summarizes stock option activity under the Amended 2014 Plan, and related information for the three months ended March 31, 2020. The exercise price of all options granted during the three months ended March 31, 2020 was equal to the market value of the Company’s common stock on the date of grant. As of March 31, 2020, unamortized stock-based compensation expense of $1,686,903 will be amortized over a weighted average period of 2.9 years. At March 31, 2020, 704,481 shares of common stock were reserved for future awards granted under the Amended 2014 Plan.



	Number of Shares		Weighted Average Exercise Price
Outstanding at December 31, 2019	1,889,775		$	1.21
Granted	707,000		1.06
Exercised	(10,149	)	0.01
Canceled/forfeited	—		—
Expired	—		—
Outstanding at March 31, 2020	2,586,626		$	1.17
Exercisable at March 31, 2020	568,118		$	1.86

Compensation Expense

Total stock-based compensation expense related to stock options granted to employees and directors recognized in the consolidated statement of operations is as follows:



	Three Months Ended March 31,
	2020		2019
Research and development	$	46,380	$	24,703
General and administrative	114,461		73,265
Total	$	160,841	$	97,968



		Three Months Ended March 31, 2020
Expected life in years		10.0
Risk-free interest rate		0.86%
Expected volatility		121%
Forfeiture rate		0.0%
Dividend yield		0.0%
Weighted-average fair value of options granted		$1.00


6.	STOCKHOLDERS’ EQUITY

ATM Sales Agreement

In ~~April~~January 2018, the Company entered into ~~an Exclusive License Agreement, or the Juniper License Agreement, with Juniper Pharmaceuticals, Inc., or Juniper,~~a common stock sales agreement under which ~~Juniper granted~~ the Company ~~(a) an exclusive, royalty-bearing worldwide license under certain patent rights, either owned by or exclusively licensed~~may sell shares of its common stock from time to Juniper, to make, have made, use, have used, sell, have sold, import and have imported products and processes; and (b) a non-exclusive, royalty-bearing worldwide license to use certain technological information owned by Juniper to make, have made, use, have used, sell, have sold, import and have imported products and processes. The Company is entitled to sublicense the rights granted to ittime in “at-the-market” equity offerings (as defined in Rule 415 promulgated under the ~~Juniper License Agreement.~~

~~The following is a summary~~Securities Act of ~~certain terms of the Juniper License Agreement:~~

~~Upfront Fee.The Company paid a $250,000 non-creditable upfront license fee to Juniper in connection with the execution of the Juniper License Agreement.~~

~~Annual Maintenance Fee~~1933, as amended). The Company will pay ~~an annual license maintenance fee~~a commission of up to ~~Juniper on each anniversary~~3% of the ~~date~~gross proceeds of any common stock sold under this agreement plus certain legal expenses. The common stock sales agreement was amended in August 2018 to refer to the Company’s shelf registration statement on Form S-3 (File No. 333-227019) that was filed to replace the Company’s shelf registration statement on Form S-3 (File No. 333-206396) that expired on August 28, 2018.

During the three months ended March 31, 2020, the Company sold 3,308,003 shares under the common stock sales agreement for gross proceeds of approximately $5.4 million and incurred offering expenses of approximately $220,000. The Company did not sell any shares under this agreement during the three months ended March 31, 2019.

April 2019 Underwritten Public Offering

In April 2019, the Company closed an underwritten public offering of 4,575,000 shares of its common stock at a public offering price of $1.10 per share. The Company granted the underwriters a 30-day over-allotment option to purchase up to an additional 686,250 shares which was exercised in full on April 12, 2019. Including the over-allotment shares, the Company issued a total of 5,261,250 shares in the underwritten public offering and received gross proceeds of approximately $5.8 million and net proceeds of approximately $5.2 million after deducting underwriting discounts and offering expenses.

Common Stock Warrants

The warrants issued in the February 2018 underwritten offering initially had an exercise price of $3.00 per share andare exercisable through February 2023.The warrants include a price-based anti-dilution provision, which provides that, subject to certain limited exceptions, the exercise price of the ~~Juniper License Agreement, the amount of which~~warrants will be ~~$50,000~~reduced each time the Company issues or sells (or is deemed to issue or sell) securities for a consideration per share less than the exercise price of those warrants in effect immediately prior to such issuance or sale. In addition, subject to certain exceptions, if the Company issues, sells or enters into any agreement to issue or sell securities at a price which varies or may vary with the market price of the shares of the Company’s common stock, the warrant holders have the right to substitute such variable price for the ~~first two years~~exercise price of the warrant then in effect. These warrants are exercisable only for cash, unless a registration statement covering the shares issued upon exercise of the warrants is not effective, in which case the warrants may be exercised on a cashless basis. A registration statement covering the shares issued upon exercise of the warrants is currently effective. The Company estimated the fair value of the warrants as of February 15, 2018 to be approximately $3.0 million which has been recorded in equity as of the grant date. The Company early adopted ASU 2017-11 as of January 1, 2018 and ~~$100,000 thereafter, and which will be creditable against royalties and other payments due to Juniper~~recorded the fair value of the warrants as equity.

In April 2019, in accordance with the price-based anti-dilution provision discussed above, as a result of the sale of shares in the ~~same calendar year but may not be carried forward~~April 2019 underwritten offering, the exercise price of these warrants was automatically reduced to ~~any other year.~~$0.98 per share and $0.8 million was recorded to additional paid-in capital as a result of the triggering of the anti-dilution provision.

~~Milestone~~ ~~Payments.The~~During the three months ended March 31, 2020, 1,699,000 warrants were exercised for gross proceeds of approximately $1.7 million. No warrants were exercised during the three months ended March 31, 2019. As of March 31, 2020, the Company ~~must make potential future development and sales milestone payments of (1) up to $13.5 million in~~had the ~~aggregate upon achieving certain clinical and regulatory milestones, and (2)~~following warrants outstanding:



Shares Underlying Outstanding Warrants	Exercise Price		Expiration Date
2,906	$	120.40	December 1, 2021
3,737	$	120.40	December 6, 2021
6,500	$	10.00	April 4, 2026
2,021,500	$	0.98	February 15, 2023
2,034,643


7.	LEASED PROPERTIES

~~up to $30.3 million in the aggregate upon achieving certain commercial sales milestones~~The Company's lease for ~~each product or process covered by the licenses granted under the Juniper License Agreement.~~

~~Royalty Payments. During the royalty term, the Company will pay Juniper mid-single-digit to low double-digit royalties based~~its corporate headquarters (3,169 square feet of office space) commenced on ~~worldwide net sales of products and processes covered by the licenses granted under the JuniperLicense~~Agreement. In lieu of such royalty payments, the Company will pay Juniper a low double-digit percentage of all sublicense income the Company receives for the sublicense of rights under the Juniper License Agreement to a third party. The royalty term, which is determined on a country-by-country basis and product-by-product basis (or process-by-process basis), begins with the first commercial sale of a product or process in a countryJuly 1, 2018 and terminates on the latest of (1) the expiration date of the last valid claim within the licensed patent rights with respect to such product or process in such country, (2) 10 years following the first commercial sale of such product or process in such country, and (3) when one or more generic products for such product or process are commercially available in such country, except that if there is no such generic product by the 10th year following the first commercial sale in such country, then the royalty term will terminate on the 10-year anniversary of the first commercial sale in such country.

~~Efforts~~.July 31, 2021. The Company ~~must use commercially reasonable efforts~~has the option to ~~develop and make at least one product or process available to the public, which efforts include achieving specific diligence requirements by specific dates specified in the Juniper License Agreement.~~

T~~erm. Unless earlier terminated,~~extend the term of the ~~Juniper License Agreement will continue~~lease for one year.

Microchips, which the Company acquired in November 2019, leases general office space in Lexington, Massachusetts and warehouse space in Billerica, Massachusetts. The Lexington lease commenced on July 1, 2013 and terminates on September 30, 2021. The Billerica lease commenced on October 1, 2016 and terminates on March 31, 2022.

Under the terms of each lease, the Company pays base annual rent (subject to an annual fixed percentage increase), plus property taxes, and other normal and necessary expenses, such as utilities, repairs, and maintenance. The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. The leases do not require material variable lease payments, residual value guarantees or restrictive covenants.

The leases do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a ~~country-by-country~~collateralized basis until the later of (1) the expiration date of the last valid claim within such country, or (2) 10 years from the date of first commercial sale of a product or process in such country. Upon expiration (but not early termination) of the Juniper License Agreement, the licenses granted thereunder will convert automatically to fully-paid irrevocable licenses. Juniper may terminate the Juniper License Agreement (1) upon 30 days’ notice for the Company’s uncured breach of any payment obligation under the Juniper License Agreement, (2) if the Company fails to maintain required insurance, (3) immediately upon the Company’s insolvency or the making of an assignment for the benefit of the Company’s creditors or if a bankruptcy petition is filed for or against the Company, which petition is not dismissed within 90 days, or (4) upon 60 days’ notice for any uncured material breach by the Company of any of its other obligations under the Juniper License Agreement. The Company may terminate the Juniper License Agreement on a country-by-country basis for any reason by giving 180 days’ notice (or 90 days’ notice if such termination occurs prior to receipt of marketing approval in the United States). If Juniper terminates the Juniper License Agreement for the reason described in clause (4) above or if the Company terminates the Juniper License Agreement, Juniper will have full access including the right to use and reference all product data generated duringover the term of the ~~Juniper License Agreement~~lease within a particular currency environment. The Company uses an incremental borrowing rate of 7% for operating leases that ~~is owned~~commenced prior to January 2019. The depreciable lives of operating leases and leasehold improvements are limited by the ~~Company.~~expected lease term.

~~Pear Tree Acquisition~~At March 31, 2020, the Company reported operating lease right of use assets of approximately $432,000 in other non-current assets, and $404,000 and $284,000, respectively, in current and non-current other liabilities on the consolidated balance sheet.

~~The Company may be required to make certain royalty~~Total operating lease costs were approximately $76,000 and ~~milestone~~$27,000 for the three months ended March 31, 2020 and March 31, 2019, respectively. Operating lease costs consist of monthly lease payments expense, common area maintenance and other repair and maintenance costs and are included in general and administrative expenses in the consolidated statement of operations.

Cash paid for amounts included in the measurement of operating lease liabilities was approximately $128,000 and $27,000 for three months ended March 31, 2020 and March 31, 2019, respectively, and these amounts are included in operating activities in the consolidated statements of cash flows. Further, at March 31, 2020, operating leases had a weighted average remaining lease term of 1.61 years.

As of March 31, 2020, future minimum payments under the ~~Merger Agreement (see Note 4).~~Company's operating leases are approximately:

~~Hammock/MilanaPharm Assignment and License Agreement~~

On December 5, 2018, the Company entered into (a) an Assignment Agreement with Hammock Pharmaceuticals, Inc., or the Assignment Agreement, and (b) a First Amendment to License Agreement with TriLogic Pharma, LLC and MilanaPharm LLC, or the License Amendment. Both agreements relate to the Exclusive License Agreement among Hammock, TriLogic and MilanaPharm dated as of January 9, 2017, or the MilanaPharm License Agreement. Under the Assignment Agreement and the MilanaPharm License Agreement, as amended by the License Amendment, the Company acquired an exclusive, worldwide license under certain intellectual property to, among other things, develop and commercialize products for the diagnosis, treatment and prevention of human diseases or conditions in or through any intravaginal or urological applications. The licensed intellectual property relates to the hydrogel drug delivery platform of TriLogic and MilanaPharm known as TRI-726. In DARE-BV1, this proprietary technology is formulated with clindamycin, an antibiotic used to treat certain bacterial infections, including BV, and has been engineered to produce a dual release pattern after vaginal application, providing maximum duration of exposure to clindamycin at the site of infection.




Remainder of 2020	$	334,000
2021	363,000
2022	42,000
Total future minimum lease payments	739,000
Less: Difference between future minimum lease payments and discounted operating lease liabilities	50,000
Total operating lease liabilities	$	689,000

~~The following is a summary of other terms of the License Amendment:~~


8.	COMMITMENTS AND CONTINGENCIES

Contingent Consideration

~~License Fees.~~ ~~The Company paid $25,000 to MilanaPharm in~~In connection with the ~~execution~~acquisition of the License Amendment and must pay $200,000 to MilanaPharm (in the Company's discretion, either in cash or with shares of the Company's common stock) within 15 days of the first to occur of December 5, 2019 or the closing of an equity financing in whichMicrochips, the Company ~~raises aggregate proceeds~~agreed to pay contingent consideration based upon the achievement of specified funding, product development and regulatory milestones. The Company recorded $1.0 million in contingent consideration liability associated with milestone payments expected to become payable through 2021 in its consolidated balance sheet at ~~least $10.0 million.~~March 31, 2020.

~~Milestone Payments.~~ The Company will pay to MilanaPharm (1) up to $300,000 in the aggregate upon achievement of certain development milestones; and (2) up to $1.75 million in the aggregate upon achieving certain commercial sales milestones.

~~Foreign Sublicense Income.~~ The Company will pay MilanaPharm a low double-digit percentage of all income received by the Company or its affiliates in connection with any sublicense granted to a third party for use outside of the United States, subject to certain exclusions.

~~Royalty Payments.~~ During the royalty term, the Company will pay MilanaPharm high single-digit to low double-digit royalties based on annual worldwide net sales of licensed products and processes. The royalty term, which is determined on a country-by-country basis and licensed product-by-product basis (or process-by-process basis), begins with the first commercial sale of a licensed product or process in a country and terminates on the latest of (a) the expiration date of the last valid claim of the licensed patent rights that cover the method of use of such product or process in such country, or (b) 10 years following the first commercial sale of such product or process in such country. Royalty payments are subject to reduction in certain circumstances, including as a result of generic competition, patent prosecution expenses incurred by the Company, or payments to third parties for rights or know-how that are required for the Company to exercise the licenses granted to it under the MilanaPharm License Agreement or that are strategically important or could add value to a licensed product or process in a manner expected to materially generate or increase sales.

~~Efforts~~. The Company must use commercially reasonable efforts and resources to (1) develop and commercialize at least one licensed product or process in the United States and at least one licensed product or process in at least one of Canada, the United Kingdom, France, Germany, Italy or Spain, and (2) continue to commercialize that product or process following the first commercial sale of a licensed product or process in the applicable jurisdiction.

~~Term~~. Unless earlier terminated, the term of the MilanaPharm License Agreement will continue until (1) on a licensed product-by-product (or process-by-process basis) and country-by-country basis, the date of expiration of the royalty term with respect to such licensed product in such country, and (2) the expiration of all applicable royalty terms under the MilanaPharm License Agreement with respect to all licensed products and processes in all countries. Upon expiration of the term with respect to any licensed product or process in a country (but not upon earlier termination of the MilanaPharm License Agreement), the licenses granted to the Company under the MilanaPharm License Agreement will convert automatically to an exclusive, fully paid-up, royalty-free, perpetual, non-terminable and irrevocable right and license under the licensed intellectual property.

In addition to customary termination rights for all parties, MilanaPharm may terminate the license granted to the Company solely with respect to a licensed product or process in a country if, after having launched such product or process in such country, (1) the Company, or its affiliates or sublicensees, discontinue the sale of such product or process in such country and MilanaPharm notifies the Company of such termination within 60 days of having first been notified by the Company of such discontinuation, or (2) the Company, or its affiliates or sublicensees, (A) discontinues all commercially reasonable marketing efforts to sell, and discontinues all sales of, such product or process in such country for nine months or more, (B) fails to resume such commercially reasonable marketing efforts within 120 days of having been notified of such failure by MilanaPharm, (C) fails to reasonably demonstrate a strategic justification for the discontinuation and failure to resume to MilanaPharm, and (D) MilanaPharm gives 90 days’ notice to the Company.

~~The following is a summary of other terms of the Assignment Agreement with Hammock:~~

~~Assignment; Technology Transfer~~. Hammock assigned and transferred to the Company all of its right, title and interest in and to the MilanaPharm License Agreement and agreed to cooperate to transfer to the Company all of the data, materials and the licensed technology in its possession pursuant to a technology transfer plan to be agreed upon by the parties, with a goal for the Company to independently practice the licensed intellectual property as soon as commercially practical in order to develop and commercialize the licensed products and processes.

~~Fees~~. The Company paid $250,000 to Hammock in connection with the execution of the Assignment Agreement and must pay $250,000 to Hammock (in the Company's discretion either in cash or with shares of the Company's common stock) within 15 days of the first to occur of December 5, 2019 or the closing of an equity financing in which the Company raises aggregate proceeds of at least $10.0 million.

~~Milestone Payments. The Company will pay Hammock up to $1.1 million in the aggregate upon achievement of certain clinical and regulatory development milestones.~~

~~Term~~. The Assignment Agreement will terminate upon the later of (1) completion of the parties’ technology transfer plan, and (2) payment to Hammock of the last of the payments described above, including the milestone payments.


9.	GRANT AWARD

~~In April~~Eunice Kennedy Shriver National Institute of Child Health and Human Development

Since 2018, the Company has received ~~a Notice of Award for the first $224,665 of the anticipated $1.9 million in~~ grant funding for clinical development efforts supporting Ovaprene from the Eunice Kennedy Shriver National Institute of Child Health and Human Development, a division of the National Institutes of Health, or the NIH. Through year-end 2019, the Company received award payments from the NIH totaling $1.2 million.

The NIH issues notices of awards to the Company for a specified amount, and the Company must incur and track expenses eligible for reimbursement under the award and submit a detailed accounting of such expenses to receive payment. ~~The~~If the Company ~~subsequently received~~receives payments under the award, the amounts of such payments ~~totaling $224,665. The award payments were applied to clinical development efforts supporting Ovaprene and were~~are recognized in the statement of operations as a reduction to research and development activities as the related costs ~~were~~are incurred to meet those obligations over the period.

OnThe Company recorded credits to research and development expense for costs related to the NIH award of approximately $293,000 and $161,000 for the three months ended March ~~11,~~31, 2020 and March 31, 2019, respectively.

Bill & Melinda Gates Foundation

Microchips has a grant agreement with the ~~Company~~Bill & Melinda Gates Foundation, or the Foundation, relating to the development of Microchips’ contraceptive program. Expenses eligible for grant funding must be incurred, tracked and reported to the Foundation. In July 2019, Microchips received ~~a Notice of Award for an additional $982,851 of the anticipated $1.9~~approximately $2.9 million in grant funding from the Eunice Kennedy Shriver National Institute of Child Health and Human Development. The second award followed the NIH's review of an interim data analysis and other results of the first phase of the research supporting Ovaprene. The award will be applied to clinical development efforts supporting Ovaprene. The remaining portion of the award under the grant, $730,722, is contingent upon, among other matters, assessment that the results of the ongoing Ovaprene study satisfy specified requirements set out in the award notice, and the availability of funds.payments. At March 31, ~~2019,~~2020, grant funding payments associated with research and development expenses for Microchips’ contraceptive program not yet incurred totaled approximately $1.1 million and are recorded as deferred grant funding liability in the ~~Company recorded a receivable of approximately $161,007 for expenses eligible for reimbursement incurred through March 31, 2019.~~Company's consolidated balance sheet.


10.	NET LOSS PER SHARE

The Company computes basic net loss per share using the weighted average number of common shares outstanding during the period. Diluted net income per share is based upon the weighted average number of common shares and potentially dilutive securities (common share equivalents) outstanding during the period. Common share equivalents outstanding, determined using the treasury stock method, are comprised of shares that may be issued under outstanding options and warrants to purchase shares of the Company’s common stock. Common share equivalents are excluded from the diluted net loss per share calculation if their effect is anti-dilutive.

The following potentially dilutive outstanding securities were excluded from diluted net loss per common share for the period indicated because of their anti-dilutive effect:


Potentially dilutive securities	Three months ended March 31,		Three Months Ended March 31,
	2019	2018	2020	2019
Stock options	2,190,360	543,396	2,586,626	2,190,360
Warrants	3,750,833	3,751,002	2,034,643	3,750,833
Total	5,941,193	4,294,398	4,621,269	5,941,193

In April 2020, the Company received a final notice of award for approximately $731,000 of the total $1.9 million in grant funding for clinical development efforts supporting Ovaprene from the NIH. At March 31, 2020, the Company recorded a receivable of approximately $428,000 for expenses incurred through such date that are eligible for reimbursement under this final notice of award. The NIH issued this final notice of award after reviewing data from the completed postcoital test (or PCT) clinical trial and commercialization plans of Ovaprene, which satisfied specified requirements set out in the award notice.

Paycheck Protection Program

In April 2020, due to the economic uncertainty resulting from the impact of the COVID-19 pandemic on the Company's operations and to support its ongoing operations and retain all employees, the Company applied for a loan under the Paycheck Protection Program, or the PPP, of the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, administered by the U.S. Small Business Administration, or SBA. The Company received a loan of approximately $367,000. The loan matures in April 2022, bears interest at a rate of 1.00% per annum, is payable in equal monthly payments commencing in November 2020 through maturity and may be prepaid at any time prior to maturity with no prepayment penalties. Under the terms of the PPP, subject to specified limitations, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, and covered utilities during the eight-week period that begins on the date the lender makes the first disbursement to the borrower. The Company intends to use the entire loan for qualifying expenses under the PPP and to apply for forgiveness of the entire loan, however, no assurance is provided that the Company will obtain forgiveness of the loan in whole or in part.

On April ~~11, 2019,~~22, 2020, the Company ~~closed an underwritten public offering~~entered into a Purchase Agreement and Registration Rights Agreement with Lincoln Park Capital Fund, LLC, or Lincoln Park. Under the terms and subject to the conditions of ~~4,575,000 shares of its common stock at a public offering price of $1.10 per share. The~~the Purchase Agreement, the Company ~~granted~~has the ~~underwriters a 30-day over-allotment option~~right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase up to ~~an additional 686,250 shares which was exercised in full on April 12, 2019. Including~~$15.0 million of the ~~over-allotment shares,~~Company’s common stock. Such sales of common stock by the Company, if any, will be subject to certain limitations, and may occur from time to time, at the Company’s sole discretion, over the 36-month period commencing on the date that a registration statement covering the resale by Lincoln Park of shares that have been and may be issued under the Purchase Agreement is declared effective by the SEC and a ~~total of 5,261,250 shares~~final prospectus in connection therewith is filed and the other conditions in the ~~underwritten public offering, and received gross proceeds~~Purchase Agreement are satisfied. The Company filed such a registration statement with the SEC on May 1, 2020 to register the resale by Lincoln Park of ~~approximately $5.8 million and net proceeds of approximately $5.2 million after deducting underwriting discounts and offering expenses.~~

~~February 2018 Warrant Exercise Price Reduced~~

~~As discussed in Note 6 above, the outstanding warrants to purchase~~ up to ~~an aggregate of 3,720,500~~7,500,000 shares of the Company's common ~~that were issued~~stock and ~~sold in February 2018 include price-based anti-dilution provisions. Under the terms of those warrants, subject to certain limited exceptions, their exercise price will be reduced each time~~it was declared effective on May 12, 2020.

Between April 1, 2020 and May 12, 2020, the Company ~~issues or sells any securities for a consideration per share less than a price equal to the exercise price~~sold an aggregate of ~~those warrants in effect immediately prior to such issuance or sale. If the Company issues~~1,864,485 shares of

common stock ~~for cash, the consideration~~in "at-the-market" equity offerings and received ~~therefor will be deemed to be the~~aggregate net ~~amount~~proceeds of consideration the Company received therefor. As of immediately prior to the initial closing of the April 2019 underwritten public offering, the exercise price of the warrants was $3.00 per share. The net amount of consideration the Company received for shares issued and sold at the initial closing was $0.98 per share. On April 11, 2019, in accordance with the anti-dilution provision of the warrants and as a result of the sale of such shares, the exercise price of the warrants was automatically reduced to $0.98 per share.approximately $2.0 million.

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

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our interim consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q and our audited financial statements and notes thereto for the year ended December 31, ~~2018~~2019 included in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, or our ~~2018~~2019 10-K, filed with the Securities and Exchange Commission, or SEC, on ~~April 1, 2019.~~March 27, 2020. Past operating results are not necessarily indicative of results that may occur in future periods.

The following discussion includes forward-looking statements. See “CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS,” above. Forward-looking statements are not guarantees of future performance and our actual results may differ materially from those currently anticipated and from historical results depending upon a variety of factors, including, but not limited to, those discussed in Part I, Item 1A. Risk Factors in our ~~2018~~2019 10-K and in our subsequent filings with the SEC, including any discussed in Part II, Item 1A of this report under the heading “Risk Factors,” which are incorporated herein by reference.

In this report: (a) “Cerulean” refers to Cerulean Pharma, Inc. before the Cerulean/Private Daré stock purchase transaction closed (as described in the “2017 Business Combination and Related Transactions” section below); and (b)report, “we,” “us,” “our,” “Daré” or the “Company” refer collectively to Daré Bioscience, Inc. and its wholly owned subsidiaries, unless otherwise stated or the context otherwise requires. All information presented in this report is based on our fiscal year. Unless otherwise stated, references to particular years, quarters, months or periods refer to our fiscal years ending December 31 and the associated quarters, months and periods of those fiscal years.

Daré Bioscience® is a registered trademark of Daré Bioscience, Inc. Ovaprene® is a registered trademark licensed to Daré Bioscience, Inc. All other trademarks, service marks or trade names appearing in this report are the property of their respective owners. Use or display by us of other parties’ trademarks, service marks or trade names is not intended to and does not imply a relationship with, or endorsements or sponsorship of, us by the trademark, service mark or trade name owners.

We are a clinical-stage biopharmaceutical company committed to the ~~advancement~~acceleration of innovative products for women’s health. We are driven by a mission to identify, ~~develop~~acquire and ~~bring to market~~develop a diverse portfolio of differentiated therapies that expand treatment options, improve outcomes and facilitate convenience for women, primarily in the areas of contraception, fertility, and sexual and vaginal ~~health, sexual health and fertility.~~health. Our business strategy is to ~~license~~in-license or otherwise acquire the rights to differentiated product candidates in our areas of focus, some of which have existing clinical proof-of-concept data, and to take those candidates through advanced stages of clinical ~~development.~~development, and then out-license these products to companies with sales and distribution capabilities in women's health to leverage their commercial capabilities. We and our wholly owned subsidiaries operate in one business segment.

Since July 2017, we have assembled a portfolio of clinical-stage and ~~pre-clinical stage~~pre-clinical-stage candidates. While we will continue to assess opportunities to expand our portfolio, our current focus is on advancing our existing product candidates ~~addressing unmet needs~~through mid- and late stages of clinical development or approval. Our global commercialization and development strategy involves partnering with pharmaceutical companies and regional distributors with established marketing and sales capabilities in women's ~~health.~~ health, including through co-development and promotion agreements, once we have advanced a candidate through mid- to late-stage clinical development.

Our portfolio includes ~~these four clinical-stage~~three product ~~candidates:~~candidates in advanced clinical development:

DARE-BV1, a ~~unique~~novel thermosetting bioadhesive hydrogel ~~formulation of~~formulated with clindamycin phosphate 2% to be administered in a single vaginally delivered application, as a first line treatment for bacterial vaginosis, or BV;

Ovaprene, a ~~non-hormonal~~hormone-free, monthly ~~contraceptive intravaginal ring;~~vaginal contraceptive; and

Sildenafil Cream, 3.6%, a ~~novel~~proprietary cream formulation of sildenafil for topical administration to the vulva and vagina for treatment of female sexual arousal disorder, or ~~FSAD; and~~FSAD.

Our portfolio also includes three product candidates that we believe are Phase 1-ready:

DARE-HRT1, a combination bio-identical estradiol and progesterone intravaginal ring for the treatment of vasomotor symptoms, or VMS, as part of a hormone replacement therapy, or HRT, following ~~menopause.~~menopause;

~~Our portfolio also includes these pre-clinical stage product candidates:~~

DARE-VVA1, a vaginally delivered formulation of tamoxifen to treat vulvar vaginal atrophy, or VVA, in patients with ~~hormone-receptor~~hormone- receptor positive breast cancer; and

In addition, our portfolio includes these pre-clinical stage product candidates:

ORB-204 and ORB-214, 6-month and 12-month formulations of injectable etonogestrel for contraception; and

DARE-RH1, a novel approach to non-hormonal contraception for both men and women by targeting the ~~treatment~~CatSper ion channel.

Our primary operations have consisted of, ~~overactive bladder.~~

and are expected to continue to consist of, product research and development and advancing our portfolio of product candidates through clinical development and regulatory approval. We expect that the ~~bulk~~majority of our development expenses ~~over the next two years~~in 2020 and 2021 will support the advancement of DARE-BV1, Ovaprene and Sildenafil Cream, 3.6%.

To date, we have not obtained any regulatory approvals for any of our ~~four~~product candidates, commercialized any of our product candidates or generated any product revenue. We are subject to several risks common to clinical-stage biopharmaceutical companies, including dependence on key individuals, competition from other companies, the need to develop commercially viable products in a timely and cost-effective manner, and the need to obtain adequate additional capital to fund the development of product candidates. We are also subject to several risks common to other companies in the industry, including rapid technology change, regulatory approval of products, uncertainty of market acceptance of products, competition from substitute products and larger companies, compliance with government regulations, protection of proprietary technology, dependence on third parties, and product liability.

In addition, ~~we intend~~the COVID-19 pandemic continues to ~~fund a portion~~rapidly evolve. We do not yet know the full extent of its potential effects on our business, including the anticipated aggregate costs for development of our product candidates, on our anticipated timelines for the development ~~expenses~~ of our ~~pre-clinical stage~~ product candidates, ~~particularly those like DARE-FRT1~~or on the supply chain for our clinical supplies. However, these effects could have a material adverse impact on our business and ~~DARE-VVA1 that have~~financial condition. See the ~~opportunity~~risk factor titled, The novel coronavirus (COVID-19) pandemic and efforts to ~~advance into~~reduce its spread could negatively impact our business, including by increasing the cost and timelines for our clinical ~~studies more quickly. We expect that DARE-FRT1 will advance into a clinical study~~development programs, in ~~approximately 12 to 18 months. Any additional product candidates we may obtain in the future will also require cash to fund their development.~~Part II, Item 1A, "Risk Factors," below.

Clinical Stage Product Candidates

DARE-BV1 is a proprietary solution-to-gel formulation containing clindamycin, an antibiotic used to treat certain bacterial infections, including BV. DARE-BV1 is designed to be administered in a convenient, single vaginal dose with a dual release pattern to prolong the duration of exposure to clindamycin at the site of infectionWe are currently working on regulatory and to potentially improve the rate of effectiveness compared to existing FDA-approved therapies. Current FDA-approved therapies for BV have clinical cure rates of less than 70 percent. In an investigator initiated pilot studystart-up activities that enrolled 30 women, DARE-BV1 demonstrated an 88 percent clinical cure rate in evaluable subjects (n=26) at the test-of-cure visit (Day 7-14) after one administration. We plan to utilize the FDA's 505(b)(2) pathway to obtain marketing approval of DARE-BV1 for BV in the U.S. We expectare necessary to commence a Phase 3 ~~clinical~~multicenter, randomized, double-blind, placebo-controlled study of DARE-BV1 ~~in approximately 250 women~~for the treatment of BV, or the DARE-BV1-001 study, and expect to initiate the study in the ~~fourth quarter~~second half of ~~2019~~2020.We plan to enroll approximately 220 postmenarchal women, ages 12 and above, at approximately 40 sites in the United States. The primary efficacy endpoint of the study will be clinical cure at the evaluation visit to occur 21 to 30 days after enrollment in the study, or the Day 21-30 visit, with clinical cure defined as meeting three criteria (derived from the Amsel criteria): resolution of abnormal vaginal discharge associated with BV as confirmed by the investigator; a negative 10% potassium hydroxide (KOH) "whiff test"; and the presence of clue cells at less than 20% of total epithelial cells in a saline wet mount. If the study's initiation and rate of subject enrollment occur as we currently expect, then we anticipate having topline data from this study before year-end 2020. In parallel with the DARE-BV1-001 clinical study and to support the new drug application, or NDA, for DARE-BV1, we are conducting nonclinical studies of certain excipients in DARE-BV1 and the clinical formulation of DARE-BV1, including reproductive toxicology studies. If the DARE-BV1-001 clinical study and the nonclinical studies are completed as anticipated and if ~~the study is~~their outcomes are successful, then we expect to be in a position to file ~~a new drug application, or~~an NDA with the FDA in ~~2020.~~ early 2021.

We anticipate that the ~~cost~~aggregate costs of the ~~Phase 3 clinical~~DARE-BV1 program through NDA filing, including the DARE-BV1-001 study, ~~including~~planned nonclinical studies, manufacturing activities for the program through filing of the NDA, and the NDA filing, ~~thereafter to~~will be ~~less than~~approximately $10.0 million.

~~Ovaprene is an intravaginal ring that, if approved, would represent a new category~~Based on the positive results of birth control. Ovaprene is designed to be worn conveniently over multiple weeks, require no intervention at the time of intercourse, and it does not contain hormones. Ovaprene is a silicone-reinforced ring with a soft, absorbable scaffolding that encircles a fluid-permeable barrier. A non-braided, multi-filament mesh in the center of the ring functions as a physical barrier to sperm. The silicone ring also releases ferrous gluconate to create a spermiostatic environment within the vagina.

Ovaprene is a combination product and, following a request for designation process, the FDA designated Center for Devices and Radiological Health, or CDRH, as the lead agency FDA program center for premarket review and product regulation. CDRH has determined that a PMA will be required to market Ovaprene in the U.S.

~~In May 2018, we announced initiation of a~~our postcoital test ~~or PCT,~~(PCT) clinical trial of ~~Ovaprene. This ongoing clinical trial is designed to assess general safety, acceptability,~~Ovaprene, topline data from which was announced in November 2019, and ~~effectiveness in preventing progressively motile sperm, or PMS, from reaching the cervical canal following intercourse. The study will enroll approximately 50 couples,~~ with the ~~woman~~support of Bayer under the commercial license agreement we executed in January 2020 (discussed below under "Recent Events"), we are conducting activities to ~~be evaluated over the course~~support submission of five menstrual cycles, with a target of having approximately 25 women complete a total of 21 visits. Each woman’s cervical mucus will be measured at several points during the study, including a baseline measurement at menstrual cycle 1 that excludes the use of any product. Subsequent cycles and visits will include the use of a diaphragm (menstrual cycle 2) and Ovaprene (menstrual cycles 3, 4 and 5). Data from the PCT clinical trial are expected to be available in the second half of 2019.

PCT clinical trials have been used as a surrogate marker for contraceptive effectiveness. Infertility research suggests that higher rates of pregnancy are associated with PMS per high power field, or HPF, of from greater than one to greater than 20 sperm, and less than 5 PMS per HPF is considered reflective of contraceptive effectiveness.

~~If the PCT clinical trial demonstrates that less than 5 PMS per HPF progressed into the cervical canal in most women and can be safely worn over multiple weeks, we intend to prepare and file~~ an Investigational Device Exemption application, or IDE, to the FDA for a pivotal clinical study of Ovaprene. We are designing that study to evaluate the safety and efficacy of Ovaprene to prevent pregnancy when used over a period of 12 months by approximately 250 women and will seek to confirm alignment with the FDA on the study's design prior to commencement. In light of disruptions resulting from the COVID-19 pandemic and prioritization of non-clinical activities that can be efficiently advanced in the COVID-19 environment, we no longer plan to commence athe study in 2020. However, we expect the development activities we are conducting, and plan to conduct, in the interim will continue to advance this program and we continue to expect to report topline data for the planned pivotal clinical ~~trial~~study of Ovaprene by year-end 2022. If successful, we expect the study's data to support a premarket approval, or PMA, submission to the FDA, as well as marketing approvals of Ovaprene in ~~the United States,~~ Europe and other countries worldwide.

Sildenafil Cream, 3.6%

Sildenafil Cream, 3.6%~~, which incorporates sildenafil, the same active ingredient~~ is in ~~the male erectile dysfunction drug Viagra®, if approved, could be the first FDA-approved FSAD treatment option~~Phase 2b clinical development for women. FSAD is characterized primarily by a persistent or recurrent inability to attain or maintain sufficient physical sexual arousal, frequently resulting in distress or interpersonal difficulty. Sildenafil Cream, 3.6% is formulated to increase blood flow locally to the vulvar-vaginal tissue, leading to a potential improvement in genital arousal response.

We plan to leverage the existing data and established safety profile of sildenafil and the Viagra® brand to utilize the FDA’s 505(b)(2) pathway to obtain marketing approval of Sildenafil Cream, 3.6% in the U.S. During the third quarter of 2018,FSAD. In December 2019, we ~~had a Type C meeting~~announced that, we reached alignment with the FDA ~~regarding~~on the design of our Phase 2b clinical trial, ~~for Sildenafil Cream, 3.6% and~~including the overall development program for this product candidate. Based on the FDA guidance we received from that meeting, we commenced Phase 2b related activities during the fourth quarter of 2018 with the initiation of a non-interventional study intended to support the validity of specific patient reported outcome, or PRO, ~~measures. This content validity PRO study seeks~~instruments to ~~identify~~be used to screen eligible patients with FSAD and ~~document~~to measure achievement of the primary efficacy endpoints, namely improvement in localized genital sensations of arousal ~~symptoms~~and reduction in the distress that ~~will be assessed in our planned at-home~~women with FSAD experience. The Phase 2b trial ~~as well as our pivotal studies,~~is designed to evaluate Sildenafil Cream, 3.6% compared to placebo cream over 12 weeks of dosing following both a non-drug and placebo run-in period. In light of disruptions resulting from the COVID-19 pandemic, we are evaluating the optimal time to demonstrate that these symptoms are the most important and relevant to our target population and are also acceptable endpoints for the FDA. In parallel, we will continue to explore additional clinical and non-clinical work that might be valuable or required to support the overall program and the anticipated design of the Phase 2b trial. Because our plan is for the co-primary endpoints usedcommence enrollment in the Phase 2b trial and are currently considering commencing in late 2020 or early 2021. Even if we commence in early 2021, we continue to ~~reflect the endpoints used in the Phase 3 trials, after the ongoing qualitative study is completed and before~~expect to report topline data for the Phase 2b ~~at-home~~ trial ~~is initiated, we~~by year-end 2021.

We plan to ~~request another Type C meeting~~conduct a Phase 1 open-label, three-arm, parallel group clinical study of DARE-HRT1 in Australia to ~~obtain~~evaluate the ~~FDA’s guidance~~pharmacokinetics, or PK, and safety of DARE-HRT1 in approximately 30 healthy, post-menopausal women. The primary objectives of the study are to describe the PK parameters of two different dose combinations (estradiol 80 µg/progesterone 4 mg IVR and estradiol 160 µg/progesterone 8 mg IVR) over 28 days, and to identify the steady state PK of each dose combination after 28 days. We currently continue to expect to report topline results of this clinical study by the end of 2020.

Our currently anticipated timelines and aggregate costs for the development of our product candidates could be delayed and could increase as a result of the COVID-19 pandemic. See the risk factor titled, The novel coronavirus (COVID-19) pandemic and efforts to reduce its spread could negatively impact our business, including by increasing the cost and timelines for our clinical development programs, in Part II, Item 1A, "Risk Factors," below.

In response to the spread of COVID-19, in March 2020 we implemented work-from-home and restricted travel policies and, subsequently, the governors of California and Massachusetts, where we have operations, issued statewide stay-at-home orders. While we have systems and technologies in place to enable our employees to work from home, productivity may be adversely impacted and challenge our ability to effectively manage and operate our business. In addition, many of our consultants, partners and vendors on which we rely heavily are subject to similar work and travel restrictions that may adversely impact their ability to perform contracted services in a timely manner or at all. In May 2020, we modified our work-from-home policy such that some of our personnel returned to working in our facilities for a portion or all of their working time. We expect to continue to modify our work-from-home and restricted travel policies as the COVID-19 pandemic and state and local stay-at-home orders evolve. The effect of the COVID-19 pandemic and its associated restrictions may increase the anticipated aggregate costs for the development of our product candidates and may adversely impact our anticipated timelines for the development of our product candidates by, among other things, causing disruptions in the supply chain for our clinical supplies, delays in the timing and pace of subject enrollment in our clinical trials and lower than anticipated subject enrollment and completion rates, delays in the review and approval of our regulatory submissions by the FDA and other agencies with respect to our product

candidates, and other unforeseen disruptions. The economic impact of the COVID-19 pandemic and the uncertainty and volatility in the capital markets it caused and may continue to cause may negatively impact investor sentiment and the availability and cost of capital, and may adversely impact our ability to raise capital when needed or on terms favorable to us and our stockholders to fund our development programs and our operations. We do not yet know the full extent of potential delays or impacts on our 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 our business and financial condition. See the risk factor titled, The novel coronavirus (COVID-19) pandemic and efforts to reduce its spread could negatively impact our business, including by increasing the cost and timelines for our clinical development programs, in Part II, Item 1A, "Risk Factors," below.

On April 22, 2020, we entered into a purchase agreement, or the equity line agreement, and a registration rights agreement with Lincoln Park Capital Fund, LLC, or Lincoln Park. Under the terms and subject to the conditions of the Equity line agreement, we may sell to Lincoln Park up to $15.0 million in shares of our common stock. Such sales of our common stock, if any, will be subject to certain limitations, and may occur from time to time, at our sole discretion, over the 36-month period commencing on the ~~endpoints for~~date that a registration statement covering the resale by Lincoln Park of shares that have been and may be issued under the equity line agreement is declared effective by the Securities and Exchange Commission, or the SEC, and the other conditions in the equity line agreement are satisfied. We refer to the date on which all such conditions are satisfied, as the Commencement Date. We filed such a registration statement with the SEC on May 1, 2020 to register the resale by Lincoln Park of up to 7,500,000 shares of the Company’s common stock and it was declared effective on May 12, 2020.

On the Commencement Date, we may direct Lincoln Park to purchase up to $500,000 in shares of our ~~Phase 2b and Phase 3 clinical trials, including whether~~common stock, or the ~~FDA agrees~~Commencement Purchase. Thereafter, on any business day we may direct Lincoln Park to purchase up to 200,000 shares of our common stock, each, a Regular Purchase; provided that the ~~PRO instruments are content valid for~~share amount under a Regular Purchase may be increased to up to 250,000 shares or up to 300,000 shares if the ~~target population. The timing~~closing sale price of ~~when~~our common stock is not below $1.50 or $3.00, respectively, on the business day on which we initiate the ~~Phase 2b at-home trial~~purchase, subject to adjustment for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction as provided in the equity line agreement. However, Lincoln Park’s maximum commitment in any single Regular Purchase may not exceed $1,000,000. The purchase price per share for the Commencement Purchase and each Regular Purchase will be ~~influenced~~the lower of (i) the lowest sale price of our common stock on the business day on which we initiate the purchase and (ii) the average of the three lowest closing sale prices of our common stock during the 10-business day period immediately preceding the business day on which we initiate the purchase. In addition to Regular Purchases, we may also direct Lincoln Park to purchase other amounts of common stock as accelerated purchases and as additional accelerated purchases, subject to limits specified in the equity line agreement, at a purchase price per share calculated as specified in the equity line agreement, but in no case lower than the minimum price per share we stipulate in our notice to Lincoln Park initiating these purchases.

Sales of shares of our common stock to Lincoln Park under the equity line agreement will depend on a variety of factors to be determined by us from time to time, including, among others, market conditions, the trading price of our common stock and our determination as to the appropriate sources of funding for our operations. The net proceeds we receive under the equity line agreement will depend on the frequency and prices at which we sell shares to Lincoln Park. We expect that any proceeds we receive from such ~~guidance.~~sales will be used for working capital and general corporate purposes.

~~DARE-HRT1~~In addition, under applicable Nasdaq rules, we may not issue or sell to Lincoln Park under the equity line agreement more than 4,941,089 shares of our common stock, which we refer to as the Exchange Cap, unless (i) we obtain stockholder approval to issue shares in excess of the Exchange Cap or (ii) the average price of all applicable sales of our common stock to Lincoln Park under the equity line agreement equals or exceeds $1.0117 (which represents the closing sale price per share of our common stock on the day before we entered into the equity line agreement, plus an incremental amount), such that issuances and sales of common stock to Lincoln Park under the equity line agreement would not be subject to the Exchange Cap under applicable Nasdaq rules. We may also not sell shares to Lincoln Park under the equity line agreement if it would result in Lincoln Park beneficially owning more than 9.99% of our then outstanding shares of common stock.

~~DARE-HRT1 is an intravaginal ring,~~In connection with entering into the equity line agreement, on April 22, 2020, we issued 285,714 shares of our common stock to Lincoln Park in consideration for its commitment to purchase shares under the equity line agreement.

License Agreement with Bayer HealthCare

On January 10, 2020 we entered into a license agreement with Bayer HealthCare LLC, or ~~IVR, containing bio-identical estradiol~~Bayer, regarding the further development and ~~bio-identical progesterone to treat the vasomotor symptoms (VMS) associated with menopause as part~~commercialization of a hormone replacement therapy regimen. There are currently no FDA-approved IVRs that deliver bio-identical progesterone in combination with bio-identical estradiol. The IVR technology used in DARE-HRT1 was developed by Dr. Robert Langer from the Massachusetts Institute of Technology and Dr. William Crowley from Massachusetts General Hospital and Harvard Medical School. We plan to utilize the FDA's 505(b)(2) pathway to obtain marketing approval of DARE-HRT1Ovaprene in the U.S. We ~~intend~~received a $1.0 million upfront non-refundable license fee payment from Bayer. We will be responsible for the pivotal trial for Ovaprene and for its development, regulatory activities, and we have product supply obligations. Bayer will support us in development and regulatory activities by providing the equivalent of two experts to ~~initiate a Phase 1~~advise us in clinical, ~~study for DARE-HRT1 during 2019~~regulatory, preclinical, commercial, CMC and ~~to report topline results~~product supply matters. Bayer, in ~~2020. DARE-HRT1~~its sole discretion, has the ~~potential~~right to make the license effective by paying us an additional $20.0 million, referred to as the “Clinical Trial and Manufacturing Activities Fee.” Such license would be exclusive with regard to the commercialization of Ovaprene for human contraception in the U.S. and co-exclusive with us with regard to development. We will also be entitled to receive (a) milestone payments 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 ~~first-in-class product.~~calendar year, subject to customary royalty reductions and offsets, and (c) a percentage of sublicense revenue.

We incurred a loss of approximately ~~$3.1~~$4.3 million for the ~~quarter~~three months ended March 31, ~~2019.~~2020. As of March 31, ~~2019,~~2020, we had (a) an accumulated deficit of approximately ~~$32.0~~$48.3 million and (b) cash and cash equivalents of approximately ~~$3.5~~$5.0 million. We also had negative cash flow from operations of approximately ~~$3.3~~$6.6 million during the three months ended March 31, ~~2019. As further discussed below, in an underwritten public offering we closed in April 2019, we received aggregate net proceeds of approximately $5.2 million.~~2020. We will need to raise substantial additional capital to continue to fund our operations and to successfully execute our current operating plan, including the development of our current product candidates. The amount and timing of future funding will depend on many factors, including the pace and results of our clinical development efforts. If we do not raise capital as and when needed, we will not be able to continue development of our product candidates or we will be required to delay, scale back or eliminate some or all of our development programs or cease operations.

~~2017 Business Combination and Related Transactions~~

~~Until July 20, 2017,~~ For additional information regarding our corporate name was Cerulean Pharma Inc., or Cerulean. Cerulean was incorporated in Delaware in December 2005. On July 19, 2017, Cerulean and Daré Bioscience Operations, Inc., a privately held Delaware corporation, or Private Daré, completed a transaction in which the holders of capital stock and securities convertible into capital stock of Private Daré, which holders are collectively referredability to as the Private Daré Stockholders, sold their shares of capital stock of Private Daré to Cerulean in exchange for newly issued shares of Cerulean common stock. As a result of that transaction, Private Daré became a wholly owned subsidiary of Cerulean. As of immediately following the closing of that transaction: (i) the Private Daré Stockholders owned approximately 51% of the outstanding common stock of Cerulean, and (ii) the equity holders of Cerulean immediately prior to the closing, collectively, owned approximately 49% of the outstanding common stock of Cerulean. In connection with the transaction, Cerulean changed

~~its name from “Cerulean Pharma, Inc.” to “Daré Bioscience, Inc.” We refer to the transaction described above as the Cerulean/Private Daré stock purchase transaction.~~

On April 11, 2019, we closed an underwritten public offering of 4,575,000 shares of our common stock at a public offering price of $1.10 per share. We granted the underwriters a 30-day over-allotment option to purchase up to an additional 686,250 shares, which was exercised in full on April 12, 2019. Including the over-allotment shares, we issued a total of 5,261,250 shares in the underwritten public offering, and received gross proceeds of approximately $5.8 million and net proceeds of approximately $5.2 million after deducting underwriting discounts and offering expenses.

~~February 2018 Warrant Exercise Price Reduced~~

As discussed in Note 6 of the accompanying Notes to Consolidated Financial Statements, the outstanding warrants to purchase up to an aggregate of 3,720,500 shares of our common stock we issued and sold in February 2018 include price-based anti-dilution provisions. Under the terms of those warrants, subject to certain limited exceptions, their exercise price will be reduced each time we issue or sell any securities for a consideration per share less than a price equal to the exercise price of those warrants in effect immediately prior to such issuance or sale. If we issue shares of our common stock for cash, the consideration received therefor will be deemed to be the net amount of consideration we received therefor. As of immediately prior to the initial closing of the April 2019 underwritten public offering, the exercise price of the warrants was $3.00 per share. The net amount of consideration we received for shares issued and sold at the initial closing was $0.98 per share. On April 11, 2019, in accordance with the anti-dilution provision of the warrants andcontinue as a ~~result of the sale of such shares, the exercise price of the warrants was automatically reduced~~going concern, see Note 1 to ~~$0.98 per share.~~our unaudited interim consolidated financial statements contained in this report and “Liquidity and Capital Resources and Financial Condition,” below.

Financial Operations Overview

To date we have not generated any ~~revenue and do not expect to generate any revenue for the foreseeable future.~~revenue. In the future, and if we are successful in advancing our product candidates through late stages of clinical development, we may generate revenue from ~~product sales,~~ license fees, milestone ~~and~~payments, research and development payments in connection with strategic partnerships, as well as royalties and ~~royalties~~commercial milestones resulting from the ~~sales~~sale of ~~products developed under licenses of intellectual property. Any revenue generated is expected to fluctuate from quarter to quarter as a result of the timing and amounts of any such payments.~~products. Our ability to generate ~~product~~such revenue will depend on the successful clinical development of our product candidates, ~~receiving~~the receipt of regulatory approvals to market such products and the eventual successful commercialization of product candidates. If we fail to complete the development of ~~products~~product candidates in a timely manner, or to receive regulatory approval for such product candidates, our ability to generate future revenue and our results of operations would be materially adversely affected.

Research and Development Expenses

Research and development expenses include research and development costs for our product candidates and transaction costs related to our acquisitions. We recognize all research and development expenses as they are incurred. Research and development expenses consist primarily of:

We expect research and development expenses to increase in the future as we continue to invest in the development of our clinical-stage product candidates and as any other potential product candidates we may develop are advanced

into and through clinical trials in the pursuit of regulatory approvals. Such activities will require a significant

increase in investment in regulatory support, clinical supplies, inventory build-up related costs, and the payment of success-based ~~milestones.~~milestones to licensors. In addition, we continue to evaluate opportunities to acquire or in-license other product candidates and technologies, which may result in higher research and development expenses due to, among other factors, license fee and/or milestone payments.

Conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We may not obtain regulatory approval for any product candidate on a timely and cost-effective basis or at all. The probability of success of our product candidates may be affected by numerous factors, including clinical results and data, competition, intellectual property rights, manufacturing capability and commercial viability. As a result, we cannot accurately determine the duration and completion costs of development projects or when and to what extent we will generate revenue from the commercialization of any of our product candidates.

General and Administrative Expense

General and administrative expenses consist of personnel costs, facility expenses, expenses for outside professional services, including legal, audit and accounting services. Personnel costs consist of salaries, benefits and stock-based compensation. Facility expenses consist of rent and other related costs. We expect to incur additional expenses because of additional costs associated with being a public company, including expenses related to compliance with SEC and Nasdaq rules and regulations, additional insurance, investor relations, and other administrative expenses and professional services.

Critical Accounting Policies and Significant Judgments and Estimates

Management’s discussion and analysis of financial condition and results of operations is based on our interim consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. Preparing these financial statements requires usmanagement to make estimates and judgments that affect the reported amounts of assets, liabilities and ~~expenses.~~expenses, and related disclosures. On an ongoing basis, we evaluate these estimates and judgments. We base our estimates on historical experience and on various assumptions we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially from these estimates. For a description of critical accounting policies that affect our significant judgments and estimates used in the preparation of our unaudited consolidated interim financial statements, refer to Item 7 in Management’s Discussion and Analysis of Financial Condition and Results of Operations, ~~and~~ Note 1 to our financial statements contained in our ~~2018~~2019 10-K, and Note 32 to our unaudited interim consolidated financial statements contained in this report.

Results of Operations

Comparison of Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019 (Unaudited)

The following table summarizes our results for the periods indicated, together with the changes in those items in dollars:

We did not recognize any revenues for either of the three months ended March 31, ~~2019~~2020 or ~~2018.~~2019.

General and administrative expenses

The ~~decrease~~increase of ~~$26,009~~$584,585 in general and administrative expenses for the three months ended March 31, ~~2019~~2020 as compared to the three months ended March 31, ~~2018~~2019 was primarily attributable to (i) ~~a decrease of approximately $311,800~~an increase in expenses for accounting, legal, and professional services ~~as the result~~ of ~~no fundraising activities in the current period as compared to the same period of the prior year,~~approximately $272,000, (ii) an increase in personnel costs of approximately ~~$239,800 reflecting the hiring~~$136,000, (iii) an increase in insurance costs of ~~additional employees which resulted in higher salary, benefit and bonus expenses in the current period, and (iii)~~approximately $47,000, (iv) an increase in stock-based compensation expense of ~~$64,141~~approximately $41,000, (v) an increase in information technology expense of approximately $25,000, and (vi) an increase in rent expense of approximately $19,000 due to ~~stock options granted~~the addition of two leases acquired in conjunction with the ~~current period compared to the same period~~acquisition of ~~the prior year.~~Microchips.

Research and development expenses

The increase of ~~$606,738~~$686,413 in research and development expenses for the three months ended March 31, ~~2019~~2020 as compared to the three months ended March 31, ~~2018~~2019 was primarily attributable to (i) an increase in pre-clinical development activities of approximately $902,000 for our microchip-based contraceptive application, which we acquired in November 2019, (ii) an increase in costs related to development activities of approximately ~~$389,000~~$893,000 for DARE-BV1, Ovaprene, DARE-HRT1 and ~~Sildenafil Cream, 3.6%,~~DARE-VVA1, (iii) an increase in personnel costs of approximately $132,000 and ~~to a lesser extent, DARE-BV1 and DARE-HRT1,~~(iv) an increase in stock-based compensation expense of approximately $22,000. Those increases were partially offset by (x) an increase in grant funding recorded as a reduction to research and development ~~expense~~expenses of approximately $132,000 related to Ovaprene and approximately $978,000 related to preclinical expenses for our microchip-based contraceptive application, (y) a decrease in costs related to development activities of approximately ~~$161,007, (ii) an increase~~$74,000 for Sildenafil Cream, 3.6%, and DARE-FRT1 and (z) a decrease in ~~personnel~~ costs related to pre-clinical development activities of approximately ~~$346,000 due to increased salary, benefit and bonus expenses due to staff additions, and (iii) an increase in stock-based compensation expense~~$79,000.

For the three months ended March 31, 2020 we accrued $12,500 of ~~$21,628 due to stock options granted~~the $50,000 license maintenance fee payable in the ~~current period and none being granted during the same period~~second quarter of ~~the prior year.~~

~~License expenses~~2020 under our license agreement related to DARE-HRT1.

The license fees expense of $112,500 for the three months ended March 31, 2019 related to the accrual of deferred license fees due under ~~the Assignment Agreement with Hammock Pharmaceuticals, Inc. and the First Amendment~~our license agreement related to License Agreement with TriLogic Pharma, LLC and MilanaPharm LLC. We accrued $62,500 and $50,000 during the quarter with respect to, respectively, the $250,000 of license fees payable under the Assignment Agreement and the $200,000 of license fees payable under the First Amendment to License Agreement, both of which are payable, at the latest, in December 2019. In our discretion, we may bothDARE-BV1.

For further discussion of these license fees, either in cash or with shares of our common stock. The license expense of $100,000 for the three months ended March 31, 2018 was entirely related to fees paid to Strategic Science and Technologies-D, LLC and Strategic Science Technologies, LLC. For further discussion, see Note ~~8, "Commitments and Contingencies" of the Notes to the Interim Consolidated Financial Statements (Unaudited).~~

~~Goodwill impairment expense~~

~~We incurred an impairment loss of $5,187,519 for the three months ended March 31, 2018 due~~3 to our determination that the carrying amount of our goodwill exceeded its estimated fair value at March 31, 2018. For a discussion of our goodwill analysis, see Note 4, "Acquisitions," of the Notes to the Interim Consolidated Financial Statements (Unaudited).unaudited interim consolidated financial statements contained in this report.

The ~~increase~~decrease of ~~$19,487~~$29,410 in other income for the three months ended March 31, ~~2019~~2020 as compared to the three months ended March 31, ~~2018~~2019 was primarily due to a decrease in interest earned on cash balances in the current period.

Liquidity and Capital Resources and Financial Condition

Plan of Operations and Future Funding Requirements

We prepared the accompanying consolidated financial statements on a going concern basis, which assumes that we will realize our assets and satisfy our liabilities in the normal course of business. ~~For the three months ended March 31, 2019, we incurred a net loss from operations of $3.1 million.~~ In addition, we have a history of losses from operations, we expect negative cash flows from our operations to continue for the foreseeable future, and we expect that our net losses will continue for at least the next several years as we develop our existing product candidates and seek to acquire, license or develop additional product candidates.

At March 31, 2019, our accumulated deficit was approximately $32.0 million, our cash and cash equivalents were approximately $3.5 million and working capital was approximately $3.2 million. We also had negative cash flow from operations of approximately $3.3 million during the three months ended March 31, 2019. From our underwritten public offering that closed in April 2019, we received gross proceeds of approximately $5.8 million and net proceeds of approximately $5.2 million after deducting underwriting discounts and offering expenses. Considering our current cash resources, we believe our existing resources will be sufficient to fund planned operations into the first quarter of 2020. For the foreseeable future, our ability to continue our operations will depend upon our ability to obtain additional capital.

These circumstances raise substantial doubt about our ability to continue as a going concern. The accompanying ~~interim consolidated~~ financial statements do not include any adjustments to reflect the possible future effects on the recoverability and reclassification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty of our ability to remain a going concern.

~~Plan~~At March 31, 2020, our accumulated deficit was approximately $48.3 million, our cash and cash equivalents were approximately $5.0 million, and our working capital was approximately $4.6 million. We incurred a loss from operations of ~~Operations~~approximately $4.3 million, and ~~Future Funding Requirements~~had negative cash flow from operations of approximately $6.6 million during the three months ended March 31, 2020.

In January 2018, we entered into a common stock sales agreement, or our ATM agreement, under which we may sell shares of our common stock from time to time in "at-the-market" equity offerings (as defined in Rule 415 promulgated under the Securities Act of 1933, as amended). Under the terms and subject to the conditions of our equity line agreement we entered into in April 2020, we may sell up to $15.0 million in shares of our common stock to Lincoln

Park. As of the date of this report, the conditions that must be satisfied before we can begin to sell shares of our common stock under our equity line agreement have not been satisfied. See "—Recent Events—Equity Line," above. Our ability to raise capital under our ATM agreement and equity line agreement is subject to certain limitations. See the risk factor titled, The sale of our common stock through our ATM sales agreement or our equity line agreement may cause substantial dilution to our existing stockholders, and such sales, or the anticipation of such sales, may cause the price of our common stock to decline, in Part II, Item 1A, "Risk Factors," below.

The cash used to fund our operations comes from a variety of sources. During the three months ended March 31, 2020, we received (1) a $1.0 million upfront non-refundable license fee payment under our license agreement with Bayer HealthCare, LLC, (2) approximately $5.2 million in net proceeds from the sales of an aggregate of 3,308,003 shares of our common stock under our ATM agreement; and (3) approximately $1.7 million upon the exercise of warrants to purchase 1.7 million shares of our common stock. Subsequent to March 31, 2020 and through May 12, 2020, we received (1) approximately $2.0 million in net proceeds from the sales of an aggregate of 1,864,485 shares of our common stock under our ATM agreement; (2) approximately $428,000 under an existing grant from the National Institutes of Health that funded a portion of the Ovaprene PCT clinical study costs; and (3) received a loan of approximately $367,000 under the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security Act administered by the U.S. Small Business Administration. For further discussion of the Paycheck Protection Program loan, see Note 11 to our unaudited interim consolidated financial statements contained in this report.

Our primary uses of capital are, and we expect will continue to be, staff-related expenses, the cost of clinical trials and regulatory activities related to our product candidates, costs associated with contract manufacturing services and third-party clinical research and development services, payments due under license agreements upon the successful achievement of milestones of our product candidates, legal expenses, other regulatory expenses and general overhead costs.

We continue to expect our expenses to increase significantly in 2020 as compared to 2019 ~~primarily in connection~~as we continue the development of our product candidates, with ~~the continuation of the~~a focus on DARE-BV1, Sildenafil Cream, 3.6%, Ovaprene, ~~PCT clinical trial~~ and ~~study readout by year end 2019, the initiation of a Phase 3 clinical trial of DARE-BV1, the continuation of Phase 2b-related activities~~DARE-HRT1, as discussed above, and ~~potential~~as we incur license expenses associated therewith. We also expect that delaying commencement of ~~the at-home Phase 2b~~our planned clinical study of ~~Sildenafil Cream, 3.6%,~~Ovaprene in light of disruptions resulting from the ~~initiation of a Phase 1 clinical study of DARE-HRT1,~~COVID-19 pandemic will result in significantly less research and ~~to a lesser extent, efforts to advance our pre-clinical portfolio candidates.~~development expenses in 2020 than previously anticipated.

To date, we have not obtained any regulatory approvals for any of our product candidates, commercialized any of our product candidates or generated any product revenue, and we cannot anticipate if, and when we will generate any revenue. We have devoted significant resources to acquiring our portfolio of product candidates and to research and development activities for our product candidates. We must obtain regulatory approvals to sell any of our products in the future. We will need to generate sufficient safety and efficacy data on our product candidates for them to be attractive assets for potential strategic partners to license or for pharmaceutical companies to acquire, and for us to generate cash and other license fees related to such product candidates.

Based on our current operating plan estimates, we dowill not have sufficient cash to satisfy our working capital needs and other liquidity requirements over at least the next 12 months from the date of issuance of the accompanying interim consolidated financial statements.

We will need to raise substantial additional capital to continue to fund our operations and to successfully execute our current operating plan, including the development of our current product candidates. We will continue to seek to raise capital through the sale of shares of our common stock under our ATM agreement and our equity line agreement, if and when the conditions required to be satisfied to beginning selling thereunder are satisfied, however, when we can effect such sales and the amount of shares we can sell under these agreements depends on a variety of factors to be determined by us from time to time, including, among others, market conditions, the trading price of our common stock and our determination as to the appropriate sources of funding for our operations. We are also currently evaluating a variety of capital raising options, including financings, government or other grant funding, collaborations and strategic alliances or other similar types of arrangements to cover our operating expenses, including the development of our product candidates and any future product candidates we may license or otherwise acquire. The amount and timing of our capital needs have been and will continue to depend highly on many factors, including the product development programs we choose to pursue and the pace and results of our clinical development efforts. If we raise capital through collaborations, strategic alliances or other similar types of arrangements, we may have to relinquish, on

terms that are not favorable to us, rights to some of our technologies or product candidates we would otherwise seek to develop or commercialize.

There can be no assurance that capital will be available when needed or that, if available, it will be obtained on terms favorable to us and our ~~stockholders.~~stockholders, and the uncertainty and volatility in the capital markets caused by the

COVID-19 pandemic may negatively impact the availability and cost of capital and investor sentiment. In addition, equity or debt financings may have a dilutive effect on the holdings of our existing stockholders. If we cannot raise capital when needed, on favorable terms or at all, we will not be able to continue development of our product candidates, will need to reevaluate our planned operations and may need to delay, scale back or eliminate some or all of our development programs, reduce expenses file for bankruptcy, reorganize, merge with another entity, or cease operations. If we become unable to continue as a going concern, we may have to liquidate our assets, and might realize significantly less than the values at which they are carried on our financial statements, and stockholders may lose all or part of their investment in our common stock. ~~See “ITEM 1A. RISK FACTORS—Risks Related to Our Business—We will need to raise additional capital to continue our operations,” in our 2018 10-K.~~

The following table shows a summary of our cash flows for the periods indicated:

Net cash used in operating activities

Cash used in operating activities for the three months ended March 31, 2020 included the net loss of $4.3 million, decreased by non-cash stock-based compensation expense of approximately $161,000. Components providing operating cash were a $448,000 increase in accounts payable, an increase of $1.0 million in deferred license revenue and a decrease in other receivables of $125,000. Components reducing operating cash were a $2.7 millionincrease in prepaid expenses, a $408,000 decrease in accrued expenses and a $931,000 decrease in deferred grant funding.

Cash used in operating activities for the three months ended March 31, 2019 included the net loss of ~~$3,051,840,~~$3.1 million, decreased by non-cash stock-based compensation expense of ~~$97,968.~~$98,000. Major components reducing operating cash in this period were a ~~$201,129~~$201,000 increase in prepaid expenses, a ~~$135,676~~$136,000 increase in other receivables, and a ~~$134,087~~$134,000 decrease of accounts payable. Components providing operating cash in this period were a ~~$59,478~~$59,000 increase of accrued expenses and a ~~$55,233~~$55,000 increase in other non-current assets and deferred charges.

Net cash provided by financing activities

Cash ~~used in operating~~provided by financing activities for the three months ended March 31, ~~2018 included~~2020 consisted of approximately $5.2 million of net proceeds from the ~~net loss~~sales of ~~$7,665,617, decreased by non-cash impairment~~an aggregate of ~~goodwill~~3,308,003 shares of ~~$5,187,519,~~our common stock in "at-the-market" offerings completed during the quarter and ~~non-cash stock-based compensation expense~~approximately $1.7 million upon the exercise of ~~$9,124. Major components reducing operating cash in this period were a $40,340 decrease~~warrants to purchase 1.7 million shares of ~~accounts payable and a $118,707 decrease in accrued expenses. Major components providing operating cash were a $255,318 decrease in other receivables and $193,495 decrease in other current assets.~~

~~Net cash provided by financing activities~~our common stock.

No cash was provided by financing activities for the three months ended March 31, 2019.

~~Cash~~Net cash used in investing activities

No cash was provided by ~~financing~~or used in investing activities for the three months ended March 31, ~~2018 consisted of proceeds from the underwritten public offering completed in February 2018~~2020 and ~~sales under the at-the-market offering agreement completed in January and February 2018.~~March 31, 2019.

License and Royalty Agreements

We have to make various royalty and milestone payments under the product license and development agreements related to ~~our three clinical-stage assets,~~ DARE-BV1, Ovaprene, and Sildenafil Cream, 3.6%, and under the other agreements related to our other clinical and preclinical candidates. For further discussion of these potential payments, see Note ~~8, “Commitments and Contingencies,” of the Notes~~3 to ~~the Interim Consolidated Financial Statements (Unaudited).~~our unaudited interim consolidated financial statements contained in this report.

We enter into contracts in the normal course of business with various third parties for research studies, clinical trials, testing and other services. These contracts generally provide for termination upon notice, and we do not believe that our non-cancelable obligations under these agreements are material.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Under SEC rules and regulations, as a smaller reporting company we are not required to provide the information required by this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

~~Based on~~At the conclusion of the three months ended March 31, 2020, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and ~~procedures,~~procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) were effective as of March 31, ~~2019~~2020 at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in various claims and legal proceedings. Regardless of outcome, litigation and other legal and administrative proceedings can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. There are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we are a party or of which any of our property is in the subject.

Item 1A. Risk Factors

An investment in shares of our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described in our ~~2018~~2019 10-K, in addition to other information in this report, before investing in our common stock. The occurrence of any of these risks could have a material adverse effect on our business, financial condition, results of operations and growth prospects. In these circumstances, the market price of our common stock could decline, and you may lose all or part of your investment. There have been no material changes from the risk factors disclosed in Part I, Item 1A. Risk Factors in our ~~2018 10-K.~~2019 10-K other than as described below:

The novel coronavirus (COVID-19) pandemic and efforts to reduce its spread could negatively impact our business, including by increasing the cost and timelines for our clinical development programs.

The COVID-19 pandemic and efforts to reduce its spread remain a rapidly evolving and uncertain risk to our business, operating results, financial condition and stock price. In large part, the extent to which the pandemic affects us will depend on future developments that are beyond our knowledge or control, including, but not limited to, the duration and severity of the pandemic, governmental and individual organization actions and policies implemented to reduce transmission of the disease, and the speed with which and degree to which normal economic and operating conditions resume.

The longer the COVID-19 pandemic persists, the greater the potential for significant adverse impact to our business operations and those of the contract research organizations (CROs), contract manufacturing organizations (CMOs) and other third-party consultants and vendors on which we depend to, among other things, conduct our clinical and nonclinical studies, supply our clinical trial materials, and assist with regulatory affairs necessary to advance our programs. Employee and family member illness, increased childcare and elder care responsibilities, and quarantines, travel restrictions, prohibitions on non-essential gatherings, shelter-in-place orders and other similar directives and policies intended to reduce the spread of the disease, may reduce our productivity and that of the third parties on which we rely and may disrupt and delay many aspects of our business, including research and development activities and production and supply of clinical trial materials. As a result of resource constraints, third parties on which we rely may not meet their contractual obligations to us or may allocate constrained resources to projects other than ours, any of which could significantly increase the cost and timelines for our development programs. In addition, the increase in personnel working remotely, both ours and those of the third parties on which we rely, could increase our cybersecurity risk, create data accessibility concerns, and make us more susceptible to communication disruptions, any of which could significantly adversely impact our business operations or significantly delay necessary interactions with the FDA and other regulatory agencies, our CROs and CMOs, clinical trial sites, current and potential collaborators, and other third parties.

The COVID-19 pandemic could cause delays in current timelines for our planned clinical studies. As of the date of this report, we expect to commence and conduct our planned clinical studies such that we can report topline data for the Phase 3 study of DARE-BV1 and the Phase 1 study of DARE-HRT1 in 2020, the Phase 2b study of Sildenafil Cream, 3.6% in 2021, and the pivotal study of Ovaprene in 2022. However, the COVID-19 pandemic may adversely impact these expectations. For example, clinical site initiation and/or patient enrollment may be significantly delayed or suspended as a result of personnel and other resource constraints of healthcare providers, as well as adherence to governmental orders and internal policies intended to reduce the spread of COVID-19. In addition, we may experience lower than anticipated subject enrollment and completion rates, including because individuals may avoid medical settings, particularly for non-critical conditions, due to concerns of contracting COVID-19 or due to shelter-in-place and social distancing orders.

In addition, the COVID-19 pandemic has resulted in disruption and volatility in the global capital markets, and while the longer-term economic impact is difficult to assess and predict at this time, it could negatively impact our ability to access additional capital when needed or on terms favorable to us and our stockholders. We currently do not have

adequate capital to complete all of our planned clinical studies on our current timelines. If we cannot raise capital when needed, on favorable terms or at all, we will not be able to continue development of our product candidates as currently planned or at all, will need to reevaluate our planned operations and may need to delay, scale back or eliminate some or all of our development programs, reduce expenses or cease operations, any of which could have a significant negative impact on our prospects and financial condition, as well as the trading price of our common stock.

Further, a key aspect of our business strategy is to seek collaborations with partners, such as large pharmaceutical companies, that are willing to conduct later-stage clinical trials and further develop and commercialize our product candidates. As a result of the COVID-19 pandemic, potential and current partners may experience operational disruptions and financial and other resource constraints and implement new strategic plans that delay or reduce their efforts in the women’s health in general or in our programs in particular, which could adversely affect our ability to enter into or maintain collaborations, strategic alliances or other similar types of arrangements and may result in or contribute to disruption and delays in later-stage clinical development and, if approved, commercial launch of our product candidates. We do not have, and do not currently plan to develop, the internal sales, marketing and distribution infrastructure necessary to independently market and sell our product candidates, if approved.

We have not developed a specific and comprehensive contingency plan designed to address the challenges and risks presented by the COVID-19 pandemic and, even if and when we do develop such a plan, there can be no assurance that such plan will be effective in mitigating the potential adverse effects on our business, financial condition and results of operations.

The extent to which the COVID-19 pandemic and efforts to reduce its spread impacts our business, financial condition and results of operations is uncertain and cannot be predicted with reasonable accuracy at this time and will depend on future developments that are also uncertain and cannot be predicted with reasonable accuracy at this time, including new information that may emerge concerning the degree to which COVID-19 is contagious and virulent, the effect of actions taken in the United States and other countries to contain and treat COVID-19, and further actions implemented to contain and treat the disease and its impact, among others.

The COVID-19 pandemic may also have the effect of heightening many of the other risks and uncertainties described the “Risk Factors” section of our 2019 10-K.

The sale of our common stock through our ATM sales agreement or our equity line agreement may cause substantial dilution to our existing stockholders, and such sales, or the anticipation of such sales, may cause the price of our common stock to decline.

In January 2018, we entered into a common stock sales agreement with H.C. Wainwright & Co., LLC, in connection with an “at the market” offering, under which, from time to time, we may offer and sell shares of our common stock. We refer to this agreement as our “ATM agreement.” In April 2020, we entered into a purchase agreement with Lincoln Park Capital Fund, LLC, pursuant to which Lincoln Park is obligated to purchase up to $15.0 million in shares of our common stock, at our sole discretion, subject to the terms and conditions set forth in the agreement, including that a registration statement covering the resale by Lincoln Park of shares that have been and may be issued under the purchase agreement is declared effective by the SEC. We refer to this agreement as our “equity line agreement.” The purchase price for the shares we may sell under our equity line agreement will vary based the market price of our common stock at the time we initiate a sale. Although we have the right to control whether we sell any shares, if at all, under these agreements, and we generally have the right to control the timing and amount of any such sales, we are subject to certain restrictions, including those that limit the number of shares we may sell. For example, based on our current public float, during any 12-month period, we may not sell securities under our shelf registration statement pursuant to General Instruction I.B.6 to Form S-3 having an aggregate market value of more than one-third of our public float, which limits the amount of shares we can sell under our ATM agreement. In addition, with respect to our equity line agreement, we may not sell shares to Lincoln Park in excess of the Exchange Cap (unless we obtain stockholder approval or the average price per share of all sales to Lincoln Park equals or exceeds $1.0117) or if selling such shares would result in Lincoln Park beneficially owning more than 9.99% of our then outstanding shares of common stock. Accordingly, we may not be able to utilize our ATM agreement or our equity line agreement to raise additional capital when, or in the amounts, we desire. However, to the extent we do sell shares of our common stock under these agreements, such sales may result in substantial dilution to our existing stockholders, and such sales, or the anticipation of such sales, may cause the trading price of our common stock to decline.

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

Item 3. Defaults Upon Senior Securities

Item 4. Mine Safety Disclosures

Item 5. Other Information

Incorporated by Reference

Exhibit

Number

Description of Exhibit

Form

File No.

Filing Date

Exhibit No.

Filed Herewith

10.13(b)*

Amendment No. 1 to Employment Agreement between Daré Bioscience, Inc. and Sabrina Martucci Johnson dated as of March 9, 2020

10.14(b)*

Amendment No. 1 to Employment Agreement between Daré Bioscience, Inc. and Lisa Walters-Hoffert dated as of March 9, 2020

10.16+

License Agreement dated as of January 10, 2020 between Bayer HealthCare LLC and Daré Bioscience, Inc.

10-K

001-36395

3/27/2020

10.16+

31.1

Certification of principal executive officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended

31.2

Certification of principal financial officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended

32.1

Certification of principal executive officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of principal financial officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

Management contract or compensatory plan or arrangement

Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10). The omitted information is not material and would likely cause competitive harm to the Company if publicly disclosed.

Furnished herewith. This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated herein by reference into any filing of the registrant whether made before or after the date hereof, regardless of any general incorporation language in such filing.

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



		Daré Bioscience, Inc.

Date: May 14, ~~2019~~2020	By:	/s/ Sabrina Martucci Johnson
		Sabrina Martucci Johnson
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: May 14, ~~2019~~2020	By:	/s/ Lisa Walters-Hoffert
		Lisa Walters-Hoffert
		Chief Financial Officer
		(Principal Financial and Accounting Officer)


	Three months ended March 31,						Three months ended March 31,
	2019			2018			2020			2019
Operating activities:
Net loss	$	(3,051,840	)	$	(7,665,617	)	$	(4,252,248	)	$	(3,051,840	)
Non-cash adjustments reconciling net loss to operating cash flows:
Depreciation	1,150			—			11,949			1,150
Stock-based compensation	97,968			9,124			160,841			97,968
Non-cash lease expenses	10,130			—
Impairment of goodwill	—			5,187,519
Non-cash operating lease cost							(55,786		)	419
Changes in operating assets and liabilities:
Other receivables	(135,676		)	255,318			125,488			(135,676		)
Prepaid expenses	(201,129		)	20,694			(2,736,149		)	(201,129		)
Other current assets	—			193,495
Other non-current assets and deferred charges	55,233			37,131
Other non-current assets							38,682			55,233
Accounts payable	(134,087		)	(40,340		)	448,314			(134,087		)
Accrued expenses	59,478			(118,707		)	(408,027		)	59,478
Other liabilities	(9,711		)	2,496
Deferred grant funding							(930,610		)	—
Deferred license revenue							1,000,000			—
Net cash used in operating activities	(3,308,484		)	(2,118,887		)	(6,597,546		)	(3,308,484		)
Financing activities:
Net proceeds from issuance of common stock and warrants	—			10,197,813
Net proceeds from issuance of common stock							5,222,687			—
Proceeds from the exercise of common stock warrants							1,665,020			—
Proceeds from the exercise of stock options							1			—
Net cash provided by financing activities	—			10,197,813			6,887,708			—
Effect of exchange rate changes on cash and cash equivalents	7,621			(13,746		)	(22,944		)	7,621
Net change in cash and cash equivalents	(3,300,863		)	8,065,180			267,218			(3,300,863		)
Cash and cash equivalents, beginning of period	6,805,889			7,559,846			4,780,107			6,805,889
Cash and cash equivalents, end of period	$	3,505,026		$	15,625,026		$	5,047,325		$	3,505,026
Supplemental disclosure of non-cash operating activities:
Supplemental disclosure of non-cash operating and financing activities:
Operating right-of-use assets obtained in exchange for new operating lease liabilities	$	231,698		$	—		$	—		$	231,698
										—


Three Months Ended March 31, 2020															Three Months Ended March 31, 2020
																		Additional		Accumulated other						Total
															Common stock			paid-in		comprehensive			Accumulated			stockholders'
															Shares	Amount		capital		loss			deficit			equity
Balance at December 31, 2019															19,683,401	$	1,968	$	44,564,674	$	(102,625	)	$	(44,023,191	)	$	440,826
Stock-based compensation															—	—		160,841		—			—			160,841
Issuance of common stock															3,308,003	331		5,222,356		—			—			5,222,687
Issuance of common stock from the exercise of warrants															1,699,000	170		1,664,850		—			—			1,665,020
Stock options exercised															10,149	1		—		—			—			1
Net loss															—	—		—		—			(4,252,248		)	(4,252,248		)
Foreign currency translation adjustments															—	—		—		(22,944		)	—			(22,944		)
Balance at March 31, 2020															24,700,553	$	2,470	$	51,612,721	$	(125,569	)	$	(48,275,439	)	$	3,214,183

Three Months Ended March 31, 2019
				Additional		Accumulated other						Total						Additional		Accumulated other						Total
	Common stock			paid-in		comprehensive			Accumulated			stockholders'			Common stock			paid-in		comprehensive			Accumulated			stockholders'
	Shares	Amount		capital		loss			deficit			equity			Shares	Amount		capital		loss			deficit			equity
Balance at December 31, 2018	11,422,161	$	1,143	$	35,791,972	$	(96,728	)	$	(28,969,767	)	$	6,726,620		11,422,161	$	1,143	$	35,791,972	$	(96,728	)	$	(28,969,767	)	$	6,726,620
Stock-based compensation	—	—		97,968		—			—			97,968			—	—		97,968		—			—			97,968
Net loss	—	—		—		—			(3,051,840		)	(3,051,840		)	—	—		—		—			(3,051,840		)	(3,051,840		)
Foreign currency translation adjustments	—	—		—		7,621			—			7,621			—	—		—		7,621			—			7,621
Balance at March 31, 2019	11,422,161	$	1,143	$	35,889,940	$	(89,107	)	$	(32,021,607	)	$	3,780,369		11,422,161	$	1,143	$	35,889,940	$	(89,107	)	$	(32,021,607	)	$	3,780,369

Three Months Ended March 31, 2018
				Additional		Accumulated other						Total
	Common stock			paid-in		comprehensive			Accumulated			stockholders'
	Shares	Amount		capital		loss			deficit			equity
Balance at December 31, 2017	6,047,161	$	605	$	25,541,210	$	(18,080	)	$	(12,230,952	)	$	13,292,783
Stock-based compensation	—	—		9,124		—			—			9,124
Net proceeds from issuance of common stock and warrants	375,000	37		1,037,727		—			—			1,037,764
Issuance of common stock via public offering, net	5,000,000	500		9,159,548		—			—			9,160,048
Net loss	—	—		—		—			(7,665,617		)	(7,665,617		)
Foreign currency translation adjustments	—	—		—		(13,746		)	—			(13,746		)
Balance at March 31, 2018	11,422,161	$	1,142	$	35,747,609	$	(31,826	)	$	(19,896,569	)	$	15,820,356



Purchase Consideration	(in thousands)
Fair value of shares issued	$	20,625
Unamortized fair value of Cerulean options	3,654
Fair value of total consideration	$	24,279
Assets acquired and liabilities assumed
Cash and cash equivalents	$	9,918
Prepaid expense and other current assets	1,915
Accounts payable	(233		)
Total assets acquired and liabilities assumed	11,600
Goodwill	$	12,679



	Number of Shares		Weighted Average Exercise Price
Outstanding at December 31, 2018 (1)	1,635,790		$	11.08
Granted	563,000		0.76
Exercised	—		—
Canceled/forfeited	(8,360	)	17.81
Expired	(70	)	59.48
Outstanding at March 31, 2019 (unaudited) (1)	2,190,360		$	8.40
Exercisable at March 31, 2019 (unaudited)	650,151		$	25.97



Years ending December 31:
Remainder of 2019	$	81,950
2020	112,943
2021	67,595
Total future minimum lease payments	262,488
Less: Difference between future minimum lease payments and discounted operating lease liabilities	39,449
Total operating lease liabilities	$	223,039


	Three months ended March 31,						Dollar			Three Months Ended March 31,						Dollar
	2019			2018			Change			2020			2019			Change
Operating expenses:
General and administrative expense	$	1,277,180		$	1,303,189		$	(26,009	)
Research and development expenses	1,693,391			1,086,653			606,738
License expenses	112,500			100,000			12,500
Impairment of goodwill	—			5,187,519			(5,187,519		)
General and administrative										$	1,861,765		$	1,277,180		$	584,585
Research and development										2,379,804			1,693,391			686,413
License fees										12,500			112,500			(100,000		)
Total operating expenses	3,083,071			7,677,361			(4,594,290		)	4,254,069			3,083,071			1,170,998
Loss from operations	(3,083,071		)	(7,677,361		)	4,594,290			(4,254,069		)	(3,083,071		)	(1,170,998		)
Other income	31,231			11,744			19,487			1,821			31,231			(29,410		)
Net loss	(3,051,840		)	(7,665,617		)	4,613,777			$	(4,252,248	)	$	(3,051,840	)	$	(1,200,408	)
Other comprehensive loss:
Foreign currency translation adjustments	7,621			(13,746		)	21,367			(22,944		)	7,621			(30,565		)
Comprehensive loss	$	(3,044,219	)	$	(7,679,363	)	$	4,635,144		$	(4,275,192	)	$	(3,044,219	)	$	(1,230,973	)


1.	ORGANIZATION AND DESCRIPTION OF THE BUSINESS


2.	~~GOING CONCERN~~